5 things to know about CVS buying Aetna for $69B

Published: Tuesday, December 05, 2017 @ 7:56 AM

The future of health care as we know it could be changing now that CVS has announced plans to buy Aetna in a transaction valued at $69 billion.

But what exactly does the CVS/Aetna deal mean for consumers? Here’s what you need to know…

RELATED: Had trouble getting your CVS prescription recently? Here’s why

A look at the proposed CVS takeover of Aetna

1. The deal will be financed with cash and stock

Early reaction on Wall Street to the financing behind this deal has been less than inspiring. That’s probably because CVS mostly plans on issuing new debt to make this transaction happen.

According to an investor presentation, the pharmacy chain will issue $44.8 billion in new debt and $21 billion in new equity — while only using $4.1 billion in cash on hand as “skin in the game” — to finance the deal.

Meanwhile, it still remains to be seen whether or not federal regulators OK the takeover. If approved, the deal is expected to close in the second half of 2018.

2. Your local pharmacy store will be in for an expansion

CVS has more than 9,700 pharmacy locations and 1,100 MinuteClinic walk-in clinics in its portfolio.

But the amount of services and products they provide may grow tremendously if CVS gets married to Aetna — think more durable medical equipment for sale, a wider range of vision and hearing services on offer and other new developments to be announced.

“CVS Pharmacy locations will include space for wellness, clinical and pharmacy services, vision, hearing, nutrition, beauty, and medical equipment, in addition to the products and services our customers currently enjoy,” the company notes in a press release announcing the Aetna deal.

3. Big data will drive the future of your health care

Aetna brings a deep treasure trove of data to the table in this deal. The insurer’s client data will help address one of the biggest and most expensive pain points in health care — readmission rates.

Right now, the two players say that together they can reduce readmission rates by 50%.

“Readmission rates can be cut in half if patients have a complete review of their medications after discharge from the hospital to help them manage their care at home. In addition, home devices to monitor activity levels, pulse, and respiratory rates can be used to prevent readmissions,” CVS notes.

“Rather than feeling lost and confused, selected high risk patients discharged from the hospital, or their caregivers, will be able to stop at a health hub location to access services such as medication evaluations, home monitoring and use of durable medical equipment, as needed.”

4. Expect more continuity of care between doctor visits

The proposed merger will also offer some new ways to tackle chronic disease.

Citing the example of someone with diabetes, CVS notes that care management via “face-to-face counseling at a store-based health hub and remote monitoring of key indicators such as blood glucose levels” will become the norm.

This approach could potentially help fill in the treatment gaps for 30 million Americans who suffer with diabetes at a cost of some $245 billion annually to the health care system.

The combined health entity of CVS and Aetna also plans to offer text alerts when a patient’s glucose level goes out of range; counseling on medication adherence; weight-loss counseling; nutritional counseling to reverse diabetes naturally and more.

4. Here’s Clark’s take…

Money expert Clark Howard likens the proposed union of CVS and Aetna to two things — a specialized insurance model pioneered by a niche insurer and…wait for it…socialized medicine!

First up, the specialized insurance model. If you’re familiar with Kaiser Permanente, the dominant health insurer in California, you know the insurer has both its detractors and its fans.

When you’re a Kaiser customer, you go to their facilities and all services are provided by their doctors. You pay your premium and your out-of-pocket for care is near zero.

“You go to their facilities, their hospitals, their doctors, their physicians assistants, their physical therapists, their pharmacies, their everything,” Clark says.

“You as a consumer pay an office visit charge and typically that’s it — no balance billing and no shock bills. But you give up your choice to go outside their system. If the care is good, great — everything is fine. If not, you’re in their system for at least that year before you can get out of it.”

Taking a cue from Kaiser, Clark believes CVS is likely to operate a large number of retail clinics that are fully integrated with Aetna. This would be in addition to the more than the 1,100 MinuteClinic walk-in clinics that CVS currently has. And these facilities will likely be open around the clock.

“You will be expected to go to their off-hours place — not to the emergency room at your local hospital — if you want to get the cost benefit of being a CVS and Aetna member,” the consumer champ predicts.

“This is about cost containment, cost control, limiting the choice to you and limiting access to you in an effort to crush health care costs and bring them in line with the rest of the developed world.”

“It won’t always be pretty, no matter whether the government socializes medicine or these behemoths like CVS and Aetna socialize medicine.”

5 tips for a more affordable healthy lifestyle

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6 tax mistakes procrastinators make and how to avoid them

Published: Thursday, April 05, 2018 @ 11:46 PM
Updated: Thursday, April 05, 2018 @ 11:46 PM

What Happens If You Don’t Pay Your Taxes

We get it. Doing your taxes is no fun, especially if you know you’re going to owe money. But as with any project on which you procrastinate, leaving everything to the last minute can lead to errors, both large and small, and some of those errors could cost you serious money.

If you’ve gone and done it, though, and are still looking at that pile of tax forms over there in the corner, we’ve compiled a list of six quick-and-dirty tips that could keep you from making some obvious, and not-so-obvious, mistakes when you finally sit down and tackle the task. They could also help you maximize your tax refund.

1. You Forgot to Sign It

You might wonder how anyone could forget to sign their tax form, but this simple process is one of the most common tax mistakes, according to the IRS. Just like forgetting to sign a check or a contract, it means your return isn’t valid. Usually, there isn’t a penalty or interest associated with this error (since you’ve already included a check or electronic payment if you owed), so the IRS will just send a notice asking for a valid signature, but it will delay the processing of your return. If you’re getting a refund, that too will be delayed.

So check, double-check — heck, triple-check — that you signed or completed the e-signature process before filing your return. Also, check out these last-minute filing tips from the IRS.

2. You Miscarried the 9

Math errors are also a very common mistake made by folks in a hurry. Fortunately for most people, the IRS corrects any miscalculations, so there’s no need for filing an amended return. But these mistakes can mean the difference between you thinking you’re getting a refund and the reality that you actually owe taxes, so be sure to check your calculations carefully.

One way to help you avoid math errors is to file electronically so the calculations are done for you. Bye-bye, No. 2 pencil! So long, calculator!

3. You Didn’t Account for All Your Income

Did you have a side hustle early last year? A freelance design gig for a friend’s business? If so, you’re going to need to account for it, regardless of whether you received a W-2 or 1099 from whomever paid you. That’s because, while there’s an IRS threshold for filing these documents by employers, there’s no similar threshold for claiming the income. Income is income is income. If you made money and don’t report it — and the IRS catches it — it’s going to cost you penalties and interest at best, and open you to a possible audit at worst.

4. You Forgot Deductions or Tax Credit

It’s easy to forget these things when you’re in a hurry, but they can end up saving you some serious money and are well worth the extra time to figure out if you qualify. So if you’re just claiming the standard deductions because you’re under the gun, you might want to take a deep breath and check out TurboTax’s list of 10 commonly overlooked tax deductions that can keep you from overpaying the tax man.

5. You Filed for an Extension but Didn’t Understand the Rules

Filing for an extension is a great idea if you’re down to the wire and don’t really understand your tax situation. But remember that an extension gives you an extra six months to file your paperwork, but not an extra six months to pay any taxes due. So, if you’re confused, tax pros recommend doing a quick calculation of your taxes, filing for your extension and making any required payment of taxes you think you owe. This will help you avoid penalties and interest once you get your final calculations together.

6. You Didn’t Bother to Request an Extension

You gave up. You shoved, slammed and jammed your return through and now it’s full of mistakes that are going to cost you money by way of penalties or because you’ve left money on the table. It’s a much better idea to file the extension, then get the help you need from a tax professional to ensure you’re not overpaying your taxes.

Whatever you do, make sure you file your taxes. Unpaid taxes can have serious consequences on your personal finances, including your credit scores if they go unpaid long enough.

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11 ways to reduce next year’s tax bill

Published: Thursday, April 05, 2018 @ 11:55 PM
Updated: Thursday, April 05, 2018 @ 11:55 PM

SAN FRANCISCO, CA - APRIL 14:  Liberty Tax Service tax preparer Ronn Seely works on tax returns on April 14, 2011 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)
Justin Sullivan/Getty Images
SAN FRANCISCO, CA - APRIL 14: Liberty Tax Service tax preparer Ronn Seely works on tax returns on April 14, 2011 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)(Justin Sullivan/Getty Images)

If you claimed the right number of dependents and standard deductions on your 2017 federal income tax return and you still ended up owing the IRS, you’re probably looking to avoid a repeat performance next year. Luckily, there are several ways to increase your chance for a refund (or at least reduce the amount you’ll owe) and you don’t have to be a tax whiz or accountant to take advantage.

Here are 11 ways you can pay less in federal taxes for your income return next year.

1. Contribute to a 401K or IRA

Contributing to a retirement fund is an important way to ensure financial independence in your golden years, but it can also convey short-term tax benefits. In most cases, the contributions you make to your 401K and IRA plans are tax-deductible and are not included in your taxable income at the end of the year. (Note: If you didn’t contribute to an IRA in 2017, you still have time. You have until April 17 to contribute up to the maximum amount and shave off a good chunk of your tax bill. Filed your taxes already? That’s OK. You can file an amended return to reflect the contribution.)

2. Buy a Home

There’s a distinct tax benefit to home ownership. The interest you pay on your mortgage is tax-deductible, and the interest is front-loaded. For the first several years, most of your mortgage payment goes toward interest, which will drastically reduce your adjusted gross income at tax time. Want an extra boost for your taxes next year? Consider paying January 2019’s mortgage payment in December to get a tax benefit before the end of the year.

3. Donate to Charity or Volunteer

You probably know charitable donations can be itemized and deducted from your income, so you’ll want to save receipts anytime you donate cash or items to charity. You can even deduct miles you travel for volunteering or other charity work.

“Miles you travel on behalf of a charity are deductible at 14 cents per mile for 2018,” said Gail Rosen, CPA.

4. Start a Home Business

Starting a home business can provide you with a new source of income and allow you to take deductions off any income the business generates.

These deductions include business costs you incur throughout the year, a portion of your mortgage and utilities if you use a home office and the cost of goods needed to keep your business running. You can even deduct startup costs.

“Any expenses that are incurred before the first sale are ‘start-up costs,’” Rosen said. “These costs cannot be deducted until the first sale. Then they are deducted over 15 years and you can deduct the first $5,000 in the first year.”

5. Search for a New Job

If you hunt for a new job in your field this year, you can write off some qualifying expenses as you search. There are exceptions, but potential write-offs include things like clothes or travel.

“If you looked for a new job in 2018, you should be aware of the income tax deduction that may be available with respect to job-search costs,” Rosen said. “Qualifying expenses are deductible even if they do not result in a new job being offered or accepted.”

6. Open a Flexible Spending Plan

Many employers offer flexible spending plans that let you contribute toward yearly medical expenses pre-tax. These contributions typically don’t count toward your taxable income.

7. Deduct Medical or Dental Expenses

Many medical and dental expenses are tax-deductible. According to Rosen, the cost of getting to and from medical treatment is deductible at 17 cents per mile, plus the cost of tolls and parking, and dependent expenses are also deductible.

“If you cover the medical cost of dependents, these can be deducted. Additionally, if you are covering the costs of an individual who would qualify as your dependent except that they have too much gross income — for example, an elderly parent — you may be able to deduct these costs as well,” said Rosen.

8. Education-Related Expenses

Current and former students have many eligible deductions and credits related to their education expenses. Paid student loan interest and tuition and fees can be claimed as deductions. Eligible current students can also access the American Opportunity Credit, which can cover up to $2,500 annually for four years, and the Lifetime Learning Credit, which can cover up to $2,000 per tax return.

9. Install Solar Energy

Homeowners who install solar energy systems in their home can get back tax credits at up to 30% of the cost of installation. This credit will begin to decrease after 2019 so you may want to act soon if you’re planning on installing solar panels.

As an added bonus, solar energy can significantly reduce your energy bills.

10. Hunt Down Every Available Tax Credit

We’ve named several tax credits above, but there are more, including credits for adopting children, the cost of child care and low-income households. Tax credits are more valuable than deductions, as they reduce your taxable income on a dollar-for-dollar basis, so make sure you’re taking advantage of every option.

11. Get a Pro to Do Your Taxes

No matter how much research you do, a professional may be able to identify tax deductions and credits that hadn’t occurred to you. Paying a reputable professional you trust can help you stay organized and minimize your tax liability. Here’s a handy guide to finding the right tax professional for your needs.

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5 surefire ways to retire earlier than you thought

Published: Monday, October 23, 2017 @ 11:27 AM

The following are five surefire ways to get to retirement quicker Set clear goals for yourself and track your progress Working hard and being disciplined is the most reliable ways to retire early Streamline your spending and scale back on luxuries Cut your housing expenses Put your money to work - wisely

Retirement can seem like a difficult goal to reach, so the thought of achieving it early may seem downright impossible.

But getting to retirement quicker doesn't require genius-level investing knowledge or extreme deprivation. With a plan, hard work and discipline, you may be able to get there sooner rather than later.

RELATED: House hunters, here are 5 secrets to getting the best home loans

The following are five surefire ways to get to retirement quicker:

Set clear goals for yourself

Consumer adviser Clark Howard recently shared advice from Chris Reining, who decided in his late 20s that he wanted to retire early. By the time he turned 37, he was able to reach this goal.

Howard said he thought setting clear goals was one of the most important things that Reining did. He labeled his investment account "Retire early" so he could see the words every day. In addition, Reining tracked his progress by using a spreadsheet you can get on his website. He wanted to save up 25 times his annual expenses before retiring.

(Getty Images/iStockphoto)

Work hard

The Forbes Finance Council recommends working hard and being disciplined as the most reliable ways to retire early.

This can be achieved through a high-paying job combined with saving as much of your income as possible. Another path is starting your own business.

Reduce spending

Forbes quotes a blogger who retired early and says that streamlining your spending is an important step toward achieving this goal. It's not glamorous or complicated, but it works.

He suggests scaling back on luxuries and investing your savings in a low-cost index fund. When you accumulate 25 to 30 times your annual spending in this type of account, you can quit working for the rest of your life.

This Wednesday, Sept. 6, 2017, photo shows a new home for sale in a housing development in Raeford, N.C. On Thursday, Sept. 21, 2017, Freddie Mac reports on the week’s average U.S. mortgage rates.

Cut your housing expenses

If you're like most people, your home is your biggest expense, so it's also your biggest opportunity to save, according to Money.

Housing costs take up about a third of the average budget, so Money recommends not taking out the biggest mortgage you can get. Live in a more modest-sized home when possible, and in some cases, homeowners can purchase a two-family home, living in one side and renting out the other.

Put your money to work - wisely

CNBC talked to Scott Alan Turner, who had more than $70,000 in debt at age 25, yet managed to turn things around and retire by age 44.

He put his money to work and although he made some mistakes in the beginning, he evolved into what he calls a boring investor. His savings are automatically funneled into low-cost index funds, which Warren Buffet calls a surefire way to build wealth.

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Financial experts say you should do these things with your tax refund

Published: Thursday, February 22, 2018 @ 6:13 PM

‘Tis the season for taxpayers to get a nice chunk of change back from the IRS.

It’s tempting to spend it all, but financial experts say there are steps you should take to shore up your financial future. 

Some who usually pay off debt will splurge this year.

“I’m going to Japan in April so I’m actually going to add that to my travel fund, so I’m really excited about it,” said Olivia Morris from Centerville.

Those who used to spend their return? 

“I just plan to save it. We are about to start a family, so I plan on saving it for the baby,” said Toska Ivory of Dayton. 

It’s important to have a plan for tax return funds or any financial windfall, said Lisa Roberts, Graceworks certified housing and credit counselor.

Pay urgent bills first then save. 

“If it’s something that is urgent -- a bill that’s going to be a roof over your head, utilities, pay them,” said Roberts, “after that you definitely want to put it into savings.”

WalletHub has these additional tax refund spending recommendations:

  • Invest in an IRS or 529 savings plan for your child’s education
  • Refinance your home loan if you can get a lower rate
  • Increase your home’s value by doing some home improvement projects. 

As for splurging? 

“If you do have the funds to do that once all of your debts and things are paid- and saving- then by all means you’ve earned it,” said Roberts. 

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