It has been a busy few months at home. Ellison was born on August 2nd. She’s doing great and Mom and Dad are adjusting! One impact of having a newborn in the house was not having time to send out a newsletter since mid-summer, but things have settled down and we’re back on track with the newsletter schedule.
In this month’s issue, we continue with our recent healthcare focus, and take a look at how you might save the next time your doctor recommends imaging for you. Our Financial Planning Tip of the Month should be of interest to parents and grandparents given that it covers college savings and 529 plans. Finally, in the Client Question of the Month we cover what’s known as phishing, and how to protect yourself and your financial information.
Micah Porter, CFA, CFP®
The Changing World of Healthcare and Medical Imaging
Micah Porter, CFA, CFP®
One of most prevalent trends in healthcare is the acquisition of physicians groups by larger hospital systems. Hospitals gain by increasing their population of potential patients. The physicians groups receive cash in acquisitions and bargaining power of the hospital systems in negotiations with insurers. Ideally, patients notice little change aside from a different name for the physicians group to reflect their new affiliation.
Since the hospital systems’ primary motivation in making these acquisitions is capturing additional potential patients, it’s understandable that the hospitals would prefer these patients use hospital services – as opposed to alternatives – when possible. While the quality of care within the hospital system might be quite good, it isn’t necessarily the most economical.
One area in which this is often true is medical imaging. Hospitals have long offered these services, but in the 1980’s as technology advanced, independent imaging centers sprang up. Their primary advantage was rates that were a good deal lower than those offered by hospitals, and patients often found them more convenient. The industry encountered some problems in the 90s, but stricter legislation and oversight removed less scrupulous operators.
As the industry became more established and physicians became comfortable with the quality-of-care offered, they began to refer cost-conscious patients to these independent facilities. Unfortunately, as physicians groups are absorbed, such referrals are less likely. However, if you need such a procedure, you could certainly ask your physician if there is an independent facility to which he/she is comfortable providing a referral. Alternatively, you might do a bit of legwork on your own. Some things to look for in a center include:
Accreditation of the facility by the American College of Radiology
Confirmation that the facility uses Board Certified physicians and technologists.
While the research might take you a bit of time, it could save you hundreds of dollars or more on each imaging procedure. If you’re paying out of pocket, it will most likely be well worth your time to do the research.
Financial Planning Tip – The Cost of College and 529 Plans
Micah Porter, CFA, CFP®
At some point, most new parents or grandparents begin thinking about how to pay for college. Since educational costs have risen at a rate well in excess of inflation over the last two decades, covering the cost of college is no mean feat. Fortunately, a 529 plan offers parents and grandparents a tax advantaged vehicle to save for and fund college expenses.
529 plans were established in 1996 under section 529 of the Internal Revenue Code, and they offer a few tax advantages as follows:
Although there is no federal deduction for 529 contributions, some states offer tax deductions for 529 plan contributions. Georgia allows a deduction of up to $2,000 per beneficiary per year. Thus, if you have two children or grandchildren and you contribute $2,000 to each of his or her plans, you can deduct a total of $4,000 on your Georgia Tax return.
Growth within the 529 plan is not taxed. Thus, there is no tax on capital gains or interest and dividends, and over the longer term, this contributes a great deal towards growth in assets.
As long as fund proceeds are used for qualified educational expenses, there is no tax on withdrawal.
The structure of 529 plans is relatively straightforward, and the accounts include both an owner and a beneficiary. The beneficiary, as the name implies, is the person for whom the funds will be used and it’s important to note that the beneficiary on a 529 plan can be changed to other qualified family members. This helps reduce the risk that a 529 plan will be overfunded for a particular child, as the beneficiary can be switched to the beneficiary’s sibling, parents, grandparents or certain other extended family members.
Most states offer 529 plans, and the official Georgia plan is the Path2College plan administered by TIAA CREF. Although state plans were relatively restrictive at one time, they’ve become much more open. Most plans allow residents of any state to participate, and most plans can also be used to fund college outside the state in which the plan is offered.
If you think a 529 plan might be a good vehicle for college savings for your children or grandchildren and you’ve got questions, let us know. Additionally, Savingforcollege.com has a wealth of information that will likely answer most questions you might have.
Client Question of the Month – Phishing
Micah Porter, CFA, CFP®
I’ve gotten several “official” e-mails about my accounts. Have they been compromised?
A client recently called concerned that she had received several e-mails from credit card companies as well as AT&T regarding account transactions she had never authorized. She contacted the companies to find out what was going on only to be told that they hadn’t sent the e-mails in question. The e-mails had actually been created by hackers trying to get account information from her, and these attempts are known as “phishing”.
“Phishing” takes many forms, from e-mails like the one our client received to those touting “business opportunities” to those supposedly providing links to account statements. TD Ameritrade recently became aware of phishing attempts purporting to offer links to online account statements, and they sent out the following notice:
This email will contain several links that appear to connect your clients to their account, but may instead prompt them to install software designed to capture their account information. Please alert your clients that they should not click any of these links. If they have received a suspicious email, please have them forward it to [email protected]
To access their statements and other account information, your clients should log in the way they normally would through our secure website.
The bottom line is that if you ever receive an e-mail from a company that seems suspicious, call the company to confirm that they did indeed send the e-mail. If that company is TD Ameritrade, you can follow the procedure they outline or feel free to call us and we’ll check it for you.