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Financial Information for Senior Military Officers

TRICARE Young Adult (TYA) Premiums to Increase...A Lot

TRICARE Young Adult, the insurance coverage for prior dependents of Military Members under age 26, will become significantly more expensive starting on January 1, 2016.

Premiums for the Prime version of TYA will increase 47% from $208 per month to $306 per month.

Standard version of TYA will increase 25% from $181 per month to $228 per month.

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Say Hello to Your New Health Care Partner: The IRS

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I was recently at a two day session on tax preparation for the upcoming year(s). I know…I know, who would willfully do that? One quarter of the instruction covered the tax implications of the Affordable Care Act (ACA) also known as ObamaCare. That is how big a presence the IRS will have in enforcing this law. I know a lot of the readers of this blog have TRICARE or other government coverage and don’t need to worry too much about ObamaCare. But, a lot of us have relatives (like kids) who will be affected. A lot of this is still being determined, but here is what I’ve learned so far. In no particular order…

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TRICARE, ObamaCare and Your Children

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With everything going on with ObamaCare…delays, exemptions, exceptions…it is hard to know exactly how it applies.

For Active Duty or Retired Senior Military Officers and their spouses ObamaCare is a non-issue. TRICARE and TRICARE For Life meet the requirements of ObamaCare. But what about the kids?

As long as your children are your dependent they will be covered by your TRICARE policy and like you, ObamaCare will be a non-issue. Your child is considered a dependent if:

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Does TRICARE Young Adult Make Sense?

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A lot of my contemporaries and I have children that may need health insurance soon. One option is TRICARE Young Adult (TYA). While TYA is an option and may make sense, especially, if your dependent young adult has pre-existing conditions, there may be a better option. And that option is a combination of a High Deductible Health Plan (HDHP) and a Health Savings Account (HSA). I really like the HDHP/HSA combination and here is why.

  1. Tax Savings. Contributions to a HSA are tax-deductible to the beneficiary of the HSA, regardless of who made them (with the exception of employers).
  2. HSA earnings accumulate tax-deferred and if used for qualified medical expenses they are tax-free
  3. Lower premiums. TYA runs from about $176-$201 per month depending on whether you select TYA-Standard or TYA-Prime. The premium on an HDHP policy could be less than half that amount.
  4. It meets the test for when insurance makes sense. Much health “insurance” has really devolved into “pre-paid health care”. By default, the expense of administering the insurance increases the cost of the treatment…which is passed on to you in premiums. Just like with your auto or homeowners insurance you want to pay for the smaller things and let the insurance cover the really big losses. An HDHP does this (even though some preventative services may be covered).

 

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Disclaimer

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by C.L. Sheldon & Company, LLC ), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from C.L. Sheldon & Company, LLC . To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. C.L. Sheldon & Company, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the C.L. Sheldon & Company, LLC ’s current written disclosure statement discussing our advisory services and fees is available for review upon request. DISCLAIMER OF TAX ADVICE: Any discussion contained herein cannot be considered to be tax advice. Actual tax advice would require a detailed and careful analysis of the facts and applicable law, which we expect would be time consuming and costly. We have not made and have not been asked to make that type of analysis in connection with any advice given in this blog post. As a result, we are required to advise you that any Federal tax advice rendered in this blog is not intended or written to be used and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS. In the event you would like us to perform the type of analysis that is necessary for us to provide an opinion, that does not require the above disclaimer, as always, please feel free to contact us.

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