Health and Education Updates

It’s Veterans Day, and before I touch on the financial topics, I must send my thanks to all those who have risked their lives to protect our world – not just my fellow armed forces veterans, but police and firefighters as well. And to my father (and all you Army veterans out there), you have my deepest sympathy regarding the crushing defeat of the Black Knights by the Falcons last Saturday – Go Air Force! Beat Army.

Medicare Part B Premium Changes  Medicare Part B premiums may rise 52% in 2016 for some Social Security Recipients. Are you part of the 30% of Social Security Recipients who will be hit with the 52% increase in Part B costs? If you pay standard Part B premiums and have them deducted from your Social Security check, then you do NOT need to worry about this increase. Those who do face the increase include:

  • People who pay higher-income Part B premiums
  • People enrolled in Part B but pay premiums directly to Medicare (perhaps because they’ve delayed Social Security benefits)
  • People who pay permanent penalties because they signed up late for Part B
  • Those who are not yet enrolled in Part B, but will sign up in 2016

There are several great articles on the ironically titled “Medicare Hold-Harmless Provision.” Just google ‘Medicare 2016 premium increase’ and read the stories from Kiplingers, AARP, or other news sources.

Education Planning – FAFSA UPDATE  The FAFSA (Free Application for Federal Student Aid) filing timeline is changing next year. Students will be able to file a 2017–18 FAFSA as early as Oct. 1, 2016, rather than beginning on Jan. 1, 2017. The earlier submission date is a permanent change which will allow students to complete and submit a FAFSA as early as October 1 every year. (There is NO CHANGE to the 2016–17 schedule, when the FAFSA will become available January 1 as in previous years.)

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IL BrightStart 529 Plan Ranks Well (at least the Vanguard side does!)

Allan Roth recently wrote an article for MoneyWatch on the CBS news website, comparing 529 Plans nationwide.  He took a look at the cost for age-based investment options within both advisor-sold and direct-access 529 Plans, and found the IL BrightStart 529 Plan is in the top 5 for low-cost plans.  Add our state’s small tax deduction for contributions, and it becomes one of the better plans offered in this country.

If you are a Clarus client with college-bound children, chances are good that you already have the Vanguard selection within your IL BrightStart 529 Plan.  If you don’t have Vanguard funds within your 529, maybe it’s time to revisit your choices.

Link to Allan Roth’s article: Top five 529 college plans – CBS News

Parents of College-Bound Kids: Read Debt-Free U

I recently read Zac Bissonnette’s book Debt-Free U.  In his words, this book details “How I paid for an outstanding college education without loans, scholarships, or mooching off my parents.”  He is funny, irreverent at times, and spot-on in his advice.   The introduction summarizes the growing problem with the availability of student loans and focuses on the people you meet during the college application process – and the lies they tell you.

Did you know that student loan debt totals about $600 billion dollars (compared to credit card debt at $850 billion dollars)?  Thirty years ago, there wasn’t any student loan debt.  One third of all borrowers will end in default.  And unlike credit cards, student loan debt has no consumer protection, cannot be discharged in bankruptcy, and Social Security payments can be garnished to pay off delinquent student loan debt.  For the 90% of the public who don’t have the resources to easily pay for college, this is a must read!  I’ll highlight more from this book in future posts.