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Financial Planning Starts Here! (Part 2)

17 December 2007 - Features - Editor

Financial Planning Starts Here! (Part 1)

Financial Planning to Fill Medicare Gaps

Medicare is so full of holes that you could be in for nasty surprises at the ripe age of 65! Obviously, this form of social security for old age does not provide for foibles such as getting treated abroad, but there are other restrictions as well. Many people find their medical expenses climbing rapidly from middle age onwards, while Medicare is more than a decade awa

The much touted blue, red, and white Medicare card works at select medical institutions only. You could be hard pressed to find doctors you like if you live in a remote part of some of our States. Medicare does not pay for all prescription drugs. The system is choc-a-bloc with deductions and co-payments. Medicare will not even pay for a cane should a person with type 2 diabetes lose his or her sight! Gaps in Medicare must have been designed by the folks behind Guantanamo!

Medicare gaps are set to increase each year. The torrents of new drugs, diagnostic tests, and medical procedures, will have most relevance for senior citizens, but only a handful of them will make it to approved lists of Medicare. Governments of tomorrow, struggling to pay for the deficits of today, are likely to jack co-payments for Medicare under all available heads. Rising longevity will certainly not help matters! Clearly, your financial planning must show plenty of initiative in terms of providing for family and your own health care in old age.

An HSA is Salt for Your Financial Planning Dish!

An HSA combines with a HDHP, to give you twin benefits of low health insurance premiums now, and a tax free fund to pay for Medicare gaps tomorrow. It is true that you end up paying more income tax in the short run, but if forecasts about national debt are right, then paying now could be better than to have pay on gains later. HSA amounts can roll over for ever, and you can even transfer cafeteria plan contributions to an HSA at any time. A prime drawback however, is that no one is certain about approved medical expenses which qualify for HSA drawings. You are responsible for maintaining accounts, with all supporting vouchers and bills. What if an auditor determines that your expenses do not qualify as being medical in nature? Dentistry is a classic example: expenses for cosmetic purposes can be disallowed.

Do you have an HSA? Please join our forum and share your experiences with auditors in terms of Medicare gaps that you have covered through an HSA. Our community would particularly like to know if any of your HSA drawings have been disallowed because an auditor was not convinced about the medical benefits.

 


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