Greetings to all, as we move closer to the end of what has been a challenging year. I hope this email finds you well.

An important set of decisions regarding saving for retirement is which type of retirement plan to contribute to, how much to contribute, and whether to contribute with pre-tax or after-tax funds. As with many financial planning decisions, the answer can vary depending on your situation.

The article below points out some important considerations and guidance on this topic. It is important to periodically re-visit whatever decisions you make, usually at least once a year or more often if your situation changes significantly.  A good time for many people to do this is later in the year when deciding on other employer or business benefits for the next year, such as health and other insurance coverages (e.g., life, disability).

Note that planning tips and other info are now posted on my website, http://www.truenorthfinancialplanning.com/, under Resources/Blog.  Feel free check it out.

Best wishes for a peaceful and safe holiday season.

Due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, penalty-free withdrawals of up to $100,000 will be allowed in 2020 for qualified individuals affected by COVID-19. Individuals will be able to spread the associated income over three years for income tax purposes and will have up to three years to reinvest withdrawn amounts. If your employer-sponsored 401(k) or 403(b) plan offers pre-tax, Roth, and/or non-Roth after-tax contributions, which should you choose? How do you know which one might be appropriate for your needs? Start by understanding the features of each. Pre-tax: For those who want lower taxes now With pre-tax contributions, the money is deducted from your paycheck before taxes, which helps reduce your taxable income and the amount of taxes you pay now. Consider the following example, which is hypothetical and has been simplified for illustrative purposes. Example(s): Frank earns $2,000 every two weeks before taxes. If he contributes nothing to his retirement plan on a pre-tax basis, the amount of his pay that will be subject to income taxes will be the full $2,000. If he was in the 22% federal tax bracket, he would pay $440 in federal income taxes, reducing his take-home pay to $1,560. On the other hand, if he contributes 10% of his income to the plan on a pre-tax basis — or $200 — he would reduce the amount of his taxable pay to $1,800. That would reduce the amount of taxes to $396. After accounting for both federal taxes and his plan contribution, Frank’s take-home pay would be $1,404. The bottom line? Frank would be able to invest $200 toward his future by reducing his take-home pay by just $156. That’s the benefit of pre-tax contributions. In addition, any earnings made on pre-tax contributions grow on a tax-deferred basis. That means you don’t have to pay taxes on any gains each year as you would in a taxable investment account. However, those tax benefits won’t go on forever. Any money withdrawn from a tax-deferred account is subject to ordinary income taxes, and if the withdrawal takes place prior to age 59½ (or in some cases, age 55), you may be subject to a 10% penalty on the total amount of the distribution, unless an exception applies. Roth: For those who prefer tax-free income later On the other hand, contributing to a Roth account offers different benefits. Roth contributions are considered “after-tax,” so you won’t reduce the amount of current income subject to taxes. But qualified distributions down the road will be tax-free. A qualified Roth distribution is one that occurs: After a five-year holding period and Upon death, disability, or reaching age 59½ Distributions of Roth contributions are always tax-free because they were made on an after-tax basis. And distributions of earnings on those contributions are tax-free as long as they’re qualified. Nonqualified distributions of earnings are subject to regular income taxes and a possible 10% penalty tax. If, at some point, you need to take a nonqualified withdrawal from a Roth account — due to an unexpected emergency, for example — only the pro-rata portion of the total amount representing earnings will be taxable. Example(s): In order to meet an unexpected emergency financial need of $8,000, Holly decides to take a nonqualified hardship withdrawal from her Roth account. Of the $20,000 total value of the account, $18,400 represents after-tax Roth contributions and $1,600 is attributed to investment earnings. Because earnings represent 8% of the total account value ($1,600 ÷ $20,000 = 0.08), this same percent of Holly’s $8,000 distribution — or $640 ($8,000 x 0.08) — will be considered earnings subject to both income taxes and a 10% potential penalty tax. Keep in mind that tapping your account before retirement defeats its purpose. If you need money in a pinch, try to exhaust all other possibilities before taking a distribution. Always bear in mind that the most important benefit of a Roth account is the opportunity to build a nest egg of tax-free income for retirement. Finally, not all plans allow in-service withdrawals. After-tax: For those who are able to exceed the limits Finally, some 401(k) and 403(b) plans allow you to make additional, non-Roth after-tax contributions. This plan feature helps those who want to make contributions exceeding the annual total limit on pre-tax and Roth accounts (in 2020, the limit is $19,500; $26,000 for those age 50 or older — up from $19,000 and $25,000, respectively, in 2019).1  As with a traditional pre-tax account, earnings on after-tax contributions grow on a tax-deferred basis. If this option is offered (check your plan documents), keep in mind that total employee and employer contributions cannot exceed $57,000, or $63,500 for those age 50 or older (2020 limits). Another benefit of making after-tax contributions is that when you leave your job or retire, they can be rolled over tax-free to a Roth IRA, which also allows for potential tax-free growth from that point forward. Some higher-income individuals may welcome this potential benefit if their income affects their ability to directly fund a Roth IRA. [In addition to rolling the proceeds to a Roth IRA, you may also (1) leave the assets in the original plan (if allowed), (2) transfer assets to a new employer’s plan (if allowed), or (3) withdraw the funds.] 2 Which to choose? Determining which types of plan contributions to make is a strategic decision based on your household’s needs and tax situation. Because non-Roth after-tax contributions are generally most appropriate only to those who wish to exceed the contribution limits on pre-tax and/or Roth accounts, it may be best to focus on maxing out those accounts first. If your plan offers both pre-tax and Roth contributions (check your plan documents), the general rule is to consider whether you will benefit more from the tax break today than you would in retirement. Specifically, if you think you’ll be in a higher tax bracket in retirement, Roth contributions may be more beneficial in the long run. Also, regardless of whether you choose pre-tax or Roth contributions, be sure to strive for contributing at least enough to receive any employer match that may be offered. Matching contributions represent money that your employer offers to help you pursue your savings goal. If you don’t contribute enough to take advantage of the full amount of the match, you are essentially turning down free money. Keep in mind that employer matching contributions are made on a pre-tax basis. Distributions representing employer matching dollars and related earnings will always be subject to regular income taxes and a potential 10% tax penalty if distributed prior to age 59½ (or, in some cases, age 55).3 Once the annual contribution limit has been reached for pre-tax and/or Roth contributions, it may be time to consider non-Roth after-tax contributions if your plan permits them. For more information specific to your situation, consult a qualified tax professional. (Working with a tax professional cannot guarantee financial success.) 1 Section 403(b) plans may allow employees with 15 or more years of service to make special catch-up contributions in addition to the age 50 catch-up contribution. Under this special rule, the maximum additional catch-up contributions in any year is $3,000 and the lifetime aggregate special catch-up contribution is $15,000. 2 Keep in mind that distributions of earnings on non-Roth after-tax contributions will be subject to regular income taxes and possibly penalty taxes if the money is not rolled over to a traditional IRA. IRS Notice 2014-54 clarifies the rules regarding rollovers of non-Roth after-tax plan contributions to a Roth IRA. 3 Employer matching contributions may be subject to a vesting schedule, through which plan participants earn rights to the employer contributions, and earnings on those contributions, over a period of time. Employer matching contributions are not offered in all plans. Check your plan documents. To find out more click here

Congress has designated April as National Financial Literacy Month in order to raise awareness about the importance of financial literacy education in the United States. National Financial Literacy Month is the perfect time to focus on your saving, investing, and financial planning goals.  It is also a good time to test your knowledge of financial basics.  I am including a brief 10 question quiz to help you gauge your knowledge of a few basics.  The answers are at the bottom (but I know no one will cheat J).  Have fun with this and good luck!

Happy spring to everyone!  It is nice to finally have some more frequent sunshine and somewhat warmer temperatures.

This month’s edition of Financial Planning Tips focuses on the benefits of tax advantaged savings vehicles.  Understanding the tax considerations of different investment vehicles and applying to your situation can make a huge difference in your long-term savings and investment results.

Read on for key information on different types of tax advantaged investment vehicles.  It is important to understand which vehicle(s) are the most appropriate for you.

I hope the new year is off to a good start for everyone.

This month’s edition of Financial Planning Tips focuses on investing basics.  With the recent volatility in the financial markets, many people have become fearful about their investment portfolios and what the future may hold.  Here are a few key investing considerations, and below is some additional information and guidance on two important pillars of investing: saving and investing wisely and asset allocation.

Key Considerations

• SPEND LESS THAN YOU EARN and invest the difference!
  • Then reinvest until you achieve your goals
  • Make this a must in your life; don’t give yourself a choice
• Find the right asset allocation for you, and stick to it!
  • Asset allocation matters much more than selection of specific investments
  • Keep it simple, and avoid investments with high fees
  • Rebalance your portfolio at least once a year
  • Resist the temptation to react emotionally to market swings.  Research shows that people who allow their investing decisions to be driven by emotion (especially fear) end up with subpar investment returns, as the temptation is to sell when the market is declining, then buy when things turnaround.  Often this results in “selling low” and “buying high”, and thus locking in losses.  Often a better strategy is to ride out market volatility, and stick to your plan!

See below for additional information/guidance on saving and investing and asset allocation.

Note that planning tips and other info. are now posted on my website, https://truenorthfinancialplanning.com/, under Resources/Blog.  Feel free check it out.

Best wishes to all for an abundant new year!

Saving and Investing Wisely

Saving builds a foundation

The first step in investing is to secure a strong financial foundation. Start with these four basic steps:

• Create a “rainy day” reserve: Set aside enough cash to get you through an unexpected period of illness or unemployment–three to six months’ worth of living expenses is generally recommended. Because you may need to use these funds unexpectedly, you’ll generally want to put the cash in a low-risk, liquid investment.
• Pay off your debts: It may make more sense to pay off high-interest-rate debt (for example, credit card debt) before making investments that may have a lower or more uncertain return.
• Get insured: There is no better way to put your extra cash to work for you than by having adequate insurance. It’s your best protection against financial loss, so review your home, auto, health, disability, life, and other policies, and increase your coverage, if needed.
• Max out any tax-deferred retirement plans, such as 401(k)s and IRAs: Putting money in these accounts defers income taxes, which means you’ll have more money to save. Take full advantage if they are available to you.

The impact of 3% yearly inflation on the purchasing power of $200,000

Why invest?

To try to fight inflation

When people say, “I’m not an investor,” it’s often because they worry about the potential for market losses. It’s true that investing involves risk as well as reward, and investing is no guarantee that you’ll beat inflation or even come out ahead. However, there’s also another type of loss to be aware of: the loss of purchasing power over time. During periods of inflation, each dollar you’ve saved will buy less and less as time goes on.

To take advantage of compound interest

Anyone who has a savings account understands the basics of compounding: The funds in your savings account earn interest, and that interest is added to your account balance. The next time interest is calculated, it’s based on the increased value of your account. In effect, you earn interest on your interest. Many people, however, don’t fully appreciate the impact that compounded earnings can have, especially over a long period of time.

Compounding interest

Let’s say you invest $5,000 a year for 30 years (see illustration). After 30 years you will have invested a total of $150,000. Yet, assuming your funds grow at exactly 6% each year, after 30 years you will have over $395,000, because of compounding.

Note:  This is a hypothetical example and is not intended to reflect the actual performance of any specific investment. Taxes and investment fees and expenses are not reflected. If they were, the results would be lower. Actual results will vary. Rates of return will vary over time, particularly for long-term investments.

Compounding has a “snowball” effect. The more money that is added to the account, the greater its benefit. Also, the more frequently interest is compounded–for example, monthly instead of annually–the more quickly your savings build. The sooner you start saving or investing, the more time and potential your investments have for growth. In effect, compounding helps you provide for your financial future by doing some of the work for you.

The end of the year presents a unique opportunity to look at your overall personal financial situation.   With factors like tax reform, life changes or just working towards your goals, now is an especially important time to review things.  Taking what we now know about the new tax law and weaving together all of the other areas of your personal finances is a great way to way to start a review.  Below are some helpful things to consider and take action on, as appropriate, before the year ends.

Best wishes to everyone for a holiday season filled with peace and joy.

Income Tax Planning –Ensure you are implementing tax reduction strategies like maximizing your retirement plan contributions, tax loss harvesting in portfolios and making charitable contributions can all help reduce current and future tax bills.   It is also good  to review your current year tax projection based on your income and deductions year to date and how that may be different from before.

Estate Planning – Examine a flowchart of your current estate plan to visualize what would happen to each of your assets and how the current estate tax law will impact you.  Be sure that your estate planning documents are up to date – not just your will, but also your power of attorney, health care documents, and any trust agreements – and that the beneficiary designations are in line with your desires. If you have recently been through a significant life event such as marriage, divorce or the death of a spouse, this is especially important right now.

Investment Strategy– Recently, we’ve seen increased market volatility and it may feel uncomfortable.  Market declines are a natural part of investing, and understanding the importance of maintaining discipline during these times is imperative.  Regular portfolio rebalancing will allow you to maintain the appropriate amount of risk in your portfolio.  And, if you are retired and living off your portfolio, you also want to maintain an appropriate cash reserve to cover living expenses for a certain period of time so that you do not have to sell equities in a down market.

Charitable Giving – There are many ways to be tax efficient when making charitable gifts. For example, donating appreciated stock could make sense in order to avoid paying capital gains taxes. Further, you may want to consider bunching charitable deductions by deferring donations to next year or making your planned 2019 donations ahead of time. If the numbers are large enough, you might even consider a private foundation or donor advised fund for your charitable giving.

Retirement Planning –Think about your future when working becomes optional.  Whether you expect a typical full retirement or a career change to something different, determining an appropriate balance between spending and saving, both now and in the future is important. There are many options available for saving for retirement, and we can help you understand which option is best for you.

Cash Flow Planning – Review your 2018 spending and plan ahead for next year. Understanding your cash flow needs is an important aspect of determining if you have sufficient assets to meet your goals.  If you are retired, it is particularly important to maintain a tax efficient withdrawal strategy to cover your spending needs. If you have not yet reached age 70.5, it is prudent to ensure you are making tax-efficient withdrawal decisions.  If you are over age 70.5 make sure you are taking your required minimum distributions because the penalties are significant if you don’t.

Risk Management – It is always a good idea to periodically review your insurance coverages in various areas. Recent catastrophic events like hurricanes serve as a powerful reminder to make sure your property insurance coverage is right for your needs. If you are in a Federal disaster area, there are additional steps necessary to recover what you can and explore the tax treatment of casualty losses. Other areas of risk management that may need to be revisited include life and disability insurance.

Education Funding – Funding education costs for children or grandchildren is important to many people.  While the increase in college costs have slowed some lately, this is still a major expense for most families. It is important to know the many different ways you can save for education to determine the optimal strategy. Often, funding a 529 plan comes with tax benefits, so making contributions before the end of the year is key.  With the added flexibility of funding k-12 years (set at a $10,000 limit), 529 accounts become even more advantageous.

Elder Planning – There are many financial planning elements to consider as you age, and it is important to consider these things before it’s too late. Having a plan in place for who will handle your financial affairs should you suffer cognitive decline is critical.  Making sure your spouse and/or family understands your plans will help reduce future family conflicts and ensure your wishes are considered.

The decisions you make each year with your personal finances will have a lasting impact.  I hope these suggestions have begun to generate some insight to areas of your personal finances that need attention.  Please contact me if you would like to discuss your year-end planning, or any other aspects of your financial planning.

The information presented here is not specific to any individual’s personal circumstances, and does not constitute investment, tax, legal, or retirement advice or recommendations.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

I am honored to be featured in the latest issue of the University of Vermont quarterly alumni magazine, Vermont Quarterly, in a piece about the benefits of donating appreciated stock and other investments.  See link below to the piece.

planned giving page (VQ November 2018)

November 1 Begins Open Enrollment for Health Insurance Marketplaces

Beginning on November 1, 2018, individuals (including their families) may apply for new health insurance or switch to a different health-care plan through a Health Insurance Marketplace under the Affordable Care Act (ACA). The open enrollment period for 2019 health coverage ends on December 15, 2018.

Individuals can use Health Insurance Marketplaces to compare health plans for benefits and prices and to select a plan that fits their needs. Individuals have until December 15, 2018, to enroll in or change plans for new coverage to start January 1, 2019. For those who fail to meet the December 15 deadline, the only way to enroll in a Marketplace health plan is by qualifying for a special enrollment period following certain life events that involve a change in family status (for example, marriage or birth of a child) or loss of other health coverage.

New for 2019

While the ACA (commonly referred to as Obamacare) has not been repealed or replaced, there have been changes to the law. The biggest change is the repeal of the tax penalty for failure to have qualifying health insurance. While the individual mandate requiring that most people have minimum essential health insurance coverage (unless an exception applies) still exists, the tax penalty for failure to have insurance has been repealed, effective January 1, 2019.

In addition, states have additional flexibility in how they select their Essential Health Benefits. In effect, states may elect to sell short-term health insurance policies with coverage terms of up to one year. These plans may offer fewer benefits compared with the 10 Essential Health Benefits covered under the ACA.

Those living in hurricane-affected areas in 2018 may apply for a special enrollment period, which provides extra time to apply for health insurance through the Marketplace. Affected areas are those designated by the Federal Emergency Management Agency (FEMA) as eligible to receive “individual assistance” or “public assistance.” So far, several counties in Georgia, Florida, South Carolina, and North Carolina have been designated eligible for federal assistance.

The federal government no longer runs SHOP Marketplaces for small businesses. As an alternative, small business employers may be able to contact insurance companies directly or work with a broker who is certified to sell SHOP policies.  In Vermont, small businesses (up to 100 employees) can obtain health insurance through Vermont Health Connect, or new for 2019, business association plans will be available.  Contact a qualified broker to find out more about association plans.  Individuals without access to employer or other coverage and purchasing coverage on their own can also obtain coverage on Vermont Health Connect.

Overview

There are many reasons you may have multiple investment and banking accounts.

• Job changes resulted in multiple retirement plans located at different institutions
• You started investing in companies or mutual funds by directly buying a small number of shares over a long period of time
• A family member gifted shares of stock to you
• A bank offered great rates on savings or loans that you just could not pass up
• You don’t trust the financial services industry, and decided to keep multiple accounts to decrease the risk of an institution going out of business or someone stealing your money

These all seemed like good ideas at the time, but there are many reasons you should simplify.

Lost Accounts

As the years go by, you may move once, twice, or a dozen times, and forget some of the outstanding accounts you have created. Without any “action” in these accounts, institutions may not be able to find you, and then they will turn over your little pot of gold to the state.

Tax Preparation

In addition, with non-retirement accounts, you will have many outstanding tax forms which can make preparing tax returns more complicated and expensive. Did your grandmother gift you that one share of Disney and now you receive a 1099 for $1.37 for the year? Not only do you have that hassle with that 1099, that one share of stock will also go through probate when you die.

With many institutions providing tax forms online, you may forget to download the form only to be reminded a year later with a fun letter from the IRS letting you know about underpayment.

Retirement Plan Distributions

Most retirement plans have required distributions at age 70 ½. If you have multiple retirement accounts, it will be important to keep track of the required amount that needs to be distributed from all the accounts total. IRA accounts are calculated separately from 401k and 403b accounts. By consolidating accounts, it makes distributions much easier to track. And given the penalty for not taking a distribution is a hefty 50%, you don’t want to mess this up.

Ease of Future Financial Caretaking and Estate Administration

The more assets you have floating out there, the more work that will be required by your financial caretakers if you become incapacitated and by the executor of your estate if you die. This increases hassle, costs, and the risk of mistakes.

So how do you simplify?

Before simplifying, make certain you understand the tax and estate implications of your current situation. After that is clarified, begin to pare down the number of accounts to the following:

• One checking and one savings account at one institution.
• One IRA account and all old retirement plans such as 401k and 403b accounts should be rolled into this IRA.
• One Roth IRA account (if you can have a Roth) – and all Roth 401k and Roth 403b contributions should be rolled into this Roth.
• One brokerage account – all outstanding stock certificates, direct mutual fund holdings, and other investment accounts should be held in this account.

In addition, if you think there are accounts that you have forgotten about, check the unclaimed property site in the state you think it may be located. The USA.gov website has a great resource for this.

When you consolidate, check the titling and beneficiary designations to make certain they are congruent with your estate plan and your wishes.

By simplifying, you can ease your financial caretaking as you age and save you and your family money and angst in the process.

 Content provided by: Whealthcare Planning, LLC

The information presented here is not specific to any individual’s personal circumstances, and does not constitute investment, tax, legal, or retirement advice or recommendations.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

I am pleased to present the latest edition of Financial Planning Tips.  This month, I have selected a topic that is often overlooked – picking a financial caretaker to manage your financial affairs if you are no longer able to do so yourself (either temporarily or permanently).  I believe everyone, at any adult age, should plan for this possibility.  Many people think that this type of planning only applies to older folks, but the reality is that even younger people can experience health or other life events that call for this type of assistance.

Picking a financial caretaker

At some point in your life, you may need a financial caretaker to pay your bills, watch over your investments and take care of your tax filings. For many people, the choice is easy – most often adult children or nieces and nephews are willing to help. For some people, there may not be anyone who you can easily turn to. What do you do if you are in this situation?

Hire a friend and a professional

If you do not have family you trust to help with your finances, consider hiring a friend you trust. However, to provide additional protection, hire a professional to oversee the person taking care of your finances, such as an accountant or fiduciary financial planner. How would this work?

First simplify your finances and consolidate your financial picture using a portal such as Mint.com or Yodlee. Set up automatic bill pay for as many payments as possible. Provide your friend and a professional with the login to your aggregator site. The two can work together to make certain you are doing a good job managing your finances.

Once you need assistance with your finances, you can begin with your friend “supervising” your bill paying, watching over your investments, and filing your taxes. Make certain they have a power of attorney to take over for you when needed, and that all of your financial institutions accept your power of attorney document.

Once your friend takes over paying the bills, make certain the financial planner or accountant periodically “audit” your friend’s work. You will have to pay for this service, but the peace of mind with having multiple eyes on your financial picture is well worth the cost.

What if there is no one who can help you pay your bills?

There are professional bill payers, but unfortunately, this profession is in its infancy and is not regulated. The American Association of Daily Money Managers is a great resource for professional bill payers, and they may also provide many other services.

If you hire a professional bill payer, they should provide a monthly accounting of your expenditures, collect all your financial statements, organize your information for your tax return, and review your investments with your professional advisers.

It is important to have your finances set up to your specifications in advance of hiring help so your instructions can be followed. For example, have an investment policy statement, budget, and plan for your sources of income and have the bill paying professional agree to follow your directives.

Content provided by: Whealthcare Planning, LLC

I hope you find this information to be helpful.  Please contact me with any questions, and feel free to forward to anyone who may benefit.

The information presented here is not specific to any individual’s personal circumstances, and does not constitute investment, tax, legal, or retirement advice or recommendations.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Controlling your health care costs

Health care costs are spiraling out of control. New technology, advanced testing, and “designer” drugs along with a “fee for service” system encourages doctors to do more, putting pressure on health care costs. What can you do to get the care you need and keep costs under control? There are a number of steps you can take.

• Live a healthy lifestyle – it shouldn’t have to be said, but the most important factor to stay healthy is to eat a healthy diet, exercise regularly, don’t smoke, and drink alcohol in moderation. Even if you already have health problems, lifestyle changes makes it easier to keep your health problems in good control.
• Get appropriate preventive care – the medical system is geared to doing too much, and preventive care is not immune to this. There are competing recommendations on what is valuable in helping prevent illness or detect it early. The U.S. Preventive Services Task Force publishes unbiased recommendations based on what has been proven to be appropriate preventive care. Consider these guidelines along with your personal circumstances when choosing preventive testing.
• Become an empowered patient – work with your doctor to understand the testing and treatment being offered and why it is being done. Ask the following questions:
  • How will the test being done help the doctor with diagnosis or treatment? Many tests are ordered because of “protocol” or “just because it would be good to know” and these are not good reasons to order costly testing. In addition, tests frequently have false positives or false negatives and you can spend even more time and worry chasing down tests that should have never been ordered in the first place.
  • What are all the options for treatment? Often doctors just recommend the treatment they think is best for you. Make certain you understand what is involved with the treatment and ask if there are any other treatments available that you should consider.
  • Are there less costly drugs that can be used? Doctors often provide medications that are convenient and don’t always consider the costs.
  • If you are on chronic medications, revisit your medication list with your doctor periodically to see if medications are still needed or if better or less expensive options are available.
• Shop around for medications – charges for medication vary from pharmacy to pharmacy. The price difference is occasionally dramatic.
• Stay in your insurance provider’s network – out of network doctors or hospitals can add greatly to the cost.
• Follow your doctor’s advice – once you’ve agreed to a plan of care, be sure to follow through. And if for some reason you can’t follow the recommendations, be sure to let your doctor know that you aren’t following through and the reason you are unable to do so. They can help you make adjustments so you can follow through on what is needed to take care of your health.

It is sometimes difficult to be an empowered health care consumer when you are ill. If this is the case for you, enlist a family member or friend to help you better navigate your health care and follow through on these tips for your health care.