Retirement: Managing unexpected expenses, an emergency fund - USA TODAY

Retirement: Managing unexpected expenses, an emergency fund - USA TODAY


Retirement: Managing unexpected expenses, an emergency fund - USA TODAY

Posted: 18 Mar 2020 03:01 AM PDT

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U.S. and international stock markets take a hit over coronavirus fears. Investment pros are advising not to panic, staying the course on retirement. USA TODAY

You might expect plenty of things in retirement – spending time with family and friends, traveling, focusing on your health wellness.

But you're also living in fear of unexpected expenses. In fact, roughly half of near-retirees and retirees say that's the biggest fear they have/had about retirement, according to a recent survey published by Empower.

"Retirement is effectively a great unknown," says David Blanchett, head of retirement research for Morningstar Investment Management. "The actual date of retirement is unknown for most, when retirement is going to end, i.e., death, is unknown, and we do - and spend – in retirement is unknown, especially before it begins."

Two questions: Will you face unexpected expenses in retirement and, if so, how best to plan for those expenses?

Expect a spending surge. Research by J.P. Morgan Asset Management shows that household expenses, in general, tend to decline after age 45. But there is a spending surge around just before and after retirement, usually the result of increased travel, housing-related changes – such as relocation or renovation – and other types of lifestyle changes.

Expect spending shocks. Research also shows a high degree of "spending volatility" during retirement. According to the JPMorgan Chase Institute, older families show more stable income, which is expected given more stable income streams – like Social Security income and annuities – but spending volatility is high and "may result from a higher probability of unexpected medical expenditures during older age."

And according the Society of Actuaries shows the most common financial shocks during retirement being home repairs and upgrades and major dental expenses.

"Unexpected expenses are inevitable in life, and in retirement," says Dana Anspach, CEO of Sensible Money. "Sometimes it happens because you forgot about future big-ticket items, like auto purchases or major home repairs ... But more often than not, it comes from a family emergency, perhaps an adult child that needs your financial assistance."

Getting ahead of unexpected expenses

Evaluate and risk manage. Step one, says Keith Whitcomb, director of analytics at Perspective Partners, is getting an understanding of where those unexpected expenses could pop up. First ask: What are your big-ticket budget items that are subject to volatility? And two, determine if it's an insurable exposure? "Try to eliminate catastrophic outcomes where possible by getting coverage," he says. "While this will increase your expenses, if it allows you to sleep at night, it may well be worth the cost."

Put a plan in place. Whitcomb also recommends having a financial action plan in place in the event of an emergency. "The plan should be codified so that all in your family know what to do financially in the event they need to act," he says. "The plan will detail your insurance coverage and an order of funding alternatives."

Have an emergency fund. Typically, the first line of defense, says Whitcomb, is your emergency fund. How much should you have in that account? According to JPMorgan Chase, families ages 65-plus with income less than $29,000 need a little bit more than $2,300 set aside while those with income greater than $95,000 need a little bit more than $13,000. A middle-income family meanwhile would need about $5,000 to cover "concurrent adverse income and spending shocks."

For her part, Sharon Carson, a retirement strategist with J.P. Morgan Asset Management, says having a cash buffer for out-of-pocket heath care expenses and long-term care expenses is also necessary. For instance, expected health care costs are projected to rise from $5,300 for a 65-year Medicare beneficiary in 2020 to $16,810 for a 95-year-old beneficiary.

Managing your emergency fund

Once you have an emergency fund in place, evaluate all your other options. What might those options be?

HELOCs and HECMs. If you own a home consider a home equity line of credit, or HELOC, says Anspach. "They are typically easy to set up and interest rates are low," she says. "Then you can be strategic about how to withdraw funds from other places in a tax-efficient way to pay it off."

You may also be able to draw on the equity in your home through a reverse mortgage – a home equity conversion mortgage, or HECM, says Whitcomb. "Having the HECM as a source of backup funding may be a good 'insurance policy' to have available for just this sort of event," he says.

Borrow cash value. If you have a life insurance policy with cash value, you may be able to use that, says Anspach. "The insurance company can tell you how much you can withdraw or borrow from the policy without putting the policy at risk of lapsing later in life."

Tap your health savings account? Consider tapping your health savings account or HSA – if you have one. "If you paid for medical expenses out of pocket during prior years where you had your HSA, as long as you have records, you can make a tax-free withdrawal from your HSA up to the amount of documented qualified medical expenses," says Anspach. These withdrawals will be tax-free.

Tap your Roth IRA. Withdrawals from Roth accounts are not included in many of the complex tax formulas that apply to retirees, such as your eligibility for the health care tax credit, or the formulas that determine how much of our Social Security income is taxable or what your Medicare Part B premiums will be, says Anspach.

Explore long-term options. In the case of medical expenses, Whitcomb says there may be longer term financing arrangements available through the provider. "You also may be able to negotiate a reduction in your bill ... As a result, you could effectively reduce the debt and lengthen out the payments to better fit your retirement budget."

Borrow against your stock portfolio. Don't sell investments during a market downturn to pay for unexpected expected expenses. Borrow against them instead. "Most brokerage firms offer some type of pledged asset line of credit where your investments serve as collateral for a low-interest rate loan with flexible payment options," Anspach says. "This works great for temporary financing needs, such as the need to put a down payment on a new home before your existing home has sold."

If markets are favorable, however, you may want to liquidate specific investments in your portfolio, says Whitcomb.

Other options. You could also draw on other forms of financing like a credit card. "While it will likely be expensive, for a short-term emergency, it may work," Whitcomb added.

Robert Powell is the editor of TheStreet's Retirement Daily www.retirement.thestreet.com and contributes regularly to USA TODAY. Got questions about money? Email Bob at rpowell@allthingsretirement.com.

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Making Dental Healthcare More Affordable for Reston Families - Patch.com

Posted: 10 Feb 2020 12:00 AM PST

Whenever an election year rolls around, affordable access to healthcare comes up as a hot topic, but have you ever thought of the importance of having affordable dental care? The truth is that many families right here in the community don't have dental insurance and therefore put their health at risk. Even though you won't likely hear candidates debating on access to dental care, this is an important issue to understand and be aware of your options.

About 74 million Americans, which equates to approximately 23% of the population, have no dental coverage whatsoever. That's twice the number of people who don't have medical insurance. These people don't just include adults on government programs like Medicare and Medicaid, but also self-employed workers, small business owners, and retired senior citizens. Basically, millions of people, often those most in financial need, must find an alternative to traditional insurance in order to afford necessary dental treatment.

Why does this matter? Studies have repeatedly shown a strong connection between conditions in the mouth and medical issues elsewhere in the body. For example, those who have gum disease are significantly more likely to develop uncontrolled high blood pressure and experience a cardiovascular event like a heart attack or stroke. Diabetes is another disease that has close ties with the bacteria of the mouth. In other words, by taking care of your smile, you put yourself in a better position to enjoy strong overall health and well-being.

Gaps in Coverage

Although those who take full advantage of their dental insurance benefits have the potential to save thousands of dollars, many people only go to the dentist for extreme dental emergencies, whether they have insurance or not. In these cases, patients often wait to see a dentist until they're experiencing a severe toothache, a chipped tooth, or some other problem. But the truth is that by simply attending checkups and cleanings regularly, patients can dramatically reduce the cost of dental healthcare.

Unfortunately, adults who do not have dental insurance and are on government assistance programs have large holes in coverage. National Medicare offers no dental benefits at all for adults over 65, and Virginia Medicaid only covers necessary oral surgical procedures, i.e. tooth extractions. This means that hundreds of thousands of people are at risk of losing teeth that otherwise could have been saved!

Insurance Alternative: In-House Saving Membership

Luckily, dental insurance isn't the only option for making dental care more affordable. Some dentists in Reston offer what are commonly called in-house savings plans or memberships for those without coverage elsewhere. Essentially, for a reasonable annual fee, members of this plan get two dental cleanings and checkups with X-rays as needed. Most plans also provide a discount on additional services, often including orthodontic and cosmetic procedures, which are largely considered elective by insurance companies.

Even if you don't have dental insurance, it doesn't mean that you're forced to pay full price for your oral healthcare. You can look for a dental practice right here in the community that offers a simpler, more affordable solution.

About the Author

With more than 30 years of clinical experience, Dr. Wayne Myles has been practicing in Northern Virginia since 1997. During the course of his career, he has completed the Las Vegas Institute of Advanced Dental Studies curriculum and earned certification in sedation dentistry and sleep apnea therapy. In his practice, Smiles by Myles, he offers the Smiles by Myles Dental Plan, which offers two free examinations for any emergency treatment on top of the preventive services and discounts. If you have questions about saving money on oral healthcare, you can contact Dr. Myles.

CMS: Oral Appliances Made from Digital Scans Now OK for Medicare... - Sleep Review

Posted: 04 Jun 2019 12:00 AM PDT

After requests from dental sleep medicine practitioners, the Centers for Medicare and Medicaid Services has changed its coverage determination to encompass traditional and digital impression options.

Not many people would argue that it is fun to lean back in a dental chair as you hear the words "open wide" before a large tray of blue goop is slid into your mouth. Then, for five minutes, you must hold still, trying not to gag, as the substance solidifies, but not without some of it, potentially, running down the back of your throat. This is often what it takes to make a model of the teeth to construct an oral appliance, the device that shifts the jaw forward to keep the airways open, making it easier for people with obstructive sleep apnea (OSA) to breathe during the night.

The patient experience of traditional impressions is one reason why dentists who treat OSA are turning to digital scans, a newer technology that creates an image of mouth anatomy, with no goop involved. Many third party payors have OK'd these digital scans, which research has shown are just as accurate as manual impressions, but Medicare lagged behind—up until now.

The Centers for Medicare and Medicaid Services (CMS) recently OK'd digital impressions  for Medicare beneficiaries who need oral appliances for sleep apnea. The change to the coding guidelines comes after a push made by dental sleep medicine advocates who pointed out the need to shift the local coverage determination (LCD) to reflect the current state of the industry.

"Digital scans and digital impressions are the future that is here now, and they provide a really terrific benefit to the patients because these scans can be taken without gagging the patients as traditional impression materials often do," says Vicki E. Cohn, DDS, DABDSM, clinical director at Sleep Apnea Dentists of New England.

Cohn often comes across patients who have restricted airways, and often times, a higher gag reflex. These patients can suffer from anxiety associated with sitting in the dentist's office chair and manual impressions can exasperate these problems.

"Many of the practitioners in the dental sleep community are using digital impression scanning techniques routinely for all patients since they believe this is a superior technique and, for them, the new standard of care.  We do not want to have to treat our Medicare patients at what we personally believe to be a lower standard of care," Cohn wrote in a letter to medical directors at CMS to ask for the change.

Fear and anxiety around conventional impression techniques can delay therapy. "For some patients it is a roadblock for care," Cohn says.

In her letter, Cohn provided educational material to support the use of digital scans and to explain the difference between digital scans and manual impressions.

Digital impressions are taken with a small camera that looks like a wand, which is moved throughout the patient's mouth to capture thousands of images. Those images are then digitally stitched together. The digital file is sent to a lab nearly instantaneously, bypassing the days that it would take for a manual impression to arrive in the mail. Traditional impressions can also get lost or damaged in the mail. Overall, digital scans lead to faster treatment for patients, according to the letter Cohn sent to the CMS directors.

"You're skipping three days of mail time, so if you have a patient and you definitely want to get this treated, you want to get this back as soon as possible," explains Jan Palmer, FAADOM, a consultant and administrator for Sleep Apnea Dentists of New England who holds positions with two Medicare durable medical equipment provider education and outreach groups.

The cost of one of these digital scanners is steep and can run over $20,000, but the return on investment comes from improved accuracy over time, David E. Federici, DMD, of Federici Dental in Manahawkin, NJ, told Sleep Review in a previous article.

"The true savings is time and accuracy—as remakes and time inserting have dropped to barely any adjustments needing to be addressed. The time factor is both in scanning and no retakes of impressions as well as getting the cases back in half the time, which also means less temporary crown recementations and happier gum tissues with less time wearing a temporary," he says. "And patients love the new technology and not having the goop in their mouths and retakes and gagging, etc."

Overall patient comfort is a huge factor, Cohn adds. There is no excess material to drip down patients' throats. Patients don't have to open their mouths uncomfortably wide. If the patient needs to take a break for any reason, the digital impression procedure may be started and stopped without altering its accuracy, Cohn's letter continues.

Additionally, unlike a traditional impression, a digital scan can be securely stored on a computer and a new oral appliance can be made from the scan again later without loss of accuracy, says Cohn.

"It's up and coming. It's just so much better, and it is a lot easier on the patients," says Palmer, who also advocated for coverage of digital scans for Medicare beneficiaries.

CMS recently released information on how to request new LCDs or revisions to existing determinations. To request new LCDs, send the request to your Medicare Administrative Contractor (MAC) in writing (email, fax, or letter); clearly identify the statutorily-defined Medicare benefit category which you believe the item or service falls under and provide a rationale justifying the assignment; identify the language you want in an LCD; include a justification supported by peer-reviewed evidence (with full copies of evidence); include the relevance, usefulness, clinical health outcomes, or the medical benefits of the item or service; and explain the design, purpose, and/or method of using the item or service for which the request is made.

Lisa Spear is associate editor of Sleep Review.

Image: A 3Shape intraoral scanner is one option for creating digital impressions for oral appliances for sleep apnea.

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