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Retirement Savings: Understanding State Retirement Plans

Hardworking citizens deserve to retire in comfort, but that isn’t always a guarantee in the real world. All around the United States, state-sponsored retirement plans are an option for employees working for companies of a certain size that don’t offer their own retirement plans. Many people see it as a good opportunity to build a retirement, but there is more to consider with these plans and their limitations. In this article, we will explore what these retirement plans offer—and whether or not they are worth the investment.

What Are State-Sponsored Retirement Plans?

A state-sponsored retirement plan is a retirement option that companies have to offer their employees once the company reaches a certain size if they don’t have their own employer-sponsored plans available. These individual plans can operate in different ways, offering an investment option with a firm that is chosen by the state. State plans can offer a traditional IRA, Roth IRA, or pre-tax for employee investment. 

These retirement plans are an opportunity for employees to put aside money for retirement. They require employers to put aside a set percentage, with the standard being 3% of an individual’s salary, for their employees. Employees can contribute between $5,500 and $1,000 annually depending on their circumstances. This money builds over time and can be accessed for tax-free withdrawal once the employee hits the designated age. For most plans, the age is 59 ½. 

Looking Out for Your Needs

People often consider a retirement plan to be something that will build itself in the background over time, but this isn’t always true. Relying on state programs or programs like Social Security can actually offer an unpleasant experience down the line. Recently, reports revealed that $1,657 was the average monthly payout for Social Security in 2022—an amount that will cover very little compared to the cost of living in most states. 

Preparing for the future takes active steps, and it must be done with a keen focus on understanding. Prioritizing your own private retirement investments is a wonderful way to set yourself up for the future without forcing you to rely on the potentially unreliable services offered by others. As much as we want to believe that the states will work these things out, there really isn’t a guarantee at this point.

To take active steps to secure your financial future, it is beneficial to start retirement planning as early as possible. Contribute as much as you can to an individual retirement if you have the option to, and be realistic about how you can alter your budget to support your future. When in doubt, working with a financial planner can help you to build a more reliable retirement. 

The Takeaway

Your financial future is in your hands, even if others say that they can help. State-run programs can be a great benefit when you retire, but they simply cannot be your only option in this day and age. Taking steps to prioritize saving money in advance is an excellent step forward. Don’t hesitate to learn more about retirement so you can take better control of your financial future and retire in comfort.

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Saving on Prescription Drugs While on Medicare

Saving on Prescription Drugs While on Medicare

If you are on Medicare, you probably spend an average of $581 per year, out-of-pocket on your prescription drugs, over and above your Part B premiums and any Medicare Advantage, Medigap, or prescription drug plan premiums that you pay. For some, it can be much more.

87% of adults aged 65-79 use prescription drugs, and the average number prescribed per person is 20.

How can you save? Medicare Advantage and Medicare Part D plans are required to provide a mail-order pharmacy option. When you use mail order, you are avoiding a retail pharmacy, prices are generally somewhat lower than in-person pharmacy service, but not always: it depends on the plan and the drug in question.

If you compare the full retail pharmacy price, using a discount card like GoodRx versus the mail-order cost, you may occasionally find that using the discount card is cheaper.

Another option has recently become available…

Billionaire Mark Cuban has started a mail-order pharmacy called CostPlusDrugs.com. Around 100 generic medications are available from this site, all at cost plus a 15% markup. You may find that the price from this site, assuming your drug is available, is far less than the mail-order price with your Medicare Advantage or prescription drug plan. New drugs will be added each month. At present, the plan is to offer only generics, but this may change. You can check if a generic is available for your prescription drug by asking your doctor’s office or googling “generic for name-of-prescription drug.” Currently, CostPlusDrugs.com does not accept insurance to keep administrative costs down. This may change in the future.

If you are considering ordering from other mail-order pharmacies, Blink Health has been rated best, it accepts most insurances and is available 24/7. Blink has most drugs available in addition to generics.

More than ever now, it pays to shop around for your prescriptions, as it true with so much else.

 

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Does Medicare Cover Ambulance Services?

Does Medicare Cover Ambulance Services?
Does Medicare Cover Ambulance Services?

Does Medicare Cover Ambulance Services?

The short answer is yes. If ground or air ambulance transport is medically necessary, Medicare will pay to transport you to the nearest facility that can provide the needed services. Services are provided under Part B. If you do not have Part B, Medicare will not pay.

The Part B deductible, which is $233 in 2022, applies. After that, you pay 20% of the Medicare-approved charges.

Most of the time when ambulance transport is necessary, it is obvious. In cases where it is not, your doctor can provide a certification that it is needed. For example, a dialysis patient may need ambulance transport to a dialysis center.

What If There’s a Question?

If the ambulance service doubts that you meet the definition of medical necessity, they are required to give you a notice that Medicare may not pay. This is called an Advanced Beneficiary Notice of Non-coverage. It is given if you requested an ambulance in a clearly non-emergency situation or the company believes Medicare will not pay. (The fact that you received such a notice, alone, does not mean that Medicare will not pay; this is determined later.)

Are There Special Situations?

Yes. If you live in the states of Delaware, the District of Columbia, Maryland, New Jersey, North Carolina, South Carolina, Virginia, or West Virginia, and you use non-emergency ambulance services more than three times in a ten-day period or once a week for three weeks or more, the company may request a pre-authorization before providing services. If the pre-authorization request is not approved, Medicare will not pay for the services.

 

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Does My Medicare Plan Provide Coverage for My Spouse?

Does My Medicare Plan Provide Coverage for My Spouse?

When people say “my Medicare Plan” it is often hard to tell if they mean Original Medicare, a Medicare Advantage Plan, or a Medigap plan. In what follows, we are referred to Part A, hospital insurance, only.

Who Gets Covered on Whose Plan?

The answer to “does my Medicare cover my spouse” is always “no” because Medicare was designed from the very beginning as coverage for each individual, not couples. The real question is, “can my spouse be covered based on my Social Security earning record?”, and the answer there, as with so much else in Medicare, is “it depends.”

The Role of Work

To be eligible for Social Security, and therefore for Medicare, one normally must have worked in covered employment for 40 quarters, or ten years. The variations come in when one spouse meets the 40-quarter requirement and the other doesn’t.

If one spouse meets the 40-quarter requirement and the other doesn’t, the nonworking spouse is covered based on the earnings record of the working spouse when both turn 65. No premium is charged. Part A is free. 

If the working spouse is at least 62 and the non-working spouse is over 65, the non-working spouse is eligible for Medicare as soon as the working spouse turns 62. No premium is charged. If the working spouse is younger than 62, the spouse over 65 can get Medicare Part A by paying a premium until the working spouse attains 62. The premium for Part A is $471 per month in 2021 if you spouse worked less than 30 quarters and $259 if your spouse worked between 20 and 39 quarters. 

The Effects of Divorce and Marriage

A divorced spouse may be eligible for Medicare at 65 based on a spouse’s earnings record if they were married to the former spouse for at least ten years. To qualify based on your spouse’s earnings record, you must have been married at least a year.

If you’re widowed or a widower and were married for at least nine months, you can qualify on your deceased spouse’s earnings record. 

If there were multiple marriages and divorces, you can qualify for Medicare based on the earnings record of only one spouse.

The Effect of Disability

Those who receive Social Security disability are eligible for premium-free Medicare after two years from the date they were found disabled. Because of the way Social Security treats disability earnings, you may qualify based on your own earnings record even if you do not have 40 quarters (ten years) of covered employment. 

If all the foregoing is less than clear to you, you’re not alone. If you have questions, contact your local Social Security office, which also handles Medicare issues. You can also call 1-800-MEDICARE to contact Medicare directly.