How to Skimm Your Life

by The Skimm

  Child tax credit

  Oh, baby. This is the most common credit used, and you can get up to $2,000 shaved off your taxes for each child.

  Education credit

  This is called the American Opportunity Tax Credit, and if you’re a college student you should take it. It can save you up to $2,500. A+.

  Electric vehicle credit

  If you’re living that hybrid life, you may be able to get a credit for $2,000 to $7,500.

  I’m married. What does this mean for me?

  You can live joint filingly ever after. We’ll get to what that means. If you and your SO got hitched before the end of the last tax year, you have two options. You can file together (joint) or solo (separate).

  Joint

  When two become one. And you pool your money together. Income minus deductions (standard or itemized) equals your collective taxable income. That puts you in a certain tax bracket. People filing together have different bracket thresholds than single filers. Pros: Joint filers can often get a better deal (aka higher deduction) just for being married.

  Separate

  Shout out to those going it alone. Even if you’re married, filing separately could be a way to save some cash…sometimes. Like if one of you has high medical expenses. The rules get tricky, and it depends on your personal situation, so look into it if you think there’s a chance you could save.

  How do I make sure I don’t eff it up?

  There are mistakes and then there are mistakes that cost you money. Everyone will tell you to spell-check and get your Social Security number right. Here are some less obvious mistakes to avoid.

  For when you feel like you forgot something…

  Make sure it’s not Tax Day. Circle April 15 (or whatever day it is that year) in your calendar. If you file late, you will pay the price. The penalty is usually 5 percent of the unpaid taxes for each month that a return is late. It starts the day after the tax filing due date and won’t go over 25 percent. You’ll get a separate bill for that.

  For when you don’t like “labels”…

  You’re going to have to like them here. Make sure to choose the correct filing status, out of the five listed earlier. There are a lot of people who choose the wrong status and end up getting less juice out of their tax refund.

  For when you have a missed call…

  It won’t be from the IRS. Beware of scam calls. They happen more often than you think, and seem legit. The callers may know a lot of your info and usually make it so that “IRS” pops up on caller ID. The IRS will never call you asking for an immediate payment or threatening to have you arrested. Just hang up and call the IRS directly at 1-800-829-1040. Or email them at phishing@irs.gov.

  For when you want to finish strong…

  Sign on the dotted line. If you’re filing your taxes old-school, on paper, you need to sign. If you’re doing everything online, you’ll be asked for your Identity Protection Personal Identification Number, aka an IP PIN. This is like two-step verification to make sure no one’s using your Social Security number and to protect you from identity theft. If you filled out last year’s taxes, check that return to find this number. If you don’t know what yours is, ping the IRS.

  Any other tips to save cash money?

  Avoid short-term capital gains taxes. Capital gains are the profits from the sale of an asset. That includes shares of stock, a piece of land, a business, a home. They’re considered taxable income and are taxed at the same rate as ordinary income. If you hold on to the asset for more than a year before selling, they’re considered long-term capital gains and may qualify for a reduced tax rate.

  Does everyone have to file taxes?

  Nope. If you make below a certain amount (for example, $12,000 if you’re under 65 and single), you get a pass. But you still may be eligible for tax refunds and credits, so it’s up to you if you wanna get in on the Tax Day spirit.

  Do I get a reward for doing all this?

  Yes. Sometimes. But it’s not always a good thing. If you get a big tax refund, it probably means you’ve been paying Uncle Sam too much throughout the year—and basically giving him an interest-free loan. The amount you get back will depend on how much you had withheld from your paycheck. (Remember when you filled out that W-4?) The IRS issues you this cash money back 21 days after it gets your tax forms. Set up a direct deposit for your tax refund. You’ll get it much faster than waiting for a check.

  theSkimm: No one said doing your taxes was fun. But you’ll feel better when it’s over. Mark your calendars and get your forms in order. You got this.

  Things No One Really Understands

  theSkimm on Health Insurance

  The sure part of insurance feels elusive.

  How can you be sure you’re not getting ripped off? How can you be sure you chose the best plan? The one thing you can be sure of is that everyone has a lot of questions about health insurance.

  How do health insurance companies make money?

  From customers paying monthly premiums. A health plan is a contract between you and an insurance company. It says that the insurance company will pay a portion of your medical bills, bills, bills if you get sick or hurt. To keep your plan, you pay your insurance company a certain amount every month. That’s called a premium. The insurance company keeps that cash on hand to pay all or some of the bill when customers get sick.

  Because insurance companies have all the customers, they can negotiate prices with doctors and hospital systems. The ones they have deals with are in-network, so the patient will end up with a smaller tab at the end of it. All the others are out-of-network, aka you’re basically on the hook for most or all of the bill.

  How do I get a plan?

  Depends on your personal situation.

  If you’re employed full-time…

  Usually through work. If you have a nine-to-five (or -six or -seven) your employer will likely pay all or a portion of your premium, and the rest will be taken out of your paycheck every month. Legally, a “large company” (50 or more employees) is required to pay a portion of your insurance.

  If you’re unemployed or self-employed…

  Through a government exchange. These are mostly run by the federal government, but some states have their own marketplaces. This means the government acts like your employer and negotiates deals with providers. Visit HealthCare.gov to check out plans. There’s also Medicare for people over 65 and Medicaid for people whose salary is under a certain amount. These are low-cost plans that are partially paid for by the government.

  If you’re under 26…

  If your family has a health insurance plan, you can stay on it. For now. If you’re about to turn 26—one, we are jealous. Two, take the time to enroll in your employer’s plan or a marketplace plan. Because of your impending birthday, you can do this even if it’s not during an open enrollment period.

  Open enrollment…when’s that again?

  If you’re going the marketplace route, aka through HealthCare.gov, open enrollment generally starts in early November and goes through mid-December. If you’re going through your employer’s plan, it varies. Insert reminder to email HR. You can enroll at any time if you experience a “qualifying life event.” Sounds scary, but it often involves popping bottles. Getting married, moving, having a kid, and leaving your job all qualify.

  How much does a plan cost?

  Also depends. Sensing a pattern? On top of your monthly premium, there are other things you pay too. Fun times. Here’s a checklist of the medical payments you’ll generally have to make, what they mean, and why you care.

  Premium

  The one we’ve talked about. This is your monthly fee for getting insurance. All health plans have premiums, but some are higher than others.

  Deductible

  The amount you have to pay toward your medical costs before your insurance company starts picking up part of the bill. So if your deductible is
$2,500, you’re on the hook for that much—on top of the premiums you’ve already paid. Then insurance raises its hand.

  Co-pay

  The flat fee you pay for covered medical services. Like a cover charge without the open bar. Preventive care, like annual physicals, may be fully covered by insurance (meaning no co-pay).

  Co-insurance

  Once you hit your deductible, you still have to pay a certain percentage of your medical bills. So let’s say your coinsurance is 20 percent. Once you hit your deductible, a $100 doctor’s bill will now cost only $20.

  Thing to know

  Out-of-pocket max. The limit does exist. It’s the most you’ll pay during your coverage period (typically twelve months). If your out-of-pocket max is $6,000, you will never have to pay over that amount during the year of your benefits coverage.

  These aren’t just definitions in a tedious dictionary. It’s important to know the difference between these things because you want to take into account allll the costs that come along with staying healthy. Generally, plans with lower monthly premiums have higher deductibles, and plans with higher premiums have lower deductibles. So don’t get immediate heart eyes at a low-premium plan.

  Ultimately, your bill will depend on your age, where you live, and your plan. But to give you an idea, in a year, the average costs for a single person to pay for a year of healthcare range from $6,000 to $10,000.

  Gimme some plan types.

  Sing it all together now: H to the MO. The two main plan types you’ll see are HMO and PPO. Here are the differences between them and why you might want to choose one over the other.

  For when you’re the monogamous type…

  Consider putting a ring on an HMO. This pays only for healthcare that’s in-network, aka hospitals that insurance providers have negotiated deals with. Premiums tend to be lower, but these plans require you to get a referral from your primary care physician (PCP) to see a specialist. If you’re not picky and want to pay less monthly, this might be for you.

  For when you’re the playing-the-field type…

  Consider going for a PPO. This covers care that’s both in- and out-of-network. But for all these options, you’ll pay a higher monthly premium. And you still end up paying more for out-of-network care than in-network care. So if you want more fish in the healthcare sea, but don’t mind paying up, this might be for you.

  This all sounds expensive. Gimme some tips to save…

  There are savings accounts for that. Specific savings accounts. Health savings accounts (HSAs) and flexible savings accounts (FSAs) are savings accounts specifically for your health insurance plans. You can contribute pre-tax dollars to them to save and pay for things like pricey deductibles, co-pays, and prescriptions. The biggest difference between them? With an HSA, any money you don’t use in the account rolls over to the next year. But to be able to qualify for an HSA, you need to have a high-deductible health plan (at least $1,350). If you have the option, it’s a safer bet since the money rolls over regardless of whether you use it that year. With an FSA, there’s no eligibility requirement but it is “use it or lose it”—meaning you’ll have to say “bye” to any unused balance. But there are two options your plan may have: a $500 flat rollover or a two-and-a-half-month grace period to spend the remainder of the funds. Saving (money) grace. Pro tip: Amazon has a page of FSA or HSA eligible items.

  I just lost my job. What do I do?

  You have COBRA to help in the short-term. COBRA stands for Consolidated Omnibus Budget Reconciliation Act. Translation: It’s a federal law that may let you keep your health insurance after you lose your full-time job. The catch? It’s only for a limited time (usually 18 months). It’s for full-time employees (that is, it doesn’t apply to freelancers who lose a client). But the biggest drawback to COBRA is that you have to pay the full cost of the premium, when your employer paid all or a portion of it before. This also applies to divorce if you were on your partner’s plan.

  Because COBRA can get pricey, experts recommend that you also look into marketplace plans. Losing your job is considered a qualifying event, so you can enroll at any time.

  Am I covered even if I’m OOO for a medical reason?

  Whether you had a baby, got sick, or are taking care of a family member, you may be able to take some much-needed time and stay covered. But it depends on where you live and what your plan is. On the federal level, all employees working at “large companies” (50 or more) are allowed 12 weeks of protected leave for these medical reasons. The catch? The leave doesn’t have to be paid. So many people can’t afford to take it.

  Individual states have been enacting their own laws to make this better for employees. New York, California, New Jersey, Rhode Island, and Washington all have paid-family-leave policies. And a company’s insurance plan may come with its own paid leave policy (which is usually better than the federal requirement).

  What about fertility coverage?

  If you’re going through fertility treatments, like IVF, there’s a chance part of it’s covered. If you work full-time and get insurance through your job, your HR department can elect to provide this. Contact HR (your favorite thing to hear) to see if your plan covers you.

  When it comes to egg freezing, most plans do not cover it. But that appears to be changing. A growing number of tech companies now cover the procedure. And if you have a diagnosed fertility problem, you may be able to get egg freezing covered.

  If you’re on a marketplace plan, your fertility coverage depends on the state you live in. Massachusetts, Maryland, Connecticut, Rhode Island, Arkansas, California, Hawaii, Illinois, Louisiana, Montana, New Jersey, New York, Ohio, Texas, and West Virginia all offer some form of coverage. But it’s not a federal rule to cover this type of treatment.

  How do I file an insurance claim?

  The easiest way to do this is to have your medical services provider (reception at your doc’s office) submit the claim electronically. But if your doc is out-of-network, you might have to file the claim yourself. Contact your insurance company or visit their website to receive the claim form. You’ll need things like your insurance policy number, group plan number, and reasons for the service.

  What should I do if the claim gets denied?

  Contact your insurance company. The info should be on the back of your insurance card and on the denial letter. And come to the call prepared. Bring a list of Qs about the denial, and gather documents like your policy, the summary of benefits and coverage, and that denial letter. Your claim may have been denied because of a simple error, and it’s worth fighting for that payment.

  Do I really need insurance?

  With the rising cost of healthcare, a growing number of people have been saying “Thanks but no thanks” and opting out of insurance. About one in five Americans reportedly do not have insurance. This may seem attractive in the short term, as less money will be taken out of your monthly paycheck. But if something unforeseen happens and you need treatment, you could end up paying wayyy more than those monthly payments would add up to.

  Why is healthcare in the US so confusing?

  That’s another full-length book. Healthcare is extremely expensive, and politicians are extremely divided on how the country should handle it. One thing you hear a lot about is “Medicare-for-all” or a “single-payer system.” That’s what Canada has. It means the federal government takes care of everyone’s bill. Team pro-single-payer says it will provide healthcare for the largest number of Americans and streamline the complicated system. Team anti-single-payer says it will hike taxes way up for Americans and make people wait in long lines for care.

  theSkimm: Health insurance has an unhealthy amount of confusion surrounding it. But regardless of your opinion on how it should be handled, you need to know what you’re signing up for.

  Things with a Reputation

  theSkimm on Credit

  If a pictur
e’s worth a thousand words, a credit score is worth…more than that.

  It’s tangible proof of your financial trustworthiness. It’s used by banks to determine whether or not to give you money, and it determines whether you get the best interest rates on loans and insurance policies.

  Back up…what exactly is a credit score?