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What a Relief! Congress Acts Against Surprise Medical Bills Blakely Financial

What a Relief! Congress Acts Against Surprise Medical Bills

If you have ever been caught off-guard by a large medical bill, a long-running practice known as balance billing might be the reason. A balance bill — which is the difference between an out-of-network provider’s normal charges for a service and a lower rate reimbursed by insurance — can amount to thousands of dollars.

Many consumers are already aware that it usually costs less to seek care from in-network health providers, but that’s not always possible in an emergency. Complicating matters, some hospitals and urgent-care facilities rely on physicians, ambulances, and laboratories that are not in the same network. In fact, a recent survey found that 18% of emergency room visits resulted in at least one surprise bill.1

Who’s Afraid of High Health-Care Costs? Most People

Percent of surveyed adults who say they are worried about being able to afford the following expenses

Source: Kaiser Family Foundation and JAMA, 2020

Coming Soon: Comprehensive Protection

The No Surprises Act was included in the omnibus spending bill enacted by the federal government at the end of 2020. The new rules will help ensure that consumers do not receive unexpected bills from out-of-network providers they didn’t choose or had no control over. For example, once the new law takes effect in 2022, patients will not receive balance bills for emergency care or non-emergency care at in-network hospitals when out-of-network providers unknowingly treat them. (A few states already have laws that prevent balance billing unless the patient agrees to costlier out-of-network care ahead of time.)

Patients will be responsible only for the deductibles and copayment amounts they would owe under the in-network terms of their insurance plans. Instead of charging patients, health providers will negotiate a fair price with insurers (and settle disputes with arbitration). This change applies to doctors, hospitals, and air ambulances — but not ground ambulances.

Consent to Pay More

Some patients purposely seek care from out-of-network health providers, such as a trusted family physician or a highly regarded specialist, when they believe the quality of care is worth the extra cost. In these non-emergency situations, physicians can still balance-bill their patients. However, a good-faith cost estimate must be provided, and a consent form must be signed by the patient at least 72 hours before treatment. In addition, some providers are barred from seeking consent to balance-bill for their services, including anesthesiologists, radiologists, pathologists, neonatologists, assistant surgeons, and laboratories.

Big Bills Will Keep Coming

The fact that millions of consumers could be saved from surprise medical bills is something to celebrate. Still, many people may struggle to cover their out-of-pocket health expenses, in some cases because they are uninsured or simply due to high plan deductibles or rising costs in general. Covered workers enrolled in family coverage contributed $5,588, on average, toward the cost of premiums in 2020, with deductibles ranging from $2,700 to more than $4,500, depending on the type of plan.2

When arranging non-emergency surgery or other costly treatment, you may want to take your time choosing a doctor and a facility because charges can vary widely. Don’t hesitate to ask for detailed estimates and try to negotiate a better price.

If you receive a higher-than-expected bill, don’t assume it is set in stone. Check hospital bills closely for errors, check billing codes, and dispute charges that you think insurance should cover. If all else fails, offer to settle your account at a discount.

1-2) Kaiser Family Foundation, 2020

Grandparent 529 Plans Get a Boost Under New FAFSA Rules

529 plans are a favored way to save for college due to the tax benefits and other advantages they offer when funds are used to pay a beneficiary’s qualified college expenses. However, up until now, the FAFSA (Free Application for Federal Student Aid) treated grandparent-owned 529 plans more harshly than parent-owned 529 plans. This will change thanks to the FAFSA Simplification Act that was enacted in December 2020. The new law streamlines the FAFSA and changes the formula used to calculate financial aid eligibility.

Current FAFSA Rules

Under current rules, parent-owned 529 plans are listed on the FAFSA as a parent asset. Parent assets are counted at a rate of 5.64%, which means 5.64% of the value of the 529 account is deemed available to pay for college. Later, when distributions are made to pay college expenses, the funds aren’t counted; the FAFSA ignores distributions from a parent 529 plan.

By contrast, grandparent-owned 529 plans do not need to be listed as an asset on the FAFSA. This sounds like a benefit. However, the catch is that any withdrawals from a grandparent-owned 529 plan are counted as untaxed student income and assessed at 50% in the following year. This can have a negative impact on federal financial aid eligibility.

Example: Ben is the beneficiary of two 529 plans: a parent-owned 529 plan with a value of $25,000 and a grandparent-owned 529 plan worth $50,000. In Year 1, Ben’s parents file the FAFSA. They must list their 529 account as a parent asset but do not need to list the grandparent 529 account. The FAFSA formula counts $1,410 of the parent 529 account as available for college costs ($25,000 x 5.64%). Ben’s parents then withdraw $10,000 from their account, and Ben’s grandparents withdraw $10,000 from their account to pay college costs in Year 1.

In Year 2, Ben’s parents file a renewal FAFSA. Again, they must list their 529 account as a parent asset. Let’s assume the value is now $15,000, so the formula will count $846 as available for college costs ($15,000 x 5.64%). In addition, Ben’s parents must also list the $10,000 distribution from the grandparent 529 account as untaxed student income, and the formula will count $5,000 as available for college costs ($10,000 x 50%). In general, the higher Ben’s available resources, the less financial need he is deemed to have.

New FAFSA Rules

Under the new FAFSA rules, grandparent-owned 529 plans still do not need to be listed as an asset, and distributions will no longer be counted as untaxed student income. In addition, the new FAFSA will no longer include a question asking about cash gifts from grandparents. This means that grandparents will be able to help with their grandchild’s college expenses (either with a 529 plan or with other funds) with no negative implications for federal financial aid.

However, there’s a caveat: Grandparent-owned 529 plans and cash gifts will likely continue to be counted by the CSS Profile, an additional aid form typically used by private colleges when distributing their own institutional aid. Even then, it’s not one-size-fits-all — individual colleges can personalize the CSS Profile with their own questions, so the way they treat grandparent 529 plans can differ.

Use of 529 Savings Plans

Source: ISS Market Intelligence, 529 Market Highlights, 2019 and 2020

When Does the New FAFSA Take Effect?

The new, simplified FAFSA opens on October 1, 2022, and will take effect for the 2023-2024 school year. However, grandparents can start taking advantage of the new 529 plan rules in 2021. That’s because 2021 is the “base year” for income purposes for the 2023-2024 FAFSA, and under the new FAFSA, a student’s income will consist only of data reported on the student’s federal income tax return. Because any distributions taken in 2021 from a grandparent 529 account won’t be reported on the student’s 2021 tax return, they won’t need to be reported as student income on the 2023-2024 FAFSA.

Consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. This information and more is available in the plan’s official statement and applicable prospectuses, including details about investment options, underlying investments, and the investment company; read it carefully before investing. Also, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits and other benefits, such as financial aid, scholarship funds, and protection from creditors. As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also the risk that the investments may lose money or not perform well enough to cover college costs as anticipated. In addition, for withdrawals not used for higher-education expenses, earnings may be subject to taxation as ordinary income and a 10% federal income tax penalty.

 

 

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other specialized advice we can provide towards your financial well-being.

BLAKELY FINANCIAL, INC. is located at 1022 Hutton Ln., Suite 109, High Point, NC 27262, and can be reached at (336) 885-2530.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Commonwealth Financial Network is not responsible for their content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through Blakely Financial or CES Insurance Agency

 

This communication is strictly intended for individuals residing in the state(s) of AK, AZ, AR, CA, CO, FL, GA, IL, IA, MD, MI, MN, MS, MO, NJ, NY, NC, OK, PA, SC, SD, TN, TX, VA, WV, and WI. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Advisor Solutions Copyright 2021.
Blakely Financial team at the 2021 Annual Meeting for the United Way of Greater High Point

United Way of Greater High Point Annual Meeting 2021

Our team had the pleasure of attending the annual meeting for the United Way of Greater High Point.

The UWGHP mobilizes the business community, volunteers, and its 27 local partners to develop resources and partnerships that address critical human service needs in our community.

Last year, Rob & Donna had the honor of getting to serve as the 2020 Campaign Chairs, the first married couple in UWGHP history to head up the campaign! Despite the unprecedented challenges that 2020 brought, the entire United Way team worked diligently to make the campaign a success.

We are proud to partner with such an incredible organization doing great work in our local community!

 

The American Jobs Plan and Proposed Tax Policy

Presented by The Blakely Financial Team

On March 31, 2021, President Biden introduced the American Jobs Plan, a proposal designed to improve the country’s aging infrastructure. In total, the plan will invest more than $2 trillion over the next decade. The specific provisions of the proposal will likely change prior to making its way to Congress and will face steep opposition from Republican lawmakers. While it’s unclear if the plan will pass or in what form, the following is a high-level summary of what we know so far, based on the White House Fact Sheet.

Major Components
Infrastructure and transportation. A total of $650 billion will be invested into infrastructure at home. This will include clean drinking water, high-speed broadband internet, electrical infrastructure, affordable housing, public schools, learning centers, and community colleges. It will also be put toward modernizing Veterans Affairs hospitals. In addition, the plan will put $621 billion into transportation infrastructure with the goal of repairing bridges and roads; modernizing public transit; improving rail service, ports, waterways, and airports; and increasing use of electric vehicles.

American manufacturing. Biden also plans to invest a total of $580 billion in American manufacturing and small business, research and development, and workforce development.

Health care. A total of $400 billion will be put toward expanding access to quality, affordable care for the elderly and people with disabilities, with the goal of also creating new jobs and increasing pay, benefits, and opportunities for caregivers.

Corporate tax rate. The corporate tax rate will be increased from 21 percent to 28 percent.

Global minimum tax. The global minimum tax for U.S. multinational corporations will be increased from 10.5 percent to 21 percent.

Large corporations. The plan proposes a 15 percent minimum tax on the income large corporations use to report profits to investors.

The IRS. Funding to the IRS will be increased to help ramp up its enforcement of tax policies (i.e., audits) with corporations.

Big-Picture Tax Proposals
While the American Jobs Plan proposes several tax changes specifically targeting corporations, Biden also discussed other tax changes during his campaign that would more directly affect individuals. These changes, which the administration may seek to implement in future legislation, could include the following:

  • Implement payroll taxes on wages greater than $400,000 (Taxpayers would not be subject to the tax between the social security wage cap [currently $142,800] and $400,000.)
  • Increase the long-term capital gains rate to 39.6 percent for taxpayers earning more than $1 million
  • Raise the top marginal income tax rate from 37 percent to 39.6 percent
  • Tax unrealized gains for individuals whose income exceeds a specified threshold
  • Eliminate the step up in basis rules applicable to inherited assets
  • Reduce the exclusion amount for federal estate and gift taxes (currently $11.7 million per individual)
  • Increase the child tax credit and expand eligibility for child and dependent care tax credit
  • Substitute a tax credit for tax deduction for retirement plan contributions
  • Provide tax relief for student debt (There are multiple proposals for how this may be implemented.)
  • Eliminate the qualified business income tax deduction for pass-through business owners
  • Eliminate 1031 exchanges for certain taxpayers whose income exceeds a specified threshold

Please note: These are informal proposals and are likely to change if incorporated into a bill. If they become law, you will be affected only if the rulings are specific to your financial situation. As always, we will continue to monitor the situation and will be there to help you navigate any future changes.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

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Blakely Financial, Inc. is located at 1022 Hutton Lane Suite 109 High Point, NC 27262 and can be reached at 336.885.2530. Securities and Advisory Services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through CES Insurance Agency or Blakely Financial, Inc.

© 2021 Commonwealth Financial Network®