Ep 70: Free Money? More Stimulus Checks & Larger Healthcare Tax Credits

Ep 70: Free Money? More Stimulus Checks & Larger Healthcare Tax Credits

Listen Now:

The Smart Take:

The government’s money-printing machine is ripping. Here comes round 3 of stimulus checks and larger healthcare tax credits for many pre-Medicare retirees.

Hear Kevin discuss the 3 rounds of checks, income phaseout ranges, and planning strategies to get yours. In some cases, you may want to file your 2020 tax return sooner and in others, you may want to wait. For many retirees, we are modifying our tax-smart distribution plan midyear 2021, lowering our taxable income targets and reducing Roth conversions, to reap benefits. Otherwise, you may lose out on thousands.

As the saying goes, there is no such thing as a free lunch. We’re all paying for this in the long run. May as well try to get yours now.

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3:49 – Tax Season Is Upon Us

6:07 – Eligibility & Phase Out Threshold For All 3 Stimulus Checks

19:20 – Short Term Solutions

22:07 – More Changes To Be Aware Of

27:02 – Healthcare Tax Credits


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The Host:

Kevin Kroskey – About – Contact

Intro:                                     Welcome to Retire Smarter with Kevin Kroskey. Find answers to your toughest questions, and get educated about the financial world. It’s time to Retire Smarter.

Walter Storholt:                Welcome to another edition of Retire Smarter. Walter Storholt here with Kevin Kroskey, president and wealth advisor at True Wealth Design, serving you in Northeast, Ohio, Southwest Florida. And we’ll bounce back up to the greater Pittsburgh area as well, but even if you’re outside of those typical areas, you can always reach out if you have any questions for Kevin, of course, check us out online@truewealthdesign.com.  Kevin, it is great to be with you today. How are you, sir?

Kevin Kroskey:                  Walter, it’s my pleasure. And I’m good, I’m happy to announce my wife, and I got our first vaccine shots over the weekend, so just a few days ago, and we are on the path to immunity. I feel a little bit like Superman today. Not completely, but a budding Superman, if you will.

Walter Storholt:                I’m really enjoying the extra finger that I have for my first shot, so that’s a little like a mini superpower that I’ve attained.

Kevin Kroskey:                  It a bonus, right? I love that positive attitude.

Walter Storholt:                People are afraid of the side effects. I don’t know. It could be a positive thing, depending on how you look at it. It’s all about perspective. I also got my first shot, and I agree with you. And it’s probably not a good thing; there is this little bit of Superman feeling of like, throw caution to the wind now. You have to actually actively fight against that just a little bit. But it’s a good feeling to feel a little bit more protected against the virus and its effects and all those kinds of things. And I certainly sense the positivity in the air around me, of other people getting vaccinated, and boy, life just inching a little bit back to closer to normal, which feels good.

Kevin Kroskey:                  For sure.

Walter Storholt:                Yeah. Did you Moderna or Pfizer, or Johnson & Johnson?

Kevin Kroskey:                  Pfizer.

Walter Storholt:                Pfizer? Same here.

Kevin Kroskey:                  So we weren’t discriminating, it was whatever and wherever we could get an appointment quite candidly. And it just happened that we got Pfizer.

Walter Storholt:                In all seriousness, no crazy side effects. Did you guys have the day where you didn’t feel good or anything like that?

Kevin Kroskey:                  For me? No. My shoulder, where I received the shot, was a little sore the next day. I woke up, I’m like, “Ohh, I had a good workout. Wait. I didn’t work out yesterday. I got a shot.”

Walter Storholt:                That’s exactly how I felt.

Kevin Kroskey:                  But my wife, the day after, was feeling a little lethargic and queasy. Certainly, we’re not sure if it was related to the shot, but she was not feeling well about  24 hours later or so. But we’re recording pretty early, two days post-shot, and she seemed fine this morning, so so far so good.

Walter Storholt:                Good. Well, fantastic to hear that. And I think that’ll be a common story. It sounds like a lot of people having that similar reaction. And I wonder how much is in the head too, of just sort of you start to feel a little off the next day or the day after, and then does your brain make you feel even more off because you’re expecting it? That type of thing.

Kevin Kroskey:                  We have a friend that’s a hypochondriac. If she gets the shot, I’m sure it’s going to be the case.

Walter Storholt:                Oh man, too good. Well, hopefully everybody’s getting healthy, getting shots, protecting themselves, all that good stuff out there. And it doesn’t hurt that bad, I had a tetanus shot a little bit before I ended up getting the Pfizer shot, and that thing hurt way more than the Pfizer shot. And my arm was sore for about two weeks afterward from that one. So I guess everybody’s a little bit different in how they handle it all.

Well, this is a busy month. We’re recording this near the beginning of April, and this is a busy financial month every year, Kevin, because it’s tax month, obviously, but there have been a lot of changes recently. The tax date getting pushed back, but not necessarily, I think, in all States. I remember there being some question of, “Were states going to follow suit with the federal pushback dates?” We also have had stimulus checks come out, so even busier than normal. This April has already kicked off with a bang.

Kevin Kroskey:                  For sure. And we’ve been getting a fair amount of client questions recently. We are working through tax season, and a lot of people are getting larger refunds. Maybe because they did not get the stimulus check or didn’t get all of it. And basically, it’s reconciling on their tax return. Just two weeks ago, we had the American Rescue Plan, so that was coronavirus stimulus 3.0, if you will. And that was passed at the end of March. And those checks are just going to start coming out of this first or second week of April. And there are some pretty big changes to how the stimulus checks are basically not just being processed, but also how you can qualify for them or not qualify for them.

So as we’ve gotten these questions, you get a few questions, and often it’ll make sense to do a podcast episode about it because there are probably many more people that have similar questions. And so not only are we going to be answering those questions around the stimulus checks and how they work, and what can we expect here, but there’s also importantly some planning aspect, particularly this year in 2021 for it. So I want to at least plant a seed on that. It’s going to be more fourth-quarter type work for us and a lot of our clients as we’re doing their tax planning for the year, or at least truing it up.

And then also there are some pretty big tax credits for healthcare that were put into this as well. So we’re not going to go through all, I don’t know, 5,000 plus pages of the American Rescue Plan 2021, but we’re going to go over the stimulus checks, we’re going to talk about the healthcare tax credits, we’re going to talk about some planning implications and hopefully distill this down and bring some clarity to it.

Walter Storholt:                Perfect. Where shall we begin?

Kevin Kroskey:                  All right, so let’s just look back on a year ago now or so, where we were in March of 2020. So the CARES Act came out, I don’t know if it was the end of March or early April, but that was the first big round of stimulus payments. And basically, as it related to stimulus checks, it was $1,200 per person, plus $500 per child under the age of 17.

One thing to keep in mind, so if you’re a married couple, a husband and wife, and your kids are grown, then potentially you were eligible for $2,400. What it was based on is your adjusted gross income. So not your gross income, not your taxable income, which is what we pay tax on, but your adjusted gross income. So it’s between those two. So your AGI, you just look at the bottom of your tax return, you’ll see the adjusted gross income number that’s there, but it was really based on your 2018 to your 2020 tax returns. So really, three tax years here could allow you to qualify for the stimulus check.

So in the way that it worked on a high level, there are some intricacies to it that don’t really matter to go into, but whenever this came out if your income was below a certain threshold for AGI and they had your 2018 tax return on file, it was based on your 2018 tax return. And again, this came out in late March of 2020. If you think about last year, tax day was pushed out all the way to July. So you may not have filed your 2019 tax returns. So if all they had was your 2018 tax return on file, it was based on 2018.

And then there was another iteration that came out, it was if you had filed your 2019 return and if you now qualified, then hey, you got some more money, or you got your money then. And if neither 2018 or 2019 worked, but 2020 you got under this AGI threshold, I’ll talk about in a moment, then it’s reconciling as you file your 2020 tax returns.

So basically, because of this, some people that maybe weren’t eligible in their 2018 or 2019 tax returns are picking up this stimulus credit on their 2020 tax returns that are being filed as we speak. So three tax years is what to remember there, and $1,200 per person plus an additional amount if it was a child under the age of 17.

So these AGI phase-outs are just the gross income, AGI, for short. I started at, if you’re a single person, $75,000 and basically double that if you’re married, filing jointly at $150,000, and it completely phased out at about $24,000 more than that. So 75 plus 24 takes you up to 99, and 150 + 24 x 2 or 48 takes it up to 198. For round numbers, I’m just going to say it completely phased out at $100,000 to $200,000. And this assumes that there were no eligible kids or kids under the age of 17, it convolutes things a little bit, but this phase-out range really depended upon the size of your potential stimulus payments.

So again, what I just gave you was the phase-out range of call it 75 to 100 if you’re single, 150 to 200 if you’re married with assuming that you have no children. If you have children under the age of 17, then the phase-out range started at the same level but actually extended a little bit further, so just keep that in mind.

So that was the round one. That was CARES Act in March 2020, and it was $1,200 per person. Round two happened at the very end of 2020, and this was a lot smaller in terms of the stimulus amount. It was basically down to $600 per person. A small change here. So rather than $500 per child under the age of 17, it was $600 per eligible person. So that was mom, dad, as well as any kids under the age of 17.

Same tax returns, 2018, 2019, and 2020, candidly everybody should have filed their 2018 tax return by December of 2020, or you have a little bit of trouble with the IRS. So pragmatically, it was really based on the 2019 or 2020 tax returns. Same phase-out range starting points, $75K if you’re single, $150K if you’re married filing jointly. But again, these phase-out ranges depend upon; they call it a recovery rebate or what the stimulus amount was. So it’s actually phased out more quickly because it wasn’t $1,200 per person as round one was; it was $600 per person.

So again, without getting into the details, but it just phased out more quickly. Basically, if you’re married, filing jointly, it was completely phased out at 174,000, assuming you had no eligible kids,  $87,000 if you were single. So those were the first two. 2020, again, they’re reconciling on the 2020 tax returns. So if you didn’t get the payments based on your 2018 or 2019 tax returns when other people were getting checks, but you qualified in 2020, then you may be getting a larger tax refund back as you file your return. And it may be somewhat of a surprise, but that’s really where it’s at. Everything is just reconciling on the tax return.

Let me pause there. Walter, I know this gets into some gobbly goop because it’s related to how these laws were written, but any questions or comments on anything I covered about round one or round two?

Walter Storholt:                No. I’ve just made a note that I need to make a dream sequence sounder because you like to do this often on episodes. Let’s go back, and then we go back and come through time. So be prepared for a dream sequence sounder in future episodes, that’s all. Otherwise, yes, I’m tracking you.

Kevin Kroskey:                  All right, good. And it’s been a while since we had the egg head alert too, so-

Walter Storholt:                I have it ready if we get to it.

Kevin Kroskey:                  All right. I’ve gotten a lot of feedback on that. It was a big hit, by the way, so thank you.

Walter Storholt:                We have to wait for something that rises to the level of fungible or something like that. If we start talking, what’s the thing now? Non-fungible…

Kevin Kroskey:                  Terminal wealth dispersion?

Walter Storholt:                Yeah, there, terminal wealth dispersion. I couldn’t remember if it was that or non-fungible tokens or something like that.

Kevin Kroskey:                  Yeah, yeah, and FT is yeah, for sure. All right, so round three, this was the one that was just passed March 2021, The American Rescue Plan. Again, I wonder who, if they had a specific marketing person, they come up with, “Here are the law writers, here’s this, here’s that.” Who gets to name these things? I wonder, it’s a different skill set I would think to put a branding name on it.

Walter Storholt:                And to think you’d have to go through history to figure out, “Okay, has this been used before? Or can I play off of something that was used in the past and slightly change it, but it’s like an homage to that previous Rescue Act of 1931?” Or something along those lines?

Kevin Kroskey:                  Yes. No, I agree. They all sound the same. CARES Act, I thought it was pretty good. You got a nice little acronym there. I have no idea what CARES stands for, but at least the acronym I thought was very apropos. So anyway, back to March of 2021, just a few weeks ago, now the stimulus amount is $1,400 per person, and it’s not just children under 17, but dependents. So that’s a change. So here, you could have a little bit of an older child, maybe somebody senior year of high school or college still dependent upon you. You could have, or you could be a baby boomer and have an elderly parent that’s living with you, and you’re providing more than half their support. And you can claim them as a dependent as well.

We have a few of those client situations. So the eligibility definition changed here a little bit, the amount increased, it’s now the highest that it’s ever been. And the same thing, though, in terms of tax returns, so it’s still based on three different years, 2019, 2020, and 2021. So everything for this $1,400 is going to reconcile on the 2021 tax return, but the IRS is looking at, “Well, what’s the most recent tax return that I have on file?” So a lot of people still have not filed their 2020 tax return.

So 2019 is the most recent return on file with the IRS. So as they’re starting to send out checks this week or next, they’re looking at the most recent tax return that they have; 2019 will be it for many people. And if you qualify based on your 2019 return, they’ll send it out. If you don’t qualify on your 2019 return, there’s going to be another; they call these checkpoints. And I’m not sure when the next checkpoint is. I don’t know if they’ve announced it, but the next checkpoint will be looking at your 2020 tax return. And assuming that you filed it by then, they will look at it. And maybe you didn’t qualify based on 2019, but you qualify on 2020 because your income’s lower, while they send out the $1,400 per person then.

And then, finally, the third checkpoint is reconciling things on the 2021 tax return. So this will be filed about this time or thereabouts next year in 2022. So same sort of three years, you got these different checkpoints. And not only has the amount and the eligibility definition changed from the prior to, but the phase-out has changed as well.

So in round one, round two, it mattered, the phase-out, it’s the same starting point. It’s the same if you’re single $75,000, $150,000 if you’re married filing jointly, but it’s no longer based on what the potential recovery rebate was. Rather, it’s more uniform, and it phases out quickly. It’s completely phased out, or the $1,400 per person has gone if your adjusted gross income is more than $80,000 if you’re single, or $160,000 if you’re married filing jointly.

So this is important. So some big changes with this round three, as I mentioned. Again, another quick recap. $1,400 per person, not just children and under 17 and say you and your spouse, but also dependents. That includes older kids as well as potentially, say your parents or somebody else that lives in your household, and you contribute more than 50% of their means. It’s based on 2019 to 2021 tax returns, so again, same three years there, but the AGI phase-out is different. It starts at the same $75,000 single, $150,000 married filing jointly, but no longer based on the potential recovery rebate, AKA stimulus payment. Now it’s just more uniform, and it completely phases out as your income goes from $80,000 AGI for single, $160,000 AGI married filing jointly.

And you can think of it as when it’s saying phased out; it’s pro-rata. Say if you’re a single person, your income AGI is $75,000; then you’re going to get the full $1,400. And it’s completely phased out at $80,000; it’s only $5,000 more of adjusted gross income. So if you’re say, $2,500 over the $75,000 or $77,500, well, take $1400 divided by two, and you’re going to get a $700 stimulus payment. So that’s the way that that phase-out works.

Quick aside here. So these checkpoints that I mentioned, how you’re paying it out over time, even though everything is going to reconcile on your 2021 tax return, each of these checkpoints is looked at individually. And what I mean by that is let’s say that you wait really long to file your 2020 tax returns, so you wait all the way until October, but maybe your income was high, maybe you made $200,000 in 2019. You were in an industry, and your position was disproportionately affected by COVID; you had a big income dip in 2020, maybe only made half that amount, or maybe you’re a business owner or something like that, and your restaurant was closed down, whatever it may be. But then 2021, maybe things rebounded, and your back up at 200.

In that case, you want to make sure that you file your 2020 tax return really ASAP, because if you don’t do it, say if you went all the way through October, which everybody can get an automatic extension through October 15th to file their tax return, but that checkpoint number two that I mentioned will have been passed by that point in time. And because you won’t have filed your 2020 tax return, the IRS is just going to be looking at 2019 tax return, “Hey, you made 200,000, you completely phased out, you don’t get the $1,400 per person.” And then you go to file your 2021 tax return in, say, 2022, and your income rebounded, so now you’re back at 200, and your checkpoint three, you failed.

So while they’re looking at the three-year tax returns, there are these kinds of different checkpoints that they’re looked at separately. So again, just the thing to remember is if you had a dip in your 2020 income, that would push you under those phase-out thresholds; you want to file your tax return ASAP.

Walter Storholt:                Interesting how the timing has sort of shifted through the different phases of the pandemic, where some people will want to file things as fast as possible, others are delaying as long as possible just to try and get the best possible situation for them. It’s like everything else in the tax world, right? Here are the rules, and then where can we float, and how can we interpret and move through those different rules to put ourselves in the best position? Using the rules to your advantage, not having to pay more than you have to. So it seems to fall in line with everything else in the tax world that we’ve talked about on past episodes, not paying more than your fair share, right?

Kevin Kroskey:                  Well yeah, for sure. You want to take advantage of whatever you can here, but maybe I’ll vent a little bit. But candidly, this stuff is so short-term thinking. Trump did something in his final year of office, where, “Hey, you could stop paying payroll taxes if you want, but then you got to pay them back next year,” and it made no sense. You got all of this operational work from an HR and a payroll perspective to do it; most of the employees probably are not going to understand it. They’re going to get a surprise that they’re going to have to pay this stuff back. You’ve got tons of resources and energy that’s just wasted by an executive order like that.

Or now that the Democrats got their will that they imposed in this most recent one, and it’s varied from what in there before, and it’s changing. I mean, it’s so convoluted. I get it that certain people need help. There are certain industries and certain people in certain segments of the population that truly, truly need rescue, that need stimulus. I would argue that just sending out checks and helicopter money and bazooka throughout the US, not really the most effective way to do it, but hey, what do I know? I’m just a guy that understands math and economics.

So it is what it is, but then this is going to go away, and then you’re going to have something new. So from a business owner perspective, it’s good to be able to think and plan long-term when you’re doing this short-term-ism like this, and executive order this, or budget reconciliation that and then it’s gone. Quite candidly, it’s a waste of resources and ridiculous, and it’s not really targeted to a lot of the people that probably need it.

So that’s our political system, but that’s what we have to deal with. And what we will do for our clients is just make sure that we do invest the resources to understand this stuff and make the most out of it. So then they can, I don’t know, do whatever they want with their money, pay less, maybe lobby, fun candid things from a longer-term. I can wish, but there we go. So that’s my vent for the day, Walter. Hopefully, that wasn’t too inappropriate.

Walter Storholt:                I like the rant. I thought it was good. I have this image of the cartoon character in the boat with lots of different leaks springing up and trying to plug the different leaks in each one, just makes another one come up. Or a little bit like the game of whack-a-mole, it just feels a little bit like you’re venting about the short-term fixes and the short-sightedness of everything that still totally ignores the long-term problem. Which I know is something we’re going to transition to in our next episode, to talk a little bit more about where all this is headed.

So it’s just interesting to bring that perspective a little bit. And this is just the stimulus side of things. We haven’t even gotten into the other changes and other tax credits. If we want to complicate things even further, you’re talking about trying to keep up with all these different changes for the layperson; it can be difficult.

Kevin Kroskey:                  Yeah. So a couple of things I’ll mention here. I won’t go into detail, we’ll probably revisit this in the fourth quarter, but a lot of times, particularly if you’re working, you may not have as much control over your income. When you’re in retirement, you can certainly have a lot more control and craft your tax-smart distribution plan, pulling money out of different accounts that have different tax ramifications, whether it’s an IRA and fully taxable, a Roth account, the tax-free or taxable money. I think the cash you have down at the bank; you take it out of the bank, there’s no tax implication there.

So very commonly, because the tax rates have been lower under, I’ll just call it the Trump tax plan, we’ve been targeting income right around $170,000, $174,000 for many, many clients. The reason being, it’s a 22% tax rate which is low for them. It’s lower than what they were paying pre-Trump tax plan. And that current law’s going to go away come 2026, and very well may go away sooner than that with some forthcoming changes this year, we’ll see. But if you think about what I just mentioned for round three, that stimulus check, I mean, you’re completely phased out at 160, and the phase-out is pretty quick.

So there is a big incentive to keep your income under AGI, that type of income under 150,000 this year, because if our original plan was just to go to say 175,000, but, “Hey, I’m going to lose out on $2,800 for my wife and me, if I go from over that $150K to my tax target of $175K, I’m going to lose $2,800 dollars, and I’m only increasing my tax range in that example by $25,000. 150 plus 25 takes me up to that 175 target.” So if I can just convert that to an imputed tax rate, you take $2,800 and divide it by 25,000; it’s about 11% tax rate, just doing the math in my head.

So we started at,  “Hey, we want to have this 175 income target; it’s a 22% tax rate, that’s great. However, if we do that and we don’t get that $1,400 per person, it’s really 22% base federal tax rate, plus another 11% imputed tax rate because it’s a loss of around three stimulus. Now I’m paying a 33% tax rate; I don’t like that.” So there’s a lot of clients, and one other quick caveat, one of the reasons why we go to 175-ish is for those clients that are 65 plus. That’s where really the Medicare income-related adjustments start applying, and basically, that adds another what I would call imputed tax rate to what you’re paying. Round numbers, there are some variables, but call it 3% to 4.5% is what it’s adding.

And so those are the things that we’re thinking about, and we have to redo and rethink some client’s tax plans. But to make it a little bit more complicated, maybe if they qualify based on their 2019 return or their 2020 return, and they already got the stimulus payment through checkpoint one or through checkpoint two. And again, these are just happening right now for this most recent stimulus plan. We need to know that because each of those checks is independent of the other. So even if we go up to $175,000 of income in 2021, but they already got their $1,400 per person, that’s fine. And then we can keep with our tax plan that we want.

So yes, we got a ton more work put on our plate this year, and which is great; because some of this complexity, we’ll be able to add value, but we’re really going to need to rethink this for certain people. So I don’t know if that’s worthy of an egg head alert; that’s just more like an IRS law alert, I suppose, but those are the things that we’re going to be working through this year. And Walter, we still haven’t gotten to healthcare.

Walter Storholt:                There’s still one more layer to get to. Oh my gosh.

Kevin Kroskey:                  One more huge layer, very briefly. So for our clients that are not on Medicare but are retired, and I guess they just don’t have to be retired, but they’re not on a group health plan, they’re on an exchange plan, so under the Affordable Care Act. And we’ve talked about this. I wrote an article on it in October 2020, if you want to check it out on the site. And the article title is, How To Get A $16,168 Tax Credit On Obamacare, Even If You Are A Fluent?

And again, it comes back to these income ranges. So, in short, Obamacare limited what somebody paid to about 9.5% of their income. Maybe a little bit less, depending on your income, but if you went over a certain threshold, then that 9.5% cap did not apply anymore. And for a lot of our clients who, husband and wife, kids are grown, that threshold is about $67,000 of, and technically this is not AGI or just the gross income; it’s MAGI or Modified Adjusted Gross Income.

I’m not going to get into the technicalities for the podcast, but there is an important difference; it’s there. If you go a single dollar over this threshold, historically, you get zero-premium tax credit. The 16,000 I mentioned in that article is gone, but the law change is now it’s limited to 8.5%, so not 9.5%, and there is no income restriction. So again, husband and wife form a MAGI, Modified Adjusted Gross Income to 67,000, and you could still get a tax credit. And if you went over it, it was completely phased out. Now, that 67,000, it doesn’t matter if you have 100,000 or 200,000, or $2 million, there’s an 8.5% cap that’s applied to it.

So let me give you a quick example, and this is a true-life client case. So clients are in their late 50s, their income this year, we’ll see, it’s probably going to be just over $100,000, depending on some things that we do and some spending that they need to make. But if you just say, for example purposes, let’s just say it’s $100,000. So this 8.5% cap would limit their… Just call it an expected contribution to $8,500, just 100,000 x 8.5%. These clients are paying nearly $20,000 a year in healthcare premiums.

So the article goes into this calculation, but it really references what they call the premium tax credit for Obamacare. There’s another reference plan, so it’s the second-lowest-cost silver plan in your market in your zip code, and you subtract your expected contribution from that. So simplistically, let’s just say that this $20,000 a year is that second-lowest-cost silver plan. So I take the $20,000 minus their expected contribution of $8,500. They’re going to get an $11,500 premium tax credit that is going to be reconciled on their 2021 tax return.

So I just share this with this client, literally via email yesterday, I hadn’t heard back from them yet, they must not have checked his email, but I can rest assured that they’re going to be darn happy to know that they’re going to get about a little bit more than $11,0000 in a premium tax credit, and it was completely unbeknownst to them. So there’s going to be certain people where this is going to be very, very beneficial for.

And also, I mentioned that 175 income target, and I mentioned Medicare. If you have somebody that maybe that Medicare threshold doesn’t apply, we still want to maybe keep somebody’s income a little bit lower this year, depending on this premium tax credit too. So assuming that they’re retired, assuming that they’re not on COBRA group health plans anymore, and they’re on this individual plan and bridging the gap to Medicare, another big, big change. And there are some other changes related to it as well, but this is going to impact, I can at least think of about a handful of clients, and they’re going to get significant dollars back on their tax return.

And I did get an email from a client where it seems that some of the healthcare companies are actually reaching out to their insureds and advancing this premium tax credit. So that means that I had a client that was paying a pretty low premium, and she said, “Hey, my insurance premiums are going down. They were 200,” and I think she said, “they were going down to 50 bucks.” And I said, “Well, that’s great, but it’s not really the healthcare premiums that are going down. They’re still the same. It’s just the tax credit is going up, and they’re advancing that credit to you.”

We’ll see.  I didn’t see anything written in this law about how companies had to respond if they do have to advance this if it’s just going to be all reconciled on the 2021 tax return, whatever. But ultimately, it’s going to be reconciled on the 2020 tax return. If it was an advance year, you’re going to pick it up then.

Walter Storholt:                Lots of moving parts. Nothing that quite rises to the level of egghead alert on its own, but I feel like the entire episode has been a little bit of an egghead alert, just because, wow, so much has changed, so many moving parts, numbers. It’s hard to keep track of it all, Kevin, but I’m glad that you are doing that for us. So I appreciate it.

Kevin Kroskey:                  Yeah, I mean, honestly, it’s important. I enjoy saving money on taxes, but it’s frustrating to me. I mean, I think we just need to take a little bit longer-term view about our society and our laws and things like that, but I get it that people need help now, but some of this short-termism. I’m a planner. I’m a long-term thinker, Walter. What can I say? It’s not my natural mode to just think short-term like this because we’re going to do this. We’re going to invest a lot of resources, we’re going to make sure that our clients save the money that they can, and then it’s going to be gone.

And so it’s not like we’re investing in the future. We’re investing in the next year or two and then back to the drawing board as things are going to change again. So I don’t know, maybe it’s a full-employment act for financial and tax people, but I don’t really think it’s the best thinking that we have for our country in general.

Walter Storholt:                Well, I thought your point earlier was really good too of just the feeling of, “Okay, let’s make a decision that seems like it’s going to be good and puts money in people’s pockets, but create so much work to do so and to track it and to implement it, that it’s like shooting itself in the foot, instead of just making it a little bit more streamlined and efficient.” I know that must drive you crazy too.

Kevin Kroskey:                  Yeah, it does. Politics, I am not a fan of politics whatsoever, but nonetheless, it is what it is. We’ll deal with it, we will make sure that our clients get the most that they can and make smart decisions, and that’s our job. And one of the things that are also popping up that will lead us into the next episode is, “Hey, with all this spending that’s going on, do we need to be concerned about that? What about inflation? What about deficits? Do we need to be thinking differently or doing things differently?” So I’ll leave that for the next one, but that’s where we’re heading.

Walter Storholt:                Lots of client questions have been coming in recently, some from the podcast, some from just everyday interactions that Kevin has had, and that are going to help lead us through our next couple of episodes, in fact, as we continue to walk down this line. So inflation, spending questions, all of that will be coming up on the next episode.

In the meantime, if you have any questions for Kevin, want to talk a little bit about your financial situation, there are a few ways that you can get in touch with the team. You can call (855)-TWD-PLAN. That’s (855)-TWD-PLAN, or go to truewealthdesign.com and click on “Are We Right For You” button, to schedule a 15-minute call with an experienced advisor on the True Wealth team. That’s truewealthdesign.com, and we’ll put contact info in the description of today’s show as always. Kevin, thank you so much. You were fired up today, went on a rant. Lots of good stuff.

Kevin Kroskey:                  It’s somewhat of a rant. I guess it’s fairly tame compared to some airwaves out there, so yeah.

Walter Storholt:                That’s true. Your rants are not too grating on the ears. No, you have very well thought out rants, so-

Kevin Kroskey:                  Well, thank you, Walter.

Walter Storholt:                … non-emotional rants. You have lots of facts and figures to go with yours, all good.

Kevin Kroskey:                  Are you calling me boring?

Walter Storholt:                No, no, not at all. That’s why we have the egg head alert, not the boring alert.

Kevin Kroskey:                  Thank you.

Walter Storholt:                No, you’re good. Thank you, sir. I appreciate it. And thank you for listening to the show today. We’ll look forward to chatting with you again soon, right back here, on Retire Smarter.

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