Category: Uncategorized

Bill Hoff

Author

FEGLI is a life insurance program available to federal employees and their dependents. It is administered by the Office of Federal Employees’ Group Life Insurance (OFEGLI) and offers various types of coverage, such as Basic, Standard, Additional, and Optional. Federal employees can select the coverage that suits their needs and those of their eligible family members, and premiums are deducted from their paychecks.

Before deciding to cancel your FEGLI coverage, it is vital to carefully consider your financial situation and the potential consequences of losing this coverage. Here are a few things to consider:

Future Earnings Potential

If you are relatively young and have a long career ahead of you, it may be worth keeping your FEGLI coverage in place, even if it is costly. If you unexpectedly pass away, your coverage could provide financial security for your family and help them maintain their current lifestyle.

Coverage Needs

Before canceling your FEGLI coverage, assessing your coverage needs is a good idea. For example, do you have other sources of life insurance, such as a private policy or coverage through your employer? If not, it may be worth keeping your FEGLI coverage in place.

Health Status

Obtaining a private life insurance policy may be more difficult or costly if you have any pre-existing health conditions. In this case, it may be worth keeping your FEGLI coverage, even if it is more expensive.  

While FEGLI can be a valuable benefit for federal employees, there may come a time when maintaining coverage is no longer necessary or cost-effective. Here are some situations in which you may want to consider canceling your FEGLI coverage:

Retirement or Leaving Federal Service

If you are planning to retire or leave federal service, you may no longer need the life insurance coverage provided by FEGLI. Therefore, it may be more financially advantageous to cancel your FEGLI coverage and obtain a private life insurance policy that meets your specific needs.

Cost

FEGLI premiums are based on your age, salary, and the amount of coverage you have. As you get older, your premiums may increase significantly, making the cost of maintaining coverage less affordable. If your FEGLI premiums become too high, it may be worth considering canceling your coverage and looking for a more cost-effective alternative.

Change in Family Situation

If your family situation has changed, you may need to adjust your life insurance coverage accordingly. For example, if you have become a single parent with young children, you may want to increase your coverage to protect your family in the event of your unexpected death. On the other hand, if your children have grown up and are financially independent, you may not need as much coverage. In these cases, it may be worth considering canceling your FEGLI coverage and obtaining a private life insurance policy that better meets your needs.

Other Coverage

Suppose you already have a significant amount of life insurance coverage through other sources, such as a private life insurance policy or a policy through your employer. In that case, you may not need the additional coverage provided by FEGLI. In these cases, it may be more cost-effective to cancel your FEGLI coverage and rely on your other policies for protection.

Bottom Line

While FEGLI can be a valuable benefit for federal employees, there may come a time when it is no longer necessary or cost-effective to maintain coverage. For example, suppose you are planning to retire or leave federal service. If the cost of your premiums becomes too high, your family situation has changed, or you already have sufficient coverage through other sources, it may be worth considering canceling your FEGLI coverage. However, it is essential to carefully consider your financial situation and the potential consequences of losing this coverage before deciding.

Contact Information:
Email: [email protected]
Phone: 2178542386

Bio:
Bill and his associates of Faith Financial Advisors have over 30 years’ experience in the financial services industry.
He has been a Federal Employee (FERS) independent advocate and an affiliate of PSRE, Public Sector Retirement Educators, a Federal Contractor and Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants.
Bill will help you understand the FERS Benefits and TSP withdrawal options in detail while also helping to guide you in your Social Security choices.
Our primary goal is to guide you into your ment with no regrets; safe, predictable, stable and for life using forward thinking ideas and concepts.

Bullet points:
> Financial Services consultant since 1984
> FERS independent advocate and an affiliate of Public Sector Retirement Educators (PSRE), a Federal Contractor and Registered Vendors to the
Federal Government
> Affiliate of TSP Withdrawal Consultants
> His goal is to guide individuals into retirement with safe, and predictable choices for stability using forward thinking ideas and concepts.

The FEHBP, the biggest employer health insurance plan in the US, is supposed to cover 8.5 million individuals, including retirees, government workers, and their families. The primary benefit of the program was that it gives federal employees and retirees the peace of mind that they are shielded from expensive out-of-pocket medical expenses. 

But we are witnessing some changes in practices in the FEHB program. The employees or FEHB enrollees pay out-of-pocket costs for their health care regardless of their FEHB health insurance. According to an Employee Benefit Research Institute report, the recent trend in health insurance that has been a sore point for FEHB enrollees is rising out-of-pocket expenditures for healthcare services. Let me decipher more about the findings of Employee Benefits Research on Federal Employee and Retiree health benefits plans.

Increase in Insurance Premium Paid By FEHB Enrollees

The health plan of federal employees includes a health premium which is, on average, increasing rapidly. The average rise in health insurance costs for federal employees and retirees in 2022 will be 3.8 percent, less than the previous year. However, due to increased inflation rates, it still significantly decreases the remaining pay for federal workers nationwide. Between 2002 and 2020, the average deductible for individuals with employee-only coverage grew from $650 to $1,945, and for those with family coverage, it climbed from $1,395 to $3,722.

According to the EBRI report, rising out-of-pocket expenses have been a general trend in the healthcare industry. People with health coverage via their workplace frequently pay more out of cash for healthcare services than they did previously. In certain situations, they have claimed that the OPM artificially cut premiums—which receive the greatest attention—by permitting plans to transfer costs to out-of-pocket expenses.

Increase in Copayments and Coinsurance Rates

Besides, copayments have also been rising. The average office visit copayment has risen from $22.30 in 2002 to $26.90 in 2020. Coinsurance rates for office visits rose relatively slowly. Still, because coinsurance requires plan members to pay a portion of the fee, out-of-pocket coinsurance payments rise in tandem with office visit expenses.

According to the research, despite this growth, the proportion of individuals with past-due medical expenses has remained relatively consistent since 2015. But inflation hikes will, in all circumstances, eventually lead health care expenses to grow as well. It is only a matter of time until the percentage of previous-due medical bills rises.

In a Nutshell

Federal employees and retirees are getting health care benefits through health insurance from the government. Still, they are being looted in the form of extra out-of-pocket costs for their health care services. The overall health insurance premium is also increasing, decreasing their remaining salary. During this rising inflation trend, it is difficult for them to cover the cost of their bread and butter.

Contact Information:
Email: [email protected]
Phone: 2178542386

Bio:
Bill and his associates of Faith Financial Advisors have over 30 years’ experience in the financial services industry.
He has been a Federal Employee (FERS) independent advocate and an affiliate of PSRE, Public Sector Retirement Educators, a Federal Contractor and Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants.
Bill will help you understand the FERS Benefits and TSP withdrawal options in detail while also helping to guide you in your Social Security choices.
Our primary goal is to guide you into your ment with no regrets; safe, predictable, stable and for life using forward thinking ideas and concepts.

Bullet points:
> Financial Services consultant since 1984
> FERS independent advocate and an affiliate of Public Sector Retirement Educators (PSRE), a Federal Contractor and Registered Vendors to the
Federal Government
> Affiliate of TSP Withdrawal Consultants
> His goal is to guide individuals into retirement with safe, and predictable choices for stability using forward thinking ideas and concepts.

Bill Hoff

Author

It’s important to know that the rules for health savings accounts have changed for those who are getting older and about to retire. Although health savings accounts (HSAs) are similar to flexible spending accounts (FSAs), both allow you to set aside pretax money for healthcare expenses. HSAs have rules that can be confusing but are especially relevant for retirees or those nearing retirement age in the US.

For taking full advantage of the tax benefits, it’s helpful to know the high-deductible health plan that qualifies for an HSA is to be defined differently for individuals than for families. It is recommended that a deductible of at least $1,500 and an out-of-pocket maximum of $7,500 be included in a plan designed for a single person. The deductible for a family plan must be at least $3,000, with a cap of $15,000.

Keys About Health Savings Accounts (HSAs) as you near Retirement

In 2022, the maximum HSA contribution was $3,650; in 2023, it will be $3,850 for self-only coverage and $7,750 for family coverage. 

In other words, how much money do you need to retire early? When it comes to HSAs, there are a few things you should keep in mind as retirement approaches.

1. Catchup With Contribution At 55 Years

Once you hit 55 years of age, you’ll be eligible to contribute an additional $1,000 to your HSA. The Internal Revenue Service states that if you and your spouse have your own HSAs but are subject to family coverage contribution limits, you may be entitled to make that additional catchup payment of $1,000 after you reach the appropriate age.

To contribute the additional $1,000 catchup sum, “as long as they’re both covered, they may each have their own HSA,” Durso explained.

You have until the following year’s tax filing deadline to make any HSA contributions, including the standard and catchup varieties. Therefore, April 18, 2023, would serve as the cutoff for the tax year of 2022.

2. Medicare and Health Savings Accounts do not Go Together.

When you turn 65, you automatically qualify for Medicare. When a person is still actively employed, they often use both Medicare Part A (hospital coverage) and Part B (medical insurance), depending on the specifics of their situation (outpatient care).

Even if you continue to use your employer-based high-deductible plan after enrolling in Medicare, Part A, or otherwise, you will no longer be eligible to make HSA contributions. Medicare recipients can utilize their HSA money for healthcare costs but cannot open a new HSA or contribute to an existing HSA.

There are also potential snags with HSAs if you are still making contributions and you put off enrolling in Medicare (after age 65) and Social Security (beyond your full retirement age, as defined by the government).

After enrolling in Medicare, “the basic line is that you are ineligible to contribute to an HSA,” as Durso said. “Many senior citizens are blind to this fact.”

3. There is no Longer a Tax Penalty for Nondeductible Expenses.

At age 65, the withdrawal rules will change. If you withdraw before that time and put the money toward medical bills, you won’t have to pay taxes or a penalty. In any other case, the funds will be treated as ordinary income and subject to a 20% additional tax.

However, after you reach that age, you will no longer be penalized for using your HSA funds for non-medical purposes.

Therefore, you will have to pay taxes on medical costs that are not tax deductible. Basically, “you can use it at any expense in the world,” as put forth by Durso. No tax is due if the money is used on medically necessary care. You’d only have to pay tax if you used it to watch something on a giant screen TV.

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Contact Information:
Email: [email protected]
Phone: 2178542386

Bio:
Bill and his associates of Faith Financial Advisors have over 30 years’ experience in the financial services industry.
He has been a Federal Employee (FERS) independent advocate and an affiliate of PSRE, Public Sector Retirement Educators, a Federal Contractor and Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants.
Bill will help you understand the FERS Benefits and TSP withdrawal options in detail while also helping to guide you in your Social Security choices.
Our primary goal is to guide you into your ment with no regrets; safe, predictable, stable and for life using forward thinking ideas and concepts.

Bullet points:
> Financial Services consultant since 1984
> FERS independent advocate and an affiliate of Public Sector Retirement Educators (PSRE), a Federal Contractor and Registered Vendors to the
Federal Government
> Affiliate of TSP Withdrawal Consultants
> His goal is to guide individuals into retirement with safe, and predictable choices for stability using forward thinking ideas and concepts.

The Case for Indexed Universal Life Insurance as the New 401(k)

Investors are constantly looking for strategies to outperform the current inflation rate. That is why so many people are investing in indexed universal life (IUL) insurance policies to achieve their goals. This concept has evolved over time into a more competitive substitute for whole life insurance and 401(k)s.

This article will outline some of the critical factors you should consider when comparing these three investing approaches.

What distinguishes whole life insurance from IULs?

An IUL policy can be executed at a higher rate, typically around 7%—a figure chosen by the stock market—and with no cap on that money if done correctly. However, whole life policies typically have a fixed rate of around 3% to 4%.

This is how an IUL can consistently outpace inflation on any whole life policy.

How do various investments fare during a recession?

Two consecutive quarters of negative GDP growth mark a recession, and the United States would have been in one as of this past July.

How can you beat the recession now? First, you have to answer this question because the current inflation rate is 9.1%: What tools do you have to beat inflation? So many large corporations place a significant portion of their shares in life insurance. Why? because they are aware of the influence of compound interest.

Now is the perfect time for you, as a business owner, to ask yourself the following questions.

1. Who serves as my financial planner or advisor?

2. Am I confident I have all the modern instruments to surpass inflation over time?

3. Will it take me another 10 or even 20 years to make up for my losses from the previous 90 days? Or will I be able to recover those losses in the following three to four years?

If an IUL is adequately funded, you can recover the same amount considerably more rapidly than you might with a 401(k), which could take five to 10 years. That is a result of compound interest’s exceptional ability to outperform inflation.

When can an IUL be superior to a standard 401(k)?

A 401(k) is a tax code the IRS has provided to allow you to pay taxes on the harvest, not the seed. Under the Reagan Administration, the 401(k) plan was introduced in the 1980s as a tax haven and a place for wealthy CEOs to invest their money over time.

They discovered that you could get more tax refunds later in life and raise more money from the middle class if you persuaded the middle class to invest all of their money in 401(k)s.

While some would argue that the idea has become antiquated, this has developed into a well-known retirement savings strategy.

Life insurance offers several advantages compared to a 401(k).

Thanks to life insurance, you can assume that you’ll always have money flowing in, even if the market declines. Your money is secured at the interest rate decided upon when you purchase it. Your entire investment never has to experience a setback because of a market downturn.

The IUL model is more complicated as the stock market sets the rate. However, the cash worth of this investment can increase in value due to compound interest thanks to IRS tax regulation 7702.

With this option, you can obtain a tax-free lifetime retirement income and leave a death benefit for your children.

Contact Information:
Email: [email protected]
Phone: 2178542386

Bio:
Bill and his associates of Faith Financial Advisors have over 30 years’ experience in the financial services industry.
He has been a Federal Employee (FERS) independent advocate and an affiliate of PSRE, Public Sector Retirement Educators, a Federal Contractor and Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants.
Bill will help you understand the FERS Benefits and TSP withdrawal options in detail while also helping to guide you in your Social Security choices.
Our primary goal is to guide you into your ment with no regrets; safe, predictable, stable and for life using forward thinking ideas and concepts.

Bullet points:
> Financial Services consultant since 1984
> FERS independent advocate and an affiliate of Public Sector Retirement Educators (PSRE), a Federal Contractor and Registered Vendors to the
Federal Government
> Affiliate of TSP Withdrawal Consultants
> His goal is to guide individuals into retirement with safe, and predictable choices for stability using forward thinking ideas and concepts.