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Special Enrollment Period Update

The 2021 special enrollment period for individual health insurance has been extended to Aug. 15, 2021.

This means anyone − Americans without health insurance as well as those who have already enrolled in a HealthCare.gov plan for 2021 − have a chance to check out their health insurance marketplace options offered through the Affordable Care Act, also known as Obamacare, outside the regular Nov. 1 through Dec. 15 period.

If you have questions about if this would apply to you, please feel free to reach out to us.

Extra Tax Credits

The American Rescue Plan (ARP) – the recently passed federal stimulus legislation – may help you save additional money if you’re already receiving federal aid for your individual health insurance. Here are some things you should know:

▪ The new law will lower premiums for most people who currently have a Marketplace health plan and expand access to financial assistance for more consumers.

▪ An enhanced tax credit is available beginning on April 1. Financial assistance is retroactive to Jan. 1, 2021 via 2021 tax filing reconciliation for individuals and families that received their health insurance through the Marketplace.

▪ Premiums after these new savings will decrease on average by $50 per person per month, or by $85 per policy per month.

To take advantage of the increased tax credits, we encourage you to call the Health Insurance Marketplace at (800) 318-2596 or visit healthcare.gov. The Marketplace call center is open 24/7 and can be accessed round the clock. If you don’t take action to update your Marketplace application, you will receive the additional tax credits when you file your 2021 tax return.

Moving to a Marketplace Plan

If you are currently enrolled in a health plan outside of HealthCare.gov (directly enrolled with the insurer) and paying full price for your policy, you may now qualify for federal aid to help pay your premiums because of changes implemented under the American Rescue Plan (stimulus bill).

If your health insurance premiums are more than 8.5% of your household income, federal aid may be available to lower your insurance costs. To see if your estimated 2021 income is in the range to qualify for a premium tax credit, please visit https://www.healthcare.gov/see-plans.

If you do think you’ll be eligible for federal aid, please contact us so we can discuss next steps with moving your health insurance from a direct enrollment without federal aid to a Marketplace plan with federal aid. We have until Aug. 15, 2021 under the Special Enrollment Period to make a plan change.

Midcoast Senior Expo

We’re excited to announce that we will have a table at the Midcoast Successful Aging Expo, scheduled for June 15 from 9 a.m. to 2 p.m. at the Rockland Elk’s Club. This is our first in person event in more than a year and we’re looking forward to connecting with our clients and community. This event is free and open to the public.

Sarah Ruef-Lindquist, JD, CTFA

In the Spring 2018, I wrote about Financial Wellness in general, and how good financial planning and cash-flow management can support overall health and well-being. A lot has changed in the past two years, and the topic is more relevant than ever.

Given what many are calling the most severe economic downturn since the Great Depression in the wake of the pandemic, I would like to explore what often become the most significant issues for people facing a financial crisis – and how to build resiliency to downturns – drawing on material published by our colleagues at Commonwealth Financial Network (CFN).

Debt. Generally, people carry some amount of debt: a student loan, mortgage, or car loan. It can be financially smart to make a large purchase using someone else’s money. Borrowing allows one to purchase big-ticket items with less out-of-pocket cash. And, with today’s attractive interest rates, at a relatively low cost. Taking on any amount of debt comes with risk; A financial setback can reduce your ability to repay a loan, and debt may prevent taking advantage of other financial opportunities.

How Much Debt is OK?

Take a close look at your personal finances, focusing on the following factors:

Liquidity. If there is anything many people have learned in 2020 is that it’s a good idea to maintain an emergency fund to cover three to six months’ worth of expenses. CFN warns us to guard against keeping more than 120 percent of your six-month expense estimate in low-yielding investments. And don’t let more than 5 percent of your cash reserves sit in a non-interest-bearing checking account.

Current debt.  CFN also stresses that total monthly debt payments like mortgages should not exceed 36 percent of monthly gross income. Consumer debt payments—credit card balances, automobile loans and leases, and debt related to other lifestyle purchases—they also say should total less than 10 percent of your monthly gross income. If your consumer debt ratio is 20 percent or more, avoid taking on additional debt.

Housing expenses. Monthly housing costs—including mortgage or rent, home insurance, real estate taxes, association fees, and other required expenses—shouldn’t amount to more than 31 percent of monthly gross income, according to CFN. Lenders use their own formulas to calculate how much home you can afford based on your gross monthly income, your current housing expenses, and your other long-term debt, such as auto and student loans. For a mortgage insured by the Federal Housing Administration (FHA), your housing expenses and long-term debt should not exceed 43 percent of your monthly gross income. With mortgage interest rates dropping to historic lows, many are refinancing or considering refinancing. If you are in the first few years of your existing mortgage, this can make sense, or if you would like to reduce payments to improve cash flow, this can be a great strategy. If you’re close to paying off your mortgage, however, it may not make sense given how the interest portion of payments are smallest as the mortgage reaches maturity.

Evaluating Mortgage Options. If you’re in the market for a new home, the myriad of mortgage choices can be overwhelming. Fixed or variable interest rate? Fifteen- or thirty-year term? If it were merely a question of which mortgage provided the lowest long-term costs, the answer would be simple. In reality, the best mortgage for a particular household depends on how long the homeowner plans to stay in the house, the available down payment, the predictability of cash flow, and the borrower’s tolerance for fluctuating payments.

How long will you be in that home? One rule of thumb is to choose a mortgage based on how long you plan to stay in the home. If you plan to stay 5 years or less, consider renting. If you plan to live in the house for 5 to 10 years and have a high tolerance for fluctuating payments, consider a variable-rate mortgage for a longer term, such as 30 years, to help keep the cost down. If the home is a long-term investment, choose a fixed-rate mortgage with a shorter term, such as 15 or 20 years.

Is a variable-rate mortgage worth the risk? Keep in mind that it’s generally not wise to take on a variable-rate mortgage simply because you qualify for one. With interest rates at historic lows, the direction they are likely to go is up. Although these mortgages offer the lowest interest rate, they’re also the riskiest, as the monthly payment can increase to an amount that may prove difficult to meet. Selecting a shorter loan term, such as 15 years, can help lessen this risk.

Remember, when it comes to taking on debt, the loan amount you qualify for and the amount you can comfortably afford to repay may not be one and the same. Be sure to consider your special circumstances before taking on debt to buy a home or make another major purchase.

Savings. A standard recommended savings rate is 10 percent of gross income, but your guideline should depend on your age, goals, and stage of life. For example, as retirement nears, you may need to ramp up your savings to 20 percent or 30 percent of your income. Taking full advantage of tax-deferred retirement savings and employer match programs are almost always good ideas. Direct deposits, automatic contributions to retirement accounts, and electronic transfers from checking accounts to savings accounts can help you make saving a habit.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

Original Medicare, Parts A & B, travel with you, no matter where you go in the U.S.

On the other hand, Medicare Part C (advantage plans) and Medicare Part D (drug plans) don’t travel so well – you will want to make sure your plans will work for you in your new service area.

If you have moved from one state to another,  you are eligible for what the Centers for Medicare and Medicaid Services (CMS) calls a Special Election Period. This SEP typically lasts two months but we recommend quick action to be sure costs you incur are covered when you need them to be.

Questions? Ask Allen. We’re here to help. Anna Moorman and Jo-Ann Neal of Allen Insurance and Financial are licensed insurance agents specializing in Medicare and are appointed with many of the major insurers in the State of Maine to help you find a product that’s the right fit for you.

Allen Insurance and Financial is holding a series of free Medicare 101 workshops in September. All are Zoom presentations with specific meeting information provided by email.

• Thursday, Sept. 10, 5 to 6:30 p.m. Register with Belfast Area Adult Education: 338-3197
• Monday, Sept. 21, 5 to 6:30 p.m. Register with Five-Town Adult Ed: 236-7800 x3274
• Thursday, Sept. 24, with the Bremen Public Library, 7 to 8 p.m. Rregister with Jo-Ann Neal via email: jneal(at)allenif.com.
• Wednesday, Sept. 30, 5 to 6:30 p.m. Register with Medomak Valley Adult Ed: 832-5205.

Anna Moorman and Jo-Ann Neal of Allen Insurance and Financial’s Benefits Division will help answer questions, including:

• What does Medicare cover?
• What does Medicare NOT cover?
• When can I enroll in Medicare?
• What is a Medicare Advantage Plan?
• What is a Medicare Supplement Plan?
• What plan is best for me?

Anna Moorman and Jo-Ann Neal specialize in Medicare and will be available for a question and answer session following the presentation.