Age has privilege based on certain, milestones like turning 65 and gaining eligibility for Medicare, health care at a reduced rate, and reduced real estate taxes. At age 59½ money can be withdrawn from retirement with no penalties. At 24 a student receives financial aid based on his own salary and not his parent’s income.

If income is too low, one can receive food, free medical costs, reduced rent, free tax money, free education, free day care, reduced utilities, and free legal aid.

If net worth is low and income is low, people can have many of the privileges outlined in the previous paragraph. In addition, one may be eligible for free nursing home care.

 Specific occupations also have privilege. For instance, individuals in the military or clergy do not pay taxes on the expense of housing. Veterans receive discounts at many retail stores and can also receive, if qualified, free health care, funeral expenses, education, financial counseling and can receive job preference. If one works for certain non-profit organizations or for the government, student education loans can be forgiven. Parents who work for the government also receive preference for their children on financial aid for college.

With the right knowledge, small business owners can structure income to their advantage from an income tax standpoint. There are numerous benefits that can be offered to employees structured to the advantage of the owner of the business. Profits of the company or business can also receive preferential treatment tax wise.

More recently we see first time home buyers, car buyers, union members, Congress, and attorneys receiving preferential treatment, even in the face of incompetence. Certain large businesses like banks, insurance companies, and auto companies have received advantages created by legislation coming out of Washington. The difficulty in having this preferential treatment is that by the time people discover what benefits are available, the time period to take advantage of these benefits has expired. As a result it benefits only those who keep informed or those who lobby help. In addition, it always results in taking from some people and redistributing it to others. Those who benefit receive value not by their own efforts, but by circumstances.

In United States societies of the past (50’s and 60’s) the check for business greed was customer service and customer satisfaction. The check mate for government is our Constitution; but Congress, as well as the judicial and executive branch of government, has over-reached its authority. The result will lead to socialism. It is not, nor has it ever been, the role of government to give charity, because it always leads to corruption. The church needs to take back it’s authority over feeding the poor, healing the sick, strengthening the weak, and providing clothes and shelter to those in need.

        If you are healthy and have no chronic diseases, life insurance offered through your employer will likely be more expensive than what is offered through non-group coverage. Proper selection of the coverage for reduced rates and adequate coverage is necessary and we can assist in that process. Group insurance may be the best alternative for someone with chronic diseases. It should be noted that a loss of employment will also mean a loss of group coverage.

        If you are without credit card debt, we generally recommend that you take advantage of matching contributions by your employer to your retirement plan. This is why we encourage young people to avoid debt early in their careers. Money invested early and accumulating over many years grows dramatically. Time and compound interest is often referred to as the eighth wonder of the world.

        If your employer offers a flexible spending account (FSA or 125) sit down and review all your medical expenses that you anticipate for the next year. This should include prescriptions, chiropractic medicine, eye glass care, dental, medical costs not covered by health insurance, and any other related expenses. You can find a complete list through your employer or with a Google search of section 125 medical expense deductions. Some plans allow .14¢/mile to and from the doctor’s office with proper documentation. This benefit has tax savings of a minimum of 20% and as much as 40% for some people. Be accurate in your estimates because if you do not use it, you can lose it.

        Some benefit plans allow for pre-tax payment of mass transit deductions to and from work as well as pre-tax parking. This is offered under Section 132 of the IRS tax code. If the cap and trade agreements take place this may be the preferred method of travel because of the high cost of fuel. If your employer does not offer it, suggest to you human resources manager that he/she look into adding it to the options. This plan benefits the employer as well, saving the FICA tax for the mass transit expense.

        Another benefit offered is tuition reimbursement under Section 127 of the code. This benefit allows the employee to be reimbursed for successful completion of educational courses offered that will bring value to the employer. Often it requires a commitment to the employer for a stated number of years. The permissible amount is $5,250 each year. I almost always recommend long-term disability for employees because it represents a catastrophic risk potential. In some cases I recommend supplementing group long-term disability with an individual plan.

        I also recommend short-term disability for those with limited financial resources. I have never been a fan of accident policies or disease specific policies. They require specific risks to occur for collection of the benefit. Sometimes a family history of disease will sway my thinking.

        Dependent care benefits can also be taken pre-FICA and pre-tax for adults or children. Up to $5,000 annually is permissible as a payroll deduction. It is important to have a review of this benefit to see whether to take the pre-FICA benefit or the child credit. Your accountant can assist you with this decision.

        If you are planning an adoption this year, be sure to take advantage of the pre-FICA and pre-tax benefit that allows up to $10,390 to be payroll deducted. In addition, there is also a tax credit available for adoption. Be sure to discuss this option with your employer because this benefit saves your employer as well.

        Proper selection of benefits can be a significant benefit to employees. This is why planning is so important. Each year most of the benefits must be determined in October or November for the next year. It is worthwhile planning how to take these benefits. Be sure to call us if you need help.

Robert Ostrander, CFP®

SWS Advisors, Inc.

Medicare Part A is hospital insurance and pays some of the cost of skilled nursing care, hospice care, and home health care.  This coverage costs about $400 each month unless you have paid Medicare taxes for 30 quarters (7½ years).  Once these taxes have been paid, there is no monthly cost associated with this coverage. 

Medicare Part B covers physician’s services, most outpatient hospital services, and other related services.  The monthly cost for this coverage is just under $100.  With this coverage, certain deductibles, coinsurance and copayments may also apply.

Medicare Part D covers prescription drug coverage.  The costs vary by provider but average about $25 per month.  You may enroll for the first time or change carriers once each year between November 15 and December 31.

About twenty percent of the population works for an employer that supplements Medicare coverage in retirement.  Often, a retired employee has personal coverage as well as coverage for their spouse until the retired employee dies.  At this point, the supplemental coverage has to be replaced by the spouse.  This is important to note, as I frequently deal with a surviving spouse who is unaware of this loss in coverage.  Failure to recognize this change often causes out of control medical expenses and confusion to the spouse about the reason for the increase in these expenditures. 

The rest of the elderly population can satisfy supplemental medical coverage with Medicare Advantage plans or Medicare Supplement plans.  The Medicare Advantage Plans are part of a network of physicians where participants are restricted to the health providers in the network.  The Medicare Advantage Plans have less cost and are most often available in large metropolitan areas.  The disadvantage is limited physician selection.  The Medicare Supplement Plans are best for those away from metropolitan areas or those who want to select their own health provider.

Because there are substantial numbers of people born between 1946 and 1964 (baby boomers represent 78 million people) that will be entering the Medicare window in the next twenty years, it is expected that either health care benefits will be greatly reduced or costs will increase significantly.   It will become increasingly difficult for elderly people to find and afford adequate health care.  It is likely that many will be forced to live with their infirmities.  This is why it may be important for those in all age groups to begin eating right, exercising and setting up disciplines for a healthy lifestyle.

Robert Ostrander, CFP®

SWS Advisors, Inc.

1. Shop for tests.  If you need an expensive test that’s not covered by insurance, it might be worthwhile to compare prices among different labs and clinics.  Fees can vary widely.  Ask you doctor for the CPT (Current Procedural Terminology) code.  If they can’t or won’t give it to you, The American Medical Association’s Web site, ama-assn.org, has an easy-to-use CPT search engine. Once you have the code, you can get price quotes from several providers.

2. Ask for cheaper drugs.  Physicians don’t always know the cost of the drugs they prescribe.  Ask your doctor if there is an equally effective but less expensive alternative to the medication you’re prescribed.

 Current health care costs are estimated to be, on average, more than $8,000 for every man, woman, and child in the United States.  I think we can all agree that there is not enough money available to pay for that.  At the center of the problem is the need for law changes limiting excessive lawsuit settlements related to health care that cause the liability expenses for physicians and hospitals to soar.  In addition, the vast majority of physician offices are run inefficiently.  For the most part they are “mom and pop” organizations.  A uniform standard for reporting and for claims processing would go a long way in reducing costs.

I recently met with a physician who does research on longevity and asked him what the most essential steps are to extend life.  His answer surprised me.  Meditation (prayer) was number one, followed by stretching, aerobic and anaerobic exercise, and finally, nutrition.  As individuals we need to take control of our own health.  Most of us know how to be healthy, but we often lack the discipline to follow through to make it happen.

We know statistically is that 2.8% of the people cause 80% of the cost of health care in any given year.  A number of years ago I discussed with an occupational physician the idea of putting a plan together to simply manage the 2.8% of the people who need care.  Unfortunately, those in the position to understand the ways to reduce the costs have no authority in the health care system.  The authority primarily resides with hospitals and insurance companies, who by no coincidence, are also the beneficiaries of higher costs.  The premium payer is often a business, leaving most employees in the dark about the options they have and the costs they pay.

Congress is currently proposing a national health care program.  No country in the world has had success with this kind of a plan because, ultimately, it leads to rationed health care and debt beyond measure.  Congress might take steps to achieve success by introducing a public program for some and private pay for others.  Because the government can hide their expenses, most people fear that it will eventually lead to the demise of the private pay plans. 

Another part of the proposal is to tax health care expenses.  If this is done it will result in substantial increases in taxes for people who work.  It is estimated that 50% of our population pay little or no income tax.  This would reduce their already meager compensation.  To remove the deduction for health care is to tax anyone who pays social security, federal and local income taxes.  Those least affected by this proposal would be the young, those over age 65, and the non-working poor.  The tax increase would result in an average additional tax of $200 each month for every man, woman, and child.  Of course, no one is average so a disproportionate cost would be borne most by older Americans not yet 65 and the working middle class.

Because health care represents one of the most formidable costs in a family budget, our advisors have been diligent in recommending to our clients the proper use of cafeteria plans, health savings accounts and the benefits of employer-paid health care.  We may see the loss of these deductions in the future.  As a result, we are asking our clients to step up their plans to get healthy.  Rationed health care will demand we begin to take care of ourselves.  Remember, 2.5 million Israelites spent forty years in the desert and had no disease.  You can do it too!

Robert Ostrander, CFP®

SWS Advisors, Inc.

Make the most of discounts. Many insurers offer discounts on services to promote healthy lifestyles, such as gym memberships, smoking-cessation and weight-loss programs, chiropractic service and acupuncture.

Sign up for employer incentives. Many employers are offering premium discounts, contributions to health savings accounts and outright cash incentives to employees who sign up for a wellness program or health assessment. Some also offer perks to people with, say, asthma, lower-back pain or diabetes for enrolling in a disease-management program.

1. Prevent rather than treat – Wev’e all heard prevention is the best cure, and it is!  One of the most effective ways to keep your costs of health care down is to take up and maintain a healthy lifestyle.  This includes maintaining or attaining a healthy weight, exercising regularly, kicking any unhealthy habits, having regualr checkups to catch any problems in their early stage, and taking advantage of any wellness programs provided through your employer or local comunity center.

2. Take advantage of free services whenever possible – Most communities have clinics that may ofer free health screenings as part of their services to the community.  Local clinics, hospitals and pharmacies often provide a variety of these, including blood pressure and cholesterol screenings and even mammograms.  They may be advertised in your local paper or on your local radio station.

3. Eat foods in their most natural, unprocessed state - The processing of foods destroys nutritional content.  The more processes it goes through before it gets to your body, the less it has to offer you.