Tax Moves to Consider in Summer and The High Cost of Health Care

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The High Cost of Health Care
A financial strategy can take health care costs into account.

Provided by Rita Wilczek

One of the most ubiquitous aspects of social media in recent years has been the arrival of Americans crowdfunding around a major health issue. While America has a level of health care available that rivals the rest of the world, there is no denying that some treatments can be notably expensive. GoFundMe, a crowdfunding website, has raised over $5 billion since 2010; their CEO, Rob Solomon, says that a third of their campaigns fund health care costs and that this category gets more donations than any other.¹

You may know someone who has been forced to seek out the generosity of their own network in order to cover the costs of health care, medicine, or treatments. It may put you in mind of your own immediate or extended family and how you or they might deal with such a situation.

Coverage may not cover everything. Sophia Nelson runs a business, has authored books, and describes herself as “doing well.” But in a recent piece in USA TODAY she revealed, “[My] medical emergency devastated me financially. Unable to work as hard as I was used to […] I had to start over in my mid-40s. It took me five years just to recover.” The idea of “doing well” is subjective, but it doesn’t take much to imagine a health crisis taking a major bite out of anyone’s savings, or worse yet, wiping them out entirely.²

It’s a common fear. A 2019 Gallup poll on the subject revealed that 46% of Americans believe that they won’t be able to afford their health care. If you or someone you know skipped treatment due to cost, they join a full quarter of Gallup’s respondents who did the same. Perhaps the biggest takeaway is that everyone seems to have health care costs on their mind; a third of respondents earning $180,000 or more per year have concerns about a health issue leading to a bankruptcy.²

What do you do? When mapping out your financial strategy, it’s perfectly sensible to make allowances for health issues, including your insurance coverage, health savings accounts, and other ways for your family to meet those concerns, head on. 

It’s easy to be afraid, but you’re also probably considering a strategy. While it’s not possible to plan for every contingency, if the concern is facing a financial issue, talking to a financial professional may help you allay some of those fears.

Rita Wilczek may be reached at (952) 542-8911 or rwilczek@hirep.net

www.ritawilczek.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - npr.org/sections/health-shots/2018/12/27/633979867/patients-are-turning-to-gofundme-to-fill-health-insurance-gaps [12/27/18]

2 - usatoday.com/story/opinion/voices/2019/06/02/health-care-insurance-driving-americans-bankruptcy-column/1276207001/ [6/2/19]

 

Tax Moves to Consider in Summer

Now is a good time to think about a few financial matters.

Provided by Rita Wilczek

Consider making tax moves earlier rather than later. If you own a business, earn significant investment income, are recently married or divorced, or have a Flexible Savings Account (FSA), you may want to work on your income tax strategy now rather than in December or April.

Do you need to pay estimated income tax? If you are newly retired or newly self-employed, you will want to be familiar with Form 1040-ES and the quarterly deadlines. Each year, estimated tax payments to the Internal Revenue Service are due on or before the following dates: January 15, April 15, June 15, and September 15. (These deadlines are adjusted to the next available workday if a due date falls on a weekend or holiday.)¹

Ideally, you would just make four equal payments per year – but if you are a small business owner, your business income could vary per quarter or per season. The risk here is that you will underpay and set yourself up for a tax penalty. Confer with your tax professional to see if you should adjust your estimated tax payments for this or that quarter.¹

Has your household size changed? That calls for a look at your pre-tax withholding. No doubt you would like to take home more money now rather than wait to receive it in the form of a tax refund later. Adjusting the withholding on your W-4 may bring you more take-home pay. Ideally, you would adjust it so that you end up owing no tax and receiving no refund. You can adjust it at the I.R.S. Tax Withholding webpage, or via a paper W-4 form.²

Think about how you could use your FSA dollars before the end of the year. The Department of the Treasury has modified the rules for Flexible Spending Accounts (FSAs). The I.R.S. now permits an employer to let an employee carry up to $500 in FSA funds forward into the next calendar year. Alternately, the employer can allow the FSA accountholder extra time to use FSA funds from the prior calendar year (up to 2.5 months). Companies do not have to allow either choice, however. If no grace period or carry-forward is permitted at your workplace, you will want to spend 100% of your FSA funds this year.³

You could help your tax situation by contributing to certain retirement accounts. IRAs and non-Roth workplace retirement plans are funded with pre-tax dollars. By directing money into these retirement savings vehicles, you position yourself for federal tax savings in the year of the contribution. If you are able to make the maximum traditional IRA contribution of $6,000 in 2019, and you are in the 24% tax bracket, that will allow you to claim a $1,440 federal tax deduction for 2019.⁴

While next April may seem far off, this is an excellent time to think about tax-saving possibilities. You have plenty of time to explore your options.
 

Rita Wilczek may be reached at (952) 542-8911 or rwilczek@hirep.net

www.ritawilczek.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - web.blockadvisors.com/estimated-tax-payments-2019/ [5/23/19]

2 - turbotax.intuit.com/tax-tips/tax-refund/top-5-reasons-to-adjust-your-w-4-withholding/L8Gqrgm0V [5/23/19]

3 - investopedia.com/ask/answers/111615/does-money-flexible-spending-account-fsa-roll-over.asp [5/21/19]

4 - fool.com/retirement/2018/12/23/the-6-best-tax-deductions-for-2019.aspx [12/23/18]