Now is the time for anyone on Medicare to consider whether changes need to be made in their coverage. The annual Open Enrollment period ends Dec. 7th, 2018. You may have seen commercials advertising how easy it is to change your plan. But wait, is it necessary? Have you moved? Has your health changed? Have your prescriptions changed? Has you financial situation changed? Have you run into problems with finding providers?

If you answered “yes” to any of the above questions you should probably investigate whether a change makes sense for 2019.
If you are eligible for Medicare and did not enroll in Medicare B or Part D, there may be penalties. You have 3 months before and 3 months after the month you turn 65 to enroll. After that you accrue penalties that will be with you for your lifetime on Medicare. If you’re in this boat, do not delay!

What is Medicare?
Medicare can seem like an alphabet soup: Parts A and B comprise “traditional” Medicare coverage. Part A is for in-patient care and Part B covers out-patient services. Part D is for prescription drugs. These building blocks of Medicare, however, have deductibles and do not provide 100% coverage. Most people opt to supplement traditional Medicare with a MediGap (Supplement) plan and a Part D prescription plan or choose a Medicare Advantage plan that packages all their Medicare benefits and includes prescription coverage. In all cases, the Part B premium ($135.50 in 2019) must be paid.
Medicare Advantage programs are available through private health insurance companies with networks of local providers; monthly premiums can range from $0 to $200. Then you “pay-as-you-go” – a copay or percentage coinsurance each time you access a medical service. Advantage plans cover everything that Medicare covers and additionally can offer extra benefits – limited dental, vision, hearing and even gym memberships. And drug coverage is included with the plan.

With Medigap (Supplement) plans you can choose different levels of coverage but, once you pay the monthly premium (in the $150-$200 range for 65 year olds and likely to increase with age), there are no copays or deductibles for any medically necessary services that traditional Medicare covers. It’s a “pre-paid” plan and the cost for your health care is known and predictable. Since it doesn’t include Rx coverage, most people choose to add a Part D plan. Usually there are no extra benefits such as those offered by Advantage plans. And, while Advantage plans have to accept any applicant; Medigap plans can – after a person’s first six months on Medicare – deny coverage for health reasons to new applicants. While any year you could switch from a MediGap to an Advantage plan, you might not be able to go the opposite direction.

Traveling?
Advantage plans have contracted networks of local providers. HMO plans limit coverage to their local network; PPO plans allow you to go outside the network for somewhat higher copays. MediGap (Supplement) plans are national rather than local and will cover any provider who accepts Medicare and may be a better choice for snowbirds or others who expect to spend time out of the area. All plans, however, will provide emergency coverage, often world-wide, but may require you to return to your local network providers to receive follow-up care. Usually separate travel insurance is recommended for international travel.

Need Help?
Lots to think about but it can make a big difference in your costs and health over the long run. Need help sorting out your options? SHIBA volunteers are trained to help. Call 541-812-0849 to schedule an appointment; there are some times still available next Monday, December 2.

Have you heard that higher income doesn’t necessarily mean increased happiness?   Studies show that on average people earning more than $75,000 (in 2010) don’t report increasing happiness with increasing income levels. The main explanation for this phenomenon is that once our basic needs are met, we aren’t very good at spending our money in ways that make us much happier.  Psychologists have taken an interest in this topic and lucky for us, their research gives us insights on how we can spend our discretionary income in ways that are more likely to increase our happiness.  Dr. Elizabeth Dunn shared some of these insights with us at the 2018 XYPN Live Conference.  Here are her top 5:

1)  Buy experiences. People report more intense feelings of happiness after purchasing an experience than after purchasing material items.  In fact, the memory of how great an experience was increases over time.  This effect contrasts with what we see with the purchase of material items, which bring smaller, more frequent jolts of happiness that tend to decrease over time.  Connecting with others to create unique and memorable experiences is one of the keys to happiness.

2)  Make it a treat. Novelty brings happiness, so you might want to reconsider purchases that used to be a treat but are now bought out of habit. Like eating out.

3)  Buy time. Are you aware of your U-index?  It measures the proportion of your day that you spend doing dreaded tasks.  Essentially, the higher your U-index, the lower your happiness.  So, outsource those dreaded tasks and see your happiness soar.  Use the extra time to connect with the people you love. If you’ve been looking for a good reason to hire a housekeeper –here it is!

4)  Pay now, consume later. This goes against everything credit card companies would have you believe, but research shows that we enjoy things more if we consume them after we experience the pain of paying for them.  Another benefit of this tactic is the added happiness that the anticipation of enjoying that item or experience will bring.  Get ready for a blog post on how budgeting can make you happier!

5)  Invest in others. One of the fundamental aspects of being human is that it brings us joy to help others.  Giving to others feeds into this part of the human experience and is one of the best ways you can spend your money in a way that will bring you happiness.  Choose beneficiaries that you connect with, and that you feel you can have an impact on.  Another perk of giving to others?  It’s good for your heart!  Lab experiments revealed that being charitable had the same effect on blood pressure as exercise!

This body of research demonstrates that maximizing your money is not what’s important.  Your spending decisions and attitudes towards money have a much more powerful impact on your well-being.  That’s what holistic financial planning is all about!

What does the fair have to do with financial planning? A lot as you’re about to read! I participated in 4-H in my youth and the highlight of the year was going to the fair to show off all our hard work, whether it was showing an animal, artwork or food. Although I grew up on a farm, my parents did not have any livestock. I begged to have a steer or horse but eventually stumbled upon pragmatic guinea pigs. They were small, didn’t take up a lot of room and were easy to show. Thus, began my reign as master showman of guinea pigs.

I went back and forth as Grand Champion Showman of guinea pigs with another competitor until I finally convinced my dad to let me try showing a steer. The goal was to sell the steer at the fair auction. Sales for first place winners can be very lucrative for a young person heading to college someday.

Showing steers was surprisingly different and took more time than I expected. I quickly learned that you need to invest time training them on a halter and lead rope, and that you have to be very disciplined in feeding and monitoring their health, keeping meticulous records. In the show ring the judge asks questions to test your knowledge and watches how your animal behaves in the ring.

I had not planned well and did not spend as much time with my steer as I should have. He had a mind of his own (his name was Runaway –need I say more?) and some minor (non-contagious) health issues. Consequently, we only earned a third-place ribbon, which was a reality check for someone accustomed to being at the top of their game with guinea pigs!

You still might be wondering what this all has to do with financial planning. Well, it was through my experience showing animals that I first learned the importance of discipline and planning. This lesson translates to finances as well. To achieve our goals, we must all be disciplined in our plan, keep good records, and monitor the health of our plans. If you don’t have a plan yet, then get help developing one. Nothing is gained without hard work and discipline. If your heart isn’t in it, you must decide what is important and focus on the things you can do. Take small steps but be consistent. And when life throws you curve balls you must be agile and be open to change.

I encourage you all to go to the fair and talk to the 4-H kids that have spent all year getting ready for the big show. You will find them dedicated and knowledgeable, and you might even learn a life lesson or two from them.