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It’s certainly no secret that healthcare costs have escalated in recent years, and there’s no reason to believe that the end is in sight.  But whether you have a comprehensive health insurance policy or have purchased a catastrophic policy, there are ways to save on healthcare costs.

Here are just a few:

1. Stop going to the emergency room for minor illnesses. There are many reasons why going to the emergency room is a good idea. A cold or the flu is not one of them. Urgent care centers are designed to handle non-emergency medical situations from coughs, colds, the flu, to minor cuts, scrapes, and bruises. If you have a comprehensive insurance plan, your co-payment for urgent care will likely be half of what the emergency room co-payment would be. And if you’re paying out of pocket, an urgent care bill will likely amount to about one-tenth of what an emergency room bill would be. Save the emergency room for emergencies, and go to the urgent care route instead.

2. Take advantage of a Health Reimbursement Account (HRA). Traditionally offered by larger employers, more small business owners are starting to offer HRAs to their employees. When signing up, you’ll choose the amount that you expect to pay in out of pocket healthcare related expenses in the upcoming year. When you have a reimbursable expense, you can file a claim with the plan administrator to be reimbursed up to the yearly amount requested, meaning the co-pays and other expenses that you have to pay out of pocket will be paid with tax-free funds. Many HRA plans now issue a card that can be used like a credit/debit card, so you can pay for medical expenses as they occur; eliminating the need to file a claim.

3. Sign up for a Health Savings Account. If your policy has an annual deductible of $1,300 for single coverage or $2,600 for family coverage, you’re eligible for a Health Savings Account. You can contribute up to $6,750 per year for a family policy, with $1,000 additional if over 55, and the savings can be used in the current or future years, unlike the HRA, which requires you to use the funds in the current year.

4. Pay attention to your medical bills. Hospital bills in particular are error-prone, billing for items and services never received. Before automatically paying any balance due, make sure that you actually owe the bill. But it’s not just hospital bills. Even bills from an office visit or lab may contain errors. Taking a few moments to review bills as they come in can help to ensure that the balance due is accurate.

5. Take the time to compare insurance plan options during open enrollment. Make sure that you compare your options, and don’t automatically sign up for the same plan, or the cheapest plan. In actuality, in many cases the cheapest plan may end up costing you the most if you have surgery, or spend any time in the hospital.

Other options include taking advantage of mail order prescriptions, utilizing health plan benefits such as free gym membership and telehealth options can also help you save. While healthcare may never be truly affordable, these and other options can help to minimize additional expenses.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2018 Advisor Websites.

For years it was assumed that tax planning was reserved for the wealthy. While wealthy individuals will see the most benefit from tax planning, with big changes looming for the 2018 tax year, even middle-income earners can reap the benefits of tax planning.  

Basic tax planning starts with your AGI or Adjusted Gross Income.  This is your total income after any adjustments or credits have been applied. Reducing your AGI is the number one goal of many tax planners, and the easiest way to do this is to contribute money to a 401(k) or other retirement plan. By the way, 401(k) contribution limits have increased for 2018, with those under 50 able to put away up to $18,500, while those over 50 can contribute up to $24,500. IRA contribution maximums have also increased, with a maximum of $5,500 in 2018, while those over 50 can contribute up to $6,500. Contributing to a qualified retirement plan is the easiest way to positively impact your AGI; reducing your taxable income while also building your nest egg for the future.

Another way to minimize your tax liability is to simply change your withholding exemptions on your W4 certificate. In fact, the IRS is recommending that taxpayers take advantage of the newly updated withholding calculator available on the IRS website to check if too much or too little tax is being withheld from your paycheck.   

Those looking to minimize tax liability in 2018 may also want to consider paying off a home equity loan. While interest was deductible on all home equity loans prior to 2018, under the new tax law, if the loan was used to pay off other expenses, the interest will no longer be deductible. However, if the loan was used for home improvements, it’s likely still deductible, provided it falls under the mortgage principle threshold of $750,000.

Aside from lowering your AGI, another area that tax planning traditionally focused on was increasing itemized deductions. While the opportunity to itemize still exists, keep in mind that deductions for moving expenses, alimony (for divorces after December 31st of 2018), and losses from natural disasters that do not occur in federally designated disaster zones have been eliminated, while deductions for state and local taxes paid have been capped at $10,000.  

However, the new tax law allows taxpayers to deduct medical expenses that exceed 7.5% of AGI, down from 10% in prior years. If you have a high-deductible health insurance plan, or typically incur significant medical expenses each year, now might be the time to consider using the medical expense deduction.  In fact, if you typically have high medical expenses, or a high-deductible health insurance plan, this might be the year to consider opening a Health Savings Account that allows individuals to contribute up to $3,450 annually, while families can contribute up to $6,850.

With all the changes looming for 2018, you may want to contact a finance or tax expert to help guide you through the maze, as well as get you on track for potential tax savings.

Resources

1. https://www.thebalance.com/tax-planning-basics-3193487

2. https://www.putnam.com/literature/pdf/II922.pdf

3. https://www.forbes.com/sites/megangorman/2018/03/12/want-to-fund-your-hs...

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2018 Advisor Websites.

*Some IRA’s have contribution limitations and tax consequences for early withdrawals. For complete details, consult your tax advisor or attorney. -Distributions from traditional IRA’s and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59 ½, may be subject to an additional 10% IRS tax penalty.

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