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Last Updated: August 15th, 2024

Medicare made easy 

  • Medicare: A Step-by-Step Guide

This blog is designed to help you understand Medicare and how it works. We’ll cover everything from eligibility to enrollment to benefits so that you can make informed decisions about your healthcare. Whether you’re just turning 65 or you’ve been on Medicare for years, we hope you’ll find this blog helpful.

 

What is Medicare?

Medicare is Health-insurance for people who are 65 years old or older. Or for people under 65 with disabilities or people of any age with End-Stage Renal Disease. Many people choose to receive their Parts A and B benefits through Original Medicare; this is a traditional fee-for-service program offered through the federal government. The health care services you receive will be paid directly by the government, and you can go to any hospital that takes Medicare anywhere in the USA. Sometimes having just original Medicare isn’t enough and will leave you with a significant amount of out-of-pocket costs. 

1. Who is Eligible for Medicare?

  • 65 years old or older
  • Under 65 years old and have a disability
  • Receiving Social Security Disability Insurance (SSDI) or Railroad Retirement Board (RRB) Disability Insurance (DI) benefits
  • Have End-Stage Renal Disease (ESRD)
  • US Citizen
If you have Social Security when you turn 65
You will be automatically enrolled in Medicare part B; you will receive your Medicare card three months before your birthday.
 
If you don’t receive Social Security income when you turn 65
You will need to take the step to sign up for Medicare



2. What Are The Types Of Medicare?

 

Original Medicare & Private Insurance 

Once you know you are eligible for Medicare, you need to choose a plan.

There are two parts to Medicare: Part A and Part B this is often called Original Medicare.

  • Part A Hospital Insurance covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care.
  • Part B Medical Insurance covers certain doctors’ services, outpatient care, medical supplies, and preventive services.


There are also additional Medicare Plans offered by private insurance companies:

  • Medicare Supplement
  • Part C Medicare advantage
  • Part D Prescription Drugs

What is a Medicare Supplement Plan (Medigap)? 

Medigap is a type of private health insurance that can help you pay for the costs of Medicare that your Original Medicare does not cover. Medigap policies are standardized, so you can be sure that you are getting the same benefits no matter which company you choose.

There are 10 different Medigap plans available, each with its own set of benefits. The most common plans are Plans A, B, C, D, F, G, K, and L. Plan A is the most basic plan, and it covers the same things as Original Medicare. Plan B adds coverage for Part B deductibles and coinsurance. Plans C, D, F, G, K, and L all add coverage for prescription drugs.

If you enroll in Medigap during your initial enrollment period, you will not have to pay a medical underwriting. This means that your insurance company cannot deny you coverage or charge you more for your premium based on your health history. However, if you enroll in Medigap outside of your IEP, your insurance company may be able to deny you coverage or charge you more for your premium based on your health history.

What is a Medicare Advantage Plan (part C)? 

You can choose a Medicare Advantage plan, which is a private health insurance plan that replaces both Part A and Part B. Medicare Advantage plans have different plans and costs, so it is important to review plans before you choose one. Medicare Advantage is a type of Medicare health plan offered by private companies that contract with Medicare. Medicare Advantage plans provide all the same benefits as Original Medicare (Part A and Part B) and may include a prescription drug plan.

Medicare Advantage plans are available in all 50 states, the District of Columbia, and Puerto Rico. Many different Medicare Advantage plans are available, so it is important to review them before you choose one. You can review plans using the Medicare Plan Finder tool on the Medicare website.

If you are eligible for Medicare, you may be wondering whether to enroll in a Medicare Advantage plan or Original Medicare. There are pros and cons to both options, so it is important to weigh your options carefully before you make a decision

Medicare Prescription Drugs (part D)

Medicare Part D is a prescription drug program offered by private insurance companies approved by Medicare. It helps cover the cost of prescription drugs that are not covered by Medicare Part A or Part B.

There are different costs associated with Medicare Part D, including premiums, deductibles, copayments, and coinsurance. Premiums are the amount you pay each month to have Part D coverage. Deductibles are the amount you pay out of pocket before your plan begins to cover your prescriptions. Copayments and coinsurance are the amounts you pay for each prescription or refill.

Part D coverage costs vary depending on the plan you choose and the medications you take. Each plan has a formulary, which is a list of covered medications and their costs. It’s important to review each plan’s formulary to make sure the medications you need are covered and to review costs.

medicare guide
Click here to review plans & self- enroll

3. Medicare enrollment periods

You can enroll in Medicare during the following times:

  • Initial Enrollment Period: Lasts for seven months; your sign-up window is from 3 months before your birth month when you turn 65 to 3 months later. It would be best if you enrolled in Medicare Part A and Part B during this sign-up window to avoid penalties. If you don’t register in time, you may have to pay the penalty for parts B and D.
  • Annual Enrollment Period: Anyone can use the Annual Election Period (AEP) to make changes to their Medicare coverage – October 15 to December 7
  • Open Enrollment Period: January 1 to March 31
    Lock-in Period: April 1 to December 31
  • Special Enrollment Period (SEP): Special circumstances within the year, You may qualify for a SEP if you have a qualifying life event, such as moving, losing your job, or getting married.
  • Medicare Birthday Rule: The Medicare birthday rule allows consumers to change to an equal or lesser benefit Medigap policy within a 60-day window without medical underwriting (not available in all states).
Watch Our Medicare 101 Series On Youtube
Medicare Made Easy; A step-by-step Guide

4. Three Ways to Sign up for Original Medicare:

1. You can apply online at: www.ssa.gov
2. Call Social Security at 1-800-772-1213 (TTY 1-800-325-0788) to apply over the phone or to request an application
3. Apply at your local Social Security office

How To Sign Up for an Additional Medicare Plan 

  1. With our Medicare plan finder tool, you can review the available plans in your zip code. You can do this yourself or with the help of a licensed agent. Determine the type of insurance you need by entering your doctors, prescriptions, etc…
  2. Check the star rating when selecting a Medicare plan. These ratings are updated every year and will help you review them.
  3. Complete an online application yourself or schedule a virtual meeting to enroll with a licensed insurance agent from Policy Engineer.

5. Medicare Penalties

Medicare Part B and Part D have late enrollment penalties if you don’t enroll when you’re first eligible.

Medicare Part B

If you don’t enroll in Medicare Part B when you’re first eligible, you may have to pay a late enrollment penalty. The penalty is 10% of the monthly premium for each 12-month period that you could have enrolled but didn’t. For example, if you don’t enroll in Part B until you’re 70, you’ll have to pay a 30% penalty on your monthly premium for the rest of your life.

Medicare Part D

If you don’t enroll in Medicare Part D when you’re first eligible, you may have to pay a late enrollment penalty. The penalty is 1% of the “national base beneficiary premium” for each full, uncovered month you didn’t have Part D or creditable prescription drug coverage. The national base beneficiary premium is $32.74 in 2023. The monthly penalty is rounded to the nearest $0.10 and added to your monthly Part D premium.

How to avoid the penalties

The best way to avoid the late enrollment penalties is to enroll in Medicare Part B and Part D when first eligible. You can enroll in Part B online or by phone, or by visiting your local Social Security office. You can enroll in Part D online, by telephone, or by visiting your local Medicare plan.

If you miss your initial enrollment period, you may still be able to enroll in Part B or Part D during a Special Enrollment Period (SEP). SEPs are available if you have a qualifying life event, such as moving, losing your job, or getting married.

Check out our Medicare 101 Handbook.

Learn more about Medicare, so you can make a confident decision and pick the best plan that fits your needs.

  • The handbook Includes Parts A, B, C, and D of Medicare.
  • What has changed in Medicare for the upcoming year
  • Available plans
  • Medicare plan buyer tips
  • and much more!
Request Handbook
Medicare Made Easy; A step-by-step Guide

Medicare Part A Guide

Medicare Made Easy; A step-by-step Guide

Last Updated: January 11th, 2025

Missed the Medicare Enrollment Deadline?

You might still have a chance to avoid the penalties.

 

 

Schedule Medicare Meeting

Timing is everything! Generally, if you miss an enrollment deadline, you will need to wait until the general enrollment period (GEP) and most likely pay the penalty. However, there are special enrollment periods (SEP) you might qualify for. If you do, you don’t have to pay any penalties. This means you can sign up outside our initial enrollment period, which starts three months before you turn 65 and lasts up to three months after.

When do you qualify for the special enrollment period?

Employment.

If you or your spouse still work(s), and you have health insurance through either of your employers. 

  • You can still sign up for Medicare part A, most people don’t have to pay a premium, and it will cover hospital expenses. You won’t have to pay a premium if Medicare taxes are deducted from your or your spouse’s paychecks for at least ten years.
pexels-andrea-piacquadio-3846042

Missed the deadline? No worries, you might be able to delay your enrollment without having to pay for any penalties. Depending on your plan through work, you may not need to enroll in Medicare part B or D. If you do have creditable coverage through work, keep the Certificate of Creditable Coverage in your records as proof. You will likely need to use this as proof that you had creditable coverage later. Plan to enroll before your employer coverage ends to avoid penalties due to a gap in your coverage. 

For Part B, you’ll need to sign up before your employer coverage ends or within eight months of losing your job-based coverage to avoid a late-enrollment penalty.

For Part D, you’ll have a shorter special enrollment period — two months after the month that your previous prescription drug coverage ends.

When your employment-based health insurance ends, you can sign up for Part B during the special enrollment period. After that, you can sign up for a Part D prescription drug policy and a Medigap policy, covering most of Medicare’s deductibles and copayments. You could also purchase a private Medicare Advantage plan, which provides medical and drug coverage.

Click here to learn more about if it’s better to keep your employer’s coverage or enroll in Medicare 

We created a step by step guide on how to enroll online in Part B during a special enrollment period.

This guide can be used by people who already signed up for part A, don’t have part b, and qualify for a special enrollment period. Please request the guide by completing the form below.

Guide Part B Special Enrollment

When should you enroll in Medicare to avoid penalties?

Medicare’s sign-up window starts three months before your birth month when you turn 65 and ends three months after. You will have to enroll in Medicare during this sign-up window to avoid penalties unless you have creditable coverage (ex., employer health insurance plan).

Guaranteed Issue Rights

You will have guaranteed issue rights during your initial enrollment period; insurance companies can’t deny you a Medicare Supplement insurance plan because of pre-existing health conditions or disabilities.

Late Penalty Part B

 Late Enrollment Penalty part B: Your monthly Part B premium could be 10% higher for every entire 12-month period that you were eligible for Part B.

That means one year is 10%, two years is 20%, three years is 30%, and so on.

Late Penalty Part D

For each month you delay enrollment in Medicare Part D, you will have to pay a 1% Part D late enrollment penalty (LEP). The penalty is calculated based on 1% of that year’s national average Part D premium.

For example, the national average for 2023 is $31,50, so if you went 18 months without credible prescription coverage, your penalty would be as follows: $31,50 x 1% = $0.315 x 18 months = $5.67 penalty per month.

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 Enrollment period overview

  • Initial Enrollment Period: Lasts for seven months; your sign-up window is from 3 months before your birth month when you turn 65 to 3 months later. You have to enroll in Medicare during this sign-up window to avoid potential penalties. If you don’t register in time, you may have to pay the penalty for parts B and D.
  • Annual Enrollment Period: Anyone can use the AEP to make changes to their Medicare coverage – from October 15 to December 7
  • Open Enrollment Period: January 1 to March 31
  • Lock-in Period: April 1 to December 31
  • Special Enrollment Period: Special circumstances within the year
  • Medicare Birthday Rule: The Medicare birthday rule allows consumers to change to an equal or lesser benefit Medigap policy within a 60-day window without medical underwriting (not available in all states).

Click here to learn about the steps you need to take to sign up for Medicare

Medicare published some of the new Medicare costs for 2023. This includes the new part B premium and the Part B deductible. There is some good news; the new premium for part B will drop to $164.90 in 2023 ($170.10 in 2022), and the deductible for Part B will also decrease. 

Overview Medicare updates 2023

  • Part A premiums, deductibles, and coinsurance also increased in 2023.
  • Medicare’s Part B standard premium & deductible decreased for 2023.
  • Medicare’s Part B and D income brackets for high-income premium adjustments start at $97,000 for a single person,
    and the high-income adjustment amount for Part B and Part D decreased in 2023.
  • Beginning January 1, 2023, Medicare will offer a new benefit that helps you continue to pay for your immunosuppressive drugs beyond 36 months.

Medicare part B dropped in price!

Medicare Part B:
It covers services from doctors and other health care providers, certain home health services, and other medical and health services not covered by Medicare Part A. 
 
In 2023 the new standard monthly premiums for Medicare part B will be $164.90. The deductible for 2023 also decreased from $233 to $226. You will be paying this deductible if you have a Medicare supplement plan that doesn’t cover the deductible (for example, plans G & N).
How will the new Medicare changes affect you in 2023?


Medicare gave the following reasons for the price drop (CMS); there was lower spending than projected on part B services, which resulted in much larger reserves. The excess SMI (Supplementary Medical Insurance) reserves are passed along to people with Medicare Part B coverage (price drop). 

Medicare Part A:

Gives coverage for inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care.
 
Deductible 
$1.600 (was $1,556  in 2022) for each inpatient hospital benefit period before Original Medicare starts to pay.

Inpatient stay
Days 1-60: $0 after you pay your Part A deductible.
Days 61-90: $400 copayment each day (was $389 in 2022).
Days 91-150: $800 copayment each day while using your 60 lifetime reserve days ($778 in 2022).
After day 150: You pay all costs.
.
Skilled nursing facility stay
Days 1-20: $0 copayment.
Days 21-100: $200 copayment each day (was $194.50 in 2022).
Days 101 and beyond: You pay all costs.
 
– source medicare.gov
How will the new Medicare changes affect you in 2023?

What about immunosuppressive drugs in 2023?

Starting in 2023, some Medicare enrollees who are past the 36th month of a kidney transplant are no longer eligible for full medicare coverage. Instead, they can elect to continue Part B coverage of immunosuppressive drugs by paying a premium. This premium will cost $97.10. Learn more about this on page 52. 

 These are the published changes so far; we will continue to update the blog when more information is released.

What can you do about these Medicare changes?

ANNUAL ELECTION PERIOD 2023

During the annual election period (AEP), Medicare plan enrollees can reevaluate their coverage and make changes, enroll or dis-enroll from the plan. Your changes will be effective on January 1, 2023.

Another Medicare plan might fit your needs better, so review your policy before your AEP ends. You only have seven weeks to make any changes for 2023

Click here to schedule a Medicare review.

Medicare Annual Enrollment Period (AEP) for 2023 will begin on October 15, 2022, and ends on December 7, 2022. 

 Medicare

First Look

2023

Schedule Here

To learn more about which changes you can make during AEP you can read our AEP blog by clicking here 

What can you do about these Medicare changes?

ANNUAL ELECTION PERIOD 2023

During the annual election period (AEP), Medicare plan enrollees can reevaluate their coverage and make changes, enroll or dis-enroll from the plan. Your changes will be effective on January 1, 2023.

Another Medicare plan might fit your needs better, so review your policy before your AEP ends. You only have seven weeks to make any changes for 2023

Click here to schedule a Medicare review.

Medicare Annual Enrollment Period (AEP) for 2023 will begin on October 15, 2022, and ends on December 7, 2022. 

 Medicare

First Look

2023

Schedule Here

To learn more about which changes you can make during AEP you can read our AEP blog by clicking here 

Medicare 101 Webinar

We also host an Educational Medicare 101 webinar every week.

During this webinar, you will:

  • Learn about how changes in the 99+ plans in your area will affect your next year by attending this Medicare Annual Election Period educational seminar.
  • How to decide whether a Medicare Supplement or Medicare Advantage Plan is right for you based on your needs.
  • How to avoid the top 7 reasons people overspend by thousands of dollars each year.
  • How to take advantage of specific rights & entitlements that protect you from overpaying
Sign up for Webinar
Review your Medicare Policy

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A recession is a period of depreciating economic performance across an economy that lasts for several months (at least 6). Companies will have fewer sales during this period, stocks will fall, and unemployment will rise. Although a recession is a normal part of the economy, many future retirees are worried about their investments, job, and if they need to delay their retirement. Knowing how much risk you can handle is essential to avoiding losses and finding the best strategy that fits your needs.

Let’s ensure you can survive a recession and come out stronger than before it started.

Recession Cycle

A recession is measured by gross domestic product (GDP). The GDP has to drop for two consecutive quarters for a recession to start. 

This is what the recession cycle looked like in the past. 

  1. Inflation starts to go up significantly.
  2. Federal Reserve (US central bank) gets involved and raises interest rates
  3. Inflation starts to slow down
  4. Stock Market pulls back heavy
  5. Recession starts

A recession can make the people who prepared for it break those who didn’t. If you start mentally preparing for a recession right now and put your money in the right places, you can avoid financial hardship. Now is the time to think about your investment strategies.

Consequences a recession may have on the economy:

  • Unemployment rates increase: businesses are more likely to lay off workers, which leads to an increase in the unemployment rates.
  • Consumer spending decreases: People tend to spend less money during a recession because they are laid off or concerned about losing their jobs. 
  • Business investments decrease: businesses are selling less  –>, slowing down the production –> which can lead to even more layoffs.  

How can you prepare for a recession?

1. Save: consider waiting on large purchases; during a recession, prices most likely drop

2. Invest: declines often start before and during the recession. This is an opportunity to invest and look for quality and essential businesses. Stay diversified. 

3. Skills: companies often lay off employees during a recession, do what you can to ensure it is not you. This will help you get a promotion or a better job in a different sector. If you lose your job during a recession, look for necessary jobs or jobs that would be booming during a recession.

4. Pay-down high-interest debt (such as credit card debt). You will save money on the interest that would be charged.  

5. Review your costs and expenses, determine what is essential, and cut back on things you don’t need. This will free up some extra cash you might need for unexpected costs.  

6. Have an emergency fund in place. This way, you can protect yourself from unexpected expenses and job loss, relieve yourself from financial stress, and give yourself more freedom since it will make you less dependent on financial institutions. Build up your emergency fund to cover at least six months of living expenses.
 

What type of investments performs well during a recession?

Consider your investment goals:

  • Do you want to minimize the risk that the price will go down?
  • Want to maximize your long-term investments?
  • Create passive income?
  • Buy stocks when the prices are low?
  • Secure retirement plan?

1. Real Estate: 

If you go back in time and look historically, real estate has been going up, except for 2008. In 2008 there was inflation, the fed got involved, and there were too many properties built compared to the number of home buyers.

It is the opposite right now. There are more buyers than properties, and people are paying over the asking price. If there is a shortage and a recession simultaneously, the real estate market prices will continue to rise. This would be a good investment during a recession to generate passive income. You could rent out your property during the recession, which gives you a steady income, and sell it for an even higher price when the economy is out of the recession.

2. Stocks

If you notice the cycle of stocks going down for an extended period, a recession could be coming up in the future instead of jumping on the selling bandwagon. You should recognize when this is happening and reorganize your investments in time. Sometimes it is better to do nothing if you have a long-term investment strategy. 

Some stocks do perform during a recession. Our financial advisor could help you make these decisions. The investment sectors below have been performing well during a recession in the past.

  • Healthcare: people always need medical care.
  • Consumer goods: foods, electricity, household items
  • Materials
  • Energy
  • Utilities
  • Communication/information technology
  • Real estate

3. Mutual funds:

Investing in a stock bundle rather than an individual stock could be less risky. If only one company in your bundle is performing poorly, the other companies performing better can compensate for your losses.

4. Dividend stocks:

Can generate passive income. The companies split a portion of their profit with their shareholders. These stocks can have less volatility because many people reinvest the portion they earned into the stock.

5. Annuities

Fixed and fixed index annuities and bonds are less volatile investments. You can also consider a deferred annuity that has a lifetime income rider.

6. Your long-term investments:

Don’t panic when you see your long-term investments drop during a recession. Hold on to your long-term investments. Stick to the investment plan you build and stay diversified. Don’t put all your eggs in one basket.

Long-term investments are most likely able to bounce back in the long term. If you are not confident that your investment plan is set up correctly, feel free to schedule a meeting with our licensed financial advisor.

→ What to look for when buying stocks 

  • High-cap stocks show that the company has more chance to stay stable during a recession. They are most likely well-established companies and have a lower risk of going out of business.
  • Look at the price performance; see how individual stocks performed compared to the market over a certain period. Remember that previous performance does not guarantee that it will perform similarly in the future.
  • Determining how much risk you can handle during a recession is crucial. You could end up with losses due to the recession, so make sure to go over your investment plan with or without a financial advisor and adjust your financial plan if needed.

What about my 401K & the recession?

  1. Review your asset allocation to make sure you positioned it correctly for success. You may want to diversify it if you haven’t done that yet. Investing in stocks might be riskier, resulting in high returns and losses, while investing in bonds can give you a more stable but lower return. A stable value fund could be another option. No matter what you do, Finding the right balance that matches your investment style and financial goals is crucial. 
  2. Keep contributing to your retirement funds. Delaying saving/investing for your retirement can leave you with financial difficulties in the future. Try to set a monthly amount that you save or invest wisely.  
  3. Consider a fixed-indexed annuity. 

Everyone has an investment risk number. Use our free risk analyzer tool to find yours. This can help you create an investment strategy that is right for you.

 
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This Content being shared is for informational purposes only; you should not construe any such information or other material as legal, tax, investment,  financial, or other advice. You alone assume the sole responsibility of evaluating the merits and risks associated with using any information provided in this post or speaking with a licensed financial advisor first.

Last Updated: January 11th, 2025

The Best Time to Start Receiving Social Security Benefits:

A Comprehensive Guide for Retirees

Social Security is a crucial supplemental income source during retirement, and the timing of when to start receiving benefits can significantly impact your financial well-being. This blog aims to help retirees make informed decisions by exploring the three common scenarios: stopping work before retirement age, continuing to work while receiving benefits, and working without receiving retirement benefits. We will delve into each situation’s key points, benefits, and considerations, ensuring you can choose the best time to receive Social Security benefits.

Social Security is one of the few supplemental income sources during retirement that changes yearly for inflation. Deciding whether you should wait to receive Social Security benefits is essential. If you choose to start your benefits before your full retirement age, your benefits will likely be reduced at a fraction of a percent for every month before you reach the full retirement age. It might be better to wait until you reach full retirement age or delay it more to receive an increase in Social Security benefits. 

According to Social Security Administration, based on data from 2022, your full retirement age =

* 66 years and four months (if born in 1956)  
* 67 years for those born in 1955 and beyond.

Situation A
Stopping Work Before Retirement Age & Starting Social Security Benefits

If you are considering retiring early and starting to receive Social Security benefits, there are essential factors to consider. You can apply for Social Security benefits as early as age 62, but doing so will result in reduced benefits. The reduction amounts to 6% per year or 0.5% per month (as of 2022) for each month you receive benefits before reaching your full retirement age. On the other hand, if you delay receiving benefits, you may qualify for an increase of 8% per year or 0.67% per month until you reach the age of 70.

Key Points:

  • You can apply for Social Security Benefits as early as age 62
  • If you apply before reaching your full retirement age, your benefits will be reduced by 6% per year or 0.5% per month (2022), and if you delay, it’s an 8% per year deferral credit or 0.67% per month. 

It’s crucial to weigh the trade-offs carefully. While starting benefits early can provide additional income, waiting until your full retirement age or beyond can result in higher benefit amounts for the rest of your life. For instance, delaying benefits until age 70 can yield up to 33% higher benefits compared to taking them at full retirement age, as shown in Table 1.

You will automatically enroll in Original Medicare (Part A and Part B) when you turn 65.

Table 1, 2020  What your Social Security reduction would be if you applied at age 62 compared to an increase at age 70

Social Security Administration: Starting Your Retirement Benefits Early, October 2020 Social Security Administration: Delayed Retirement Credits, October 2020

If you decide to work after receiving Social Security benefits, your benefit payments will be recalculated based on that year’s income limits. Additionally, at age 65, you will automatically enroll in Original Medicare (Part A and Part B).

Situation B
Continuing Work and Receiving Social Security Benefits

Retirees who wish to keep working while receiving Social Security benefits can do so, but certain income limits may affect the benefits they receive. If you are younger than your full retirement age during the tax year, the income limit is $22,320 in 2024. For every $2 you earn above this limit, $1 will be deducted from your Social Security benefits. Once you reach your full retirement age, the income limit increases to $59,520, and the reduction changes to $1 in benefits for every $3 you earn above the limit.

However, it’s essential to understand that the income limits only apply to income earned through work and not other sources such as investments, annuities, pensions, or capital gains. Moreover, there are no reductions in benefits if you work after reaching your full retirement age.

Key Points:

  • You can work and receive Social Security benefits.
  • Your Social Security benefits will be reduced until you reach full retirement age. 
  • The maximum income you can earn to avoid an extra benefit reduction depends on how close you are to the full retirement age. If your income is above this limit, they will reduce your benefits until you reach full retirement age.
  • Double penalty – if you earn more than the income limit, apply before full retirement age.
  • There are no reductions if you work after you reach your full retirement age.

Can you work and receive Social Security benefits?


Yes, you can work and get Social Security benefits simultaneously. Social Security can give you the extra boost of income you need if your job doesn’t give you enough. However, there are income limits. They will deduct a certain amount from your benefits if you earn more than these limits. The income limits only apply to income from work, and it does not count for investments, annuities, pensions, or capital gains.
 

What are the Income Limits for 2024?

The Social Security Administration sets its income limits for people receiving Social Security benefits yearly. This is the amount you are allowed to earn without getting a reduction on your Social Security payments. If you make more than the limit ($22,320 in 2024), your benefits will be reduced (if you are younger than the retirement age). Luckily, these reductions will be returned to you when you reach full retirement. The social security benefits are only withheld temporarily.

If you’re younger than full retirement age during all of 2024, they will deduct $1 from your benefits for each $2 you earn above $22,320. If you reach full retirement that year, the limit changes to $59,520 (2024). They will deduct $1 in benefits for every $3 you earn above the limit.

If you are older than full retirement and decide to work, you will receive your full benefits; there are no income limits.

For more examples, visit ssa.gov. 
*note: there are different rules if you work outside the country or are on disability.

You will automatically enroll in Original Medicare (Part A and Part B) when you turn 65. Check before signing up for Medicare Part B if you or your spouse are still covered under an employer-provided group health plan.

Situation C
Continuing Work and Delaying Social Security Benefits

There can be significant advantages for retirees who choose to keep working and delay receiving Social Security benefits. For each month you delay your benefits beyond your full retirement age, your benefits increase. Delaying until age 70 can lead to the maximum possible increase in benefits, up to 33% more than what you would receive at your full retirement age (see Table 1). Furthermore, delaying Social Security benefits can be beneficial since your current earnings may replace earlier years of lower or no wages, leading to a higher benefit amount. However, keep in mind that enrolling in Original Medicare (Part A and Part B) three months before turning 65 is crucial to avoid penalties if you do not receive your Social Security benefits at that time.

Key Points:

  • If you decide to keep working and not start your benefits until after your full retirement age, your benefits will increase for every month you do not receive them until you reach the age of 70.
  • Delaying can also increase your benefits because your current earnings could replace an earlier year of lower or no wages.
 
*You will need to enroll in Original Medicare (Part A and Part B) three months before you turn 65 to avoid any penalties if you don’t receive your Social Security benefits when you turn 65

How much will you get?→Social Security Quick Calculator 

Want to learn more?

Deciding when to start receiving Social Security benefits is a critical financial decision that can significantly impact your retirement income. Each situation has its merits and drawbacks, and understanding the implications of starting early, continuing to work, or delaying benefits is crucial. By carefully assessing your financial needs, health status, and long-term goals, you can make an informed choice that aligns with your unique circumstances.

Feel free to schedule a meeting with one of our licensed financial planners if you need help deciding when to apply for social security benefits or retirement planning in general; identifying goals and objectives is key to a successful retirement.

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 On the crowdfunding website, GoFundMe, 22,000 open cases are looking to raise money for funeral expenses. The average amount of money, $2,200, gets raised in those funds, which is not enough. Today’s funerals are $8,000 on average. Don’t put your family in the position of having to ask for money online.

Reasons not to rely solely on go-fund-me

  • No guarantee you will get what you need; there is a possibility that they won’t reach their go-fund-me goal to cover the funeral expenses.
  • It can disrupt your family’s grieving process. Grieving and not knowing how much you will receive from friends/family and knowing they might not get enough can increase stress and make the grieving process even harder.
  • You can leave your loved ones with financial stress/difficulties. Your loved ones will not likely receive funds to cover funeral costs and other financial expenses they are left behind with, such as debt, car loans, and the mortgage. Ask yourself; Will they be able to stay at the house you bought together? Do they have to take out loans to cover expenses?

If there is anyone who relies on you financially, you need to have life insurance or another plan in place. If you are reading this and you do not have life insurance or enough of your own money saved to replace your income, your family will likely go through financial difficulties; if something were to happen to you.

Life insurance can take away the financial stress of losing a significant other. The paid-out benefit gives you more space and time to focus on what is most important: taking care of yourself and your family, who will have to keep going. It will also give them time to grieve and additional time to deal with funeral arrangements and provide them with the funeral they deserve.

Reasons to properly plan and get life insurance.

  • Peace of mind that your family will be taken care off
  • The insurance company will cover funeral costs
  • With the death benefit, you can cover all other bills such as debt, mortgage, and tuition for your children.
  • Your family will be able to afford to stay in their home and avoid the stressful situation of finding a new place to live while grieving.
  • It can protect long-term plans such as retirement or college

How Much Life Insurance to Purchase?

How much you need depends on your lifestyle or your future goals.  Life is not a one-size-fits-all proposition, and neither is your insurance policy. The amount you need can be:

  • Needs-based. The amount your loved ones need to survive financially.
  • Goals-based. The amount your family needs to reach their financial goals (tuition, retirement)?
  • Legacy. What are you hoping to leave behind for your family?

 

Self-Enroll Below To Protect Your Family With Life Insurance

With our quoting tool, you can calculate how much life insurance you need to cover all your finances. 

All you need to have to calculate your coverage amount are the financial obligations you would want to meet if you died and the financial resources you already have. 

Factors such as the amount of debt you have, your mortgage, and the tuition for your children play a role.

Once you know how much you need, you can compare the policies of different companies.

Policy Engineer is contracted with over 50 of America’s top insurance carriers and can help enroll you in a wide range of programs.

Make sure your family can continue to live your lifestyle financially without being put in the position of having to ask for money online. 

 

Last Updated: January 11th, 2025

How To Avoid Part B & D Late Enrollment Fees

If you are eligible for Medicare and do not enroll in Part B and D when you are first eligible, you may have to pay a late enrollment penalty. It’s important to understand the enrollment periods and penalties associated with Medicare Part B and D to avoid late enrollment fees. This blog will cover some tips to help you avoid late enrollment fees.

 

Review plans and prices here

→ Click here to schedule a free Medicare review if you want help from a licensed insurance agent to review your Medicare plan and eligibility. 

 

When should you enroll in Medicare to avoid penalties?

Medicare’s sign-up window starts three months before your birth month when you turn 65 and ends three months after. You will have to enroll in Medicare during this sign-up window to avoid penalties unless you have creditable coverage (ex., employer health insurance plan). 

You will also have guaranteed issue rights during your initial enrollment period; this means that insurance companies can’t deny you a Medicare Supplement insurance plan because of pre-existing health conditions or disabilities.

If you don’t enroll in Medicare in time, you most likely have to pay the penalty for parts B and D. 

* Late Enrollment Penalty part B: Your monthly Part B premium could be 10% higher for every entire 12-month period that you were eligible for Part B.

 That means one year is 10%; two years is 20%, three years is 30%, and so on.

*Late Enrollment Penalty part D: For each month you delay enrollment in Medicare Part D, you will have to pay a 1% Part D late enrollment penalty (LEP). The penalty is calculated based on 1% of that year’s national average Part D premium.

For example, the national average for 2023 is $31,50, so if you went 18 months without credible prescription coverage, your penalty would be as follows: $31,50 x 1% = $0.315 x 18 months = $5.67 penalty per month.

Medicare enrollment periods

  • Initial Enrollment Period: Lasts for seven months; your sign-up window is from 3 months before your birth month when you turn 65 to 3 months later. You have to enroll in Medicare during this sign-up window to avoid potential penalties. If you don’t register in time, you may have to pay the penalty for parts B and D.
  • Annual Enrollment Period: Anyone can use the AEP to make changes to their Medicare coverage – from October 15 to December 7
  • Open Enrollment Period: January 1 to March 31
  • Lock-in Period: April 1 to December 31
  • Special Enrollment Period: Special circumstances within the year
  • Medicare Birthday Rule: The Medicare birthday rule allows consumers to change to an equal or lesser benefit Medigap policy within a 60-day window without medical underwriting (not available in all states).

Tips

  1. Understand the enrollment periods: There are specific enrollment periods for Medicare Part B and D. Your initial enrollment period is a seven-month window around your 65th birthday, including the three months before, the month of, and three months after. If you miss this window, you may have to pay a late enrollment penalty.

  2. Enroll in Part B and D when you are first eligible: It’s important to enroll in Part B and D when you are first eligible to avoid late enrollment penalties. If you’re still working and have health insurance through your employer, you may be able to delay enrolling in Part B without penalty, but you should check with your employer to make sure.

  3. Understand the penalties: The late enrollment penalty for Part B is 10% of the monthly premium for every year that you were eligible but did not enroll. The late enrollment penalty for Part D is 1% of the national base beneficiary premium for every month that you were eligible but did not enroll.

  4. Consider enrolling in a Medicare Advantage plan: If you enroll in a Medicare Advantage plan that includes Part D coverage, you may not need to enroll in a separate Part D plan. However, it’s important to make sure that the plan you choose covers all of the medications you need.

  5. Keep your coverage up-to-date: If you already have Part B and D coverage, make sure to keep your coverage up-to-date to avoid any gaps in coverage that could lead to late enrollment penalties.

Most common Questions:

1. What if you had creditable coverage through your work or your spouse’s employer?

Depending on your plan through work, you may not need to enroll in Medicare part B or D. If you do have creditable coverage through work, keep the Certificate of Creditable Coverage in your records as proof. You will likely need to use this as proof that you had creditable coverage later. Plan and enroll before your employer coverage ends to avoid penalties due to a gap in your coverage. 

Click here to learn more about medicare health coverage through work.

2. What happens if you don’t have creditable coverage?

As soon as your coverage terminates, you have 63 days to enroll in new coverage, or else you begin to accrue the Part B and Part D penalties. If you are without credible coverage for 12 months, you will be assessed a premium penalty for Part B and Part D whenever you enroll. Medicare Advantage Prescription Drug (MAPD) plans will have a Part D penalty.

Your creditable coverage will end when you retire or change jobs. When it ends, you will need to enroll in Part B and/or a Part D prescription plan to avoid any late enrollment penalties. 

3. Does your employer offer Cobra?

*If you have COBRA before signing up for Medicare, your COBRA will most likely end once you sign up. You will have eight months to sign up for Part B without a penalty, whether or not you choose COBRA. If you miss this period, you’ll have to wait until January 1 – March 31 to sign up, and your coverage will start on July 1. This could cause a gap in your coverage, and you could end up with a lifetime Part B late enrollment penalty (medicare.gov).
* Generally, COBRA coverage is offered for 18 months (36 months in some cases).

Click here to read other essential facts about cobra 

4. What if you are on disability?

Disability and Medicare Penalties

If you have a disability, you qualify for social security disability payments before 65. You will also be eligible to receive Medicare health coverage and will receive Medicare Part A (Hospital) automatically. The only thing you will need to do is; to determine if it is necessary to enroll for Part B/D during the initial enrollment period to avoid penalties or if you can delay your enrollment. If you don’t sign up or drop out before you turn 65, you will have to pay a late penalty. This is an additional 10% of the Part B premium for each year you didn’t have Part B but were eligible for and for Part D: for each month you delay enrollment in Medicare Part D, you will have to pay a 1% Part D late enrollment penalty (LEP).

When you turn 65, your initial enrollment period (on disability) will restart. You lose your eligibility for Medicare based on disability, and it will be based on your age; you will have the same enrollment period as anyone else who turns 65.

Your Medicare sign-up window is from 3 months before your birth month when you turn 65 to 3 months later. 

Being on Disability and Paying a Part B Late Penalty

When you turn 65, the initial enrollment period you had before (while on disability) will restart. The Medicare coverage restarts as if you never had it before. Any late penalties for Part B or Part D (drug coverage) you had to pay when you were on disability will be waived; you will no longer have to pay those.

How do Disability and Guaranteed Issue Rights work?

After being on disability, you will be eligible for the guaranteed issue rights; this means that companies can’t deny your Medicare Supplement insurance plan application because of pre-existing health conditions or disabilities.

Everyone is eligible for the guaranteed issue rights during their initial enrollment period, even if they were denied before when they were on disability.

Make sure to review Medicare plans and prices yearly. 

Last Updated: January 11th, 2025

Can Life Insurance Through Your Employer Protect Your Family Financially?

Life insurance is an important financial tool that provides financial protection to your loved ones in the event of your death. Many employers offer life insurance coverage as part of their employee benefits package. This type of life insurance, commonly known as group life insurance or employer-sponsored life insurance, can play a crucial role in safeguarding your family’s financial well-being. In this blog post, we will explore the benefits and considerations of life insurance through your employer and its potential impact on your family’s financial security.

Employer-Sponsored Life Insurance Explained: Your employer may offer you a life insurance policy that can benefit your designated beneficiaries in case of your death while you are employed. This type of coverage is usually provided at no cost or at a lower rate, making it an appealing choice for many employees.

  1. Financial Protection for Your Family: One of the significant advantages of life insurance through your employer is that it can provide a financial safety net for your family. In the event of your death, the policy’s death benefit can help replace lost income, cover funeral expenses, pay off outstanding debts, and ensure that your loved ones are not burdened with financial hardships during an already challenging time.

  2. Convenience and Ease of Enrollment: Obtaining life insurance through your employer is generally convenient and straightforward. The enrollment process is typically streamlined, and you may not be required to undergo a medical examination or provide extensive health information. This ease of enrollment can be beneficial, especially if you have pre-existing health conditions that might make obtaining an individual life insurance policy difficult.

  3. Limitations and Considerations: While employer-sponsored life insurance can be valuable, there are some limitations and considerations to keep in mind:

  • a) Coverage Amount: The coverage amount provided by employer-sponsored life insurance policies is often limited. It may be a multiple of your annual salary or a fixed amount, which may not adequately protect your family’s long-term financial needs. Life insurance through your work is a nice benefit, but it might cover less than you and your family need. 
  • b) Job Dependency: Since this type of life insurance is tied to your employment, you may lose your coverage if you change jobs or lose your job. It’s crucial to assess whether the policy is portable or if you have the option to convert it to an individual policy upon leaving your job.
  • c) Inadequate Customization: Group life insurance policies offered by employers are generally designed to meet the needs of the majority of employees. They may not provide individual life insurance policies’ flexibility and customization options. Tailoring coverage to your specific circumstances, such as additional riders or specific beneficiaries, may be limited.
  1. Supplementing Employer-Sponsored Coverage: To ensure comprehensive financial protection for your family, it’s often advisable to consider supplementing your employer-sponsored life insurance coverage with an individual life insurance policy. Individual policies typically offer greater flexibility, higher coverage amounts, and the ability to customize your coverage based on your unique needs. This will leave your family with enough money to cover debts, tuition, retirement, medical costs, income replacement, etc…

If you have life insurance through your employer

You need to look at these two main things:

Question 1: Is your death benefit high enough?
It’s important to note that the life insurance coverage provided by your employer may not offer adequate death benefits. The death benefit is the amount the insurance company would pay your family in case of your passing.

Question 2: Is it possible to keep your life insurance when you change jobs?

Usually, your life insurance coverage ends when you leave your job. However, you can choose to obtain life insurance independently from your employer to ensure that it stays with you regardless of your job. Obtaining life insurance at a young and healthy age is recommended as the rates increase with age. This way, you will have complete control over your coverage. 

It is important to note that obtaining a policy at a younger age and in good health can result in lower rates. It is recommended to secure these cheaper rates for future benefit.

How should you ensure that life insurance through your work is enough?

Follow these simple three steps to determine which insurance policy you should get.

  1. Determine how much life insurance you need:

    You need to replace your income and make sure you cover your debts. Everyone needs a different amount. People with multiple kids might need more than people with no kids. Homeowners: If you own a home, ensure you get enough to cover your mortgage. If you get enough life insurance, your family can invest the benefit into an interest-bearing account, live off the interest alone, and maintain their current lifestyle financially. 


  2. Determine the length of the insurance:

    Make sure the term of your policy is correct. Life insurance companies give the option to have anywhere from a 5-year term policy up to a permanent life insurance policy. An example of this would be a homeowner who still has 20 years to pay off their home; a 20-year term life insurance policy will cover that mortgage during the 20 years while the house is still being paid off.  

  3. Shop & compare

    If you have life insurance through your employer, you might be limited to the amount of life insurance companies to pick from. In reality, you can choose from hundreds of companies and combinations of life insurance policies. We have a tool that you can use to compare and even self-enroll If you want to. Click here to shop and compare.

Overview of the advantages and disadvantages of Life insurance through your employer.

Advantages

  • It is convenient: Easy, they won’t give you too many options to choose from. HR might do the paperwork, and you can go there if you have any questions.
  • Price: Most likely, your employer will cover the costs of your life insurance or offer it at a low price
  • Guarantee: Most policies through your employer will accept you even if you have serious medical conditions.

Disadvantages

  • Coverage stays with your job: if you move or switch jobs, you may not be able to take the policy with you. Some employers offer to convert your policy from employer-based to individual one. However, you will most likely end up with a higher price. The older you get, the higher your policy will be, so it is better to lock in a reasonable rate for a policy earlier on.
  • Your choices will be limited: coverage through your employer might be through one insurance company, and only a couple of plans will be available. Most of them are term life policies with a limited death benefit.
  • Amount: Your policy’s death benefit will likely be lower. Most people need more than what their work offer to be able to leave their family financially protected. If you get better coverage, it can cover your family’s debts, mortgage, and retirement and even help cover tuition for your children.

calculate death benefit

If you don’t want to be limited by the policy through your work, you can add a policy that fits your needs better.

You can use Policy Engineer’s life insurance tool to calculate how much life insurance you need, compare different companies, and self-enroll. We are happy to assist you; if you need help, schedule a meeting with one of our policy engineers.

Life insurance through your employer can be a valuable benefit that helps protect your family financially in the event of your untimely passing. While it offers convenience and ease of enrollment, it’s essential to review the coverage amount, consider potential limitations, and assess whether supplementing with an individual life insurance policy is necessary. A comprehensive approach to life insurance will ensure that your loved ones are adequately safeguarded, providing them with the financial stability they need during a difficult time.

FAQ

Q: What is life insurance through an employer?

A: Life insurance through an employer, also known as employer-sponsored or group life insurance, is a type of insurance coverage provided by an employer as part of their employee benefits package. It offers life insurance protection to employees, typically at a group rate.

Q: How does life insurance through an employer work?

A: When you enroll in life insurance through your employer, the employer pays the premiums or a portion of the premiums on your behalf. The coverage is usually term life insurance and remains in effect as long as you are employed by the company. If you pass away while covered by the policy, a death benefit is paid out to your designated beneficiaries.

Q: Is life insurance through an employer free?

A: Some employers offer employees basic life insurance coverage at no cost. However, the coverage amount is often limited. If you opt for additional coverage beyond the basic amount, you may have to contribute towards the premiums.

Q: How much life insurance coverage can I get through my employer?

A: The amount of life insurance coverage provided through an employer varies. It may be based on a multiple of your salary (e.g., one or two times your annual salary) or a fixed amount. The coverage limit is determined by your employer’s policy.

Q: What are the advantages of life insurance through an employer?

A: Life insurance through an employer has several advantages:

  1. Convenience: The enrollment process is usually simple, and you may not need to undergo a medical examination.
  2. Cost: Basic coverage is often provided at no cost or at a reduced group rate.
  3. Accessibility: Employer-sponsored coverage is typically available to all employees, including those with pre-existing health conditions.
  4. Portability: Some policies may allow you to convert the coverage to an individual policy or carry it with you if you change jobs.

Q: Are there any disadvantages or limitations to employer-sponsored life insurance?

A: Yes, there are some limitations to consider:

  1. Coverage Limitations: The coverage amount may not be sufficient to meet all of your family’s financial needs.
  2. Job Dependency: If you leave your job or are terminated, you may lose your coverage, unless it is portable or convertible.
  3. Lack of Customization: Group policies may not offer the same level of customization options as individual life insurance policies.
  4. Tax Implications: If the employer pays for a portion of the premium, the portion paid by the employer may be considered taxable income.

Q: Should I rely solely on life insurance through my employer?

A: It is generally recommended not to rely solely on employer-sponsored life insurance coverage. Consider supplementing it with an individual life insurance policy to ensure you have adequate coverage that meets your specific needs. Individual policies offer more flexibility, higher coverage amounts, and the ability to customize your coverage.

Last Updated: January 11th, 2025

Retirement Planning & Long-term Care

Long-term care is often overlooked, and the costs are underestimated in retirement planning. On top of that, long-term care expenses are growing every year. The possibility of needing help taking care of yourself later in life is probably hard to imagine and most likely not on your priority list. However, if you forget to add this to your planning, you might run out of your retirement savings before you know it.

Why is it important to plan for long-term care?

As we journey through life, it’s essential to consider our present needs and potential challenges that may arise in the future. Long-term care is a crucial aspect that often gets overlooked until it becomes an immediate concern. Research indicates that an astounding 70% of individuals over 65 will require some form of long-term care in their lifetime (acl.gov). Therefore, proactive planning for long-term care is not only wise but necessary to ensure a worry-free and secure future. In this blog, we will delve into the significance of preparing for long-term care and explore various options that can help you navigate this complex terrain.

Ask yourself the following question;

If you need long-term care, how will you pay for it, or who will pay for it?

The Reality of Long-Term Care Costs: Before we dive into the planning options, let’s first understand the magnitude of long-term care expenses. According to the median cost survey conducted by Genworth in 2022, here’s an overview of the average annual costs for various care options:

  1. In-home homemaker services: $53,768
  2. In-home health aide: $54,912
  3. Community adult day care: $19,240
  4. Community assisted living facility: $51,600
  5. Nursing home semi-private room: $93,075
  6. Nursing home private room: $105,850

Based on the numbers, it’s clear that long-term care can have a major impact on your financial stability if you don’t plan for it properly.

What about Health Insurance and Medicare?

While many individuals may assume that their regular health insurance or Medicare will cover long-term care costs, this is unfortunately not the case. Medicaid can provide assistance if your income falls within the Medicaid income limits. However, relying solely on Medicaid might restrict your choices for care, limiting the options for location and type of care you receive. Early planning is, therefore, essential to ensure you have the freedom to make informed decisions about your long-term care preferences.

Please plan and be ready in case you need it

There are different ways to prepare for these costs, and they all have ups and downs. We will discuss five options.

Option 1: Long-term care insurance

Long-term care insurance is a reliable option that offers peace of mind for the future. People opt for this type of insurance for two primary reasons:

  1. Protecting Retirement Savings: Long-term care insurance shields your hard-earned retirement savings from being depleted by exorbitant care expenses.

  2. Choice and Flexibility: With long-term care insurance, you can choose the type of care you desire, be it in your home, an assisted living facility, adult daycare center, hospice care, memory care, or nursing home care.

This insurance covers not only routine daily activities like bathing and dressing but also chronic medical conditions, disabilities, and disorders. While the policy price may increase in the future, the benefits far outweigh the potential drawbacks. The cost of the policy can be influenced by factors such as age, the maximum amount it pays per day, the number of years it will pay, and optional benefits like inflation protection.

What does long-term care insurance cover?

Long-term care insurance not only covers the basic routine daily activities, like bathing, dressing, or getting in and out of bed, but it will also cover in case of a chronic medical condition, a disability, or a disorder.

  • Your home.
  • An assisted living facility.
  • An adult daycare center.
  • Hospice care.
  • Memory care.
  • Nursing home care.

The downside is that you may never use it, and your policy price could increase in the future.

The price of a policy can be based on the following:

  • Age: the younger you are, the lower your premium will be.
  • The maximum a policy pays per day
  • The maximum number of years a policy will pay
  • Optional benefits, such as inflation protection

Option 2: Living benefits (life insurance)

Some individuals may consider leveraging their permanent/whole life insurance policy with an accelerated death benefit. This enables you to use a portion of your death benefit to cover long-term or other medical costs while you are alive. However, it’s essential to review your policy carefully to understand its limitations and consider adding riders if needed.

Another innovative option is a hybrid life insurance long-term care policy, which combines both life insurance and long-term care coverage. This provides more flexibility and can be a suitable alternative for those who wish to address both needs in one comprehensive policy.

 It is essential to review your policy to determine what it includes and if you need to add riders. 

  •  Check if the accelerated death benefit will increase your premium or if it is included in your premium.
  • Check The triggers you need to get your accelerated death benefit approved. A common trigger is having a terminal illness. Check the triggers you can use for the accelerated death benefit.

Option 3: Retirement Savings

While using retirement savings to cover long-term care expenses eliminates the risk of paying for something you might not use, it could have adverse consequences. Depleting your retirement funds might leave your significant other or family members in financial hardship or lead to an unfortunate situation where you run out of money to support yourself in later years.

Option 3: Your family, friends, or go fund me

Unfortunately, many individuals find themselves unprepared for long-term care and end up relying on the support of their family, friends, or even resorting to crowdfunding. Research indicates that 64% of people who overlook planning for long-term care have to depend on the help of their family (Ahip.org, September 2016). However, this route is uncertain and does not guarantee that you will receive the care you need. This makes it unpredictable; you will depend on other people and won’t guarantee that you will get the care you need.

Option 4: Annuities

Funding long-term care costs can be achieved through annuities, which involve investing a lump sum with insurers. This generates a steady income that can be utilized for various expenses, including long-term care. The nature of the annuity chosen determines whether the income stream is consistent or variable. Although annuities are available for purchase at any age, they usually require a significant investment and may have a waiting period before payments begin..

Planning for long-term care can be tricky, but it is crucial. Feel free to schedule a meeting with one of our licensed financial planners if you need help creating a plan for long-term care or retirement. Identifying goals and objectives is critical to a successful retirement.

Long-term care
Life Insurance
Annuities

Last Updated: January 11th, 2025

Protect Your Paycheck: The Importance of Disability Planning

Imagine a scenario where you suddenly find yourself unable to work for several months due to illness or injury. How would you cope with the essential costs of living, such as rent, mortgage, car loans, and groceries? Unfortunately, this situation is more common than you might think. According to the Social Security Administration, one out of four 20-year-olds will become disabled and unable to work before reaching the age of 67. This sobering statistic highlights the critical need for disability planning to safeguard your financial stability and that of your family. In this blog, we will explore the significance of disability insurance and the various ways to protect your paycheck during challenging times.

Imagine not being able to work for a couple of months. How will you pay for essential costs such as; rent, mortgage, car loans, or groceries? Do you have an emergency fund or insurance in place?

This scenario is more common than you would think. According to Social Security Administration, one out of four of all 20-year-olds will become disabled and unable to work sometime before reaching 67. This makes it essential to consider what income loss means for you and your family. You can avoid the financial stress you would endure with disability insurance. It will give you peace of mind knowing that you and your family would be okay financially if you couldn’t work for a while. Protect Paycheck with Disability Planning.

There are three ways to get disability benefits. 

  1.  State Disability: Some states offer disability benefits to replace a portion of your income if you can’t work for some time. Click to see what’s offered where you reside. 
  2. Disability Insurance: Set up an insurance policy to control how much and how long your income will be replaced. Click here for a quote.
  3. Social Security: Supplemental Security Income (SSI) is a Federal income supplement program for individuals that have been disabled for over 12 months and considered a permanent disability: Click to learn how much you may qualify for.

What is Disability insurance?

The Power of Disability Insurance: Disability insurance is your safety net during times of uncertainty. It covers a percentage of your income if you suffer from an illness or injury that prevents you from working. Not only does it protect you in case of disabilities, but it can also cover other situations such as mental health issues, severe migraines, pregnancy complications, cancer, or surgery. With disability insurance, you can focus on your recovery without worrying about how to pay your bills. Most policies provide around 70% of your income for a specified duration, giving you the financial breathing space you need to get back on your feet.

Is Disability Coverage through work enough?

While some individuals may believe they are already covered through disability insurance provided by their employer, it’s essential to assess the adequacy of such coverage. Workplace disability insurance might fall short and not cover injuries or illnesses that occurred outside of work. Additionally, your coverage might end if you switch jobs or fields. To ensure comprehensive protection, consider obtaining your disability insurance independently.

Let’s review these possible scenarios

Scenario 1: The Unforeseen Accident

Meet Sarah, a 32-year-old marketing executive with a promising career ahead of her. She’s always been health-conscious and never thought she’d need disability insurance. One fateful day, while driving back home from work, she gets into a serious car accident, leaving her with multiple fractures and a severe back injury. The doctors advise her to take at least six months off work to recover fully.

Without disability insurance, Sarah is now faced with a financial nightmare. Her employer’s short-term disability coverage only covers a portion of her salary for the first few weeks, and after that, she’s left with no income. With mounting medical bills and her regular expenses, such as rent and utilities, piling up, Sarah quickly realizes that her emergency savings won’t last long.

In contrast, had Sarah invested in long-term disability insurance, her worries would have been significantly reduced. She would have received a percentage of her income regularly, allowing her to focus on her recovery without stressing about her financial obligations. This situation serves as a wake-up call for Sarah and many others, highlighting the importance of having a comprehensive disability insurance plan in place, even for young and healthy individuals.

 Scenario 2: A New Chapter, A New Challenge

Meet John and Lisa, a young couple in their late 20s, eagerly expecting their first child. Lisa works as a freelance graphic designer, while John is a software engineer employed at a tech startup. Since both are relatively young and healthy, they’ve never considered disability insurance before.

As Lisa’s due date approaches, she develops severe complications that lead to an emergency C-section. The doctor advises her to take an extended leave from work for a smooth recovery. Given Lisa’s freelance status, she doesn’t have access to any workplace disability benefits.

John, on the other hand, had limited disability coverage through his employer. However, it barely covers a fraction of their monthly expenses, leaving them in a vulnerable financial position. Lisa’s recovery takes longer than expected, and without a steady income from her freelance work, they struggle to keep up with their bills and medical expenses.

John and Lisa now understand that buying disability insurance would have been smart. By having long-term disability insurance, they could have secured a more stable financial future during this crucial stage of their lives. They would have been able to concentrate on taking care of their newborn and helping Lisa recover without being concerned about their finances.

What types of disability insurance exist?

There are two primary types of disability insurance – long-term and short-term disability insurance.

Long-term disability 

Long-term disability benefits are paid out for the number of years indicated in the plan. There are long-term disability plans that pay out partial wage replacement benefits until a certain age, such as 65 years old.

  • Covers around 40-70% of your salary.
  • Typically lasts for five years or longer, sometimes until you reach 65 years old.
  • Costs approximately 1-3% of your annual income.
  • Usually has a 3-6 month waiting period before benefits kick in.

Short term disability

Short-term disability typically pays out a portion of an employee’s income from 9 to 52 weeks, depending on the plan. “elimination” period is usually set from seven to 14 days. Only get this type of disability insurance if your employer offers you free.

  • Covers around 60-70% of your salary.
  • Lasts for a few months (9 to 52 weeks, depending on the policy).
  • Costs approximately 1-3% of your annual income.
  • Has a shorter elimination period, usually around 14 days.

How much disability insurance do you need?

Determining the right amount of disability insurance coverage depends on various factors, such as your income, expenses, and lifestyle. To get an estimate, you can use the following formula:

Remember that the younger you are, the cheaper your premiums will be.

How much does disability insurance cost?
Disability insurance costs for short-term and long-term coverage are most likely between 1% to 3% of your annual income. For example, if you make $50,000 a year, that’s $60 – $125 monthly. You’ll pay less if you get a long-term policy with a more extended elimination period.

Who Needs Disability Insurance?

It is wise to have long-term disability insurance regardless of your type of job. Not everyone needs disability insurance, but disability planning is crucial to ensuring a stable lifestyle for you and your loved ones while working. Your planning should give you peace of mind. Knowing that your financial stability would stay intact if your income were to stop due to an injury or illness.

What Disability Insurance doesn’t cover:

Disability insurance is designed to replace a portion of your income. It doesn’t cover extra expenses such as; medical bills and extended or term care costs. 
Long-term policies don’t usually cover pregnancy. However, the complications that extend beyond pregnancy (if a doctor orders you to stay at home after a C-section) could qualify you for benefits, but only if you had a long-term policy in place before you got pregnant. 
Short-term policies cover birth as a disability, but you might be waiting long, six-to-eight weeks for each check. 

How do I get disability insurance?

  1. On your own through with the help of an Insurance Agency. One of the best ways to get disability insurance. It lets you get the exact amount of coverage you need and compare coverage and prices from various insurance companies. You don’t need to worry about losing coverage if you change jobs or leave a particular professional organization. You can work with a licensed policy engineer to get the best coverage and price for your needs.
  2.  Through a specific industry professional organization 

    Pros
    – Many professional organizations for people in a specific industry offer the option to buy insurance through a group plan.
    – It’s easier to qualify for coverage and less expensive than buying disability insurance on your own.

    Cons
    -The professional organization may choose to stop offering the coverage at any time.
    – You would lose coverage if you change professions or leave the professional organization industry.

  3.  Through your employer:
    Pros
    -Typically, the coverage is automatic.
    -There’s often no premium for you to pay. 
    Cons
    -You lose coverage if you leave or are terminated from your job.
    – Coverage limitation. Most likely not enough to be okay financially.
  4. Through the government
    Workers’ Compensation Every state has its own Workers’ Compensation laws. It only covers work-related injuries and illnesses and may not be enough to cover your lost income.
    Social Security Disability Insurance Qualifying isn’t easy. Around 65% of the applications were initially denied. The average payment (in 2020) was only $1,258.
    State disability insurance programs are Only in 5 states. It covers only a portion of your income for about 4 to 6 months.   

Ready to protect your Paycheck?

Disability planning needs depend on each individual’s income and job duties. That’s why our licensed Policy Engineers take an in-depth look at your situation to determine your actual disability income needs. You can do all this online from the comfort of your home. Protect Paycheck with Disability Insurance. Get a free disability income evaluation today! 

What’s the average length of a disability?

More than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach the full retirement age of 67.

Don’t get caught with empty pockets.

Almost half of the American adults indicate they can’t pay an unexpected $400 bill without taking out a loan or selling something to do so.

Don’t follow the herd.

At least 51 million working adults in the United States are without disability insurance other than the basic coverage available through Social Security.

Three months go by in the blink of an eye.

Only 48 percent of American adults indicate they have enough savings to cover three months of living expenses if they’re not earning any income.

Disability Insurance
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