Category Archives: Individual and Medicare

Check your drugs – the $3000 mistake!

“I like my prescription plan – I don’t have to pay a deductible with it!” said my client on the phone.  She was about to make a $3000 mistake…

If you are a senior with Part D Prescription coverage, you are aware that every year, the companies move the medications around on the tiers, drop medications, and make other changes.  These changes mean one thing – you have to check your drug costs every year!

Part D Plans are usually sold based on lowest premiums – and for seniors on a fixed income this is no surprise.  However, the premium is a small part of the expense.  In looking at one plan yesterday, the plan with the $23 a month premium, looked real good, compared to the plan with the $101 a month premium – except that the “expensive plan” actually saved my client $1700 in drug costs over the year.  In the case of the caller above, that number was north of $3000.

If you don’t have any medications, then take the cheapest plan – but the more medications you take, the more likely you are to make an irreversible $3000 mistake – and preventing it takes 10 minutes. Just give me a call.

Changes to Medicare Plans in 2014

Medicare HMO/PPO plans are getting a little harder to find, and payment reductions under Health Care Reform are being blamed.  While it isn’t a big drop (5.3% fewer plans), the trend is concerning.  Most of the dropped plans are in the South, Midwest and Northeast.

More concerning to me is the 13% drop in Special Needs plans.  These programs – typically specially designed to assist COPD, CHF, Nursing Home and Diabetic patients – are an important part of the landscape.  I had several special needs clients who lost care under the Care improvement Plus plans this year, as they closed down one of their plans.  United Health, nationwide, dropped 65 special needs plans.

Prescription plans are also seeing increases in Part D premiums and Copays, on average a 5.1% premium increase.


Why are they made again and again?

Much has been written about the classic financial mistakes that plague start-ups, family businesses, corporations and charities. Aside from these blunders, there are also some classic financial missteps that plague retirees.

Calling them “mistakes” may be a bit harsh, as not all of them represent errors in judgment. Yet whether they result from ignorance or fate, we need to be aware of them as we plan for and enter retirement.

Leaving work too early. The full retirement age for many baby boomers is 66. As Social Security benefits rise about 8% for every year you delay receiving them, waiting a few years to apply for benefits can position you for greater retirement income.1

Some of us are forced to make this “mistake”. Roughly 40% of us retire earlier than we want to; about half of us apply for Social Security before full retirement age. Still, any way that you can postpone applying for benefits will leave you with more SSI.1

Underestimating medical expenses. Fidelity Investments says that the typical couple retiring at 65 today will need $240,000 to pay for their future health care costs (assuming one spouse lives to 82 and the other to 85). The Employee Benefit Research Institute says $231,000 might suffice for 75% of retirements, $287,000 for 90% of retirements. Prudent retirees explore ways to cover these costs – they do exist.2

Taking the potential for longevity too lightly. Are you 65? If you are a man, you have a 40% chance of living to age 85; if you are a woman, a 53% chance. Those numbers are from the Social Security Administration. Planning for a 20- or 30-year retirement isn’t absurd; it may be wise. The Society of Actuaries recently published a report in which about half of the 1,600 respondents (aged 45-60) underestimated their projected life expectancy. We still have a lingering cultural assumption that our retirements might duplicate the relatively brief ones of our parents.3

Withdrawing too much each year. You may have heard of the “4% rule”, a popular guideline stating that you should withdraw only about 4% of your retirement savings annually. The “4% rule” isn’t a rule, but many cautious retirees do try to abide by it.

So why do some retirees withdraw 7% or 8% a year? In the first phase of retirement, people tend to live it up; more free time naturally promotes new ventures and adventures, and an inclination to live a bit more lavishly.

Ignoring tax efficiency & fees. It can be a good idea to have both taxable and tax-advantaged accounts in retirement. Assuming that your retirement will be long, you may want to assign that or that investment to it “preferred domain” – that is, the taxable or tax-advantaged account that may be most appropriate for that investment in pursuit of the entire portfolio’s optimal after-tax return.

Many younger investors chase the return. Some retirees, however, find a shortfall when they try to live on portfolio income. In response, they move money into stocks offering significant dividends or high-yield bonds – which may be bad moves in the long run. Taking retirement income off both the principal and interest of a portfolio may give you a way to reduce ordinary income and income taxes.

Account fees must also be watched. The Department of Labor notes that a 401(k) plan with a 1.5% annual account fee would leave a plan participant with 28% less money than a 401(k) with a 0.5% annual fee.4

Avoiding market risk. The return on many fixed-rate investments might seem pitiful in comparison to other options these days. Equity investment does invite risk, but the reward may be worth it.

Retiring with big debts. It is pretty hard to preserve (or accumulate) wealth when you are handing chunks of it to assorted creditors.

Putting college costs before retirement costs. There is no “financial aid” program for retirement. There are no “retirement loans”. Your children have their whole financial lives ahead of them. Try to refrain from touching your home equity or your IRA to pay for their education expenses.

Retiring with no plan or investment strategy. Many people do this – too many. An unplanned retirement may bring terrible financial surprises; retiring without an investment strategy leaves some people prone to market timing and day trading.4

These are some of the classic retirement planning mistakes. Why not plan to avoid them? Take a little time to review and refine your retirement strategy in the company of the financial professional you know and trust.


Reeve Conover can be reached at 877-423-9990 or


This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.



1 – [4/17/12]

2 – [5/10/12]

3 – [8/10/12]

4 – [5/13/12]



Whats really happening – how ACA is affecting my clients.

I have had enough information to do quotes, and make final decisions with clients for about 14 days.  While I have not gotten to everyone yet, I have gotten through about 100 individuals and 40 group clients.

I listen to, and read, the same media you do, and I hear all the positioning, spinning and attacking you do.  But whats happening in the trenches?  So far its a mixed bag.  Here is what you need to know:


1.  (Almost) everything has changed

2.  You cannot keep what you have, at least not for long. I don’t care what anyone says, the facts are that all the benefits have changed (rarely for the good).   Some carriers are allowing their clients (Blue Cross, Blue Choice) to keep contracts until next September, but they will have to change to the new plans at that time.  Alot of Carriers have simply left the market and left their clients high and dry (Carolina Care, Emblem) requiring clients to change on 12/1 or 1/1.

3.  Either your rates are going to go up (most states) or your benefits are going to be reduced (several states like NY)

4.  It may be in the best interests of your employees to drop coverage. Some of my clients are going this way.  If your employees cannot afford the coverage, you cannot pay any more, and they qualify for a subsidy – drop coverage.  Its the only way for them to get the subsidy – you reduce your expenses and overhead, and they get much lower priced benefits.

5.  The only reason to go on the exchanges is to (a) get a subsidy if you are an individual, or (b) get the tax credit if your small business qualifies.  Otherwise, steer clear.  The data security on the exchange is very questionable, they are a mess, and you have more options “off the exchange.”

Items 1,2,3 and 4 are not going to change.  Item 5 may, if they can get their act together.  That remains to be seen.  IF you need to go on the exchange, I will assist you – but we may do it by paper.  It may take longer, but be a lot less risky.  And if you are going to go on the exchange anyway, call me about one of the identity theft programs.

No more “use it or lose it” on FSA

Employees with a health care flexible spending account may carry over up to $500 into the next plan year under a new Internal Revenue Service rule, effective immediately, but employers are not required to adopt the new rule. The rule change might encourage more people to open FSAs, which are tax-deductible and can be used for medical expenses including cost sharing and over-the-counter drugs.

However- Employers have to choose – between the 2 1/2 month grace carryover period, or allowing the $500 rollover.

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA. - SIPC - Brokercheck