Personal Finance

What to know about selecting health plans

Published

2 months ago

February 24, 2025

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Although a broader window for Medicare enrollment has closed, some retirees have another opportunity to make changes to their coverage.

Medicare Advantage open enrollment is available from Jan. 1 through March 31.

Medicare Advantage plans are offered by private insurers as an alternative to original Medicare. Generally, Medicare Advantage may cover Medicare Parts A and B, as well as Medicare Part D prescription drug coverage and other potential extra benefits.

During this open enrollment period, individuals who are already enrolled in a Medicare Advantage plan may switch to another Medicare Advantage plan. Alternatively, they may drop their current Medicare Advantage plan and opt for Medicare original coverage.

To be sure, there will be more options later in the year during a broader open enrollment period that lasts from October to December, when Medicare original enrollees may also opt to change plans.

For beneficiaries who are eligible to make changes during this time, it’s important not to ignore this window, according to Juliette Cubanski, deputy director of the program on Medicare policy at KFF, a provider of health policy research.

“Plans can change considerably from one year to the next,” Cubanski said. “If people don’t compare their coverage to other options, they may not know that they’re going to be faced with higher costs.”

Check for significant changes

In order to be confident that you’re getting the best deal, it helps to evaluate how your current Advantage plan may have changed since last year.

You may be faced with higher costs if your personal prescriptions have gone up, for example, or your preferred medical provider is no longer in network.

Digging into those plan changes now can help avoid “bad surprises” later, according to Cubanski.

“Make sure the coverage that you have is going to continue to be the coverage that works best for you,” Cubanski said.

Planning for long-term care: Here's what you need to know

Consider extra benefits

To be sure, Medicare Advantage plans have received negative attention because in some cases coverage was denied for necessary care.

Medicare Advantage plans are more likely than traditional Medicare to use prior authorization, approval needed before a patient can receive certain services or medications. However, because prior authorizations that have been denied are frequently overturned when they are appealed, that has prompted questions as to whether the plans are avoiding coverage obligations.

Medicare Advantage plans are more likely than original Medicare to offer extra benefits — such as dental, vision and hearing — that elderly beneficiaries need.

Most Medicare beneficiaries — 83% — consider supplemental benefits to be important to their coverage, according to a recent survey from The Commonwealth Fund, a provider of independent research on health care issues.

Notably, a larger share of Medicare Advantage enrollees — 89% — said supplemental benefits are important to them, versus 74% of traditional Medicare enrollees, The Commonwealth Fund found.

“People on Medicare, both older adults and those with disabilities, generally really need dental, hearing and vision services, as well as other benefits that are typically offered by Medicare Advantage plans,” said Gretchen Jacobson, vice president of Medicare at The Commonwealth Fund.

Beneficiaries who are in traditional Medicare may not have coverage for those same services unless they are able to purchase a supplemental plan or they qualify for Medicaid, Jacobson said.

Seek outside help

When it comes to comparing Advantage plans, beneficiaries do not have to go it alone, Cubanski noted.

State-based organizations — the State Health Insurance Program, or SHIP — provide assistance to Medicare beneficiaries to help sort through their plan options.

Unlike insurance brokers or other professionals, these organizations do not have a financial interest to sign people up for certain plans, Cubanski said.

Personal Finance

How students choose a college

Published

2 days ago

May 3, 2025

Business Finance News

Is it best to go to college or dive straight into the working world?

Ethan Bianco, 17, waited right up until the May 1 deadline before deciding which college he would attend in the fall.

The senior at Kinder High School for the Performing and Visual Arts in Houston was accepted to several schools, and had whittled down his choices to Vanderbilt University and University of Texas at Austin. Ultimately, the cost was a significant factor in his final decision.

“UT is a much better award package,” he said. In-state tuition for the current academic year is $10,858 to $13,576 a year, which would be largely covered by Bianco’s financial aid offer.

Vanderbilt, on the other hand, consistently ranks among the best private colleges for financial aid and promises to meet 100% of a family’s demonstrated need.

The school initially offered Bianco $35,000 in aid, he said. With that package, “it would be about $40,000 more for my family to attend Vanderbilt per year.”

However, he successfully appealed his award package and leveraged private scholarships to bring the price down further — and committed to Vanderbilt on National College Decision Day.

How cost plays into college choices

For most graduating high school seniors, the math works out differently. The rising cost of college has resulted in a higher percentage of students enrolling in public schools over private ones, according to Robert Franek, editor-in-chief of The Princeton Review.

“Currently, it is about 73% of the undergraduate population — but this year, with increasing uncertainties about financial aid and changing policies about student loans, it is very likely that number will go up,” Franek said.

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Soaring college costs and looming student debt balances have pushed this trend, and this year, there are added concerns about the economy and dwindling federal loan forgiveness options. As a result, this year’s crop of high school seniors is more likely to choose local and less-expensive public schools rather than private universities far from home, Franek said.

Price is now a bigger consideration among students and parents when choosing a college, other reports also show. Financial concerns govern decision-making for 8 in 10 families, according to one report by education lender Sallie Mae, outweighing even academics when choosing a school

“Choosing a school is a personal and individual decision,” said Chris Ebeling, head of student lending at Citizens Financial Group. Along with academics and extracurriculars, “equally important is the cost,” he said. “That needs to be weighed and considered carefully.”

Carlos Marin, 17, on National College Decision Day.

Courtesy of AT&T

On National College Decision Day, Carlos Marin, a senior at Milby High School, also in Houston, enrolled at the University of Houston-Downtown. Marin, 17, who could be the first person in his family to graduate from college, said he plans to live at home and commute to classes.

“The other schools I got into were farther away but the cost of room and board was really expensive,” Marin said.

College costs keep rising

College costs have risen significantly in recent decades, with tuition increasing 5.6% a year, on average, since 1983 — outpacing inflation and other household expenses, according to a recent report by J.P. Morgan Asset Management.

Deep cuts in state funding for higher education have also contributed to the soaring price tag and pushed more of the costs onto students. Families now shoulder 48% of college expenses, up from 38% a decade ago, J.P. Morgan Asset Management found, with scholarships, grants and loans helping to bridge the gap.

Nearly every year, students and their families have been borrowing more, which boosted total outstanding student debt to where it stands today, at more than $1.6 trillion.

A separate survey by The Princeton Review found that taking on too much debt is the No. 1 worry among all college-bound students.

Incoming Vanderbilt freshman Bianco qualified for a number of additional private scholarships and even received a free laptop from AT&T so that he could submit the Free Application for Federal Student Aid and fill out college applications. He said he is wary of taking out loans to make up for the difference.

“I believe that student loans can be beneficial but there’s also the assumption that you’ll be in debt for a very long time,” Bianco said. “It almost becomes a burden that is too much to bear.”

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Personal Finance

Here are the HSA contribution limits for 2026

Published

2 days ago

May 2, 2025

Business Finance News

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The IRS on Thursday unveiled 2026 contribution limits for health savings accounts, or HSAs, which offer triple-tax benefits for medical expenses.

Starting in 2026, the new HSA contribution limit will be $4,400 for self-only health coverage, the IRS announced Thursday. That’s up from $4,300 in 2025, based on inflation adjustments.

Meanwhile, the new limit for savers with family coverage will jump to $8,750, up from $8,550 in 2025, according to the update.

To make HSA contributions in 2026, you must have an eligible high-deductible health insurance plan.

For 2026, the IRS defines a high deductible as at least $1,700 for self-only coverage or $3,400 for family plans. Plus, the plan’s cap on yearly out-of-pocket expenses — deductibles, co-payments and other amounts — can’t exceed $8,500 for individual plans or $17,000 for family coverage.

Investors have until the tax deadline to make HSA contributions for the previous year. That means the last chance for 2026 deposits is April 2027.

HSAs have triple-tax benefits

If you’re eligible to make HSA contributions, financial advisors recommend investing the balance for the long-term rather than spending the funds on current-year medical expenses, cash flow permitting.

The reason: “Your health savings account has three tax benefits,” said certified financial planner Dan Galli, owner of Daniel J. Galli & Associates in Norwell, Massachusetts.

There’s typically an upfront deduction for contributions, your balance grows tax-free and you can withdraw the money any time tax-free for qualified medical expenses.

Unlike flexible spending accounts, or FSAs, investors can roll HSA balances over from year to year. The account is also portable between jobs, meaning you can keep the money when leaving an employer.

That makes your HSA “very powerful” for future retirement savings, Galli said.

Healthcare expenses in retirement can be significant. A single 65-year-old retiring in 2024 could expect to spend an average of $165,000 on medical expenses through their golden years, according to Fidelity data. This doesn’t include the cost of long-term care.

Most HSAs used for current expenses

In 2024, two-thirds of companies offered investment options for HSA contributions, according to a survey released in November by the Plan Sponsor Council of America, which polled more than 500 employers in the summer of 2024.

But only 18% of participants were investing their HSA balance, down slightly from the previous year, the survey found.

“Ultimately, most participants still are using that HSA for current health-care expenses,” Hattie Greenan, director of research and communications for the Plan Sponsor Council of America, previously told CNBC.

Build emergency and retirement savings at the same time

Personal Finance

There’s a higher 401(k) catch-up contribution for some in 2025

Published

3 days ago

May 2, 2025

Business Finance News

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If you’re an older investor and eager to save more for retirement, there’s a big 401(k) change for 2025 that could help boost your portfolio, experts say.

Americans expect they will need $1.26 million to retire comfortably, and more than half expect to outlive their savings, according to a Northwestern Mutual survey, which polled more than 4,600 adults in January.

But starting this year, some older workers can leverage a 401(k) “super funding” opportunity to help them catch up, Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida, previously told CNBC.

More from FA Playbook:

Here’s a look at other stories impacting the financial advisor business.

Here’s what investors need to know about this new 401(k) feature for 2025.

Higher ‘catch-up contributions’

For 2025, you can defer up to $23,500 into your 401(k), plus an extra $7,500 if you’re age 50 and older, known as “catch-up contributions.”

Thanks to Secure 2.0, the 401(k) catch-up limit has jumped to $11,250 for workers age 60 to 63 in 2025. That brings the max deferral limit to $34,750 for these investors.

Here’s the 2025 catch-up limit by age:

50-59: $7,500
60-63: $11,250
64-plus: $7,500

However, 3% of retirement plans haven’t added the feature for 2025, according to Fidelity data. For those plans, catch-up contributions will automatically stop once deferrals reach $7,500, the company told CNBC.

Of course, many workers can’t afford to max out 401(k) employee deferrals or make catch-up contributions, experts say.

For plans offering catch-up contributions, only 15% of employees participated in 2023, according to the latest data from Vanguard’s How America Saves report.

‘A great tool in the toolbox’

The higher 401(k) catch-up is “a great tool in the toolbox,” especially for higher earners looking for a tax deduction, said Dan Galli, a CFP and owner of Daniel J. Galli & Associates in Norwell, Massachusetts.

While pretax 401(k) contributions offer an up-front tax break, you’ll owe regular income taxes on withdrawals, depending on your future tax bracket.

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However, your eligibility for higher 401(k) catch-up contributions hinges what age you’ll be on Dec. 31, Galli explained.

For example, if you’re age 59 early in 2025 and turn 60 in December, you can make the catch-up, he said. Conversely, you can’t make the contribution if you’re 63 now and will be 64 by year-end.

On top of 401(k) catch-up contributions, big savers could also consider after-tax deferrals, which is another lesser-known feature. But only 22% of employer plans offered the feature in 2023, according to the Vanguard report.