Living Well

Future Healthy: Could telehealth slash your health care costs?

In the era of two-hour Amazon Prime and instant movies on Netflix, we've grown to expect a certain level of convenience. These services are affordable and make our lives easier. Is it reasonable to expect the same from our health care? Telehealth says yes. If you aren't reaping the benefits of the latest in health care technology, you probably will be soon.

What is telehealth?

Telehealth — which is also called telemedicine — allows doctors to examine and treat you from afar. Virtual appointments may happen through your computer, tablet or smartphone. Popular services include primary care, dermatology, psychotherapy, and non-life-threatening injuries.

What are the advantages of telehealth?

Telehealth revenue is expected to grow past $7 billion by 2020 and it's easy to see why. But, families living in rural areas may feel the biggest impacts. These communities already have lower rates of health insurance coverage. Local provider shortages and little transportation access make it difficult to get quality care. As technology and access to broadband internet improves, telehealth could make a big difference.


Telehealth can also be convenient for patients with physical disabilities in both urban and rural areas. Even with access to public transportation or a personal vehicle, physical challenges can make it difficult to get around.

Able-bodied patients with demanding schedules may struggle to squeeze in routine health appointments. But logging online for a check-up after work could make things easier. There's no doubt about it — telehealth could offer benefits for all types of patients.

But will your health insurance pay for it?

According to a recent Washington Post report, Medicare, Medicaid, the Department of Veterans Affairs, and all private health plans cover some level of telehealth.

So, is it safe to expect a reimbursement for your latest e-visit for a prescription refill? Well, it depends. Each insurance company offers a different level of coverage. The only way to know for sure is by double-checking directly with your provider.

For example, Cigna's Marketplace plan offers telehealth through their online portal. The service is offered through American Well. According to my plan's telehealth portal, I can connect with a board-certified physician virtually for $49. There is also access to video-based counseling and mental health prescription management.

Can telehealth save you money on health care?

Convenience is a great thing, but for most of us, the price is often a deciding factor. Whether you decide to embrace or skip telehealth services may depend on how much it costs. Generally, virtual appointments are less expensive than in-person visits, but this isn't always the case.

Your telehealth savings — or lack thereof — will depend on your health insurance plan. It may be difficult to see a difference if you have the same copayments for both types of appointment. But it's possible you will see more savings with a high-deductible plan. It's well-worth your time to learn more about your options.

Expect to use telehealth more in the future

As technology improves, and insurance companies embrace telehealth services, our out-of-pocket expenses will only continue to go down. If you are open to trying it, speak with your insurance company to see what they will cover. You may be pleasantly surprised by both the cost and convenience.

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Whether it's for covering medical expenses, or planning bigger investments, our Future Healthy column will help support your path to retirement, no matter where you are on the journey. And for the latest info about your health and financial wellness, be sure to check out our HSA Learning Center, and follow us on Facebook and Twitter.

Accounts

Compound It! HSA information for military veterans

Post-military life is never easy. Your transition will include a lot of big decisions. Your new career, education plans, and where to live may involve some major life changes. Navigating the flood of health care options can be especially challenging.

If you have a high-deductible health plan (HDHP), you may qualify for a health savings account (HSA). This could save your family a lot of money — but there are some special rules you need to be aware of. Here's a few things veterans might want to know.

Should veterans consider HSAs?

There are a lot of reasons you may be hearing more about health savings accounts (HSAs). As health care costs rise, these accounts are one way to make expenses more affordable for families. You actually get three different tax benefits:

  • Tax-deductible contributions
  • Tax-free growth if you choose to invest the money
  • Tax-free withdrawals for qualified medical expenses

The biggest challenges to veterans are the rules, because not all health insurance qualifies. To be eligible, you must have an HDHP and it has to be the right type of plan. If you are shopping on the Marketplace, HSA-eligible plans are actually labeled.

For other health insurance, it's always best to double-check with your plan administrator. (We'll tackle why HSA eligibility is so important — and how it can cost you — later.)

Can I contribute if I receive VA benefits?

It's easy to get confused by HSA contribution guidelines — especially as a veteran. Three years ago, a new law improved eligibility rules. Now, there are looser restrictions if you are getting Veteran Affairs benefits for service-connected disabilities. Both you and your employer can make HSA contributions if you're otherwise eligible, regardless of when you receive treatment.

Before the new law, getting VA benefits — even for service-related disabilities — created a conflict. Whenever you used VA benefits, you had to wait three months before you could make another HSA contribution.

The new law certainly makes things easier, but you still need to be proactive. You need to make sure your HDHP can be used with an HSA. Also, this exception doesn't apply to all types of treatment. It must be a service-connected disability to qualify.

What happens if I'm no longer eligible and still make HSA contributions?

If you have already broken the rules, you may be curious about how strict they really are. It's possible you have even Googled what happens when you break them. If you don't have an eligible plan and contribute anyway, it could raise a red flag.

The IRS has a 12-month testing period. They expect you to stay HSA-eligible for the whole time. As far as exceptions go, they make it clear they will allow disability and death only. If you aren't eligible, your contributions count as taxable income. The IRS also tacks another 10% penalty on top. You can see exactly how much you owe by filling out Part III of Form 8889.

Don't be afraid to ask for help

Every family has a unique set of health care needs. Figuring out what's best for yours may not be easy. If decoding the HSA rules feels too overwhelming, start by speaking with your company's HR department. If there is no one on staff with tax expertise, ask for a local referral. They will be eager to see you are taking full advantage of your employee benefits — and most importantly — staying healthy for many years to come.

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Compound It! is your weekly update of achievable, effective, no-nonsense HSA account, saving and investment advice, delivered by people who make it work in their own lives. For the latest info about your health and financial wellness, be sure to check out the HSA Learning Center, and follow us on Facebook and Twitter.

Qualifications

Compound It! Can you use an HSA for a domestic partner?

Non-traditional family finances aren't easy to navigate and health care is no exception. Let's face it — when health savings accounts (HSAs) launched back in 2004 — inclusivity wasn't top of mind for legislators.

As a result, many families have questions about HSAs and the best ways to use their pre-tax money for medical expenses. To get a better understanding, we took a look at how the IRS interprets the law.

What is a domestic partner?

Domestic partnerships began in the 1980s as the result of activism. LGBTQ groups fought for same-sex rights long before the legalization of gay marriage. Vermont was the first to extend domestic partner benefits statewide.

Today, each state has their own definition of domestic partnerships, and it extends beyond same-sex couples. Most domestic partners live together, combine finances, and some may raise children together too.

Only a handful of states recognize domestic partnerships at the state level. Even if your state doesn't, it's possible some local or locally-based companies do. The best way to learn more is by speaking to your company's human resources department.

How your domestic partner impacts your health savings account

Covering health care for your entire family is expensive. Even routine check-ups, dentist appointments, and the most basic care adds up fast. Health savings accounts (HSAs) are one way to reduce the burden. By putting pre-tax money into your account, you get a discount every time you swipe your HSA card — but only for qualified medical expenses.

Bad news: domestic partners don't qualify

When it comes to stretching your health care dollars, your HSA may appear to be the perfect solution — until you realize who it actually covers. According to the IRS, you can only cover qualified medical expenses for certain people. These folks are limited to:

  • You
  • Your spouse
  • Dependents you claim on your tax return

Same-sex marriage has been legal since 2015 and married couples enjoy the same benefits as spouses of the opposite sex. But unfortunately, the same perks aren't available for domestic partnerships. The same goes for civil unions or other types of non-married relationships.

The one exception for domestic partners

We get it — it's disappointing to learn your domestic partner can't benefit from your HSA. Although it's rare, there's one exception. If you've become your domestic partner's caretaker and they're a dependent on your tax return, you can offset the medical expenses with HSA money.

If you spend health savings account money on your domestic partner

In most cases, spending your HSA money on your domestic partner isn't a mistake you want to make. In the eyes of the IRS, it's a non-qualified distribution. That means your withdrawal may be taxed like normal income. Plus, you could have to pay an extra 20% penalty.

Talk early and often about your finances

Dealing with money in a non-traditional household isn't easy. Even if your state recognizes domestic partnerships, there are many federal benefits you won't qualify for. You can't use your HSA for your domestic partner's health care, but that doesn't mean you can't plan for a healthy financial future.

The key to any couple's long-term financial success is communicating early and often. By working together, you can avoid potential challenges as they arise — which will set you both up for a long, healthy life together.

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Compound It! is your weekly update of achievable, effective, no-nonsense HSA account, saving and investment advice, delivered by people who make it work in their own lives. For the latest info about your health and financial wellness, be sure to check out the HSA Learning Center, and follow us on Facebook and Twitter.

Accounts

Compound It! Finding balance between HSA spending and investing

Over the past few years, I've had some major financial breakthroughs. Reining in my food spending. Comparison shopping for health care expenses. Purchasing a disability insurance policy. Each time, my finances were better for it — all because I learned something and made changes.

Learning about the benefits of health savings accounts (HSAs) was another game-changer. For anyone with a high-deductible health plan (HDHP), the triple tax savings is huge. Another spark happened when I realized I could invest my HSA money. I may be young and healthy now, but what about in 20, 30, or even 40 years?

In an ideal world, I could invest every dollar I put into my HSA over the next few decades. There is no doubt the money will be useful in the future. But in reality, there are health care expenses to pay for now, too.

Of course, we're not financial pros, nor should any of these ideas be used in place of actual financial guidance. You should always speak with a qualified professional before making any financial decisions. That said, here's my own experience creating an HSA cash vs. investments strategy.

Audit your health care expenses every year

Health care isn't cheap with an HDHP. It only took one $400 dermatology bill for me to realize this. It was an expensive lesson — and not one I want to repeat.

I've learned the best way to avoid costly surprises is through an annual health care expense audit. By reviewing each expense, line-by-line, I can predict what I may see for the next year. After seeing last year's expense breakdown, it was easier to estimate how much I may spend in 2019.

These are my baseline annual health care expenses:

  • Dentist - $380 - two cleanings and one x-ray
  • Doctor - $18.75 - annual physical
  • Eye doctor - $205.54 - annual appointment(s)
  • Prescriptions - $362.02 - generic anxiety and acne medications
  • Psychiatrist - $224 - quarterly appointments

That's almost $1,200 in out-of-pocket expenses I can't avoid. I'm left with two choices:

  1. Budget for these expenses monthly, or
  2. Pay for them with HSA funds.

Spending HSA money vs. investing the balance

Investing HSA money has worked out for me. It allows the funds to grow for future medical expenses. The only problem is, if my HSA money is 100% invested now, I can't easily access the funds if needed. I'm expecting at least $1,200 in out-of-pocket health care expenses, so I need a plan to pay for it. Here are some pros and cons to consider.

Option #1 - Budget $100 a month for health care expenses and pay in cash

Adding an extra $100 a month into my budget seems reasonable — especially if I can cut back on other areas. I may not feel the difference. I have to remember that $1,200 is only a baseline number, though. I could easily wind up spending more, which could cut into my savings goals. That's why this option is riskier.

Option #2 - Keep $1,200 of HSA in cash and pay for health expenses over time

The safer option is keeping at least $1,200 of my HSA in cash. By paying for health care expenses with HSA money, I'm less likely to derail my monthly budget.

Staying on track means I'll have a better chance of sticking with my savings and investing goals — including funding my Roth IRA and solo 401(k), which both offer tax benefits, too.

Lastly, it's possible I will be less hesitant to pay for health care if I have already earmarked the money. This could pay off through better health for years to come — something you really can't put a price tag on.

Of course, it's important to stay organized. To avoid IRS scrutiny, it's critical to keep itemized receipts for every single health care expense.

Given all the upsides — which outweigh the cons — spending $1,200 of my $11,000 HSA seems like a prudent choice for 2019.

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Compound It! is your weekly update of achievable, effective, no-nonsense HSA saving and investment advice, delivered by people who make it work in their own lives. For the latest info about your health and financial wellness, be sure to check out the HSA Learning Center, and follow us on Facebook and Twitter.

Taxes

Tax Facts: It's time to get organized with tax forms

Bust out your party hats — it's time to think about taxes. The government shutdown may be over, but that doesn't mean the IRS is ready. Sifting through the tax overhaul is already a major undertaking, and the shutdown has left the agency with limited time to prepare. According to reports, it will take a while for things to get back to normal.

You can't speed up the government's timeline, but you can make an effort to work ahead. Tracking down the right tax forms is the perfect place to start. If you have a health savings account (HSA), there will be a few more to watch for. Here's a list of what you need.

Complete your tax return with these HSA forms

You may not enjoy stalking your mail carrier for tax forms, but you can't file your taxes without them. Luckily, there aren't too many forms to keep track of. These are the ones you need:

  • Form W-2 - If you work for someone else, you receive Form W-2 every year. This form includes a breakdown of your income. If part of your earnings was put into your HSA, you can see that amount here. You should receive Form W-2 by early February. The deadline for your company to send it is January 31, 2019.
  • Form 5498-SA - When you put money into your HSA, the IRS wants to know about it. That is the purpose of Form 5498-SA. You can make HSA contributions until the tax deadline, so this form shows up a lot later — May 31, 2019. A copy goes to both you and the IRS.

These HSA forms are part of your tax return

Because HSAs offer three different tax benefits, the IRS is eager to stay on top of any moves you make. The three forms above track your activity for the year. Once you have them handy, it's easy for you (or your tax software!) to complete these two:

  • Form 5329 - When it comes to HSA contributions, there is a strict annual limit. If you contributed too much, you need to fill out Form 5329. But you should try to avoid doing this because the IRS charges a 6% tax on the extra amount.
  • Form 8889 - Form 8889 is also part of your tax return. It includes the year's contributions and withdrawals. If you spent any HSA money on "non-qualified medical expenses," the IRS treats it like taxable income. They will also add an extra 20% tax on top of it all.

Your state may require a different set of forms

Once you have gathered your federal HSA tax forms, it may be tempting to cross it off your list and move on. But you could be overlooking your state's filing requirements. The best way to know for sure is by speaking with a tax professional in your state.

Taking back control of your taxes

There is nothing you can do to control future shutdowns or sweeping tax law changes. But you may rest a little easier knowing your own taxes are in order. By keeping track of the necessary paperwork, you will be one step closer to filing your taxes on time.

Being punctual is by no means a guarantee you will receive a faster refund — but you won't be adding to the delays.

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Tax Facts is a weekly column offering straight up, no-nonsense HSA tax and finance tips, written in everyday language. Look for it every Tuesday, exclusively on the HSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook and Twitter.

Laws & Legislation

Compound It! Policy changes that could impact tax-free health accounts in 2019

As the cost of healthcare continues to rise, saving Americans money has become a critical bipartisan issue. Last July, Congress passed a few bills to expand and improve tax-free healthcare benefits.

Tip: You can track the progress of these bills — and others — by visiting https://www.congress.gov/. It's easy to see the status by searching by bill name or "health savings accounts." The tracker under each result highlights how far along each bill has come:

  • Introduced
  • Passed the House
  • Passed the Senate
  • To the President
  • Becomes law

These bills are only the tip of the iceberg. Although they haven't cleared the Senate, they're worth keeping an eye on as lawmakers get back to work. Many of these provisions came from letters from employment organizations, so it's possible we'll see them resurface in the future.

Before we get started, please note that FSA Store and HSA Store are not expressing any political views or opinions by covering this information below. This article is simply providing a summary view of the potential changes in store for tax-free healthcare benefits.

That said, here's a closer look at the current version of each one — and how they could impact your family's benefits. Let's start with H.R. 6199 the 'Restoring Access to Medication and Modernizing Health Savings Accounts Act of 2018."

  • Coverage flexibility - According to the IRS, your HSA-qualified high deductible health plan (HDHP) can't offer most benefits before you hit the annual deductible. This provision would allow benefits up to $250 for you or $500 for your family. These changes could make primary care visits or telehealth an easier choice.
  • Employer healthcare services onsite - Currently, if your employer offers free or discounted onsite healthcare services, it could impact your HSA eligibility. This provision loosens these restrictions, as long as you don't receive "significant medical care benefits."
  • Spouse flexible spending accounts (FSAs) - Right now, if your spouse has an FSA, it can impact their ability to contribute to an HSA. This provision allows your spouse to make limited HSA contributions, too.

H.R.6311 is better-known as the "Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act of 2018." And it's directly related to a lot of potential changes for your tax-free healthcare in 2019.

  • Carry forward FSA balances - Although it varies by employer, most FSAs have a "use-it-or-lose-it" policy every year. Some companies give you a limited carryover or grace period, but both are limited to $500. This provision could allow you to carry over up to three times your annual contribution limit.
  • Contribute to your HSA with Medicare Part A - Once you enroll in Medicare, you can no longer make HSA contributions. This provision changes the rule for working seniors. As long as you have an eligible high-deductible health plan, you can still contribute.
  • HSA catch-up contributions for spouses - Currently, if you're 55 or older and want to make catch-up contributions to your HSA, you need separate accounts. This provision could let you both contribute to the same account.
  • Medical expenses before your HSA is open - As it stands, you can't reimburse yourself for medical expenses before your HSA was active. This provision could offer a "reasonable grace period" for these expenses.
  • Bronze and catastrophic plans - As you may have noticed, not all Marketplace plans are HSA-eligible. This provision could expand eligibility to include bronze and catastrophic plans.

Why these bills matter

When it comes to paying for health care, you know every dollar counts. If you are one of the millions enrolled in a high-deductible health plan, an HSA is one way to ease the burden. While HSAs do offer tax savings, rules and restrictions make it difficult to take full advantage.

Even if these two bills don't pass, it's possible you'll see a slew of new HSA bills crop up in 2019. These bills may include some of these provisions or even better improvements — aimed at putting money back into your family's pockets.

Compound It! is your weekly update of achievable, effective, no-nonsense HSA saving and investment advice, delivered by people who make it work in their own lives. For the latest info about your health and financial wellness, be sure to check out the HSA Learning Center, and follow us on Facebook and Twitter.

Living Well

Tax Facts: Still not enrolled in health insurance? Now's the time…

This time of year, you're either scrambling to finish work or scoping out last minute gifts from your desk to look "busy." Either way, your health insurance plan — or lack thereof — may be low on your list of priorities.

The truth is, you may be more concerned by your glut of unused PTO or chipping in for a New Year's Eve blowout. And with the individual mandate going away in January, there is less of a reason to get covered.

Even if you're young and healthy, winging it without a plan is risky. Here's why you can't afford to skip health insurance coverage for 2019.

Many health plans cover preventive care

For many of us, wellness is a lifelong challenge. The stress of work, family, and money is enough to lose sleep over. And when you're tired, ordering pizza and watching Netflix every night is pretty appealing. The problem is, years of stress, little sleep, lack of exercise, and poor diet choices can lead to chronic illness.

The good news is, most health insurance plans cover preventative care. That means annual checkups with your doctor, screenings, and shots won't cost extra. Marketplace plans pay for screenings for depression, diet counseling, lung cancer, obesity, and more. According to the Centers for Disease Control and Prevention, preventive care uncovers illnesses and diseases when they're easiest to treat — and most likely to be successful.

Of course, saving money on healthcare is a good thing, but living a long, healthy life is what's most important. Preventive care is one way to make that happen and it may be more affordable than you expect.

Health insurance prepares you for the worst

Let's pretend you had the chance to join your company's health policy or buy insurance through the Marketplace, but waived both opportunities. It may be fine until your annual toe wrestling tournament (yup, it's really a thing!) goes horribly wrong and you wind up with a broken leg.

Some innocent fun may quickly turn into a nightmare when you realize the injury may set you back up to $7,500. That's no small chunk of change — and it only gets more expensive from there. A three-day hospital stint could rack up $30,000 and treating cancer could mean hundreds of thousands of dollars.

Health insurance won't protect you from out-of-pocket expenses. But it may shield your family from the types of bills that could cause financial catastrophe. Marketplace plans even have a cap on the total amount you will have to pay.

Imperfect health insurance is better than none at all

It's easy to understand why you may choose to opt-out of health insurance. It's expensive, confusing, and — let's face it — it doesn't feel much like coverage when your bills start rolling in. But even a flawed plan is better than going without. Life throws you enough financial curveballs. There is no need to make unexpected high medical bills another one of them.

Tax Facts is a weekly column offering straight up, no-nonsense HSA tax and account tips, written in everyday language. Look for it every Tuesday, exclusively on the HSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook and Twitter.

Living Well

Future Healthy: Burning out before 30 … my HSA story

It's easy to take health for granted in your 20s. Late nights, lack of sleep, and poor diet may seem like they're easy to overcome. But your body can wear down like a neglected machine. I know because this happened to me — before the age of 30.

After years of traveling and working 70-80 hour weeks, fatigue set in. Even the longest nights of sleep weren't enough. My short-term memory lagged and anxiety made basic tasks impossible. Through the flood of confusion, one thing was clear: I was burning out and becoming depressed.

Paying for healthcare myself

When I was ready to face my illness, I uncovered a costly surprise — no mental health coverage. A couple of tearful calls to my health insurance provider confirmed it. If I wanted therapy, I would pay every penny myself. With no emergency fund and little room in my budget, my journey to recovery was over before it began.

I started ruthlessly slashing expenses left and right — shopping, eating out, and partying all had to go. Soon, there was enough to cover a reasonably-priced therapist. A combo of talk therapy and medication improved my symptoms within a few months.

With a clearer mind, I ramped up my savings and finally built a six-month emergency fund — about $20,000. It wasn't a lot of money, but it gave me the confidence to quit my stressful job. I spent a few months resting to repair the damage from burnout.

My first high-deductible health plan (HDHP)

Quitting my job offered many benefits. The time to focus on health was priceless. The only downside was losing my group health insurance. I found an HDHP I could afford through a local broker. The premiums were low, but like many, I worried about the out-of-pocket expenses.

A few months later, I picked up a part-time contract job to ease back into the working lifestyle. The extra cash flow was comforting. As time went on, I realized it wasn't enough, though. The reality of my high-deductible plan was more obvious with each medical expense. A few costly doctor's bills put a major dent in the emergency fund I worked so hard to build.

Adding a health savings account (HSA)

It wasn't long before I started looking for ways to save. A little digging online uncovered the world of health savings accounts (HSAs). As long as I kept my HDHP, I could save on taxes by contributing up to my annual limit.

I could also invest the money and withdraw it tax-free for future medical expenses. Best of all, changing health plans wouldn't stop me from using the money if I needed it.

My health emergency fund

As I started making more money, maxing out my HSA became a priority. Over the past few years, I've resisted the urge to tap the balance. $10,736 isn't a ton of money to some, but it could cover minor health emergencies like a relapse in depression.

In a few years, there may be enough for a bigger expense. And if I stay consistent, I could have almost $300,000* in 30 years for healthcare expenses in retirement. (*Assuming monthly contributions of $291, compounded monthly at 5% for 30 years.)

I've come a long way since I quit my job. I devote a lot more time to physical and mental wellness, and will never take health for granted again. But things change when you least expect it. Because of this, funding my HSA is now an integral part of my monthly budget.

Whether it's for covering medical expenses, or planning bigger investments, our Future Healthy column will help support your path to retirement, no matter where you are on the journey. And for the latest info about your health and financial wellness, be sure to check out our HSA Learning Center, and follow us on Facebook and Twitter.



Retirement

Future Healthy: Avoid these Medicare enrollment deadline mistakes

As your retirement gets closer, it's normal to feel uncertain. The next phase of your life holds a lot of wildcards, and these can be difficult to plan for. Of all the question marks, healthcare is one of the biggest. The average couple spends $280,000 on healthcare in retirement. It's a line item too expensive to ignore.

Medicare is one way to soften the financial blow. It's an opportunity for guaranteed and affordable health insurance. But only if you follow a strict set of rules.

The different parts of Medicare

Medicare is the government's health insurance program. Most people sign up at 65, but if you have certain disabilities, it may be possible to enroll sooner. You may also qualify with end-stage renal disease. Let's look at the different parts of the program.

Part A - This is often called "hospital insurance." Part A covers hospital stays and short-term care in a skilled nursing facility. It also includes some services at home. Learn more about the specifics here.

Part B - This is also called "medical insurance." Part B covers visits with certain doctors, outpatient care, and medical supplies. Preventative services are also included. It's important to know you're responsible for 20% of these expenses. The coverage details are here.

Part D - These are Medicare-approved private plans covering prescription drugs.

Tip: Parts A and B don't cover everything. You'll still have deductibles, coinsurance and copayments, and are still on the hook for:

  • Long-term care
  • Most dental care
  • Eye exams
  • Dentures
  • Cosmetic surgery
  • Acupuncture
  • Hearing aids and exams for fitting them
  • Routine foot care

Mistake #1 - Failing to sign up when you're first eligible

If you haven't reached your full retirement age yet, enrolling in Medicare may not be top of mind. The problem is, it's easy to miss a key deadline. You have a seven-month window to sign up for Part A and Part B. This includes:

  • Three months before you turn 65
  • The month you turn 65
  • Three months after you turn 65

If you don't enroll in Medicare Part B when you're first eligible, you may face a late enrollment penalty. It could be 10% more monthly premiums for each 12-month you were eligible but didn't sign up. This penalty stays with you for as long as you're using Medicare Part B.

It's possible you'll also have to wait until January 1 - March 31 to sign up. This means your coverage wouldn't start until the following July.

If you didn't sign up because you can't afford it, your state may offer resources to help cover deductibles, coinsurance, and copayments. You can learn more about the four types of Medicare Savings Programs here.

Mistake #2 - Missing the Medigap enrollment window

If you're healthy now, it may be hard to imagine a different scenario. But the truth is, no one has a crystal ball. Things may change faster than you expect. In an ideal world, Medicare would cover all your healthcare expenses. Unfortunately, the realities of coverage look a lot different.

Medigap is a private insurance policy to cover copayments, coinsurance, or deductibles. For example, Medigap may cover the 20% Part B deductible you'd normally have to pay. Like other types of insurance, you'll qualify for the best plan when you're younger and healthier.

Tip: There's a six-month Medigap enrollment window. The clock starts ticking once you've enrolled in Medicare Part B. After that, it's possible you won't qualify for a plan. Even if you do, it may be more expensive.

Mark your calendar for these critical deadlines

Missing the deadline to sign up for Medicare Part A, Part B, or Medigap is more than a simple mistake. It will cost you a lot more money for years to come. Do yourself a favor by setting more than one reminder. You'll sleep better knowing you'll be ready when the time comes.

Whether it's for covering medical expenses, or planning bigger investments, our Future Healthy column will help support your path to retirement, no matter where you are on the journey. And for the latest info about your health and financial wellness, be sure to check out our HSA Learning Center, and follow us on Facebook and Twitter.

Accounts

Compound It! The truth about short-term health plans

In August, the Trump administration made headlines by approving a slew of new short-term health insurance plans. These plans don't follow the Affordable Care Act's rules. Many don't offer coverage for prescription drugs, prenatal and maternity care, mental health, or preexisting conditions.

Before, short-term health plans were only allowed for three months. But the new rule allows the plan to last up to 364 days, with extensions up to 36 months. Before you're sold on the lower monthly premiums, you need to understand what you're signing up for. The stripped down coverage may not be the bargain you expect.

What are short-term health plans?

Short-term, limited duration health plans were originally created for temporary gaps in coverage. These policies usually last less than a year and often put a cap on how much you can spend.

One distinct feature of short-term health plans is they aren't renewable. This means your coverage ends once the term is over, and you'll have to apply again to continue. If your health situation changes, it's possible you won't qualify. That's one of the biggest downsides of short-term health plans -- they don't have to cover pre-existing conditions.

Short-term health plans have a lot of limitations:

  • Plans require medical underwriting. You can be denied or charged more for any reason.
  • Pre-existing conditions won't be covered. If you get sick, your plan could look for reasons to label your illness as pre-existing and deny coverage.
  • You won't have the same protections as plans from the exchange. Plans on the exchange must pay out at least 80% of premiums in benefits. For short-term health plans, the average is 50%.

Because short-term health plans don't follow the Affordable Care Act, enrolling this fall could cost you. Congress nixed the individual mandate, but the rule won't apply until 2019.

What's covered by short-term health plans?

You may notice short-term health plans priced at 20% or less than regular plans. But like so many things — you get what you pay for. Short-term health plans are a fraction of the cost because they offer a fraction of the coverage.

If you rely on health insurance for prescriptions, mental health, or substance abuse treatment, expect to pay for these out-of-pocket. The same goes for prenatal and maternity care. A recent Kaiser Family Foundation survey revealed most plans won't cover you. Those that do have exclusions and limitations to wrestle with. They found six of the seven plans cap prescription drug coverage to $3,000 per year.

With gaps like these, it's easy to see why states like Massachusetts and New Jersey have banned the sale of short-term health plans entirely.

When do they make sense?

There are times when a lapse in health insurance is unavoidable. If you leave your job or family loses coverage, a short-term health plan could fill the gaps. It could be a temporary solution, as long as you understand the risks. If you enrolled in a short-term health plan this year, you can estimate how much you'll owe for the individual mandate penalty here.

A few final words...

President Trump plugged short-term health plans as "much less expensive healthcare at a much lower price." And for the right candidates, they might be. But enrolling can be a risky move. The coverage gaps and limits could mean paying a lot of money on basic healthcare. Picking an HDHP from the exchange may actually save you more — with better benefits.

Compound It! is your weekly update of achievable, effective, no-nonsense HSA saving and investment advice, delivered by people who make it work in their own lives. For the latest info about your health and financial wellness, be sure to check out the HSA Learning Center, and follow us on Facebook and Twitter.