Changes to Social Security – Primarily the file & suspend strategy | AGT The Safe Money People

Congress is putting an end to two Social Security filing strategies that many couples have used to add tens of thousands of dollars to their retirement incomes. But there’s a six-month window in which couples who are at least 66 years old can take advantage of them, as well as a partial reprieve for some others.

The implications of the new Social Security rules became clearer Friday after the Senate passed the budget bill that includes the changes. The measure will become law after President Barack Obama signs it.

The strategies under fire—known as file-and-suspend and a restricted application for spousal benefits—have made it possible for both members of a couple who are 66 or older to delay claiming benefits based on their own earnings records while one pockets a so-called spousal benefit based on the other’s earnings.

To do this, one individual files for benefits and suspends them, while the other files a restricted application to collect only a spousal benefit—not his or her own earned benefit even if it would be higher. That way, both individuals can take advantage of delayed retirement credits, which increase their earned benefits by 6% to 8% for each year in which they defer claiming between the ages of 66 and 70—and one gets some income from Social Security in the meantime.

Combined, the strategies can boost lifetime retirement income by as much as $60,000 or more, says William Meyer, chief executive of SocialSecuritySolutions.com, a service that identifies Social Security claiming strategies likely to yield the highest amount over a beneficiary’s life span.

While the new law shuts down the two strategies, some people can still take advantage of them—provided they act fast. For those for whom the strategies will be off limits, meanwhile, claiming decisions may become less complicated but also less lucrative.

Here’s what you need to know:

A six-month window before new rules kick in.

Under the new law, individuals will still have the ability to suspend their benefits. But Social Security will no longer allow relatives to submit a new claim for spousal or dependent child benefits based on the earnings record of a worker who has suspended his or her own benefits. However, that provision won’t go into effect for six months from the date President Obama signs the budget bill.

As a result, if you are 66 or older now—or will turn 66 within the next six months—there might be an advantage in filing and immediately suspending your benefit. That would give a spouse who is also 66 or older the option to file a restricted application for only a spousal benefit and receive that benefit while both of you delay claiming on your own records. But both you and your spouse must act within the six-month window.

There’s a similar window for individuals at full retirement age who have children under age 18 or disabled adult children. Those who are 66 or older—or will turn 66 within the next six months—can file-and-suspend so their children can claim dependent benefits. Again, both parties need to take action within six months.

If you won’t turn 66 until after the six-month window closes, your relatives won’t receive a dime unless you are already receiving your benefits, says Web Phillips, senior legislative representative at the National Committee to Preserve Social Security and Medicare, a nonprofit advocacy group.

Some people get a break.

Families who are already using these strategies will be grandfathered. Their benefits will not be changed or interrupted due to the legislation, says Mr. Phillips.

Also, if you turned 62 this year or are older, you will still be able to file a restricted application for only a spousal benefit starting at age 66. This will allow you to receive a spousal benefit while you defer claiming your own benefit so that it can grow larger.

After file-and-suspend is phased out in six months, to take advantage of this, your spouse must already be claiming a benefit, said Michael Kitces, director of planning research at Pinnacle Advisory Group Inc. in Columbia, Md.

When married individuals apply for a retirement benefit other than with a restricted application, they are deemed to have filed for both their own earned benefit and a spousal benefit, and will receive whichever is higher, instead of having a choice to get one and switch to the other later.

Flexibility on retirement vs. survivor benefits remains.

Generally, widows and widowers won’t be affected by the new law, says Mr. Meyer. And individuals who are eligible for both earned and survivor benefits will continue to have a couple of claiming strategies open to them, making careful comparison worthwhile.

Starting at age 60, a survivor can take a reduced benefit based on his or her deceased spouse’s benefit—and then switch to his or her own benefit later if it is higher. Alternatively, the survivor can start with his or her own benefit as early as age 62 and then switch to a full survivor benefit at full retirement age.

One of these strategies is often better than simply sticking with one benefit or the other.

If you’re divorced.

The restricted-application changes also apply to people who are divorced.

Under current law, a divorced individual who is 66 or older and was married at least 10 years but is currently unmarried can claim a benefit based on the ex-spouse’s earnings record while allowing his or her own benefit to grow. A former spouse is generally entitled to file such a claim once an ex turns 62, says Mr. Phillips.

But under the new law, only those who turned 62 this year or are older will be able to file to do this when they turn 66. Younger divorced people will receive either their own earned benefit or a spousal benefit—whichever is higher—instead of having a choice to take one and switch to the other later. You must be unmarried to get a divorced spouse benefit.

The fate of one key difference in the rules for those who are divorced is unclear: Under current law, you can collect a benefit based on an ex’s work record even if he or she isn’t yet collecting a benefit, as long as the ex is at least 62. But due to the new rule on file-and-suspend, it’s unclear what would happen to a spousal benefit claim if an ex had suspended his or her benefit.

“This was likely not intended and will hopefully be fixed,” says Mr. Kitces.

Retirement Taxes Skokie IL - AGT The Safe Money People Call 847-933-9222

http://www.AGTthesafemoneypeople.com Retirement Taxes Skokie IL | AGT The Safe Money People Give us a call today 847-933-9222

https://www.youtube.com/watch?v=fNzt-...

Retirement Taxes Skokie IL
Why haven’t I heard of the ideal retirement pyramid from my advisor?

Every financial planner, banker, broker, and organization has their opinion on your retirement pyramid meaning your exposure to risk should look. Who’s right? Which one do we go by or do we even understand what they’re saying? How about Harry Markowitz, have you heard his name? Well, he won the Nobel Prize for finance with his ideal retirement pyramid. Why are they telling you about him? Perhaps, it doesn’t go along with their agenda of where they want your money. Your money needs to be in a safe place in your retirement. Come and learn why.

AGT the safe money people has been serving customers in the Skokie Community for over the past 10 years. We hope you found his video helpful, if you would like to learn more about our services, please visit our website - http://www.AGTthesafemoneypeople.com/. If you have a specific question, or if you have some immediate concerns regarding your finances, please don't wait, give us a call and we would be happy to speak with you.


https://www.youtube.com/watch?v=fNzt-...


AGT The Safe Money People
5009 Oakton Street
Skokie, IL 60077
Phone: (847) 933-9222
google.com/+AGTTaxInsuranceServicesSkoki­e

Tax facts about long-term care insurance - AGT The Safe Money People

Traditional long-term care insurance (LTCI) policies that meet the IRS requirements are treated as tax-qualified policies. These policies can generate tax breaks for clients, but those breaks depend on the client’s circumstances. (Non-tax-qualified policies don’t provide any tax advantages.) Here’s what you need to know.

Premium Deductibility

LTCI policyholders who itemize their deductions and have unreimbursed medical expenses that exceed 10 percent of their adjusted gross income can deduct eligible LTCI premiums. (Eligible premiums are age-based; see IRS Publication 502 for the current limits.) The hurdle for taxpayers age 65 and older is 7.5 percent of AGI through 2016. Those conditions mean that few policyholders will ever claim that deduction, according to Scott Olson with LTCShop.com in Yucaipa, CA.

“Nobody has medical expenses that high,” he said. “If they do, they probably can’t qualify for long-term care insurance. So, for somebody who’s a (IRS Form) W-2 employee, there’s not going to be much hope in terms of getting any pretax dollars or income tax benefits unless they live in a state that has a nice credit.”

Jayne Van Zile, CLTC with JVZ Strategies in Rochester, NY, has not seen any W-2 employees claim a deduction for their premiums. If the client did have that level of medical expenses, she notes, it’s likely they would qualify for a waiver of premium on their LTCI coverage. The group that does get a tax break for is self-employed who show a net profit, she adds. Sole proprietors can deduct eligible LTCI premiums as accident and health insurance and they can include premiums paid for their spouses and eligible dependents, regardless of the AGI percentage threshold.

“A perfect example is a professor who does some consulting on the side and generates, say, $10,000 of income annually on a 1099 basis,” she said. “That professor can take the premium and if they’re between 51 and 60 years old, that person plus their spouse can reduce their adjusted gross income in 2015 by $1,430 a person or if they’re 61 or over, it jumps to $3,800 per person.”

State Tax Credits

As Olson pointed out, some states provide incentives in the form of tax credits or deductions for residents’ LTCI premiums. The American Association for Long-Term Care Insurance (AALTCI) summarizes the available state-level tax breaks on its website. 

Some states provide little or no financial incentive to buy LTCI but others are generous. For example, New York residents are entitled to a 20 percent tax credit on any tax-qualified LTCI premium paid regardless of income, age, or premium, said Van Zile. The catch is that the taxpayer must have a New York State tax liability—policyholders can’t receive a credit greater than the amount of tax they owe. “It is a significant benefit and I have found clients take this into account when determining their out-of-pocket costs,” she said.

Paying with an HSA

Tax-qualified LTCI premiums are considered to be a qualified medical expense. Consequently, taxpayers with health savings accounts (HSAs) can make tax-free withdrawals to pay their LTCI premiums. Some additional criteria apply, but paying premiums from a HSA can still cut out-of-pocket costs. “Someone who owns a health savings account, even if they’re a W-2 employee, can use the money in the health savings account to pay for their long-term care insurance on a pretax basis,” said Olson.

Tax breaks matter

In New York, a self-employed person can take both the available Federal deduction and the New York state tax credit, said Van Zile. Many of her clients are self-employed and she says that they take these tax incentives seriously. Olson agrees that tax savings are an incentive. Potential tax breaks are not a primary concern for prospective buyers but the topic almost always comes up, he says. The buyers typically initiate that discussion and want to know if their premiums will be tax deductible. Olson responds by asking additional questions about their employment status and deductions; that information gives him an idea of the likely tax result.

“The main question that I’ll ask is if they or their spouse or partner are self-employed or have any type of self-employment income because self-employed people get the best deductions for long-term care insurance,” he said. “That actually is a pretty high percentage of my clients. I mean, probably close to half of my clients are self-employed or they are a small-business owner.”

How to Protect Yourself From Medical Identity Theft

In 2011, 200 people in Arizona, Florida, Michigan and New Jersey received almost $9.6 million in Medicaid benefits. The problem? They were already dead when they received these benefits. Claiming services in the names of the deceased is just one of several examples of medical fraud, specifically medical identity theft. You may be familiar with run-of-the-mill identity theft, but its lesser-known cousin can be more enduring. Regular identity theft may involve a credit card or bank account number that may be protected by a loss limit, or by insurance through the banking institution or the FDIC.

Unfortunately, the information that is stolen in medical identity theft (e.g., your name or Social Security number) is not something you can change as easily. Unfortunately, the damages associated with medical identity theft also don’t have limits. The thief may use your identity to obtain medical services, buy prescription drugs or submit false claims in the patient’s name. Victims often foot the bill for damages. One recent study found that 65 percent pay an average of $13,500 to resolve the crime, and only 10 percent of victims achieve a completely satisfactory resolution. Medical identity theft usually occurs locally. In other words, the majority of health care data breaches result from a lone computer being stolen rather than hacking into an organization’s mainframe data system.

Among these common thefts, two-thirds happen when a laptop or tablet is stolen, or when an unauthorized person accesses records via email, a computer terminal or network server. Moreover, 22 percent of breaches still involve paper records.

To prevent medical identity theft and other types of health care fraud:

 • Don’t give out your Medicare, Medicaid or Social Security numbers to unauthorized people

 • Keep records of your doctor visits, tests and procedures in a health care journal or on a calendar

• Review your Medicare Summary Notices and Part D Explanation of Benefits to compare the services that were billed against the dates and procedures performed, as recorded in your journal or calendar

• Carefully review your billing statement to check for charges for something you did not receive, double billing for the same thing (even though a different term may be used), and any services you did not receive and that were not ordered by your doctor

• Whenever you visit a medical provider, don’t be shy about asking questions about his recommendations, whether or not certain tests or procedures are necessary and what they will reveal, and if there are less expensive options

 • Always call your provider(s) if you have questions about your bill If you suspect any fraud, you are the front line to save taxpayers billions of dollars each year.

You can report your findings to an agency that will investigate further. Remember, while most health care fraud is committed by a small minority of unscrupulous health care providers, they tend to repeat their scams often, so the more reports received from victims, the better the chances that they will be identified and convicted.

To report your suspicions, collect the following information to help verify your claim:

 • The provider’s name and any identifying number you may have • Information regarding the service or item you are questioning

• The date the service or item was supposedly given or delivered • The payment amount approved and paid by Medicare

• The date on your Medicare Summary Notice • Your name and Medicare number (listed on your Medicare card)

 • The reason you think Medicare should not have paid the claim to the provider

To report suspected errors, fraud or abuse, you can contact either the Office of Inspector General for the Department of Health & Human Services at 800.447.8477 (TTY: 800.377.4950), the Report Fraud Online at http://oig.hhs.gov/fraud/report-fraud/index.asp, the Centers for Medicare & Medicaid Services at 800.633.4227 (TTY: 877.486.2048) or the Medicare Beneficiary Contact Center at mailing address P.O. Box 39, Lawrence, KS 66044.

1. Government Accounting Office. May 14, 2015. “Medicaid: Additional Actions Needed to Help Improve Provider and Beneficiary Fraud Controls.” http://www.gao.gov/products/GAO-15-313. Accessed July 8, 2015.

2. Ponemon Institute. February 2015. “2014 Fifth Annual Study on Medical Identity Theft.”http://medidfraud.org/2014-fifth-annual-study-on-medical-identity-theft/. Accessed July 8, 2015.

3. HealthDay. April 14, 2015. “Unauthorized Breaches of Medical Records on the Rise.” http://consumer.healthday.com/bone-and-joint-information-4/computer-related-health-news-143/unauthorized-breaches-of-medical-records-on-the-rise-698366.html. Accessed July 8, 2015.

4. Stop Medicare Fraud. 2015. http://www.stopmedicarefraud.gov/reportfraud/index.html. Accessed July 8, 2015

Insurance for Retirement Skokie IL - AGT The Safe Money People Call 847-933-9222

Insurance for Retirement Skokie http://www.AGTthesafemoneypeople.com/ Come and learn how you can make more by earning less but not loosing. Give us a call 847-933-8222 for free.

Assessing Risks Reduces Severity, Frequency of Falls - AGT The Safe Money People

Following the adage “Knowledge is power” can literally keep us from falling down. In the U.S., one out of every three people over 65 takes a tumble each year, and 20 to 30 percent of those who survive incur moderate to severe injuries. Yet, those who have taken the time to assess the risk of falling in their homes are less likely to be in that one-third.1 It may not be surprising that, once someone has taken a spill, they inherently develop a fear that makes them more cautious about preventing another fall. For the majority of the population, that’s a good instinct. But for seniors, it can make them withdraw from certain activities. Ironically, this new caution can increase their risk of falling again, particularly by preventing them from taking routine walks or another form of exercise. To help address this phenomenon, the U.S. Department of Health and Human Services sponsored a study to measure whether a personalized program of intervention could help reduce the risk of an older person taking a fall. The program includes an in-home physical, emotional and cognitive functioning evaluation, a detailed record of a person’s history of falls, an assessment of the home environment and an inventory of current medications that may impact the person’s sense of balance. All of these factors are taken into consideration and used to create a customized recommendation for the individual. Some risk factors are intrinsic, meaning they are linked to the person’s health and habits. Other risks are extrinsic, which refers to those associated with the home environment.” As part of the study program, participating seniors are educated on both types of risks and how they may be avoided. For example, someone who routinely gets up to go to the bathroom in the middle of the night may have been doing it for so long they do not need to turn on a light. However, as they age, their senses may not be as sharp and they may not notice a new obstacle in the path. Installing a nightlight to guide their path to the bathroom could be a simple solution that greatly decreases their fall risk. Participants in the study who received intervention training and recommendations experienced a 13 percent lower rate of falls than ones who did not, and those who did experience falls were less likely to suffer a serious injury. Moreover, their long-term insurance claims were 33 percent lower over a three-year period, suggesting that this awareness may have had a long-term impact on both cognitive and physical health. This isn’t terribly surprising, seeing as the study also found participants were nearly 20 percent more likely to make fall-preventing modifications to their home than nonparticipants. 1. ThinkAdvisor.com. Aug. 3, 2015. “Elders’ Risk of Falling Is Falling.” http://www.thinkadvisor.com/2015/08/03/elders-risk-of-falling-is-falling. Accessed Aug. 5, 2015.

Annuity Skokie IL | AGT The Safe Money People 847-933-9222

Annuity Skokie IL http://www.AGTthesafemoneypeople.com/ Come and learn how you can make more by earning less but not loosing. Give us a call 847-933-8222 for free