What is an FSA?

An FSA is commonly referred to as a flexible spending arrangement. This is a tax advantaged plan where one can set aside a portion of their earningsThere are many types of FSA but the most common is a medical FSA.

In its most common form this is an account one can set aside using deductions from payroll through work to pay for medical expenses including prescriptions, eye glasses, deductibles and many more. Often times employers will even help fund an FSA for example one large fortune 500 company will match up to $1000 for every dollar you put into your account.

So should you max out your FSA?

Not necessarily keep in mind that in a lot of plans if you don't use the money within the plan year and the grace period this is not ideal. The best method to decide is to take into account your expenses from the previous year. If you itemized these deductions your tax return should give you the correct amount.

Why do businesses over FSA or HSA, or HRA?

Often times businesses will over this option paired with a higher deductible, this gives the employees more of a say in their medical expenses, it helps keep costs lower and if your medical expenses are low it makes more sense to have a higher deductible paired with one of the above options.

Why don't all businesses over these plans?

I have heard various reasons from businesses why to not offer the plan one of the main ones is that it may be more administrative work, more than one thing to monitor etc. Also some employers don't really understand the benefits and setbacks of these options so they stick with the status quo.

Medini Financial will bring you more information regarding various insurance and financial service questions as long as they keep coming. Again thank you so much for the email questions. If you have any comments or questions please forward them to Medinifinancial@gmail.com

All about Riders

I often get asked when going over options with my clients what a rider is on an insurance policy. Think of a rider a lot like a tow-able trailer, it has wheels and it can move but not on its own. An insurance policy is towing the trailer and the trailer is riding along. Basically an individual cannot purchase a rider on its own but they can purchase and often drop riders while keeping the insurance policy.

Here is are a few examples of riders;

Children's Living Term Rider: This rider is basically term insurance for your children attached to your policy this often comes with a conversion privilege where the child once 18 can purchase insurance without going through underwriting.

Spousal Rider: A policy added on to an insurance policy that covers the spouse of the insured

Living Benefits Rider also know as Accelerated Death Benefit: This rider works to allow you to access your death benefit early if you are diagnosed with a critical illness or are in a hospice. Some insurance companies offer this rider for free.

Waiver of Premiums Rider: This is often sold with insurance policies and only is applicable to age 65 this rider waives the premium on their insurance policy if the become disabled.

Hopefully this clears some things up thanks again for stopping in as always Medini Financial s here to answer your pressing insurance questions.

LONG TERM CARE INSURANCE ANSWERS

When my clients think long term care they either think of medicare of of a nursing home. One thing I often hear when I ask about long term care the first thing they say is I am not going to a nursing home I don't need long term care insurance. The funny thing is that long term care may be the only thing that can keep you from going to a nursing home.

Q. Won't Medicaid and Private Insurance cover most of my LTC needs?

A. The fact of the matter is that LTC is only covered in part by medicaid and private insurance only cover a fraction of what is needed.

Q. Am I too young to think about LTC insurance?

A. Depending on your situation yes, or no. Long Term Care insurance is cheaper when you are younger of course but the difference in cost between a 21 year old purchasing LTC insurance and a 29 Year old purchasing LTC is negligible.

Q.What are my options?

A. You can either spend down your assets or put everything in your kids names till 5 years before you need it to qualify for medicaid(known as medicaid planning) and end up in a nursing home with an available bed.

You can fund your needs out of your own pocket.

You can have friends or family take care of you

You can purchase long term care insurance.

Q. Can I purchase LTC insurance through work?

A. Yes often you can and if not you can request your employer to add it to your plan, the benefit to your employer is there are several plans where he doesn't have to fund it so you get a great group discount and he has a rich benefits plan.

Q. WHAT IS LONG TERM CARE INSURANCE?

A. Insurance designed to provide coverage for necessary medical or personal care services provided outside of a hospital setting, such as in a nursing home or in the insured's home Long term care insurance is product bought by individuals and sold by insurance companies to offset the cost of needing care, LTC insurance includes many.

Q. What companies offer LTCI?

A. Prudential and John Hancock are two of the most popular options in the state of Pennsylvania.

Please, consult your financial services consultant with any other questions or email medinifinancial@gmail.com. Medini Financial is licensed with the Pennsylvania Department of Insurance only.

We appreciate your time. Keep those questions coming!

Why Medini Financial?

Why Medini Financial

I almost always here this question when I deal with clients who have gone online looking for insurance and they run into either a handful or a barrage of reps. The answer to the questions is simple.

Medini Financial is not like the large insurance firms who are too busy to care about their clients after the sale.

Medini Financial is unlike the struggling independent agency who often doesn't have the experience to offer a suitable solution, or who because they are struggling will only offer products that fatten their wallets, lastly Medini Financial is a name that is going to last. While Medini Financial gives information on a variety of products and lines of insurance we have carefully chosen to grow organically and not offer products which 1) are unnecessary and 2) which we cannot maintain up to date information on.

Medini Financial takes the time every week to share its knowledge with the world, we are friendly professional and most important helpful. Let's be honest, no matter how nice your agent is in the long run if he isn't helping you and your family you are going to drop him. So again the question is asked why Medini Financial?

It all goes back to our core philosophy "Knowledgeable Answers, Personalized Advice, and No Pressure."

Next week we will give answers to the recent emails I have received regarding long term care, a side note most people who email me saw either something online or on TV that caught their eye, if you have a questions about any insurance or retirement planning topic feel free to reach out via email to medinifinancial@gmail.com

How to Leverage Insurance to Supplement Retirement Planning

One thing people don't realize about insurance is that its tax status makes it a very viable option to supplement any retirement plans you may have while providing protection for your family.

Here is one example of how one can leverage insurance to aid in retirement planning this is especially helpful if you plan on retiring before 59.5 where you would suffer penalties taking money out of your 401k.

If you were to invest in either a variable or universal policy and you put extra money into and let it grow to the max with out losing its insurance status you can then take withdrawals out tax free.

When I say lose its insurance status I mean exactly that if you over-fund a policy beyond a certain point , which with todays software can be easily illustrated for various scenarios the money in the policy may be taxable as a gain. So before you go funding your life insurance policies like crazy, have your financial representative make an illustration of for example of what would happpen if you put 300 dollars away in a variable policy at age 24 till age 55 and then took out withdrawals for 5 years. You will be pleased to see how much your money has grown but also how much you can take out tax free.

When using this method you need to make sure that you don't let your policy lapse you see as long as any death benefit is paid the money you invested and took out will be tax free.

Note that when using this method that some money is lost to offset sales charges and fees, if you were to invest in the same investments that are within a variable life insurance policy outside the insurance policy if you put them side by side the investments outside the insurance policy would be more however depending on you tax situation the insurance policy may be a good fit. After all its not how much that is in your account that is most important but its important to know how much you keep.

This is just one of the many reasons why Life Insurance may be a good option for you. If you need further assistance or would like to see an illustration of how this works shoot an email over to medinifinancial@gmail.com

What is an Annuity?

Several people ask me about their retirement goals and what I can do to help. Some people have asked me this question out of pure curiosity. Medini Financial in Ephrata would like to share its knowledge of what an annuity is and go into a little detail of the different types of annuities out there.

Annuities are products that are sold by licensed insurance agents that pays income out to its annuitant.

Annuities come in several varieties.

A fixed annuity pays out a fixed amount of income to its annuitant and grows at a fixed rate.

A variable annuity on the other hand is similar to an investment in a 401k where you can choose the subaccounts where your funds are invested.

People often choose annuities for two reasons one it offers another vehicle for tax deferred growth, and the second reason is because to ensure a steady stream of income in retirement.

Here is an example of how annuities have helped people in retirement.

Harry is a 65 year old man who is retired he has 800,000 dollars he has saved up for retirement, lets say he needs 50,000 dollars a year to survive. He can elect to leave the funds in an investment vehicle like a CDS, stocks, bonds, money market accounts, or a savings account depending on risk tolerance. Now if Harry's investments make a 0% return on investment the money will last 16 years, longer if the the investments do well and obviously shorter if the investments go south.

An annuity may help him guarantee a stream of income for as long he lives in exchange for either a one time payment, or a series of payments into the annuity. In case of options he can take out the money immediately known as an immediate annuity or he take out the money later what is known as a deferred annuity.

Now in this case is Harry would like to have guaranteed income the annuity can be the perfect vehicle. In this case an annuity is appropriate because income is more important than liquidity. If Harry were to live to be 100 and if he started taking out payments at age 70. He would have had a guaranteed stream of income all those years.

Annuities may or may not come with riders and additional benefits at various costs usually a few basis points. This topic has confused a lot of people with all the options out there.

Often times Fixed annuities are more suitable than CD's but sometimes CDS are more suitable than fixedannuities. The main attraction with an Annuity is often times the insurance companies pay higher rates than a CD.

Payouts on annuities can be for various options,including lifetime, or a for certain period of time i.e 20 years. For more information you can check out this great article

http://money.cnn.com/retirement/guide/annuities_basics.moneymag/index.html

or you can contact Medini Financial at 717-419-6347 or via email medinifinancial@gmail.com Every person's financial situation is different. Let Medini Financial take a look at your individual situation and you can see if what options are best for you and make your own decision.

Medini Financial is committed to share its expertise with the local community. Should the need arise for you or your family Medini Financial looks forward to getting you the best rates and world class service.

When Should I consider life Insurance?

Someone reached out to me today and sent me an email asking:
When should I consider life insurance?

This is a very good question and every person's situation is different. To answer that question I will also answer these two questions : What is insurance? What is life insurance specifically?

I remember when I was studying to get my license and I ran across the definition for insurance. I always knew what insurance did on some basic level but didn't have a legal definition for it. Chris Rock put it this way, insurance is giving someone money in case (expletive) happens. The legal definition is that you are transferring risk from one party to another. Simple right. Life insurance is transferring the risk of someone passing away and the financial outcome as a result. So when you purchase or consider life insurance you are transferring the risk that you will pass away in exchange for money? This is the most basic reason to buy life insurance is to protect your loved ones in case you pass away in an untimely manner. Life insurance provides a tax free benefit to a party who would be affected by your loss, i.e your beneficiary.

Life insurance is normally purchased when:

1) A couple gets married.

2) You are taking on a loan college, vehicle, home purchase etc.

3) You have someone dependent on you for financial support who would be hard pressed with out you. To replace income for e.g Birth of Child, Adopting a child, caring for parent, etc.

4) If you are planning on retiring before 59.5 years old (will go into detail later, this involves advanced topics in insurance and its tax situation)

5) You or your loved ones cannot cover the costs for funeral out of pocket (10,000)

6) A child is born and the insurance will be used as a partial vehicle to fund college expenses (also an advanced topic which will be touched upon later)

7) To divide up funds equitably once you pass away and increase the amount your next of kin would receive (also another advanced topic which will be discussed at another time)

8) To be used as a vehicle for charitable giving could be an organization could be your University

9) You are looking to use insurance as an investment vehicle (also another advanced topic to be discussed on this blog)