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Planting Seeds

March 22, 2023

Spring is a time of growth and renewal. I always enjoy seeing our flower beds come back to life in the spring after a cold winter. One springtime tradition that my family has is to take a road trip to enjoy the Texas wildflowers in full bloom (and often some Texas barbeque). One of our favorite flowers is the state flower of Texas – the bluebonnet. One interesting fact about bluebonnet seeds is that they germinate in September through December – in the middle of winter! These seeds go through the winter months growing below ground while our plants above ground are freezing and dying. That process of growth beneath the surface produces the abundant flowers that we enjoy in spring.

Establishing good financial habits can be like planting bluebonnet seeds. It should be done early, can grow “beneath the surface” for a season, but provide stunning results once mature. Here are a few good financial habits to consider this spring that can lead to future financial growth:

1. Start Saving Early
One of the best financial habits that you can develop is to start saving early. Whether it’s for a rainy-day fund or for long-term goals like retirement or a down payment on a house, the earlier you start saving, the better off you’ll be in the future. Even small amounts of savings can add up over time with the power of compound interest. Even the mighty oak started out as just an acorn!

2. Build Good Credit
Credit is essential for many aspects of your financial life, including buying a house, getting a loan, or even renting an apartment. Building good credit takes time, so it’s important to start early by making timely payments on your credit cards, loans, and other bills. Keep your credit utilization low and avoid opening too many credit accounts at once. Good credit is like using good soil – it’s the foundation that the rest of your goals like buying a home or car can be built.

3. Invest in your education
Investing in your education is one of the best ways to improve your earning potential over the long term. Whether it’s going back to school for a trade or degree, or taking courses to enhance your skills, investing in your education can pay off in the future by opening up more career opportunities and increasing your earning potential. A good education is like Miracle Grow – and it’s a miracle how much it can make your income grow!

4. Develop a budget
Developing a budget can help you stay on track with your finances and avoid overspending. Make a plan for your income and expenses, and stick to it! This will help you develop good financial habits and avoid debt. I personally use an app for my budget that I can check daily to see if I’m on track. Like a well-planned garden, a budget can keep your spending on track and within expectations.

5. Practice smart spending habits
It’s easy to get caught up in the latest trends or to spend money on things you don’t need. Practicing smart spending habits, such as shopping for bargains, buying used items, and avoiding impulse purchases, can help you save money and avoid debt. One tactic that companies use extensively today is to sign up for a “free trial” or subscription to use their products. A recent study showed that 51% of Americans have unwanted subscriptions. Get out your pruning shears and cut back those weeds so your financial health doesn’t get choked out by unnecessary subscription fees.

Planting these seeds now can lead to a financial future that is in full bloom. If you want the help of a professional along the way, consider hiring a CFP® professional to help your plant the seeds for tomorrow’s financial success.

Published in the Victoria Advocate

David Faskas is a CFA and CFP® professional with KMH Wealth Management, LLC. He specializes in investments and portfolio management. He is the Chief Investment Officer, Chief Financial Planning Officer, and a managing member of the firm.

 

https://kmhwealth.com/wp-content/uploads/2023/03/bluebonnets.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-03-22 01:01:592023-03-17 15:00:05Planting Seeds

Keeping Things Rolling

March 8, 2023

As a mom of young children and a CERTIFIED FINANCIAL PLANNER™, a thought that’s always at the front of my mind is how to best set my children up for their futures, especially in regards to their education. Before my kids were walking, they all had a savings account. Personally, my husband and I selected 529 college savings accounts. A 529 plan boasts plenty of advantages: tax free growth, tax-free withdraws for qualifying educational expenses, and high contributions limits just to name a few.

The one catch is the term qualifying educational expenses. If you’re a fellow parent, you know that no two children are the same and trying to assume the educational path of a babbling toddler can be tricky. If you do decide to invest for your child in a 529 plan and your child ends up only needing part or none of the funds you’ve saved, you are left with few options on how use these funds without being subject to a 10% penalty and paying taxes on the earnings. Luckily, recent legislation under the SECURE Act 2.0 may have provided parents a backup plan for leftover 529 funds by way of a rollover into a Roth IRA. Of course, this won’t come without a hefty list of stipulations to do so.

When this rule within the SECURE Act 2.0 goes into effect in 2024, unused funds have the option to be rolled into a Roth as long as: the 529 plan has been opened at least 15 years, the Roth IRA receiving the funds is in the same name as the 529 beneficiary, and the beneficiary has earned income at least equal to the amount being transferred. The Act goes on to state that the current lifetime transfer limit is set at $35,000, the annual transfer limit is the annual Roth IRA contribution limit, and only contributions and earnings made more than five years ago can be transferred.

If that sounds like a lot of hoops to jump through, it’s probably because it is. But a few extra hoops could result in setting your child up for success far beyond their (potential) college years. Similar to a 529 plan, all growth within a Roth IRA is tax-free for qualified distributions. With a 529 rollover into a Roth IRA, the funds for one child could essentially receive tax free growth for decades.

Here’s an example: Bob and Sue have a child, Grace, in 2023. They open a 529 savings account and begin to contribute monthly. They stick to their goals and in 2041 when Grace reaches age 18 they have saved $200,000. Grace receives a scholarship to cover her first two years’ worth of tuition. Bob and Sue realize they are going to have an overfunded 529 plan. Grace had a part time job at 18 and continued it throughout her college career. Because of this, Bob and Sue are able to rollover the maximum Roth contribution amount of $6,500 each year that Grace has earned income from the overfunded 529 into a Roth IRA for Grace. Within six years, Bob and Sue have reach the maximum 529 to Roth rollover amount of $35,000 for Grace. If Grace doesn’t touch this account until she reached age 59 ½ and receives a 5% annualized return, her Roth IRA, started from funds when she was just a baby, would be worth approximately $190,000 and without ever paying taxes on the growth. This won’t fund Grace’s retirement, but definitely is a great gift started by her parents almost 60 years prior!

With that being said, does legislation mean that everyone should run to put funds into 529’s with the thought of rolling them into Roth IRAs in fifteen years? No, probably not. Is there potential value to be added under this new regulation? Absolutely. The reality is that both 529s and Roth IRAs could have a place in your child’s financial future. Navigating education funding and planning for the next generation should be handled on personalized level, not a one size fits all box. Work with a CFP® professional to learn what options work best for you and your family.

Published in the Victoria Advocate

Sara Potts is a CFP® Professional and Operations Manager with KMH Wealth Management, LLC

https://kmhwealth.com/wp-content/uploads/2023/03/rolling.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-03-08 01:01:462023-03-01 21:36:56Keeping Things Rolling

Who Can Be Claimed as a Dependent?

February 22, 2023

It is everyone’s favorite time of the year, right? Maybe not so much. As a tax preparer, I often get questions during this time from family and friends regarding their own personal tax returns. Questions usually stem from the idea of “getting something back”, or often sound something like, “I paid for this during the year, isn’t that tax deductible?” Another question that comes up fairly often is “Can I claim him/her as a dependent on my tax return?” A fair question that can depend on several variables.

There are two different types of dependents that can be claimed by a taxpayer. A Qualifying Child and a Qualifying Relative. Each type comes with its’ own set of rules that allow a taxpayer to claim that individual as a dependent.

A Qualifying Child must be a close relative, pass the age limit test, pass the residency and filing requirements, and pass the support test. The child must be the son (stepson), daughter (stepdaughter), brother (stepbrother), or sister (stepsister) of the taxpayer. The child may also be a descendant of any of the above and still qualify. An adopted or foster child of the taxpayer would also qualify. Only a resident of the United States, Canada, or Mexico may be claimed as a qualifying child. The child must be under the age of 19, unless a full-time student in which case the child must be under the age of 24. The child must live with the taxpayer for more than half of the year. A college student living on campus and coming back home for major breaks will typically not disqualify them from the residency test. The child may also not file a joint tax return with another taxpayer. Finally, the child must not have provided more than half of his or her own support. A dependent being awarded a scholarship is not considered contributing to half of his or her own support

When it comes to claiming a Qualifying Relative as a dependent, some different parameters are at play. The same support test applies for a qualifying relative as a qualifying child. Children (stepchildren), grandchildren, brothers (stepbrothers), sisters (stepsisters), nieces, nephews, parents and grandparents are the most common persons that can be considered a qualifying relative. A non-relative may qualify as long as they live with the taxpayer for the entire year. The relative may not file a joint tax return and must be a resident of the United States, Canada, or Mexico. The gross income limitation applies to those who are trying to claim someone as a qualifying relative. The relative’s gross income must be under a threshold of $4,400. This amount does not include Social Security income, tax-exempt interest or scholarships that the relative receives.

A common situation that arises with multiple support dependents and/or children of divorced parents, is who gets to claim a qualifying child or relative. A multiple support declaration may need to be filed when multiple taxpayers contribute, in total, over 50 percent of the dependent’s support, but no one taxpayer contributes more than 50 percent individually. In this case, Form 2120 will need to be filed and the taxpayers may decide amongst themselves who gets to claim the dependent on their tax return. In most cases, the parent who has custody of their child for the majority of the year will get to claim the child for tax purposes. This is independent of who actually provides more than one-half of the support for the child.

If you have made it this far, you may feel overwhelmed with all of the “nit-picky” rules that come with the territory. While it is a lot of information, it is imperative that you consult with your Certified Public Accountant with any questions you may have when it comes to being able to claim a dependent. You may be eligible for a list of beneficial credits on your tax return.

Published in the Victoria Advocate

Hayden Schilling, CPA is a staff accountant for Keller & Associates CPAs, PLLC.

https://kmhwealth.com/wp-content/uploads/2023/02/dependents.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-02-22 01:10:482023-02-17 15:39:02Who Can Be Claimed as a Dependent?

RMD Status: It’s Complicated

February 8, 2023

“It’s Complicated” is a relationship status used on social media by people when their relationship is full of tension and they find themselves in a mixed state. With Valentine’s Day next week and the recent passing of the Secure Act 2.0, I made the association between this term and the current status of Required Minimum Distribution (RMD) rules. “It’s Complicated” is the most justifiable definition of current RMD regulation.

The signing of the Secure Act in 2019 caused a major heartache to IRA owners, beneficiaries and advisors alike. A reminder that nothing in the tax code is “together forever.”

The Secure Act teased IRA owners nearing the magic age of 70.5, by moving the age that RMDs begin, also called the Required Beginning Date, from 70.5 to 72. Though it felt noncommittal, it wasn’t necessarily toxic for those wanting another year to defer taxes and grow their accounts. Still, it added to the muddling of understanding.

In what felt like a breakup, the longtime ability for those inheriting an IRA to stretch their account withdrawals over their lifetimes came to an end. Beginning in 2020, if you were a named beneficiary (and did not qualify as an eligible designated beneficiary) of an Inherited IRA account, you have a 10-year timeline and a ticking clock to distribute the entire account balance. You could say the stretch IRA is “never ever getting back together” with lifetime RMDs.

Advisors are called to play Cupid to keep clients from becoming star-crossed with incorrect calculations and flirting with missed RMD penalties. Rules vary depending on age and relationship for IRA owners and Inherited IRA beneficiaries to follow, which will inevitably cause frustration to those new to the RMD game.

And then…in Congressional fashion, a 2.0 version of the Secure Act was signed at the end of 2022. For RMDs, this version hasn’t caused as much disruption as the original bill but still made some notable changes.

If you are an owner of an IRA or retirement plan account in your name, read on. Pull out your Driver’s License and review your DOB. Born in 1950 or earlier, you are “in a relationship” with RMDs. Continue going steady. Calculate your required amount by dividing your account’s previous year-end balance by the IRS Uniform Lifetime factor determined by your age at the end of the current year. If your true love (aka spouse) is more than 10 years younger than you, the IRS Joint Life & Last Survivor table will be used for your factor. For account owners born after 1950 and before 1960, your 73rd birthday will mark the start of your required distributions. And for those of us born after 1959, the RMD age increases to the treasured age of 75.

Are you smitten with these new rules? RMD regulation is a complicated love affair. Find an advisor who has a passion for understanding your requirements, like a local CFP® Professional.

Published in the Victoria Advocate

Beth Koonce is a CFP® Professional and Lead Advisor with KMH Wealth Management, LLC.

https://kmhwealth.com/wp-content/uploads/2023/02/RMDComplicated.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-02-08 01:01:062023-02-01 15:09:26RMD Status: It’s Complicated

Preparing for Tax Season

January 25, 2023

The holidays have passed, the calendar has turned to a new year full of resolutions. January is Financial Wellness Month for those of you that resolve to get your finances in order. One way to get a jump start on this initiative is to get your tax documents together to file later this month when the IRS opens electronic filing. At the time of this writing, our team of CPAs is currently working hand in hand with our clients to meet their initial deadline on January 31, 2023, for their information return filings such as 1099s and W-2s.

While these information return filings may not apply to you, I want to share some frequently asked questions we receive and provide guidance to answer them.

Why should I file my tax return as early as possible?
Filing early has many advantages. For starters, filing as early as possible helps to mitigate some of the exposure to possible identify theft. Cyber criminals are notorious for attempting to front run filing incomplete, fraudulent returns in their victims’ names in order to re-route the victim’s tax refund into the criminal’s bank account. Further, those who file their return early will likely get their refund sooner, or if they owe tax, will have more time to ensure funds are in place to pay by the April 18, 2023, deadline. April 15th is on a weekend and April 17th is Emancipation Day in Washington, DC.

What is the easiest way to determine what documents I need?
A good general rule of thumb to start is to examine your tax return from the previous year. For clients of our firm, we send them a document known as an organizer which illustrates the names and amounts of the documents they previously had to guide them through organizing current year documents. For those who may prepare their own return, find your 2021 tax return and walk through it to compile a list of documents you may need.

When can I file my return?
As of this writing, an official filing date has not been announced. If history is any guide, the week of January 23, 2023, will likely be the opening of the IRS beginning to accept tax returns.

Should I file my own return or hire an accountant?
Generally, you should seek the assistance of an accountant if you had a major life event or milestone such as marriage, divorce, child birth, new homeownership or an inheritance. Also, those with small businesses are likely to benefit from the services of a Certified Public Accountant to help navigate the business filings related to businesses. This is true even for those who may work in the gig economy or have a side business in addition to their day job.

I often tell clients and prospective clients the more organized you can become, the easier your tax return filings will be. This is especially true for our clients who we recommend at least one mid-year tax projection as well to ensure we are on track and no surprises await in April. Hopefully, these tips will get you started to a smooth and uneventful tax season.

Published in the Victoria Advocate

Kyle W. Noack CPA/CFP® is Chief Executive Officer of Keller & Associates CPAs, PLLC and KMH Wealth Management, LLC.

 

https://kmhwealth.com/wp-content/uploads/2023/01/prep-for-tax.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-01-25 01:01:092023-01-20 14:50:17Preparing for Tax Season

Up in the Air – One-Time Student Loan Forgiveness Program

January 11, 2023

In March of 2020, I was in my final semester of graduate school, preparing for midterms and anticipating what I had hoped to be a relaxing spring break. At this point, there were only small rumblings about the Coronavirus disease. I left campus for spring break, eager to return in a week to finish my graduate courses, walk the stage in May, and receive my diploma. My spring break was extended for a week, then my classes transitioned to fully remote, and I never returned to university again.

As a result of the COVID-19 pandemic and the undoubtedly strange, unpredictable times it brought, President Trump ordered that federal student loans were to be placed in forbearance as of March 2020. Meaning, federal student loan borrowers were permitted to skip payments, and the interest rates on the loans were adjusted to zero percent. More recently, President Biden announced a federal student loan forgiveness program that allows individuals up to $10,000 in forgiveness on federally owned student debt (up to $20,000 for those with a Pell Grant), provided individuals meet the income requirements. Consequentially, lawsuits have been filed that threaten to block the forgiveness program, and as a result, the White House has further extended the loan payment pause. Meanwhile, the lawsuits head to the Supreme Court.

The Biden Administration is set to duke out the legality of the student loan forgiveness program in court in early 2023. Over the last three years, many borrowers have halted payments on their student loans and have become acclimated to not making the payment, while a reality check looms on the horizon. Loan repayment is scheduled to resume this year. It has been announced that borrowers can expect to resume payments 60 days after a Supreme Court ruling or June 30, 2023 – whichever comes first.

During the forbearance period, borrowers can choose to make voluntary payments towards their student loan balance in an effort to directly reduce the principal and take advantage of zero percent interest. A lower principal balance means less interest will accrue, providing significant cost savings and the ability to pay off the student loan faster. If borrowers have not been making payments on their student loans during the forbearance period, it is not too late to start fitting it back into the budget to avoid financial stress later.

Borrowers can also review their repayment plan options. Federal student loans have several options for income-driven repayment (IDR) plans. IDR plans fix monthly student payments at an amount that is intended to be affordable based on borrowers income and family size. This repayment option typically requires borrowers to pay 10% of their discretionary income each month towards their loan. Discretionary income is the amount left over after paying for vital life needs, such as housing and groceries. In the details of President Biden’s loan forgiveness program (not so headline-worthy when directly compared to loan forgiveness) is the proposed changes to the IDR calculation that could potentially reduce repayment terms and lower the 10% discretionary income threshold; however, final regulations that provide thorough details on the IDR calculation have yet to be released.

COVID-19 brought uncertain times for those with student debt. It still remains unclear how President Biden’s loan forgiveness plan will impact borrowers’ wallets, as the proposal remains in legal limbo. Borrowers should remain diligent by staying up-to-date on developments, budgeting for resuming payments, and reviewing their repayment options, like IDR plans.

Published in the Victoria Advocate

Carlee H. Gibbs, CPA is a staff accountant for Keller & Associates CPAs, PLLC.

https://kmhwealth.com/wp-content/uploads/2023/01/up-in-the-air.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-01-11 01:00:472023-01-10 21:16:22Up in the Air – One-Time Student Loan Forgiveness Program

Thoughts About Family and Planning

December 28, 2022

As I write this column, all of our family has joined us out of town for the Christmas and New Year’s Day holidays. Four kids, two husbands, one fiancé, four dogs (plus our two dogs), two cats and maybe a partridge in a pear tree. No grandkids yet, and no pressure. We were married ten years before our oldest, Missy, blessed us. Everyone is working remotely (including Phyllis and me) and silence is in short supply!

I am so thankful to have this rare time together, no matter how many things are on all of our collective work lists. Phyllis and I take deep breaths and enjoy having everyone together. Phyllis is the master organizer and Christmas is her favorite time of the year. We both just keep working as we can while juggling the family!

Our Christmas gifting has shifted this year to totally Secret Santa for all of us. In prior years, it was just the kids, but now it just makes sense. One special gift limited to a budgeted amount shifts the focus from the gift to the person. Everyone has to really think and research, if you will, what best suits the recipient of their special gift. I can’t wait for Christmas Day.

We give regularly to our church and other favorite charities. This time of year we review our tax status and consider some special charitable gifts. I have said this in a previous column, you will never miss the money you give to those in real need! I encourage you to do the same.

We have tried to instill a planning mentality within our family. Phyllis and I were fortunate to have had parents that provided for us. In reality, our parents really sacrificed and planned for us so we received the education we needed without the burden of debt. They also instilled in us a strong work ethic during our formative years, expecting us to work for our spending money, which we both did.

We endeavored to do the same for our children. We started saving on a regular monthly basis as soon as we could after they were born. This paid off as we had what we needed for them to attend college with a little “get to work” money after graduation. Missy graduated from high school in 2008, a bleak year for the markets, but it worked out. One of our daughters went out of state for college, which threw us for a loop, but it also worked out.

Over our careers starting in 1979 and 1980, there have been a number of bleak times in the markets, but when you keep a long term perspective and stay consistent in your savings and investments, things seem to work out. Just for grins, Google what inflation and mortgage rates were in 1980.

Have a financial plan. If you don’t have a plan, make a plan! Make sure you have a good CPA that understands your needs. In addition, make sure you have a CERTIFIED FINANCIAL PLANNER™ professional that places your best interest ahead of their own.

I hope you have a wonderful holiday and a great 2023!

Published in the Victoria Advocate

Lane Keller CPA/CFP® is a managing member of Keller & Associates CPAs, PLLC and KMH Wealth Management, LLC.

https://kmhwealth.com/wp-content/uploads/2022/12/familygathering.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2022-12-28 01:00:552022-12-21 16:10:11Thoughts About Family and Planning

Budgeting for Christmas

December 14, 2022

Christmas, to me, has always lent an opportunity to be merry, spread joy and spend time with both family and friends that I do not see on a regular basis. For my wife and I, this year will be extra special as is it will be our first Christmas as parents. We have been blessed by our son who has just surpassed 11-months-old and who has become extremely mobile. His true and unadulterated fascination by everything is contagious. Watching life through his eyes has given me a reminder of appreciation for the little things in life.

With this Christmas holiday being our first as parents, it brings some added self-pressure to make sure that our son has an enjoyable first Christmas. As we prepare, we have used our budget to navigate this pressure and ensure we are still on course for reaching our financial goals. The Christmas holiday can pressure every budget. Falling off your budget in December (or any month for that matter) will lead to starting the next month behind. This can be even more important for December as the start of the year tends to have many required, annual payments due, such as property and income taxes.

Using credit cards may be enticing to help cover some of the budget deficits. I would strongly reconsider swiping your credit card. The typical credit card interest rate in America ranges between 15% to over 30%. Interest owed will be accrued monthly on any unpaid balance which will continue to exasperate the deficit issues.

As my wife and I have pushed to stay within our budget, it has given me additional opportunities to reflect on what values that I want to teach my son. For most children, it is hard not to relate how good of a Christmas you may have based on how many gifts you receive. I want to make sure to raise my son with the idea that Christmas is not about gifts but about being merry, how much joy you can spread and spending time with family and friends. Combine this philosophy with living the last year of seeing happiness through my son’s eyes and it has really shown me the importance of spreading joy by giving. This can be done not only by financial or material giving but by time volunteering with a local charity. To this reflection, we have increased our personal December charity budget amount.

Many local charities give directly back to the community that you live in. Find a charity that has a mission statement that resonates to you. Your generosity can give a local child or a family an opportunity to have a Christmas that they may not have otherwise. Keep receipts of these charitable donations in your current year tax folder. Contributions given to 501(c)(3) charitable organizations may receive a tax benefit if you plan to itemize deductions when filing your tax return. Unlike the 2020 and 2021 tax years, there are not any charitable deductions allowed on your 2022 tax return if you do not itemize.

If you have significant charitable contributions, be sure to coordinate with a Certified Public Accountant or CERTIFIED FINANCIAL PLANNER™ professional to make sure you are maximizing any potential tax benefits.

Merry Christmas and Happy Holidays!

Published in the Victoria Advocate

Christopher Laughhunn CPA/CFP® is the Tax & Accounting Principal for Keller & Associates CPAs, PLLC and an Associate Advisor for KMH Wealth Management, LLC.

https://kmhwealth.com/wp-content/uploads/2022/12/christmaswrapping.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2022-12-14 01:00:382022-12-09 16:35:58Budgeting for Christmas

Hefty Medical Bills? Knowledge Pays

November 23, 2022

I’ve never had more to be thankful for this Thanksgiving – I have my whole family. Six weeks ago, I almost didn’t. My 4 year-old caught the flu last month and required a visit to our rural ER. Unbeknownst to us, he was in critical condition with a collapsed lung and a cascading list of complications. Ultimately, he required helicopter transport to a larger hospital where he was admitted to the Pediatric ICU and released 4 days later. Although I am sifting through over $150,000 in medical bills, this Thanksgiving I’m lifting praise and thanksgiving that we still have our son.

When surprise medical bills suddenly take dominance over your financial life, it quite literally pays to understand your rights and your payment options. I’d like to share with you the knowledge I’m employing to navigate our flood of medical bills. First, I have come to expect billings errors. I review medical bills closely and request an itemized bill if I have questions. Keeping accurate records will help if I need to file a billing dispute.

If you are covered under group or individual health plans, the No Surprises Act protects you from receiving surprise medical bills for most emergency services, non-emergency services from out-of-network providers at in-network facilities, and services from out-of-network air ambulance services. While my provider and my insurer work to settle the $46,000 helicopter bill between each other, I know that I am only required to pay up to my out-of-pocket maximum for the policy year.

To avoid exceeding my out-of-pocket limit, I pay medical bills in the order the claims are filed with my insurance company – not in the order received through the mail. Insurance companies process claims in the order they are filed. If I pay a bill out of order and jump ahead, my insurer can’t help and chances are I will have to fight the provider for a refund. You can log into your health insurer’s online portal to see a chronological list of claims. I keep that list, along with accurate records of the bills I receive, and those I have paid. As I approach my out-of-pocket limit, I may face a $1,200 bill, but only have $500 left to reach my out-of-pocket limit. At that point, I will contact my insurer to compare records. They will likely ask me to contact the phone number on that bill (and possibly all remaining bills) and request the provider to resubmit the claims.

In all cases, cash is king and gives you negotiating power. This can be helpful if you do have insurance, but don’t expect to reach your out-of-pocket limit for the year. I personally have saved thousands of dollars on medical bills for something as routine as childbirth, simply by contacting the billing department of the service provider and asking “What discount can you offer if I pay in full?” You may be surprised with a substantial discount.

Be mindful of the implications of medical debt on your credit. Most healthcare providers don’t report to credit bureaus; your bill would likely be sold to a collection agency before appearing on your credit report. After the bill goes to collections, the three main credit bureaus provide a 365 day grace-period to resolve the debt before the collection account appears in your credit history. Utilize that grace period to work out a payment plan with the provider that works for your budget, or negotiate with the collector who can typically offer steeper discounts than providers.

When considering the lifelong impact of surprise medical costs on your long term financial plan, knowing your rights and your options can save you tens, possibly even hundreds of thousands of dollars. A CERTIFIED FINANCIAL PLANNER™ professional can help you understand the nuances of health insurance and develop a plan to pay off all types of debt. If you believe you have been wrongly billed, you may contact the Department of Health and Human Services (HHS) at: 1-800-985-3059 or visit www.cms.gov/nosurprises to learn more about your rights and your options.

Published in the Victoria Advocate

Hannah Gohmert is a CFP® professional and the Chief Compliance Officer of KMH Wealth Management, LLC.

https://kmhwealth.com/wp-content/uploads/2022/11/medicalinsurance.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2022-11-23 01:55:122022-11-18 15:59:42Hefty Medical Bills? Knowledge Pays

Veterans Benefits

November 9, 2022

With Veterans Day approaching, I’m reminded of the incredible commitment and sacrifice that our veterans give for our freedom. I am proud of my late father, a proud Marine, as well as my brother who served in the Air National Guard. These heroes, among many others, continue to provide our country freedom and security.

There are thankfully many financial, educational and health care related resources available to the armed forces for those who are eligible and apply. I was the fortunate beneficiary of my father’s service in college through the Hazlewood Act. Although we could have benefited further by discovering information earlier on in my college journey, it was a great benefit that I was able to enjoy for my final few years in college. My hope is that this information can help someone else realize their eligibility, and not repeat our delay to get the most out of the program.

The Hazlewood Act is a benefit specific to the State of Texas that benefits veterans, their spouses and dependent children. Through this statute, up to 150 hours of tuition at public institutions of higher education in Texas are exempt from charge, including most fees. It’s an incredible benefit that can amount to significant savings! A Texas Veterans Commission department specialist can help you determine if you qualify, guide you on paperwork, and determine what requirements you need to fulfil to qualify. It is also important to note that if a dependent is claiming benefits, then they must use them before they turn 25 to remain eligible. With Texas being poised to surpass California as the most veteran-populated state, these benefits can potentially help many deserving families reach their educational endeavors. Additional Veterans Administration (VA) education benefits may be available to a service member’s child(ren) or spouse if they have a service-connected disability or died in the line of duty.

The VA also provides great health care benefits. With VA health care, you have coverage for regular checkups and appointments with specialists. This can be an invaluable benefit prior to reaching Medicare age, and also works as a supplemental plan once you begin Medicare.

Another important program is VA disability benefits. The VA may pay for medical care, equipment, and even provide a monthly tax-free payment to veterans who become ill or injured while serving in the military. There are even benefits such as housing grants to buy or modify a home for service members with disabilities.

There are many more benefits available to veterans. If you are a veteran, it is important that you consult with a specialist to see what you might be entitled to. You can reach VA Benefits Administration at (800) 827-1000, and you can obtain more information on the Hazlewood Act at (512) 463-3168. My family made use of the specialists at these departments extensively as we went through the process of applying for the Hazlewood Act, and I would encourage you to do the same if you are eligible for any benefits. Thank you to all veterans for your service!

Published in the Victoria Advocate

David Faskas is a CFA and CFP® professional with KMH Wealth Management, LLC. He specializes in investments and portfolio management. He is the Chief Investment Officer, Chief Financial Planning Officer, and a managing member of the firm.

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