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Money Moves to Make Now


Nov. 17, 2018 Kiplinger

Many people wait until the new year—and the annual ritual of New Year’s resolutions—to take stock of their finances. But there are compelling reasons to attend to some financial tasks before December 31.

Health care

Spend your FSA money

If you have a health care or dependent care flexible spending account, check its balance and rules. In many cases, you’ll lose anything left in the account at year-end—although some accounts allow you to carry over up to $500 or offer a grace period for claiming expenses from the previous year. If you still have cash in the account that needs to be spent, start by reimbursing yourself for any eligible health or dependent care expenses that you overlooked earlier in the year, including deductibles and co-pays as well as uncovered expenses for glasses or contacts, prescription drugs, or dental care. Beyond that, stock up on FSA-eligible products, such as contact lens solution, first aid items and thermometers. For a list of FSA-eligible items, visit fsastore.com.

Round up HSA-eligible expenses

Unlike FSAs, health savings accounts offer an unlimited amount of time to reimburse yourself for eligible medical expenses and don’t have a use-it-or-lose-it rule, so you can let the money grow tax-free until you need it. Gather the receipts for any medical expenses that you paid out of pocket. If you didn’t reimburse yourself for those expenses this year, file the receipts so you can reimburse yourself for the expenses, tax-free, any time in the future—even in retirement.

Fund a health savings account

Were you enrolled in a high-deductible health insurance plan this year? If you haven’t already opened an HSA, there’s still time. Most policies with deductibles of at least $1,350 for single coverage or $2,700 for family coverage qualify for an account. The account will give you a triple tax break: Contributions are made pretax or are deductible on your tax return, the money grows tax-free, and the funds can be withdrawn tax-free for medical expenses. If you had an HSA-eligible policy throughout 2018, you can contribute up to $3,450 if you had single coverage or up to $6,900 if you had family coverage. People who are 55 or older anytime during the year can make an additional $1,000 contribution.

Squeeze in appointments

If you’ve met your health insurance deductible for 2018, you may save money by scheduling appointments and procedures before the end of the year—rather than in the new year after your deductible kicks in again. And most dental insurance plans cover two cleanings and have a maximum dollar amount that they will pay toward your dental care each year. If you have benefits remaining or your dentist has recommended treatments that you haven’t completed, schedule an appointment before your unused benefits disappear.

Qualify for a health care subsidy in 2019

Premiums for many insurance policies you purchase on a health care exchange are high enough to induce sticker shock, especially if you don’t qualify for a subsidy. But if you’re near the cutoff to receive a subsidy (400% of the federal poverty level, or $48,560 for singles, $65,840 for couples and $100,400 for a family of four), you can take steps before year-end to lower your income—and the amount you’ll pay for your 2019 coverage. Contributions to a 401(k), a health or dependent care flexible spending account or a health savings account, or selling stock at a loss, help reduce your modified adjusted gross income, which is used to calculate subsidies. Early retirees may also be able to qualify for a subsidy if they have the flexibility to reduce withdrawals from tax-deferred IRAs or 401(k)s.

Credit and rewards

Freeze your credit reports

A freeze is the best way to prevent identity thieves from opening new credit accounts in your name because it blocks new lenders from viewing your credit reports, reducing the chances that someone will successfully pose as you when applying for credit. Thanks to a new federal law that took effect on September 21, both placing and lifting a freeze on your credit reports is now free. (Previously, consumers in most states paid fees.) Given the pileup of data breaches in recent years, a freeze is a wise move even if you haven’t suffered ID theft because your personal data may sit for years before someone attempts to use it.

When you request a freeze with each of the three major credit agencies—Equifax, Experian and TransUnion—by phone or online, they must place the freeze within one business day. And if you ask them to lift a freeze, they must act within an hour.

Run a credit checkup

If you haven’t checked your credit reports in the past 12 months, visit www.annualcreditreport.com to get a free copy from Equifax, Experian and TransUnion. Review each for errors or signs of identity theft, such as an incorrect address, a credit account that you never opened, or a collection account that you don’t recognize. If you spot an error, contact any lender that’s involved to resolve the issue and file a dispute with each credit agency that’s reporting the mistake. Identity-theft victims can follow the steps at IdentityTheft.gov to have fraudulent information blocked from their credit reports.

Keep tabs on your credit reports throughout the year by signing up for a credit-monitoring service, which regularly scans your reports and notifies you of significant changes. You can cover all three credit agencies by enrolling in free monitoring at CreditKarma.com, which tracks your Equifax and TransUnion reports, and at FreeCreditScore.com, which monitors your Experian report. Each service also offers free credit-score updates and access to information in your credit reports from the corresponding agencies.

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