How to Save Big on Healthcare

You have probably heard that big changes are coming to healthcare this month, but you might not be sure how it affects you. Here's what you need to know to save big on healthcare this year.

The Affordable Care Act caused state healthcare exchanges to open on October 1. A healthcare exchange is a kind of marketplace where insurance companies offer different plans to consumers.

However, just because these plans are available to you does not mean that you should automatically drop your employer's insurance. This is because, under your company's insurance, your employer is actually paying for some of your coverage. 

On the other hand, there are specific circumstances that may make shopping the healthcare exchange worth your while. If you fall into one or more of the categories listed below, you should consider shopping the exchange for a better deal on your healthcare coverage:

• More than 9.5% of your household income goes to health insurance. Even if you have your company's healthcare insurance, you may be paying a significant portion of the cost. If so, you can drop your company plan and find assistance in the state healthcare exchange. 

• Your employer pays for less than 60% of your healthcare costs. This is another indicator the government uses to identify inadequate coverage. It usually applies to high-deductible plans. 

• You work for a company with less than 100 employees. The Affordable Care Act only requires companies with more than 100 employees to provide health insurance. If  your employer offers no or minimal coverage, you might be able to find a better plan at the exchange. 

• You earn less than 400% of the poverty level. If you qualify for a government subsidy, shopping the healthcare exchange is a good idea. To qualify for a subsidy, you must earn between 133 and 400% of the poverty level. If you fall below the 133% mark, you qualify for Medicaid. If your income is above the cutoff point, you can still use the exchange to shop for health insurance. However, you will not receive a tax break. 

Whether or not you are enrolling in the healthcare exchange, there are other ways that you can save on your medical expenses. One way is to have a healthcare savings account. It could save you money on taxes as well as provide free money for medical bills. Here are THREE types of healthcare savings accounts to consider:

• FSA - A Flexible Savings Account is set up through your employer and puts pretax dollars aside for medical expenses. FSAs are especially helpful for expenses that you know are coming, such as paying for children's braces. In order to be reimbursed, you must turn in your receipts. When using a FSA, it is important to budget carefully since the money must be spent within the calendar year or it returns to the company. 

• HSA - The money in a Health Savings Account can be invested, so it could earn more for you than if it was just sitting in savings account. The earnings are rolled over every year, and you can withdraw all of it when you turn 65. These accounts are available through employers and banks, and many of them come with fees. To sign up, you have to a high-deductible insurance policy.You must also be careful not to use the funds for a non-qualified medical expense before you turn 65. If you do, the IRS will add an extra 20% to your federal taxes. 

• HRA - The only type of account that employers completely fund is a Healthcare Reimbursement Account. The money in this account will stay there from year to year, and it covers nearly everything that a FSA or HSA would. While some require you to file a claim, others simply give you a check card to use for your health expenses. However, you do not keep the money once you leave that job, so keep that in mind if you are preparing to retire or change careers. 

With these tips in mind, you should be well prepared for the coming healthcare changes. If you have any other ideas on how to save money on medical expenses, please share them in the comments below!

Written by: Meg Thompson, Marketing Resources, at Family Services, Inc.

4 ways to use your tax refund to strengthen your overall financial situation

If you are anything like me, you’ll be more than tempted to use your tax refund for that flat screen you’ve wanted, or maybe that weekend vacation you keep putting off. It feels good to finally get those material things you’ve “needed”. However, like most material indulgences, the charm wears thin and quick…especially when an emergency comes up, or reality hits that you should invest more in your future.

I asked our experts here at Family Services, Inc. for different ways to use a refund that will leave you feeling secure, and confident about your financial situation.

 1.       Pay off/down debt: This encompasses a lot. Who doesn’t have debt these days? Pay off a credit card balance. Double up on a mortgage payment. Doing this once a year can shorten your overall payment period (provided it's allowed under the terms of your loan). If you’re not a homeowner, apply this trick used for mortgages to your student loan debt. Paying down debt, whether it’s a credit card, car loan, mortgage, student loan, or any other kind, is usually a guaranteed return equal to the interest you would have otherwise paid.

2.       Make an emergency fund: If you have your debts under control, and don’t feel it’s necessary to make an extra payment, then your tax refund might be an excellent starting point for building an emergency fund. Personally, my refund will be put away as “emergency funds”. The other day I left work to find that I had a flat tire. Needless to say, I had NO money to pay for this unexpected expense and was forced to charge it, maxing out my credit card!

3.       Invest: If you have no debt and a healthy emergency fund (kudos to you), then you can always look to the future. A tax refund can be used to put a down payment on a house, buy a car, or help pay for an education for you, or the little ones (look to ESA plans and 529 plans). Try one of these: 401(k), 403(b), Roth IRA, Traditional IRA, SEPs. Have questions? One of our licensed financial coaches can help! The purpose and the time frame will help you decide the kind of investment you should be looking at.

              

4.       A savings account: Instead of a regular savings that would perhaps hold your emergency fund, try a Christmas club account. Christmas is the same time every year, but it still catches the majority of people off guard. Even better, invest in a Certificate of Deposit account, similar to a savings account but with higher interest for your benefit.

Go to www.fsisc.org or call 843-735-5522 for information or assistance.

Written by: Sarah Cornwall, Marketing Resources Assistant at Family Services, Inc.

Use Leap Year to Get Your Financial House in Order

NFCC Offers Financial To-Do List for February 29

Washington, DC – If there’s one thing everyone wants, it’s more time, and that’s exactly what we have this year. A once every four-year phenomena of the calendar known as Leap Year is providing us with 24 extra hours this February 29.

For some, the day will come and go with little to show for it. However, with a little forethought, people can use the extra hours to make a difference in their financial lives. The National Foundation for Credit Counseling (NFCC) suggests that consumers dedicate this gift of time to tackling the financial tasks they may have been putting off.

Prepare federal income taxes. Gather all 1099s, W-2s, and receipts related to eligible deductions. Whether filing on your own or through a professional, these items will be needed to prepare an accurate return.

Create or organize a home financial center. Since the financial documents are out, create files for each category. This step will help you stay organized all year long, and will make preparing next year’s tax return much simpler.

Review all insurance policies. The time to become familiar with insurance policies is not when you make a claim. Insurance is not something to buy and forget, as life changes often dictate adjustments to the policy. Make an appointment with your insurance provider to confirm that your current needs match your coverage.

Review retirement contributions. Due to the payroll tax cut, working Americans now have extra money in their paychecks. The best use of this money could be increasing the retirement contribution at work. Make sure to maximize the benefits of an employer match and age-related allowable contribution increases.

Order your credit report and score – With good reason, people are very interested in their credit score. However, many do not realize that the score is based on the information in the credit report. In spite of it being free through www.annualcreditreport.com, the NFCC Financial Literacy revealed that 65 percent of Americans had not ordered their credit report in the last 12 months. The credit score didn’t fare any better, with 63 percent of respondents indicating they’d not ordered their score. Even though there will be a small fee charged to obtain the credit score, it will be money well-spent, as these three numbers dictate much of your financial future.

“Those who use the extra time afforded by Leap Year to accomplish these five financial moves will wake up March 1^st with a well-earned sense of accomplishment,” said Gail Cunningham, spokesperson for the NFCC. “The efforts they put forth on this bonus day will yield rewards throughout the year.”

If you need free or low-cost professional help putting your financial house in order, reach out to an NFCC Member Agency today. To schedule an appointment with a Certified Credit Counselor at the agency closest to you, dial (800) 388-2227, or go online to www.DebtAdvice.org. For assistance in Spanish, call (800) 682-9832.

The National Foundation for Credit Counseling (NFCC), founded in 1951, is the nation’s largest and longest serving national nonprofit credit counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services. NFCC Members annually help more than three million consumers through close to 800 community-based offices nationwide. For free and affordable confidential advice through a reputable NFCC Member, call (800) 388-2227, (en Español (800) 682-9832) or visit www.nfcc.org. Visit us on Facebook: www.facebook.com/NFCCDebtAdvice, on Twitter: twitter.com/NFCCDebtAdvice, on YouTube: www.YouTube.com/NFCC09 and our blog: http://financialeducation.nfcc.org/.

Its Official!

2012 Youth Financial Literacy Summit. Check it out!

FATHER KNOWS BEST – OR DOES HE?

Survey Reveals Definite Lack of Financial Skills

Washington, DC – As Father’s Day approaches, many dads begin reflecting on the life skills they’re teaching their children. Nice manners, discipline and a good work ethic top many lists. Not to be overlooked, however, are financial skills, because regardless of whether they are taught formally or by example, parents pass along their financial habits to their children.

This concept is confirmed by the National Foundation for Credit Counseling’s (NFCC) 2011 Financial Literacy Survey in which the majority of respondents, 42 percent, indicated that they learned the most about personal finance from their parents. At first glance, this appears to be a good thing, as the home should be the ideal place for children to learn skills and habits.

However, the same survey also revealed that 41 percent of adults gave themselves a grade of C, D or F regarding their knowledge of personal finance. This is a disturbing decline in financial literacy, as one short year ago “only” 34 percent of Americans gave themselves a low grade. Further, five percent of U.S. adults, or about 11.5 million people, indicated that the failing grade of F best represented them, marking a sharp increase from previous years when less than three percent of adults self-identified at this level.

Taken together, these results suggest that many parents are ill-prepared to teach their children sound financial principles.

“The good news is that Americans recognize and are willing to admit their financial deficiencies,” said Gail Cunningham, spokesperson for the NFCC. “Now it is up to them to do something about it, particularly if they have children who will invariably model their parent’s financial behavior.”

There are many resources available to consumers desiring to improve their level of proficiency in personal finance, including self-help books, the media, the Internet or financial professionals. Interestingly, the survey showed that while Caucasian and Hispanic adults are more likely to identify the home as the primary learning ground for personal finance, African-Americans are more than twice as likely as Caucasians to garner such information from self-help books, the media or friends.

Looking at gender, men were more than four times as likely as women to give themselves failing grades for their knowledge of personal finance, eight percent versus two percent, respectively.

“During these painful economic times, it can be argued that keen personal finance skills are more important than ever,” continued Cunningham. “The NFCC calls on parents to stop the cycle of financial illiteracy by improving their own level of financial expertise, thus enhancing the likelihood that their children will some day be able to give themselves a grade of A in this important life skills category.”

If you want to improve your level of personal financial skills, reach out to an NFCC Member Agency where you can meet with a counselor one-on-one, or participate in group workshops on a variety of financial topics. The services are free or low-cost and are open to the public. To be automatically connected to the NFCC Member Agency closest to you, dial (800) 388-2227, or go online to www.DebtAdvice.org. For assistance in Spanish, dial (800) 682-9832. OR, if you're in the Charleston Area contact Family Services, Inc at (843) 735-7802

The National Foundation for Credit Counseling (NFCC), founded in 1951, is the nation’s largest and longest serving national nonprofit credit counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior and build capacity for its Members to deliver the highest quality financial education and counseling services. NFCC Members annually help over three million consumers through close to 800 community-based offices nationwide.

One simple change can make life, money management easier

By Carey Denman

In a house with four children, I can easily become besieged by laundry. It mounts quickly, but takes hours to tackle all the tiny socks and spaghetti-stained t-shirts. On any given day, there is a load of laundry sitting somewhere, waiting to be stain-treated, washed, dried, folded, or put away.

Laundry isn’t complicated (unless you end up drying a piece of wayward gum, which has been known to happen at my house), but it is a process that can be overwhelming. That’s why I decided to remove the hampers from my children’s rooms and set up a canvas cart with three separate bins.

My children now drop off their dirty clothes in a centralized location, where it immediately gets sorted by color. When one bin gets full, I can do laundry without having to walk all over the house dumping out hampers and sorting clothing.

My experience with the laundry cart reminds me how valuable one small change can be. Though I’ll never be free of laundry, I have found a way to streamline the task. In the same way, you will always have to deal with money, no matter how much or little you have. Too often, people get overwhelmed by the idea of getting their finances under control. When they don’t know what to do first, they often end up doing nothing.

You can learn to manage your money effectively by making one small change at a time. Start by asking yourself, “What isn’t working well?” For example, do you have a habit of paying bills late and ending up with late fees? Do you scramble when the holidays approach, then overspend on your gift purchases? Do you eat out more often than you would like?

Once you identify one area you would like to improve, then you can consider a simple solution. Suppose you want to stop paying your bills late. Start by putting your bills in one place and setting aside one or two specific days every month to pay them. If necessary, set up e-mail reminders or ask a trusted friend to keep you accountable.

If you want to build an emergency fund, set a relatively small goal--$500 to $1,000—and sign up for an automatic payroll deduction. You’ll never miss what you don’t see, and you’ll be encouraged when your savings balance grows each month.

If you want to spend less eating out, pack your lunch the night before. You can also stock your desk or work area with hearty, non-perishable foods such as trail mix, dehydrated soup mixes, granola bars, juice boxes, beef jerky or almonds. In a pinch, you can eat what you have on hand, and you won’t be tempted to dash out and buy something instead.

Planning ahead can help you rely less on convenience foods, too. You could cook and freeze several meals for later. My husband’s thrifty 89-year-old grandmother does this, creating complete, individual meals for herself. Even learning how to cook one or two new dishes can help you to spend less on expensive, ready-made food.

Advance planning also can help you avoid the last-minute holiday crush. If you can’t avoid it this year, start fresh in January. Make a gift list at the beginning of the year. Then, commit to making or buying just one gift a month; come next December, you—and your budget—won’t be stressed.

Ultimately, you’re in the best position to decide what solutions will work for you. Starting small will let you build on your success, allowing you to get your finances under control one simple change at a time.

10 Expenses to Cut to Help Pay Off Credit Debt

Even small cuts make a difference, so examine your costs in these 10 areas first.

If you find yourself falling deeper into credit card trouble, it's time to take a hard look at what's coming in, what's going out and see where you can free up some cash quickly to start hacking away at your debt.

Some trims may seem small, but if you package several of them together, you can soon get started on a respectable payment plan.

Here are some ideas for places to turn first.

1. Cell Phones

"For $9.88, you can buy a TracFone (prepaid cell phone) with pretty decent coverage and pay by the minute," says Mike Sullivan, director of education at Take Charge America in Phoenix. "And if you're careful, you can end up saving $40 to $50 a month off a typical $80 cell phone bill." He also recommends canceling your land line unless you have medical issues that may require emergency calls.

2. Cable/Satellite

Most people can save money just by getting rid of the extra pay packages they have -- such as premium movie channels and extra services. "If you're really in trouble, cancel the whole package," Sullivan says. Check out the library for free movies, DVDs and CDs to bridge the entertainment gap.

3. Homeowners Insurance and Car Insurance

By increasing the deductible of your policy from $500 to $1,000, you can see big decreases on your premium, says Michael Barry, vice president of media relations for Insurance Information Institute in New York. "People pay about $880 a year, so if I can knock $88 off, it's a start." Regarding auto insurance, take a look at your collision insurance if you have an older car. If you have even a fender-bender, sometimes the cost to repair the car would be more than it's worth, so perhaps you could cancel the collision insurance altogether. First, look up the value of the car at Kelley Blue Book, Edmunds.com or the National Automobile Dealers Association, then check the collision line on your auto insurance bill and see what it's worth to you to keep that insurance. Also, if you don't drive that car much, look for a discount. "If you drive from 7,000 to 7,500 miles a year, you can often qualify for low-mileage discounts," Barry says.

4. Transportation

Americans are increasingly finding alternatives here. In fact, consumers spent 11 percent less last year in this category, according to the Bureau of Labor Statistics' 2009 Consumer Expenditures Survey released in October. If you have more than one car, this may be the time to look at downsizing to just one car and getting around with better planning, carpooling, bike riding, public transportation or car sharing. Car-sharing companies such as Zipcar operate in a growing number of cities and on many university campuses. You can rent a car by the hour when you have to have one without the expense of insuring and maintaining your own car.

5. Utilities

"People often overlook programmable thermostats," says Edward Tonini, director of education of Alliance Credit Counseling in Charlotte, N.C. "You can spend $20 to get a programmable thermostat and if you set it right, it can save you $100 over the course of a year easily."

6. Food

Households spent an average of just more than $300 a month on food eaten at home and about $215 per month on food outside the home in 2009, the BLS survey reported. "Maybe eating out isn't necessary for you," Tonini says. "Packing lunches and eating at home will lower your discretionary spending."

7. Gym Membership

Are you really using it multiple times a week? Divide your monthly dues by the number of times you go in a month and get a realistic picture of what you're spending on a one-hour workout. Park districts or community centers often have low-cost or free programs. Also check into exercise videos or a piece of home exercise equipment that you would use regularly. If you decide to keep the membership, check to see whether the facility offers discounts for coming at off-peak times.

8. Movies

A family of four can quickly rack up nearly $100 on one movie with popcorn, drinks and maybe even parking fees. "Instead of going to the movies, have a game night at home. It sounds kind of corny, but it will be more meaningful than sitting in the dark when you can't talk to each other," says Dave Gilbreath, a regional director with Apprisen Financial Advocates in Yakima, Wash.

9. Tax Relief

Wendy Burkholder, executive director of Consumer Credit Counseling Service of Hawaii in Honolulu, says, "Many of the families we work with are struggling with credit card debt because of loss of income. One of the first things to do is re-evaluate your tax withholding on your paycheck (if your spouse or partner has lost a job). If you don't make the change, you end up with a whopping refund. You don't need the money a year from now, you need it now." If you're overpaying taxes, you're also giving the government a free loan and are likely putting off paying for your own bills, which can lead to fees and penalties, she says.

10. Health Insurance for Dependents

"If you're struggling with loss of income, you may no longer be able to afford $600 being deducted from a paycheck to cover your dependents," Burkholder says. She suggests checking to see whether you now qualify for a state or federal coverage plan for dependents, such as the Children's Health Insurance Plan, or coverage by health care providers that may offer reduced prices for basic health care for children.

Deciding what to cut first will be different for every consumer, but whatever the choice, it should be sustainable, rather than a one-time quick fix, Tonini says. Sometimes it's cutting out the daily $4 coffee, but "they need to figure out what their 'latte factor' is."

Happy Holidays from Family Services everyone!