Medicare Open Enrollment

Written by Gerald E Gasber, CFP®, CIMA®, QPFC.

If you're like most people, the information you receive about Medicare through the mail, from insurance agents, or talking with friends, family, and co-workers, is confusing! And the abundance of conflicting information can leave you anxious, worrying that you'll do the wrong thing like missing a key enrollment period or incurring hefty penalties.  


- A co-worker says I should wait until Open Enrollment in the fall to enroll
- A brochure I received in the mail says I HAVE to enroll in Medicare at age 65
- My neighbor says if I have health insurance through my employer, I don't need to enroll in Medicare
- A relative says I don't need to enroll in Medicare Part D if I'm not on any medications now, and that I can enroll in a Part D at any time
- My best friend says to just enroll in a cheap plan now since I'm healthy, that I can always change to a better plan during Open Enrollment

One area of confusion for many people is the various enrollment periods for Medicare. Very few people are clear on which enrollment period is for what situation, and what the implications are if you miss the relevant enrollment period.

Because Medicare Open Enrollment is approaching, we decided this would be a good time to provide you with the information you need regarding this enrollment period.

Medicare Open Enrollment occurs every year from October 15th through December 7th. The term "Open Enrollment" seems to imply that anyone can enroll in Medicare at this time. In reality, Open Enrollment is for making CHANGES to your existing Medicare coverage - primarily your Medicare Advantage Plan (or Medicare Part C plan), or your Medicare Part D prescription drug plan.

Here is what you can do:

- Switch from one Medicare Advantage plan to another Medicare Advantage plan
- Enroll in a Medicare Part D prescription drug plan
- Switch from one Medicare Part D prescription drug plan to another
- Switch from an Original Medicare supplement plan to a Medicare Advantage plan

When you do make a change in your coverage, the new plan will be effective January 1.

You can NOT change from a Medicare Advantage plan to an Original Medicare supplement plan during Open Enrollment. You can only do this from January 1st through February 14th every year. And if you've been on your Medicare Advantage plan for 12 months or longer, you MAY NOT QUALIFY for an Original Medicare supplement plan if you have health issues. This is one reason the decisions you make when you first become Medicare eligible are so important- you may not be able to make changes in the future.

Why would you want to make changes to your coverage? In most cases people change their plans due to an increase in the premium of their current plan, or an increase in the copay amounts. You may also want to change from one Advantage plan to another because the network of providers has changed and the group of doctors you are currently seeing has dropped out of your plan's network. This also applies to Medicare Part D plans- the copays may go up for your medications, or perhaps you are on new medications which are very expensive on your current plan; or the pharmacy you like is no longer in the plan's network.

To make a change in your Medicare coverage you simply enroll in the Medicare Advantage plan or Part D Prescription plan you want, and you will automatically be dropped from your current plan.

So who should you listen to? Our firm has retained the services of an expert who specializes in this area of planning. Eileen Hamm has the experience and knowledge to provide you with the advice, guidance, and recommendations that will get you through the confusing world of Medicare. Since she does not sell any Medicare products, her advice is objective with no underlying pressure to "sell you." We pay her firm a retainer fee, as a value-added benefit to you for being our client so there's NO charge to you. If you'd like to take advantage of this service, contact us and we'll make an introduction.


Regs to the Money Market Fund's Rescue?

Written by Gerald E Gasber, CFP®, CIMA®, QPFC & Bob Veres.

The world of money market funds changed forever back in 2008, when an investment vehicle called the Reserve Primary Fund loaded up on loan obligations backed by Lehman Brothers. Lehman famously went under, and the fund "broke the buck," meaning that when Lehman was unable to pay back its loans, the value of a share of the Reserve Primary Fund dipped under $1.

This was the first time many investors realized that money market funds were not risk-free. Many panicked, causing a run on other money market instruments, and overall the event added another unhappy twist to the financial crisis.

Fast forward to the near future: October 14, 2016, the date when new protective regulations implemented by the Securities and Exchange Commission will go into effect. Yes, the government wheels creak along slowly.

What regulations? The new regulations make a distinction between institutional and retail money market funds. Prime and municipal/tax-exempt money market funds whose investors are institutions are required to move from a fixed $1.00 share price to a floating share price/NAV (net asset value).

U.S. government money market funds will be permitted to retain the stable $1.00 per share NAV and may be offered to retail investors or institutional investors. In order to be considered a government fund, a portfolio is required to invest at least 99.5% of its total assets in cash, government securities, and/or repurchase agreements that are collateralized solely by government securities or cash.

All retail money market funds will also maintain a stable $1.00 share price. In order to be considered a retail fund, the fund must have policies and procedures reasonably designed to limit beneficial ownership to natural persons (for example, accounts associated with social security numbers), including individual beneficiaries of certain trusts and participants in certain tax-deferred accounts, such as defined contribution plans.

Liquidity Fees and Redemption Gates

The SEC's amendments also include new rules about liquidity fees and gates (temporary suspension of redemptions) allowing a fund's board of directors to directly address runs on a fund. If deemed appropriate by the fund's board, fees and gates could be imposed on funds whose portfolios fail to meet certain liquidity thresholds.

• If a fund's weekly liquid assets fall below 10% of total assets, nongovernment funds are required to impose a 1% liquidity fee, unless the board determines that it would not be in the fund's best interest or that a higher (up to 2%) or lower fee is more appropriate.
• If a fund's weekly liquid assets fall below 30% of its total assets, the board may impose a liquidity fee of up to 2%. Additionally, the board may suspend redemptions for up to 10 business days in a 90-day period.

The bottom line is that retail investors will still be able to put $1 into a money market fund and expect to get $1 back out again when they sell shares—with, perhaps, a tiny bit more confidence a few months from now.



Got a new 18-year-old? This "power" can help you help your young adult

Written by Gerald E Gasber, CFP®, CIMA®, QPFC.

When you look at your newly minted 18-year-old, you probably still see the beautiful baby you brought home years ago. But after reaching that milestone birthday, your baby is considered an adult under the law, and you no longer have the parental right to access his or her medical or financial information.

That fact can be alarming, especially if your almost adult is getting ready to go to a far-off college or preparing to travel the world.

However, documents such as financial power of attorney, health care power of attorney, and a health information authorization can help you get access to the information you might need to help your child. And when you add a "durable" clause or paragraph to the power of attorney documents, you maintain the authority granted in cases when the granting person—in this case your child—becomes incapacitated for even a short time.

While you're at it . . .

If you're already working with an attorney to prepare financial and medical powers of attorney, you might also want to add a will. It's a general good practice, even if your child doesn't have a lot of assets now.

Documents for financial health

Your child's fiscal health might benefit from your having a financial durable power of attorney. Its parameters can be limited or broad, depending on what works best for your family.

Limited rights restrict your access to your child's financial information. You might only be able to see your child's account balances, so you can tell when a checking account needs an injection of parental cash. Broad rights could allow you full transactional capabilities on an account. This option is worth considering if your child will be out of the country.

"Even if your attorney prepares a power of attorney for your child, you may want to talk with your financial institutions to see if they have agent authorization forms they'd prefer you to use," said Alisa Shin, a senior wealth manager with Vanguard Personal Advisor Services®. "Using a financial institution's form may make it easier for you to transact on your child's behalf."

"When your child is away, having a power of attorney or agent authorization lets you help if he or she has a financial problem and isn't here to take care of it," Shin said.

Documents for physical health

A Heath Insurance Portability and Accountability Act (HIPAA) authorization form will let a health care provider—including a college's medical team—share information about your child's condition with you without violating privacy regulations.

"Once they're 18, schools and hospitals aren't required to notify parents if their children are being treated," said Shin. This is the case even if your child is still covered by your health insurance plan.

The college health center may be able to provide you with the appropriate HIPAA authorization form. Filing this document with the health center before school starts helps ensure you're the one who's called if your child needs more serious medical attention. "Think about the hours of angst you'll save not knowing what's happening with your child," Shin said.

While the HIPAA authorization lets you know your child's medical condition, your child will need to execute a health care power of attorney (prepared by the attorney) so that you can make medical decisions for your child if he or she can't. This document might also be called a health care proxy or health care directive. More often than not, a health care power of attorney will contain the necessary HIPAA language so that if your attorney is preparing the document, your child might not need to execute a HIPAA form.

Peace of mind once documents are in place

Like most parents, you want your budding young adult to take on the world—but also need to know you can help when needed. The appropriate power of attorney documents can give you confidence in your ability to do exactly that.

• The information provided here is for educational purposes only and isn't intended to be construed as legal or tax advice. We recommend that you consult a tax, legal or financial advisor about your individual situation.


Expensive Olympics

Written by Bob Veres & Gerald E Gasber, CFP®, CIMA®, QPFC.

The opening celebration for the 2016 Olympic Games is just days away and of course all you're hearing about is pollution, crime, unfinished facilities, Zika and cheating Russian athletes. Chances are, the games will go off without a hitch and be highly-entertaining, despite some of the challenges that the athletes will face in their housing and venues. But once the games are over, the nation of Brazil is likely to experience a familiar dose of economic trauma.

Why? A recent study by the Council on Foreign Relations looked at the economics of different Olympic Games, and found that the costs inevitably outweigh the benefits. Part of the problem is enormous cost overruns; when nations bid for the games they typically underestimate the cost of constructing stadiums, fields, apartments for the athletes, safe transportation and security. In the case of the Beijing and Sochi Games the estimated costs were $20 and $10.3 respectively while the actual price tags came in at $45 and $51 billion. Building appropriate venues for the games in Athens, Greece actually led to a government bankruptcy.

If those facilities could be recycled into popular tourist destinations, the expense might be justified. But the report found that the more typical situation is a lot of so-called "white elephants"—expensive facilities that have limited post-Olympics use. Beijing's famous "Bird's Nest" stadium cost $460 million to build and now sits unused. The entire city of Sochi, Russia stands idle.

The Rio Olympics are estimated to cost $20 billion for infrastructure alone, even after plans to overhaul the city's sewage system were cancelled due to cost overruns. Estimates suggest that the city will attract only a fraction of the anticipated 480,000 (International Olympic Committee estimate) to 600,000 (Brazilian Ministry of Tourism estimate) visitors, which means that the already-compromised fiscal situation in Brazil will get worse at some point after the games have left town. And don't expect the sewage situation to be cleaned up once the visitors have departed.

Meanwhile, it is getting more expensive simply to bid on hosting the games. When you add up the cost of drawing up construction plans, hiring consultants, organizing the way the event will be run and the necessary travel expenses, a bid can cost as much as $150 million—as it did when Tokyo made its 2016 bid. The city of Toronto recently backed out of bidding on the 2022 games, due to an estimated $60 million in bidding expenses—and of course that doesn't count the rumored under-the-table payments to IOC executives.

That leaves two countries still in the running for the 2022 Winter Games: Kazakhstan and China. It may not be a coincidence that neither country has to worry about pesky voters and citizens claiming that the costs are not justified by the benefits.



Who Pays for College? Are They Getting Their Money's Worth?

Written by Gerald E Gasber, CFP®, CIMA®, QPFC & Bob Veres.

According to the Student Loan Marketing Association (more commonly known as Sallie Mae Bank), the average tuition, room and board at a private college comes to $43,921. Public tuition for in-state students at state colleges amounted to $19,548, with out-of-state students paying an average of $34,031.

How are parents and students finding the cash to afford this expense?

Sallie Mae breaks it down as follows: 34% from scholarships and grants that don't have to be paid back, coming from the college itself or the state or federal government, often based on need and academic performance.

Parents typically pay 29% of the total bill (an average of $7,000) out of savings or income, and other family members (think: grandparents) are paying another 5%.

The students themselves are paying for 12% of the cost, on average.

The rest, roughly 20% of the total, is made up of loans. The federal government's low-interest loan program offers up to $5,500 a year for freshmen, $6.500 during the sophomore year, and $7,500 for the junior and senior years. If that doesn't cover the remaining cost, then students and parents will borrow from private lenders. The average breakdown is students borrowing 13% of their total tuition costs and parents borrowing the other 7%.

Is the cost worth it? The Federal Reserve Bank of New York recently published a report on the labor market for college graduates. The conclusion is that younger workers have experienced much higher unemployment rates than their college graduate peers—the figures currently are 9.5% unemployment for all young workers, vs. just 4.2% for recent college graduates. Overall, the unemployment rate for people who have graduated with a 4-year degree is 2.6%, and even during the height of the Great Recession, it never went over 5%.

And income is higher as well. The average worker with a bachelor's degree earns $43,000, vs. $25,000 for people with a high school diploma only. The highest average incomes are reported for people with pharmacy degrees ($110,000 mid-career average), computer engineering ($100,000), electrical engineering ($95,000), chemical engineering ($94,000), mechanical engineering ($91,000) and aerospace engineering ($90,000).

Lowest average mid-career incomes: social services ($40,000), early childhood education ($40,000), elementary education ($42,000), special education ($43,000) and general education ($44,000).

Among the lowest unemployment rates: miscellaneous education (1.0%), agriculture (1.8%), construction services (1.8%) and nursing (2.0%).

Yes, there are some themes here, and of course people in every career can fall above or below these averages. Nor does everybody who graduates with a particular degree end up in a career that tracks that degree. (Of particular note: the list does not include a financial planning or investment advisory degree.) The point is that despite the cost, a college degree does seem to provide significantly better odds of getting a job, and getting paid more for the job you do get.