:::: MENU ::::

Posts tagged with: irs

Open Enrollment

by

First, thanks so much for the many thoughtful (and kind!) comments on my budget post. When I saw the comment count shoot up it made me nervous to read through them, but almost everyone was really very kind and forgiving (and generous in offering support, tips, advice, etc.) THANK YOU!

Speaking to one of the common comment themes I saw – many people asked about my take-home pay. For a $95k salary, my take-home ($2440/biweekly) is pretty low. The reason for this is that I have a LOT of things withheld and/or paid from my check pre-tax. This list includes the following (all numbers from my most recent paycheck):

  • Medical insurance ($125.50/check)
  • Dental insurance ($52.28/check)
  • FSA – Health ($68.37/check)
  • FSA – Dependent Care ($136.75/check)
  • Retirement account (required and already investing at the lowest amount so no chance to reduce – $256.91/check)
  • Parking permit ($38.45/check)

Plus, of course, all my taxes as well ($552.13 from my last check).

If I added this all up correctly, that comes to a whopping $1230.39 taken from my check before it hits my direct deposit! WHOA! That’s a third of my check!

So the question came up – can I change some of these things so I can get back more money per paycheck. And the answer is – YES! Right now is my open enrollment period and I’d LOVE to have some help with figuring things out! Let me address things one at a time.

Taxes

I can likely lower my tax withholdings per check, but have opted not to make any changes right now. Taxes are not part of my open enrollment, so I can change those at any time. Based on what feels best to me (and many comments/advice I’ve received), I’m going to do our 2017 taxes ASAP once the new year hits. That will give us a better feel for how much we really owe and we can make adjustments accordingly. Given our huge tax debt (that we’ll be paying on for what feels like a lifetime), we’ve opted NOT to reduce our withholdings for the time being. We’re likely over-paying a little this year, but we feel okay with that – any extra money can go to help reduce the tax bill and we can re-adjust after the CPA has gone over everything.

Retirement, Dental, Parking

These are all pretty well “set” and cannot be changed. We have limited options for dental – I can decline the insurance, but we use it and need it. So it stays. In terms of parking, I live too far to walk/bike and don’t have anyone living nearby to ride-share with. So unless I switch up my Mom car for a motorcycle (never happening), this bill is pretty much “set” too. Retirement is required by my employer. I used to invest a full 10%, but have reduced down to the minimum (7%) already. No way to make this any lower.

Medical 

So here is where I could REALLY use some advice. Currently, we have a PPO plan and this entire year I’ve been thinking that, come open enrollment, we’d switch to a HSA. But when I started really doing some research to compare the two options, I think we’d end up spending MORE with the HSA. Yes, we’d save on monthly premiums, but the out-of-pocket costs and deductibles are much higher.  Here are some side-by-side comparisons I put together. What do you think?

Health Savings Account PPO 
Per-paycheck Premium $61 $150 (note: this is more than listed above because premiums are going up)
Overall Deductible In-network:

$1300/employee; $2600/family

In-network:

$500/employee; $1,000/family

Other Deductibles Non-preventive prescription coverage:

$1300/employee; $2600/family

None
Out-of-pocket limit In-network:

$2,000/employee; $4,000/family

In-network:

$1,000/employee; $2,000/family

Not included in out-of-pocket limit Premiums and health care not covered by the plan Premiums, drug co-pays, and health care not covered by the plan
Annual limit on what the plan pays None None
Costs for common services with in-network providers.

Primary care to treat illness or injury

Specialist visit

Other practitioner office visit

Preventive care /screening

Diagnostic (x-ray, blood work)

Imaging (CT/PET/MRI)

Mental health

Generic drugs

 

 

10% co-insurance

10% co-insurance

10% co-insurance

No charge

10% co-insurance

10% co-insurance

10% co-insurance

non-preventive: 100% until deductible is met. Preventive: $10 copay

 

 

$15 copay

$30 copay

$10 copay for OB/GYN

$15 copay primary care; $10 OB/GYN

No charge

No charge

$15 copay

$10 copay

 

I receive biweekly pay (26 checks/year). So the HSA annual premium is $1586. The PPO annual premium is $3900 (a difference of $2314). But if we’re having to pay $2600 for our family health deductible + $2600 for the prescription deductible (compared to a $1,000 deductible for the PPO plan), I think it’s just too much money out-of-pocket! (though, caveat, I’m no expert with healthcare – does the out-of-pocket max only apply to healthcare, or would that also include prescription coverage??)

My thought is that we’d be better to stay in the PPO. It also scares me to think of paying 10% of any imaging, diagnostic, etc. We’ve been lucky thus far (knock on wood), but we have young kids – broken bones are a given at some point, right?

Those more experienced than I am – thoughts?

Flex Spending Accounts

The dependent care account contributions will decrease in 2018 and even moreso in 2019. Right now, we still have hefty monthly bills. Our girls are in kindergarten and, though half-day kinder is state-subsidized, the state does not cover the costs of full-day kinder. We pay that. The total was actually right about $1,000/month, but we paid out of our FSA a huge chunk for one of our kids’ entire semester of tuition (for which we received a discount). We’ve been paying the remaining costs out-of-pocket (the dependent care FSA was depleted months ago).  For next year, we’ll only have one semester worth of full-day kinder costs (the second half of the year they’ll advance to first grade – totally free!), plus the costs of care for summer and after-care, as needed. (Note: several people have suggested that hubs take over childcare so I just wanted to address that here:  hubs does handle the bulk of childcare. Where we live, half-day kinder is 8:30-11:30am. Hubs is in classes full-time that extends well beyond that timeframe. The full day kinder program is 8:30-3:00pm. Currently, hubs gets the girls at 3:00pm every day except Wednesday – his long day – so we pay very little in “after care” at the present time. Just one day per week. This arrangement is unlikely to change for the rest of the academic year).

Bottom line, we should be able to lower the amount of FSA money withheld for dependent care for next year, thus increasing the size of my take-home pay.

The health care FSA is entirely dependent upon whichever medical plan we choose. If we get the HSA, we’ll use the health savings account. If we keep the PPO, we’ll keep a flex spending account for medical expenses. This year, we put $1750 in our health FSA and it was not nearly enough. If we keep the PPO, we’ll increase our health FSA contributions probably to about $2250-ish (though I’d need to crunch numbers first).

So the big question is…..HSA or PPO (with a FSA)? Pros and cons? What are your thoughts and why?


IRS Frustrations

by

The IRS is currently working its way to the top of my list of most hated organizations to deal with.

My current Top 3 List of Organizations I Hate Dealing With include:

#3. Social Security (I am the representative payee for my father so I have to deal with them in reference to his disability payments, and it suuuuuucks the life out of me!)

#2. IRS! Read more below.

#1. Navient. Oh Navient, you know how much I hate you.

(Side note: Hmmmm, interesting how 2 of the 3 are government organizations and the third is also backed by the federal government. Inefficiency, much???)

Nothing like calling the IRS, sitting on hold for half an hour, and then having the line disconnected. Only to call again, sit on hold again, and have it disconnected again. I think there might be a 30-minute time hold limit and then the IRS system automatically disconnects??? I’ve been sitting on hold while working at my desk so I’m not out and about with poor cell service or anything like that. Grrrr!!!!! If you can believe it, I’m still trying to set up a payment plan from my 2016 back-taxes!!!! AGH! In April we sent a huge payment and tried to initiate a payment plan at that time. Thought it was all set up, but it turns out it was never accepted. I’ve tried calling multiple times but have been thwarted every time (to clarify, I’ve been able to speak to people, but they can never help me – they have to mail me something to sign, or transfer me to another department. It’s a whole cluster-f over there)! I’ve been making payments online through their online system just so they’re receiving something, but it hasn’t been officially set up yet. I was just able to (fingers crossed) finalize everything today, but they still deal with 1983 technology so the official agreement has to be mailed out, signed, and returned. Sooooo, still not completely set up but at least it’s progress compared to the past 7 months of nonsense. The issue, if you’re curious, is that when we did our 2016 taxes we also had a small amount they claimed we owed from 2015. We had an accountant help us with everything and agree the 2015 charges shouldn’t exist. So everything was on “hold” with 2016 stuff because we’d refused to sign an IRS agreement of taxes owed for 2015. I guess they couldn’t move forward with any payment plans unless and until the discrepancy was resolved, which took a long time and a lot of snail-mail back-and-forth. (Who doesn’t use internet these days??? I mean, I know it’s secure info but there are lots of ways to encrypt email, right???)

Anyway, it’s been a pretty shitty past couple of days. A lot of stress with work drama and some nonsense going on at our kids’ school in addition to the ever-present financial stress we have in our lives currently. I’m glad to have this minor “win” on the IRS front. Not that it’s even been officially completed yet. But I think we’re finally on our last step. Supposedly, the papers will come in the mail, we sign and return, and everything should be set for our first OFFICIAL payment starting in December. We’ll be paying $283/month, which is significantly LESS than what I’d been paying previously through their online system. The reduced payment means we’ll be paying for a much longer period of time (ummmm, approximately forever???) But with our serious budget shortfall going on right now, we really can’t afford to continue making larger payments. So it is what it is. And we keep moving forward.

My motto the past few days has been: Make today better than yesterday and tomorrow better than today. My husband thought it sounded a little pessimistic, but I think it’s optimistic. Looking forward to a better tomorrow! 🙂