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Recent Articles Of Interest To All Following articles recently appeared in our Newsletter or derived from other articles of interest to retirees. Click on the title of the article to link to it.
RAYSIP DISTRIBUTION AT AGE 70 ½ By Joe DeAmbrose This note is in the nature of a “heads-up” for any retirees who are nearing age 70 ½ with a RAYSIP account balance which includes Raytheon stock. There is a tax savings opportunity available to such retirees which deserve more focus than provided in plan literature. Here are the basics: The age 70 ½ date is important because at that date taxable distributions must be made by employer plans like RAYSIP and also by Individual Retirement Accounts (IRA’s). RAYSIP will also close out accounts around that date which could either be in the form of a distribution of the account balance or, more often than not, accomplished by way of a direct transfer of the account balance to an IRA of the retiree. The retiree can elect the method of close-out but however effected, a part of the account balance is taxable and cannot be rolled over to an IRA or made part of a direct transfer to an IRA. The taxable amount is called a Required Minimum Distribution or RMD and is calculated by dividing the account balance at December 31 of the year before the distribution year by life expectancy factors from published IRS Tables. The factor for the age 70 ½ year from the most commonly used Table (the Uniform Lifetime Table) is 27.4. The factor for the age 71 ½ year is 26.5 and on and on. The distribution for the age 70 ½ year must be distributed on or before April 1 of the age 71 ½ year. Thereafter, RMD distributions must be made before the end of each succeeding year. To illustrate with an example: Retiree A will reach age 70 ½ in 2008, having a RAYSIP account balance of $250,000 on December 31, 2007, The RMD amount for 2008 is $9,124 ($250,000/27.4) which must be distributed by RAYSIP on or before April 1, 2009. A wants to have the balance of the account directly transferred to an IRA. The practices followed by RAYSIP as to the timing of the distribution of RMD amounts and the close out of the account are not published but based on discussions with a Fidelity retirement specialist (Fidelity administers the distributions and account close-out) there appears to be some flexibility in arranging the timing of distributions and transfers, ranging from having the age 70 ½ RMD distribution and the IRA transfer made in 2008, or having RMD distributions and IRA transfer made in 2009, or having an RMD distribution in 2008, and the IRA transfer made in 2009. Note that unless the account is closed out in 2008, RAYSIP must make an RMD distribution for the age 71 ½ year in 2009. The key to the tax savings is the Raytheon stock account in RAYSIP. The tax law provides favorable tax treatment if employer stock is distributed in kind from a plan like RAYSIP. Distributions from IRA accounts are not eligible so the tax savings opportunity is not available once RAYSIP accounts are closed-out. To expand on the illustration, assume A has Raytheon stock in RAYSIP with a value of $30,000 and a cost of $14,000. The built-in gain of $16,000 is technically called “net unrealized appreciation” or NUA. Having a Raytheon stock account is common as RAYSIP includes the former RAYSOP plan that held only Raytheon stock and for many years, the RAYSIP “match” was made in Raytheon stock. The cost amount is the value of the stock when it was acquired. The cost amount is not contained in RAYSIP statements but is available on the Fidelity NetBenefits website or can be obtained from a Fidelity retirement specialist. The NUA amount is not subject to tax when the stock is distributed and will only be subject to tax when the stock is sold or otherwise disposed of, and then, the NUA amount will be taxed at capital gain rates. So, a portion of a RAYSIP stock distribution is taxed at capital gain rates rather than ordinary income rates. The capital gain rate will always be lower than the ordinary income rate. Assuming A’s normal tax rate is 28%, A’s capital gain rate would be 15%. If A elects to take a distribution of all or a portion of the Raytheon stock in kind, the cost component of the distribution will be subject to tax at a 28% rate and the NUA amount will be subject to tax at a 15% rate. A tax of $8,400 would be imposed on a distribution of $30,000 at ordinary income rates ($30,000 X 28%). The tax would be only $6,320 ($14,000 X 28%) and ($16,000 X 15%) if stock with that value were distributed in kind and then sold, and payment of $2,400 of that tax could be delayed to another year if the stock were not sold. But wait---most employer plan distributions can be transferred or rolled over to an IRA without incurring any tax. True, a tax on distributions from pre-tax accounts will have to be paid at some time at ordinary income rates because of the RMD requirements described above but that tax bill will be paid over dozens of years in the future. “Why pay it now”, A might think. Here’s why. A cannot postpone tax on RMD distributions. A is facing a taxable cash RMD distribution for 2008 of $9,124 on which an ordinary income tax of $2,555 will be imposed. If instead, he elects to take a distribution of Raytheon stock worth $9,124, the pro-rata NUA amount (53%) of $4,866 will be subject to tax at the 15% capital gain rate reducing the aggregate tax to $1,922. The stock distribution of $9,124 satisfies the RMD requirement for the year without regard to the favorable tax treatment. The tax savings are greater if A holds on to the stock as an investment because $730 of the $1,922 tax can be deferred until he sells the stock but that involves a separate investment decision. The tax savings can be even greater. If A acts to delay payment of the 2008 RMD distribution to 2009, but before April 1 of 2009, and delay the close out of the account to 2009, RAYSIP will have to make another RMD distribution for 2009 (which would have to be made by A’s IRA if the RAYSIP close out took place in 2008). On A’s numbers, the 2009 distribution ( December 31, 2008 account balance/26.5) should be over $9,000. In total, A can elect a stock distribution of about $18,124 in 2009 which will cover the RMD requirements for 2008 and 2009. If the stock is sold in 2009, the tax will be $3,818 compared to $5,075 if there were a cash distribution. If the stock is held, the tax for 2009 would be reduced to $2,368. Substituting a stock distribution for two RMD distributions enhances the tax savings. There is one important condition for success. The stock distribution must be part of a distribution of the entire RAYSIP account balance which takes place within one taxable year on account of certain events. This “lump-sum” distribution requirement is a little tricky but manageable. One way to satisfy this condition while maximizing tax savings is to arrange for a close out of the RAYSIP account in the age 71 ½ year (2009 in A’s example) with both RMD distributions in that year. This is something to be worked out with a Fidelity retirement specialist. Taking an available employer stock distribution instead of a taxable cash distribution, such as an RMD distribution, should always be the right choice but individual circumstances have to be taken into account and may alter the size of the savings. This is not a simple subject. It involves overlapping tax principles and not-so-simple calculations; qualified tax advice should be obtained. Obtain Your Share of the Economic Stimulus Tax Credit I am sure you have heard of the stimulus package recently approved by our government. It will provide up to $600 per individual and $1200 per couple depending upon your income. Many seniors do not file income taxes as their income does not warrant it. Even if you do not owe any taxes, you must file a federal Income Tax return in order to receive your share of the rebate. Of course if your income is low enough you can file a very simple 1040A form. If you need help completing the form you can ask at your local senior center. The center may offer the service or know where you can obtain free or low cost help. AARP provides such a volunteer service. If you have a problem locating an AARP volunteer let our office know and we will try to locate a volunteer for you. Raytheon ERISA Litigation A retiree informed us that he recently received a Form W-2 relative to Raytheon ERISA Litigation and had several questions. If you received a similar Form W-2 and also have questions, you should call The Garden City Group at 866-881-7492. Taxation of Pension Plan Distribution? Question: Answer: You can recover your contribution amount tax free on a pro-rata basis as you receives pension payments. The data goes into line 16a and 16b on Form 1040. Line 16a is the total pension amount received and line 16b is the taxable amount. The taxable amount is the total less the amount of pro-rata basis recovery for the year. There are a couple of acceptable methods for determining the non-taxable piece. One is called the simplified method and a worksheet can be found in the IRS instructions to Form 1040 for line 16. For example, if the pension started in 2007 at age 65, the simplified method assumes that there will be 260 monthly payments and you divide your contributions by that number to get the monthly exclusion which would be $28.07 for $7,300 of contributions. If the payout is in the form of a Joint & Survivor a different number would be applied.
I write to you as the President of the Association of Raytheon Retirees, Inc., (ARR) a Massachusetts non-profit corporation. The ARR is an organization of thousands of retirees of Raytheon Company and was formed and operates to monitor, preserve, and improve retirement benefit undertakings of the former employer of the membership. The primary benefits in this regard are pensions and retiree medical. The Association is acutely aware of the economic difficulties faced by our membership and by other retirees similarly situated across our nation. Medical costs continue to rise while the purchasing power of fixed pension income erodes. Employers are eliminating defined benefit pensions and are deaf to pleas for modest cost-of-living increases in pension payouts. The lot of many retirees is increasingly precarious, especially those who retired many years ago. The Congress is currently working on a stimulus package based largely on providing relief to taxpayers. The ARR has a proposal in this regard; one which would advance the goal of economic stimulation and would relieve some of the financial burden on retirees from escalating medical costs. There are many ways to deliver a tax benefit to needy retirees, including adjustments to the social security taxation thresholds and the medical deduction limits but the Association’s proposal is much simpler—extend a benefit that was accorded to retired public safety officers in the Pension Protection Act to a broader class of retirees. The benefit provided to retired public safety officers is contained in section 402(l) of the Internal Revenue Code. Pursuant to that section, a limited amount ($3,000) of an otherwise taxable pension distribution from a governmental plan can be applied to the payment of health insurance premiums of a retired officer without tax consequence. A few simple amendments would make this tax benefit available to retirees in general or, if budgetary constraints are an impediment, to a defined subset of these retirees. For example, the subset could take into account age and/or income levels. The broadening of the class eligible for this benefit also would level the playing field. A draft of the specific changes in statutory language to implement the proposal is attached for your assistance. The Association encourages you to consider this proposal as you draft legislation to provide a needed stimulus to the economy. This proposal will target the benefits of the stimulus at one of the most needy and deserving citizen groups. Sincerely, Robert Hamilton President Association of Raytheon Retirees, Inc. MIT Completes a 6 Year Project To Put All Of Its Courses On-Line MIT recently completed putting every one of their courses on- line. That is over 1800 undergraduate and graduate courses. The courses include video lectures, lecture notes, assignments and exams. The courses include Algebra, Physics, Differential Equations, Technology and Culture in Japan, Literature and History. Visit their website at http://ocw.mit.edu to take a look for yourself. They are all available free of charge and over 1 million people a month are logging on. Medical Plan Comparisons For Retirees 65+ By Bruce Nogueira Each year, around November 1, retirees over 65 are asked, by Raytheon, to enroll in a medical plan for the coming calendar year. Many retirees throughout the US have only the choice between Raytheon’s Medicare Plus Plan (PLUS plan) and “no coverage.” However, in some areas Medicare Advantage plans are also an alternative. This article is intended to provide a comparison of the highlights of the PLUS plan with a couple of Medicare HMO plans. As previously, we’ll use the current year (2007) benefits design and premiums for comparison-since we know the details. Please read carefully your 2008 enrollment package for any changes to the plans & premiums. We will use the Eastern Mass. Enrollment options which are available to this writer. Also, please note that the retiree individual premiums listed are for Raytheon retirees who retired after 1994. It is hoped that retirees living outside of E. Mass. can use this analysis in reviewing any Medicare Advantage plans offered in their area. At the outset, you should understand that the PLUS plan & Medicare HMO’s offered by Raytheon are all employer sponsored group plans. Please do not confuse the Medicare HMO Blue or Tufts Medicare Preferred plans with similar names that Blue Cross & Tufts offer to the general public as private plans. The benefits differ somewhat & the Rx coverage, if any, is less comprehensive in the private, non-group plans. Raytheon Medicare Plus This plan offers supplemental coverage after Medicare A & B or Medicare D (Rx plans) pay their benefits. Raytheon has designed this plan as a catastrophic coverage medical plan. You have to pay $1750 out-of pocket before the PLUS plan pays the 20% coinsurance not paid by Medicare. Similarly, the PLUS plan pays 80% for drug expenses only after your total drug costs reach $2400 with your Medicare D provider. Medicare Advantage Plans Medicare HMO Blue & Tufts Medicare Preferred are paid by Medicare to provide all your medical & drug benefits in place of Medicare. The benefits pay for most medical care in full after a co-pay. These are managed care plans that have a limited network of MD’s and hospitals available for your care. You must have a primary care physician (PCP) & if you use services outside the network, or without PCP referral, you could end up paying 100% of the expenses. Highlights of Plan Choices for 2007 Raytheon Medicare Plus Advantages · Access to virtually all hospitals, MD’s, & Labs. · Lower monthly premium. · Pays inpatient Medicare deductible in full. · No annual or lifetime benefit limit.· Disadvantages · Most outpatient expenses not covered until you spend $1750 out-of-pocket. · You have to enroll in a Medicare D to get Rx benefits after $2400 total drug costs. · Reimbursement at 80% after the $2400 is an arduous process. Medicare HMO Plans Advantages · Most medical & Rx expenses are covered in full after a small copay, when care is received in-network. · All medical & Rx benefits are delivered by one provider-for example, Blue Cross or Tufts. · Prescription drugs are simple & straight forward to purchase-no need to keep records & file for reimbursement after $2400 is reached. · No annual or lifetime benefit limit. Disadvantages · Premiums are higher. · The networks have a limited group of MD’s & hospitals, & change annually. · No coverage is provided for services received outside the network or if not referred by your PCP. There is no one right answer. Each retiree’s medical needs are unique, so you should tailor your plan selection accordingly. It goes without saying that you should make sure that your primary care physician (PCP), specialists & hospitals used are in the HMO network before you enroll. Recently, I talked with an E. Mass. retiree who was about to turn 65. He explained that Raytheon sent to him a lot of information on the PLUS plan, but nothing on the plan details for Medicare HMO Blue or Tufts Medicare Pref. He contacted the HMO’s & received a one page summary of benefits. After much follow-up, he got more details about the HMO plans. He initially thought that since he was in the HMO Blue under 65 plan & was accustomed to the network and referral restrictions, he would enroll in the Medicare HMO Blue plan. To his surprise, his PCP & some Boston hospitals were not in the Medicare HMO Blue network. Author’s note: my wife and I experienced that same problem a few years ago. The retiree did find his PCP in the Tufts plan and will try that HMO for a year. For the past 3 years, I have been concluding the Raytheon PLUS plan was not a good value for retirees. But here is a case where the plan worked. A retiree in Florida sent an e-mail to me extolling the coverage under the PLUS plan when it is really needed. His wife had surgery for cancer & subsequently received chemo & radiation treatments on an outpatient basis. In addition, a $5000 injection was required after each chemo treatment to offset the ill effects from those treatments. Since the $1750 out-of-pocket was reached quite quickly, virtually all of these expensive outpatient treatments were covered in full between Medicare & the PLUS plan. This is an example of the PLUS plan’s catastrophic feature working to provide coverage for unexpected major medical events. Finally, you should know that if you enroll in a Medicare HMO plan in 2008, and subsequently decide that you made a mistake, you can disenroll from the HMO & enroll in the Raytheon Medicare PLUS plan immediately. The Raytheon Benefits Center can help you on this procedure. Private Plans for Medicare Eligible Retirees By Bruce Nogueira Some retirees-mostly ones who retired after 1994-have turned to private medical plans offered in their State instead of enrolling in Raytheon’s offerings of Medicare PLUS or a Medicare HMO plan. These plans are becoming much more competitive with Raytheon’s group choices than in prior years. But tread carefully, there may be limitations in these private plans that are not in the Raytheon sponsored group plans. If you decide on a private medical plan instead of Raytheon’s plans, you would have to select “no coverage” on the Raytheon enrollment, & won’t be able to join a Raytheon plan again until January 1, 2009. However, you can get the real net cost of these private plan premiums by deducting the $ 77/month for the PLUS plan. Most of the private plans require a one year enrollment commitment when you sign up. We are not suggesting that retirees necessarily purchase these plans, but rather know of their availability in case the plan designs & premiums may fit better with your medical coverage needs. Medigap Plans These plans are the traditional Medicare supplemental type plans that we have had around for the past 30+ years, & are offered by Blue Cross, AARP, etc. In essence, these plans pay the portion of your medical bill that Medicare doesn’t pay. These private plans fare well compared to the PLUS plans $1750 out-of-pocket before supplementing Medicare payments. But these private plans don’t have drug coverage. Therefore, you would have to buy a Medicare D plan for drug coverage. One such Medigap plan is Medex Bronze in Mass. This plan covers the 20% co-insurance in full for outpatient medical expenses, as well as the Medicare B deductible & in-patient deductible. This plan’s 2007 premium is $150/month. If you bought the least costly Medicare D plan from Humana, for example, it costs $17/month. The total cost would be $167 (less the $77 premium for Raytheon PLUS) nets at $90/month. But, unlike the PLUS plan, Humana drug plan does not pay anything in the gap-when total drug costs exceed $2400. This plan combination would probably be better for someone who has many outpatient medical expenses & substantially less than $2400/year Rx expenses. Medicare HMO private plans The private versions of the Raytheon group Medicare HMO’s are essentially the same for the medical expenses but differ for Rx coverage- slightly in the co-pays but significantly in coverage in the gap where typically only generics covered; whereas the Raytheon version has no limitations after $2400 is reached. Here are some monthly premium comparisons for 2007:
Medicare Private Fee For Service (PFFS) Plans Like the Medicare HMO’s, Medicare pays the insurers to provide coverage in place of Medicare for these PFFS plans. The PFFS’s cover both medical & drug expenses as part of their design. But unlike HMO’s, PFFS plans do not have restrictive networks, PCP’s or referral requirements. These plans are quite new to the market, & we don’t have a lot of experience with their effectiveness. A typical plan of this type is the Tufts Medicare Preferred-PFFS. This plan allows you to use any MD or hospital & you pay co-pays like an HMO—typically $15 for an office visits. The prescription drug benefit co-pays are:
These co-pays apply only during phase 1 (under $2400 total drugs); but only generics are covered in the gap (Phase 2) after $2400 is reached. Here are some monthly premiums for a couple of PFFS plans: · Tufts Medicare Preferred PFFS: $124 (2008) · Harvard Pilgrim First Seniority Freedom PFFS:$78 (2007) If you consider this plan a replacement for Raytheon PLUS, you could reduce the above premiums by $77/month. Be Careful ! Even if your Rx annual costs are well below $2400, these PFFS plans are so new that the low premiums may be to attract retirees into these plans & increase the premiums in future years. Similarly, because of their newness, not all MD’s or hospitals will accept these PFFS plans for payment. I think it would wise to wait a year before signing with a PFFS plan—to let the bugs work out. However, these plans have a design that, I believe, will be attractive for a lot of retirees. Private Medicare Advantage PPO Plans A PPO plan has a much bigger network of MD’s & hospitals than its cousin the HMO plan. Also, the PPO does not require a PCP or referrals, & out of network usage is subject to higher co-pays (for example, $30 vs. $15 in-network) compared to no coverage out of network for the HMO’s. Again, Medicare pays the PPO to provide medical & dental benefits instead of Medicare. The medical coverage is with co-pays & is very comprehensive, & the prescription drug benefit is similar to the above PFFS benefits. Here is the Private Tufts Medicare Preferred PPO drug benefit:
These co-pays apply only during phase 1 (under $2400 total drugs); but only generics are covered in the gap (Phase 2) after $2400 is reached.
The Tufts Private PPO plan has a monthly premium of $114. If you reduce this by the $ 77 you would have paid for the Raytheon PLUS plan, you would be paying $37 extra for the PPO to get full outpatient benefits after a co-pay & co-pays for Rx’s on the first $2400 of drug costs. The key, of course, is whether your MD’s & Hospitals are in the network or not—but you have a greater chance that they are in than does the Medicare HMO. Electing “no coverage” for Raytheon & Medicare D This is a little risky, but I have only Medicare A & B for medical coverage. I have about 6 MD visits a year, some outpatient tests & X-rays & pay the 20% myself as I would have under the PLUS plan. My Rx’s are 2 generic & 1 pref. brand which I pay in full since I have no Medicare D drug plan. If I joined the least expensive Medicare D plan, it would cost an extra $500 to buy the same prescriptions through the Medicare D plan. There is a penalty if I join a Medicare D plan in the future. My calculation is that the penalty would be $3.35/ month for each year that I’m not enrolled—that is if they enforce a penalty at all. My savings in premiums is $94/month ($77 for PLUS & $17 for Humana Rx plan) for an annual savings of $1128. So, in effect if my out-of-pocket payments are less than $1128, I have made the right choice. The risk, of course, is that I’ll have a major medical event requiring hospitalization & expensive follow on outpatient treatment. This approach is not for everyone, & should be used with great caution. Editor's Note: There was a recent article in the Boston Globe describing these fee for service (PFFS) plans offered in New England. The great caution was MDs that accept regular Medicare payments are not required to accept the coverage of these PFFS plans and you have no regular Medicare coverage to fall back upon. (There is a link to the complete Globe article on our website.) The rates for 2008 are surfacing! An interesting
observation: The Humana Rx standard plan will cost $24/month & the Humana Rx
enhanced plan will cost $25/month in 2008. For the extra dollar, it might be
worth it for retirees to enroll in the enhanced plan next year. The enhanced has
no deductible ($275 for Standard) & co-pays that are generally favorable vs.
standard's 25%-- except if you have tier 3(non-preferred brand). I took my
wife's payments for 2007 & compared the 2 plans for 2008. It came out to a
wash--only because my wife had a tier 3 drug. Retirees should calculate their
'08 costs under the enhanced vs. the standard to see which provides the better
outcome. SOME HELPFUL HINTS IN PLANNING YOUR RETIREMENT WARNING NOTE: The Raytheon Human Resources and the Raytheon Retirement Benefit Center are the official sites for retirement related questions. All items mentioned here should be verified with Raytheon by the potential retiree before taking any action. The Association of Raytheon Retirees does not guarantee that this information is current or correct. The Planning Guide is presented here as lessons learned to identify areas of possible follow-up. These lessons learned have been assembled over the years by many non-union Raytheon employees to help future retirees. This particular guide is applicable to a large, but limited group of employees; those from Massachusetts or other legacy Raytheon organizations. If you are aware of changes, corrections or similar guides in use elsewhere, the ARR would appreciate a copy to help other fellow potential retirees. OPTIMUM RETIREMENT TIME RETIREING BEFORE (60) IS NOT A GOOD OPTION SUBMITTING YOUR RETIREMENT PAPERS RETIREMENT PACKAGE BENEFITS CALCULATION PACKAGE RAYTHEON RETIREMENT GUIDE The Raytheon Retirement Guide is a booklet that contains the following information: SOCIAL SECURITY RETIREMENT CALCULATIONS MEDICAL INSURANCE 401K CONVERSIONS PAYROLL DEDUCTIONS ROCKING CHAIR PERFORMANCE SHARING PLAN SHORT TERM DISABILITY
This is the new policy: TELEPHONE NUMBER CHECKING OUT You no longer receive a "Verification of Retirement Form" in your Raytheon Retirement Guideline booklet. You now have to notify your supervisor (however you feel best- in person, e-mail, letter, etc) one month prior to your retirement date. He then notifies HR, who in turn will (may as it is very dependent on the individual that you are working with in HR) start the ball rolling for payroll. Your supervisor is supposed to provide you with the latest Checkout form, but it seems no one really knows which is the latest form. When I was checking out half the people I had to get to sign my form stated that this was a new form that they had never seen before and where were they to sign- as if I should know!! Go to http://docushare1.app.ray.com/dscgi/ds.py/View/Collection-38297 to get the latest form. There is a long list, but I found the correct one at or near the top of the list shown. Check with both the library and document control a month or so before you retire to find out if there are any old books or documents that they may believe that you have. Checkout was much easier than I thought. It only took me about 1 hour to check out. You will need your cell phone, pager, credit card, etc to turn it during check out. You will also need the ID Tag numbers (L7xxxxxx) from each item so that IS can log you out. They will impound your computer, so do not check out too soon before you actually want to leave. I uploaded all of my hard drive to a server for others to retrieve if necessary. Otherwise it will all be lost!! This whole retirement process is pretty much open loop. You get zero feedback unless you call and ask questions.
Authorizing A Medical Representative With the new medical privacy laws, even your spouse cannot discuss claims matters with Medicare, Fiserv, or your Medicare D Prescription Drug Provider (PDP). One way to ease this problem is to authorize a medical representative. This year, I completed forms for Medicare, Fiserv, and Humana to name my wife and daughter as my authorized representatives to whom my personal health information may be disclosed. Similarly, my wife completed those forms naming me and our daughter as authorized representatives on her behalf. You can obtain the privacy forms by calling Medicare, Fiserv, and your Medicare D PDP. The forms are mostly straight-forward, but the Medicare form will require care when answering the questions. On question 2, check the box: “Other personal health information”, and write the explanation: “All my personal health information. “ On question number 3, check the box that has a start and stop date for disclosing my health information. I put start 01/01/2007 and a stop date of 12/31/2012. This is 6 years and I hope I remember to renew the document at the end of 2012. In retrospect, I probably should have put the stop date way out—such as 12/31/2027. Health Care Proxies are used primarily in situations where you are unable to make medical decisions on your own. This Medical Representative approach is a useful tool for claims issues before you need a Health Care Proxy. I have already used this authorization to help my wife on her Rx claims with Humana this year. For those retirees whose total Rx costs are likely to exceed $2400 the coordination of benefits with the Raytheon Medicare Plus Rx plan could result in the same problems our retirees experienced in 2006. Raytheon has contacted most of the major Medicare D PDP carriers to get cooperation in processing Rx claims when your PDP stops paying toward your prescriptions, because your total Rx costs exceeded $2,400.00 Unfortunately some pharmacies and mail order vendors might not follow the Coordination of Benefits process as set up by the PDP’s. To help your chances of getting the Raytheon 80% benefit when $2,400.00 is exceeded, here are a couple of suggestions: contact your PDP and ask for the coordination of benefits office (for example, the Humana # is 800-999-1118), and request a coordination of benefits form. Complete this form with the requested ID information from your Raytheon Medicare Plus card, and mail the form to your PDP. after your drug costs total about $500.00, call Innoviant(1-877-559-2955) to see if they are receiving your Rx claims information from your PDP. If not, request Innoviant to follow-up with your PDP to set up a proper electronic exchange of your claims data in the future. Raytheon believes that the coordination of benefits with the PDP’s should be better in 2007 than the problems many experienced last year trying to get payment from the Raytheon plan. But you can help yourself by using the above approaches early in the year to get your Rx claims data onto the Innoviant system before your drug costs exceed $2,400.00. There have been recent changes in the tax laws aimed at encouraging charitable contributions. It allows individuals over age 70 ½ receiving payments from an individual retirement account (IRA) in 2007 to have all or part of the payment made directly to a charity. The result is that the payment is not subject to tax as it would normally be. On the other hand, no deduction is allowed for the directed payment. Some individuals could gain a tax benefit by making a directed payment from an IRA rather than receiving a payment from the IRA and making a separate charitable contribution. The potential beneficiaries are a narrow group to start with, i.e., age 70 ½ with an IRA. Tax savings only arise for a relatively small subset of that group such as non-itemisers and those with tax features affected by the amount of their income. Some possible beneficiaries are:
Many retirees receive mandatory distributions from IRA’s. They also may be
making recurring contributions to their church or other charities. The new law
allows such individuals to minimize income taxes when there is such a
combination. If you think you may qualify, ask your tax preparer if changing how
you contribute in 2008 can save some tax dollars.
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Last modified: 12/27/07 |
