Monday, June 6, 2016

Ten HSA Questions Regarding Dependents, Retirement & Health Insurance

Health savings accounts help employees sock away money for health care costs. They’re used along with a high deductible health insurance plan, and they offer some great tax benefits.

Contributions made to HSAs lower one’s taxable income, and payments made from an HSA aren’t taxed. Plus, the funds can be invested and interest can accrue in an HSA — tax free.

Used with care, HSAs can be a smart financial tool. But they’re also potentially complex.

For better or for worse, the responsibility is on the employee to make sure he or she stays within the rules of the game. For some this is empowering. For others, it’s intimidating.

Whether someone already has an HSA or is considering one, keep reading to find out about 10 potentially weird, possibly little-known FAQs about HSAs.


  • What is the HSA eligibility rule regarding not being a dependent on someone else’s income tax return? If you are a dependent on someone else’s tax return, are you eligible for an HSA?

Answer: No. This rule serves primarily to prevent children from opening and funding HSAs. The rule does create some interesting scenarios for adult children.

  • Can HSA owners that enroll in Medicare use their HSA to pay for Medicare premiums even though they are no longer HSA-eligible?

Answer: Yes. The majority of Americans will start Medicare at age 65 and therefor lose eligibility for an HSA. Losing eligibility for an HSA means that the HSA owner cannot contribute new money but does not stop a person with an HSA balance from continuing to use that balance for medical expenses.

Thursday, June 2, 2016

Getting Married Soon? Give Social Security Your New Name

Every year, June marks the beginning of two busy seasons: summer and “wedding season.” With joyful expectation, many of us have already marked our calendars and started wrapping up our plans for the vacations, ceremonies, and honeymoons. While the betrothed work out the details, Social Security wants to remind them about one detail that’s extremely important: the “record” Social Security keeps of your life’s earnings.

For many people, a wedding often means a name change is in order. If you are legally changing your name, you need to apply for a replacement Social Security card reflecting your new name. If you’re working, also tell your employer. That way, Social Security can keep track of your earnings history as you go about living your wonderful new life.

If you have reported income under your former or maiden name, and didn’t inform SSA of a change, they might not have received an accurate W-2 and your earnings may have been recorded incorrectly. This is easier to fix now — when you first change your name — than years from now when you retire, when it may cause delays in receiving your benefits. This is important because they base your future benefits on your earnings record. So, visit their website at, or call them at 1-800-772-1213 (TTY 1-800-325-0778), to find out what specific documents you need to change your name and to apply for a replacement card.

Last year, the Supreme Court issued a decision in Obergefell v. Hodges, holding that same-sex couples have a constitutional right to marry regardless of where they live within the United States. As a result, Social Security recognizes more same-sex couples as married for purposes of determining entitlement to Social Security benefits or eligibility for Supplemental Security Income (SSI) payments. They recently updated instructions for employees to process claims and appeals when a determination of marital status is necessary.

Tuesday, May 31, 2016

Last Day of Disability Insurance Awareness Month

Today is May 31st, the last day of "Disability Insurance Awareness Month"...Let's end the month off with a story about Valerie King and how Disability Insurance Saves a Family—Twice.

When Valerie King transitioned from her medical residency to practicing as an emergency room physician, her group disability plan was going about to terminate so she converted her plan to an individual disability policy. Although Valerie never thought she would need it, a condition called ulcerative colitis made the decision for her. The disease and a series of surgeries made it impossible for her to carry out her duties, and she found herself unable to practice the profession she loved. It was her disability insurance that allowed her to survive financially and care for her three young daughters who she was raising as a single mother.

Life also had a second chapter for Valerie. She met and married Tim, also a divorced parent. They looked forward to raising their blended family together and sought the advice of insurance professional Larry Ricke, CLU, ChFC. In addition to the life insurance he had recommended, Larry made sure Tim understood the importance of disability insurance. Tim didn’t believe he’d ever need it, but with Valerie’s urging he finally agreed to get coverage.

Monday, May 30, 2016

Happy Memorial Day from NFS

It’s not about the sales, the bbqs, or the three-day weekend… but rather the heroes whose lives we sacrificed that we may enjoy our live, our liberty, and the pursuit of our dreams while you spend today with your family who have lost sons, daughters, husbands, wives, mothers, fathers, others while supporting and defending the ideal which have made and kept America the lad of the free for our everyday is memorial day.

Happy Memorial Day from all of us at NFS.

Friday, May 27, 2016

Could You Live on $1125 a Month? If Not, Read This

You’ve just become disabled, but you’re not worried. Why? Because you think Social Security
disability payments will “take care of you.” Really? According to statistics from the Social Security Administration, the average person who has qualified for Social Security benefits receives $1,125.10 a month.

If you’re making $50,000 per year, how long could you (and your family) survive on a disability payment of $1,125.10 per month? That’s only $13,501 per year, or 27% of your income. This assumes you qualify for benefits, and not everybody does. And if you do, it may still be more than two years—yes, years— before you start to receive any payments. What will you do in the meantime?

It’s time for you to protect your paycheck.

What am I talking about? You protect your home by insuring it against loss. You do the same for your car, boat, motorcycle, RV and personal property, but have you insured your paycheck?

Yes, I am talking about disability insurance. You protect your worldly goods with insurance, and you also need to protect your income against loss. If you become ill or injured and are unable to work, disability insurance pays you a percentage of your income until you can return to work.

May is Disability Insurance Awareness Month, the perfect time to talk to us and learn how to protect your paycheck.

-Marvin H. Feldman, CLU, ChFC, RFC, President and CEO of the LIFE Foundation

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Thursday, May 26, 2016

Don’t Let These Myths Stop You From Getting the Proper Coverage

Figuring out if you need disability insurance is pretty easy.  If you have a job, you need it.  Why then do the majority of American workers lack this basic protection?  Common misconceptions are largely to blame.  Here I will debunk four of the big myths surrounding this essential insurance coverage.

1.    Myth:  “I’d rely on my savings until I could get back to work.”

Reality:  Most people overestimate the resources they have to cover their expenses if a disabling illness or injury kept them from earning a paycheck.  According to a LIFE Foundation survey, half of working Americans say they couldn't make it a month before financial difficulties would set in, and more than one in four would have problems immediately.  Keep in mind that disabling illnesses or injuries often last for months or even year.

2.    Myth: “I don’t need it – I don’t work in a dangerous profession.”

Reality:  You actually have a three in 10 chance of suffering a disabling illness or injury during your career that would keep you out of work for three months or more.  While it’s true that people in professions like farming, law enforcement, and construction face greater risks, the odd of suffering a long-term disability are high for all workers because illness – not accidents – account for 90 percent of disabilities that keep people out of work.

3.    Myth:  "The government provides assistance when people get disabled."

Reality:  According to the National Safety Council, 73 percent of long-term disabilities are a result of an injury or illness that is not work-related and therefore wouldn’t qualify for state-based Workers’ Compensation programs.  If you were hoping for Social Security disability benefits, know that about 45 percent of those who apply are initially denied, and those who are approved receive an average monthly benefit of just $1063, which would leave you with an income barely above the poverty online.  Government programs are a good back-up plan, but shouldn't be your main line of defense.

Friday, April 1, 2016

April 15 a Good Reminder to Avoid the Estate Tax Trap

By Robert Deschene, Esq

During tax season, I’m reminded of Ben Franklin’s old saw:  nothing is certain in life but death and taxes.  As we approach the dreaded April 15, many of us are focused on our income tax returns.  Still, many people also wonder or worry about whether, upon their deaths, “estate tax” will be due.

What is the Estate Tax?

When we hear the words “estate tax,” we might think they can’t possibly apply to us, but only to very wealthy people, like Warren Buffett.  Not necessarily.  The government imposes a tax on the transfer of your wealth at death.  Estate tax is the amount that your estate will owe the government, and is calculated by the value of all the property you owned at your death.

Right now, the federal government’s estate tax does not apply unless you own at least 5.45 million at death.   Relatively few of us have to worry about this.

Massachusetts’ Separate Estate Tax

The bad news is that Massachusetts is one of the states which impose its own separate estate tax, which is imposed if you die owning $1 million or more.  The graduated tax rate can run as high as 16%, which can be a significant sum that you will not be leaving to your family.  Massachusetts seniors with taxable estates often migrate to Florida, not only for the warmer weather, but because Florida has no state estate tax.

Who Pays? – Your “Taxable Estate”

Some people ignore the issue of estate tax because they don’t think of themselves as a “millionaire”.  But remember that this tax is imposed on your “taxable estate,” which includes your home and/or vacation home, death benefits payable on any life insurance policies you own (i.e., not the cash surrender value), and any balances paid out of your retirement accounts (e.g., IRAs, 401ks) when you die.   If you total up these assets, or project their future value, you may easily exceed the $1 million threshold for paying estate tax, even though we don’t feel like millionaires.  So do the math.

Ways to Reduce your Taxable Estate

Monday, March 28, 2016

Many Retirees Face April 1st Deadline to Take Required Retirement Plan Distributions

WASHINGTON — The Internal Revenue Service today reminded taxpayers who turned 70½ during 2015 that in most cases they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Friday, April 1, 2016.

The April 1 deadline applies to owners of traditional (including SEP and SIMPLE) IRAs but not Roth IRAs. Normally, it also applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans.

The April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by Dec. 31. So, a taxpayer who turned 70½ in 2015 (born after June 30, 1944 and before July 1, 1945) and receives the first required distribution (for 2015) on April 1, 2016, for example, must still receive the second RMD by Dec. 31, 2016.

Affected taxpayers who turned 70½ during 2015 must figure the RMD for the first year using the life expectancy as of their birthday in 2015 and their account balance on Dec. 31, 2014. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. Worksheets and life expectancy tables for making this computation can be found in the appendices to Publication 590-B.

Most taxpayers use Table III  (Uniform Lifetime) to figure their RMD. For a taxpayer who reached age 70½ in 2015 and turned 71 before the end of the year, for example, the first required distribution would be based on a distribution period of 26.5 years. A separate table, Table II, applies to a taxpayer married to a spouse who is more than 10 years younger and is the taxpayer’s only beneficiary. Both tables can be found in the appendices to Publication 590-B.