• Medicare Premiums Going Up by 5.9%

    The Medicare Part B premium will be $185 per month in 2025, a 5.9% increase from this year’s $174.70. Most individuals pay no premium for Part A, as long as they’ve paid into Medicare at least ten years (or are married to someone who did). But for individuals age 65+ who are new to the country (as legal residents) or otherwise don’t qualify for free Part A, they can buy into it for $285 per month if they have at least 30 quarters of coverage, or $518 if fewer than 30 quarters (up from $278 and $505, respectively, in 2024).

    All of the IRMAA amounts went up as well. The IRMAA will start at a MAGI of $106,000 for individuals and $212,000 for couples. MAGI for IRMAA purposes is adjusted gross income plus tax-exempt interest. This is based on the most recent tax return the IRS has on file, generally 2023.

    2025 IRMAA Table

    Medicare participants should have received their premium notices in early December. As always, they can appeal the IRMAA if they have experienced a life-changing event and expect their income to be lower than the amount used to calculate the 2025 IRMAA. If they appealed last year due to retirement or other reasons, they will need to appeal again this year. Then next year the tax return used for the IRMAA should reflect their lower income going forward. If the tax return used to figure the IRMAA is not correct—say they filed an amended return—this is also grounds for appeal.

    The Part B deductible will be $257, up 7% from the 2024 deductible of $240. The Part A deductible will be $1,676, up $44 from $1,632 in 2024. After the Part A deductible is paid—covered by most Medigap policies—Medicare will cover the first 60 days of hospital costs. After 60 days, the coinsurance amounts are $419 per day for days 61–90 and $838 beyond that. These Part A coinsurance amounts are also covered by Medigap. Indeed, these high Part A costs, as well as the 20% coinsurance for Part B, are the reason Medicare supplement insurance (Medigap) is recommended.

    Medicare Advantage is a different animal. These plans are free to establish their own costs and benefits as long as they meet certain minimum Medicare requirements. Many Medicare Advantage plans have no deductible. Some even rebate all or part of the $185 Part B premium. Individuals with Medicare Advantage plans should refer to their evidence of coverage booklet to see what their hospital and other costs would be.

    Take the time to review your situation with a Medicare expert.

  • Lane Hipple’s Annual Donation Drive

    **UPDATE 12/11/24**

    Thanks to your overwhelming generosity, all the gifts listed below were purchased, and we still have a week to go! If you would still like to donate, we will accept gifts card to distribute to these families, and possibly others!

    Hello friends,

    Let’s come together again and support families in our community this holiday season. Collectively over the last few years, we have provided a wonderful holiday for several families and the appreciation and gratefulness that has been expressed to us is heartwarming.

    We have received a list of requested items from local school representatives. Please do not wrap the gifts. If you buy a specific item, please email melissa@lanehipple.com so we can try to prevent duplicates. We did receive duplicates last year and found homes for all the gifts. This list will be updated weekly. Gift cards will be accepted also. Suggestions are food stores, Visa, Target, Walmart, etc.

    Donations will be accepted in our lobby during business hours, 8:30 am to 5 pm, until Tuesday, December 17th.

    **Items crossed out have already been gifted**

    Christmas Tree Family 

    Boy age 10 – size 12 clothes

    • Coat, gloves, hat
    • Loves football
    • Has a PlayStation 5 (maybe Game Stop gift card)

    Boy age 8 – size 7-8 clothes

    • Coat , gloves, hat
    • Cat Man and Dog Man Books
    • Soccer ball
    • Tennis racket and Balls
    • Loves Roblox

    Boy age 5 – size 5 clothes

    • Coat, hat, gloves
    • Coloring books

    Boy age 3 – size 3T clothes

    • Coat, hat, gloves
    • Coloring books

    Snowflake Family 

    Boy age 13 – size 14

    • Coat and clothes
    • Game Stop gift card

    Girl age 12 – size 16

    • Coat and clothes
    • Shoes, size 8
    • Loves music

    Girl age 8 – size 10-12

    • Coat and clothes
    • Shoes, size 3
    • Arts and crafts
    • Loves gymnastics

    Candy Cane Family 

    Boy age 8 (size 10-12)

    • Coat, boots, gloves, hat
    • Shoes, size 4
    • Loves camping and fishing
    • Philly sports
    • Legos
    • Outdoor activities all seasons

    Cookie Family 

    Girl age 8 (size 14/16)

    • Shoes, size 5
    • Anything from Yummi Land
    • Loves Red from Descendents: Rise of Red
    • Surprise Barbies
    • Lip gloss making kit

    Girl age 15

    • Pants (woman size 9/10)
    • Medium or Large tops
    • Shoe size 8
    • Loves crocheting  (needles, colorful thread)
    • Loves make up

    Boy age 2 (size 4T)

    • Shoe size 9 in toddler shoes
    • Loves trucks, planes, helicopters
    • Any learning toys

    Silver Bells Family

    Girl age 9

    • Shoe size 13 
    • Rollerblades
    • Art supplies
    • Books
      • Kawaii Kitties (How to draw) by Olive Yong
      • Kawaii Doggies (How to draw) by Olive Yong
      • How to Draw Kawaii Dragons for Kids by Amandine Cavalieri

    Boy age 12

    • Shoes (size 9)
    • Rollerblades
    • Legos related to Sonic or Minecraft
    • How to Draw Minecraft by Random House
    • Art supplies (markers, paint, sketchbooks)
    • **Books for the family in Spanish and English (preferably in both languages)
      • Hombre Perro (Dog Man, Spanish edition) by David Pilkey
      • Dog Man
      • Los Tipos Malos (The Bad Guy, Spanish edition) by Aaron Blabey

    Snowman Family

    Boy age 6 shirts size ⅞ (favorite color yellow)

    • Submersible Submarine (Amazon)
    • STEM: Zoob Builders (Amazon)
    • Excavator (Amazon)
    • National Geographic Microscope (Amazon)
    • Trains New York MTA New York City Battery Operated set (Amazon)
    • Wooden puzzles US, World, Solar System (Amazon)
    • Model Clay, Kinetic Sand, paint, paint brushes
    • Books – Bob Shea favorite author
      • I Am Invited to a Party, Mo Williams, 
      • Rhyming Dust Bunnies, Jan Thomas
      • Any books about spiders, whales, ocean, or insects

    Girl age 15 Top size 5 (favorite color dark blue)

    • Moorestown School Store – Pull Over Jacket size M
    • Body Scrub (Rituals.com)
    • Face Care (Laneige.com)
    • Lip Gift Set (Laneige.com)
    • Isotoner gloves black, size s/m
    • Winter ear warmer headband
    • Anything My Hero Academia, Anime, fuzzy socks, calligraphy, hair scrunchies

    Girl age 13 Top size 5 (favorite color yellow)

    • Face Care Bubbles Gift Set (Ulta)
    • Mocha Sherpa Sweater size M (Macy’s)
    • Hippie Rose Junior Sherpa half zip (Macy’s)
    • Driftwood Faux fur hoodie size M (Hollister)
    • Black joggers adult M/Tall (Old Navy)
    • OPI nail polish/nail stickers (Target)
    • Any color Prism Pencils or Graded graphite pencils, water colors
    • Winter hat/beret, gloves, fuzzy socks, any boy wash or scrubs, scrunchies

    Thank you for helping make a difference in the lives of these children.

  • Gifting Wealth: Tax-Efficient Ways to Share Wealth During the Holidays

    Share Wealth and Save on Taxes this Holiday Season

    The holiday season is a time for giving, and for those who wish to share their wealth, there are financially efficient strategies that help you give sensibly. Here are some options that can help with gifting wealth or assets for the holidays, while keeping tax implications in mind.

    1. Annual Gift Exclusion for Gifting Wealth

    One of the simplest and most direct ways to share wealth is through the IRS annual gift tax exclusion. For 2024, the IRS allows individuals to give up to $18,000 per recipient without triggering gift taxes or the need to file a gift tax return. Married couples can combine their exclusions to gift $36,000 per recipient.

    The annual gift exclusion is also a smart way to minimize estate taxes because you can take out up to the gift exclusion limit every year, which cuts on your tax liability.

    2. 529 College Savings Plan Contributions

    For those looking to support a loved one’s education, contributing to a 529 college savings plan is another tax-efficient option. While contributions are not federally tax-deductible, the earnings in these accounts grow tax-free, and withdrawals used for qualified educational expenses are also tax-free.

    Additionally, contributions to a 529 plan are considered gifts for tax purposes. A unique feature of 529 plans is the ability to “front-load” five years’ worth of contributions. For example, an individual can contribute up to $90,000 in a single year without incurring gift taxes, provided no other gifts are made to that beneficiary over the following four years.

    3. Charitable Contributions

    Donating to charitable organizations is another way to share wealth that may provide tax benefits. Contributions to qualified charities are generally tax-deductible for those who itemize deductions, and in some cases, donating appreciated assets like stocks may offer additional tax savings. By donating appreciated assets, the donor can avoid paying capital gains taxes on the appreciation, while the charity receives the full value of the asset.

    Some may also consider setting up a donor-advised fund (DAF), which allows for an immediate tax deduction while giving the donor time to decide on specific charitable recipients.

    4. Gifting Wealth through Appreciated Stock

    Gifting appreciated stock can be a tax-efficient way to transfer wealth to family members, particularly those in lower tax brackets. When appreciated stock is gifted, the recipient assumes the donor’s cost basis and holding period. If the recipient is in a lower income tax bracket, they may be able to sell the stock and pay less in capital gains taxes, or potentially none if they fall within the 0% capital gains bracket.

    5. Direct Payments for Medical or Educational Expenses

    Another strategy for tax-free gifting is paying for someone’s medical or educational expenses directly. Payments made to medical providers or educational institutions on behalf of another individual do not count toward the annual gift exclusion and are not subject to gift taxes. This approach allows people to provide meaningful assistance without reducing their available gift tax exclusion.

    6. Gifting Wealth by Establishing a Family Trust

    For those considering longer-term planning, creating a trust can offer a way to distribute wealth over time while providing potential tax advantages. Depending on how the trust is structured, it may allow assets to grow outside of the donor’s estate and, in some cases, offer tax benefits to both the grantor and the beneficiaries. A common vehicle for this is an irrevocable trust, which removes assets from the donor’s taxable estate.

    Conclusion

    During the season of giving, there are many tax-efficient ways to share wealth and uplift others. With a little planning, you can give to a charity, support a child’s education, help a loved one in need, or establish a legacy for your family, all while managing your tax burden.

    Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.

  • Effective Estate Planning: Avoiding Common Mistakes

    Estate planning is an essential process for anyone looking to manage their assets, protect their loved ones, and establish a clear path for how their estate will be handled after they pass. Despite its importance, effective estate planning can be a complex and often misunderstood task. Mistakes made during this process can result in unintended consequences, causing stress and financial strain for those left behind. To help you navigate this critical aspect of financial planning, we’ll explore some of the most common mistakes people make when crafting an estate plan and how you can avoid them.

    1. Failing to Create an Estate Plan

    One of the most significant mistakes people make is simply not having an estate plan at all. Without a clear plan, the state’s intestacy laws will dictate how your assets are distributed, which may not align with your wishes. This can lead to lengthy legal battles and create tension among family members. Additionally, it can result in unnecessary taxes and fees that could have been avoided with proper planning.

    Creating a will or trust is a basic but crucial step in making sure your assets are handled according to your desires. While it might seem daunting, starting with even a simple plan can help prevent many future complications.

    2. Not Updating Your Estate Plan

    Life is constantly changing, and so too should your estate plan. Failing to update your plan as circumstances evolve is a common mistake that can lead to outdated or irrelevant instructions. Events such as marriages, divorces, births, deaths, or changes in your financial situation should all prompt a review and potential update to your estate plan.

    For example, if you’ve divorced and remarried, but haven’t updated your will, your former spouse could inherit assets you intended for your new spouse or children. By regularly reviewing and updating your estate plan, you can ensure it reflects your current wishes and the most up-to-date information.

    3. Not Designating Beneficiaries or Naming the Wrong Ones

    Many people overlook the importance of designating beneficiaries for accounts like retirement plans, life insurance policies, and investment accounts. Failing to name beneficiaries means these assets could be tied up in probate, delaying their distribution.

    In addition, naming the wrong beneficiaries can have unintended consequences. For instance, you might still have an ex-spouse listed as a beneficiary on an insurance policy or retirement account. To avoid this mistake, make sure you review and update beneficiary designations regularly, particularly after major life changes.

    4. Overlooking a Power of Attorney and Healthcare Directive

    Another key component of effective estate planning is designating a power of attorney and creating a healthcare directive (also known as a living will). A power of attorney allows someone to make financial decisions on your behalf if you’re unable to do so, while a healthcare directive outlines your medical wishes in the event you’re incapacitated.

    Without these documents, your family could face additional challenges trying to manage your affairs if something unexpected happens. It’s important to choose individuals you trust to carry out your wishes and to communicate your decisions clearly with them.

    5. Not Considering Tax Implications

    Taxes can have a significant impact on the distribution of your estate. Many people fail to take tax implications into account when crafting their estate plans, which can lead to higher taxes for beneficiaries. Understanding how estate taxes, gift taxes, and income taxes apply to your assets can help you minimize their effect on your heirs.

    While tax laws can be complicated, seeking guidance on how to structure your estate in a tax-efficient way can be helpful. Strategies such as gifting assets during your lifetime, setting up trusts, or exploring charitable giving options can potentially reduce the tax burden on your estate.

    6. Leaving Too Much Control to One Person

    It’s common for individuals to appoint one trusted person, such as a spouse or child, to manage their entire estate. However, this can sometimes lead to tension or even disputes among other family members. Leaving too much control to one person can also be overwhelming, especially if that individual is grieving or managing other responsibilities.

    Consider dividing responsibilities, such as naming co-trustees or designating different individuals for financial and healthcare decisions. This way, no one person is burdened with all the responsibilities, and it can help reduce the risk of family conflicts.

    7. Not Planning for Long-Term Care

    As people age, the possibility of needing long-term care increases. Failing to plan for the costs of long-term care can significantly reduce the value of your estate. Without sufficient planning, your assets may be used to pay for care, leaving little for your heirs.

    Long-term care insurance, setting up trusts, or other financial strategies can help address this issue. Including long-term care in your effective estate planning process can protect your assets while making sure you receive the care you need.

    Related: 5 Reasons Women Should Plan For Long-Term Care

    8. Overlooking Digital Assets

    In today’s digital world, it’s important not to forget about digital assets when creating your estate plan. Digital assets include everything from social media accounts and email to online banking and investment platforms. Without proper instructions, your loved ones may struggle to access or manage these accounts.

    Consider creating a list of all your digital accounts, passwords, and instructions on how you want these assets managed. Some states even have specific laws governing the handling of digital assets, so be sure to incorporate this aspect into your plan.

    9. Failing to Communicate Your Plan

    Even the most carefully crafted estate plan can lead to confusion or disputes if your loved ones aren’t aware of it or don’t understand your intentions. It’s important to communicate your estate plan with those affected by it—particularly those who are named in the will, beneficiaries, or individuals tasked with responsibilities like power of attorney or executor.

    Having open conversations about your wishes can help prevent misunderstandings and make certain that your estate is handled smoothly when the time comes.

    Are You Utilizing Effective Estate Planning Strategies?

    Effective estate planning is a critical process that requires thoughtful attention to detail. By avoiding common mistakes such as not creating a plan, neglecting to update it, or failing to communicate your wishes, you can help ensure that your estate is managed according to your goals. Taking the time to carefully consider your assets, beneficiaries, and responsibilities will go a long way in creating an effective estate plan.

    Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.

  • Creditable Drug Coverage

    This article was written by Elaine Floyd, CFP® and modified from the original, found here.

    A key feature of Medicare—and any insurance really—is that the system only works if people maintain continuous coverage. This is why anyone on Medicare—that is, anyone 65 or older and enrolled in Part A and/or Part B—also needs to have creditable drug coverage. If they go more than 63 days without creditable drug coverage after their initial enrollment period ends, they will pay a late enrollment penalty when they sign up for Part D. The penalty is 1% of the national base beneficiary premium ($34.70 in 2024) for every month they went without creditable drug coverage. This amounts to about 35 cents a month—not a huge amount but it could add up if there are many months—and it continues for life.

    Most people avoid the penalty by enrolling in Part D at the same time they enroll in Parts A and B—that is, when they turn 65 or come off employer insurance if working past age 65. But there are some fairly common situations that can lead to the penalty without individuals even realizing it.

    One of the most common situations is where an individual is working past age 65 and staying on an employer plan that pairs an HSA with a high-deductible health plan. The individual may know not to enroll in Medicare if they want to keep making HSA contributions, but they may not realize that the drug coverage offered by the HDHP is not creditable. When they finally go off the employer plan and enroll in Medicare, they learn that they must pay a Part D late-enrollment penalty because the entire time they were covered by the HDHP, they did not have creditable drug coverage.

    Another common situation is where an employee retires and has retiree health insurance offered by the former employer. Anyone 65 or older who has retiree coverage must sign up for Medicare Parts A and B, because Medicare pays primary to retiree insurance. But they do not need to find supplemental insurance in the marketplace (Medigap or a Medicare Advantage plan) because the retiree insurance serves as the supplement—often including drug coverage. If the drug coverage is creditable, there’s no problem. But if the drug coverage offered by the retiree plan is not creditable, and if the individual later goes to sign up for Part D, penalties will apply. This could come as a surprise.

    How is a person supposed to know if their drug coverage is creditable? And how are they supposed to know about the penalty in the first place? It’s probably safe to say that the vast majority of late enrollment penalties are not willfully incurred. People get hit with them because they didn’t know.

    Note that the Part D late-enrollment penalty is separate and distinct from the Part B late-enrollment penalty. The Part B penalty is 10% of the premium for every 12-month period the person went without health insurance after qualifying for Medicare at 65. So it’s possible to be a few months late signing up for Part B and not be charged the penalty. But if a person goes more than 63 days without creditable drug coverage, the Part D late-enrollment penalty will apply.

    What is creditable drug coverage?

    Creditable drug coverage is at least as good as the coverage specified by Medicare’s standard drug plan design. Because the plan may not adhere exactly to the design—giving a little here, taking a little there—it just needs to be actuarially equivalent. As you can imagine, the formulas for determining actuarial equivalence are complicated and not something you can figure out for yourself. Rather, each insurance company is required to determine whether its plan meets CMS’s definition of creditable coverage and to disclose this information to employers.

    Employers in turn are required to disclose this information to all Medicare-eligible employees. Medicare eligible policyholders include active employees, spouses, dependents, COBRA qualified beneficiaries, and retirees. Employers will not always know whether an individual is Medicare eligible, so it is recommended that they distribute the notice to all employees. Notification must be made: (a) annually, prior to October 15; (b) prior to the effective date of coverage for Part D eligible employees enrolling in the employer’s group health plan (e.g., new hire onboarding); (c) upon termination of the prescription drug plan; (d) if the creditable coverage status changes; and (e) upon request.

    Because creditable drug coverage notification is not always obvious—it may be embedded in a newsletter or other routine communication—it is recommended that individuals request such information from their employers as part of the Medicare planning process. It should be noted that drug coverage offered by Tricare (for retired military), the VA, and FEHB (for retired federal employees) IS creditable. Individuals who have these plans do not need to sign up for Part D. Neither do individuals who are staying on employer or retiree plans that do offer creditable drug coverage.

    Changes for 2025

    The Inflation Reduction Act is ushering in some changes that may cause some plans whose drug coverage was previously creditable not to be so starting in 2025. In short, out-of-pocket spending by patients is being limited to $2,000 a year, with the difference largely being picked up by insurers. See this article for a more complete explanation of how this works. Insurers who do not meet this test—that is, who do not limit their insureds’ out-of-pocket spending to $2,000—will be deemed not creditable. That’s why this year, more than ever, all individuals 65 and older who do not have either a Part D drug plan or a Medicare Advantage plan that includes drug coverage—that is, individuals who are getting their drugs covered through an employer or retiree plan—will need to ensure that the coverage they have is creditable for 2025. If not, they will need to shop for and enroll in a Part D drug plan sometime between October 15 and December 7, with coverage starting January 1.

    The mandate to disclose creditable drug coverage to Medicare-eligible individuals falls to the employer (who in turn gets the information from the insurer). Employers who fail to provide the necessary notifications risk violating their fiduciary duties under ERISA.

    If you would like Lane Hipple to review your Medicare plan documents prior to, or during, this fall’s open enrollment period, please call 856-638-1855 and request a Medicare Review.