Watch Your Health looks to improve health of policyholders

Insurance technology platform Watch Your Health is looking to improve the health of policyholders of companies using digital measurement tools. The firm has tied up with both life and general insurance companies in a bid to improve customer engagement.

Set up in 2015, the company provides a digital health ecosystem for the corporate sector and insurance sector, in particular. Individuals are required to enter their health-related data as well as data on the hours of sleep and food habits. Those using fitness bands can automatically transfer the data.

Ratheesh Nair, founder and CEO, Watch Your Health said that they are looking to tie-up with a majority of insurance companies.

“We use analytics to help clients to not only maintain their health goals, we also have doctors, dieticians, physiotherapists and psychologists on our rolls to help individuals for their varied needs,” he said.

Using a digital application, the users can get access to their Health Risk Assessment (HRA) and further actions can be suggested based on the data collected. For instance, if an individual is found to be getting inadequate sleep, he/she can be referred to a psychologists who could help them manage their schedules better.

The company has tied up with CignaTTK Health Insurance to offer lifestyle management and health assessment to policyholders. Those who are enrolled in the life management programme receive counselling and guidance from healthcare professionals and could also get 10-20 percent premium discounts.

For the insurance companies, Nair said that this will enable them to get more healthy customers and also improve persistency of the products. There is an on-call health coach available who can assist individuals with queries. All health data is also available on a mobile application for easier access.

The insurance regulator has recently said that companies can offer premium discounts to customers based on actionable data. For example, customers who demonstrate that they are committed to being fit, by walking a certain number of steps each day, healthy eating and exercising may be offered the same product at cheaper price.

Watch Your Health is currently a B2B platform and works with insurance companies and corporate houses.

Tech & insurance: How wearable gadgets could rule the future of healthcare

Rakesh Goyal

Health insurance remains one of the under-penetrated segments in India with only 25-30% of Indians having health insurance. However, like in every other field, technology is likely to play an integral part even in the insurance sector. Even the insurance regulator is batting for the use of wearable devices for life and health insurance policies which can provide a regular stream of data about the policyholder.

Insurance Regulatory and Development Authority of India (IRDAI) had formed a working group to examine innovations in insurance involving wearable or portable devices in January last year. It has examined a range of devices, including fitness bands, skin patch sensors, smart contact lenses and implantable devices among others.

This move is significant not only from the policyholders and insurers point of view but also for the health insurance sector in India. According to the data from General Insurance Council, gross direct premiums underwritten by non-life insurers in the health segment stood at Rs 24,783.51 crore for the April-October 2018 period.

Health insurance is the second most important segment having a market share of 25.8% after motor insurance which has a market share of 37.3%.

Bringing in technology and use of wearables in health insurance will have a critical role in risk assessment and improvement. Right now, insurers have access to point-in-time data through medical tests, which are often not satisfactory for risk assessment on an ongoing basis. The usage of data from wearables in health insurance will have a critical role in risk assessment and improvement.

Non-availability of electronic health records or any other common repository of health data makes the process of risk assessment even trickier for insurers. Even now, once a policyholder is on-boarded by an insurer, the insurer has no actual way of tracking and promoting healthy living. Wearables can play a crucial role in this setting by providing a regular stream of health data to the insurer.

In terms of innovation, few of the insurers have started offering products that prompt policyholders to stay fit and give lower premiums if they fulfill the criteria. Popularly known as wellness programs, these policies help policyholders get benefits to the tune of 10-30% if they remain healthy.

Such programs aid two purposes – these wellness programs teach a healthy lifestyle among policyholders, and help create a portfolio of healthy policyholders, which could eventually reduce incoming claims for insurance companies.

This technology advancement can also lead to better claims and improving underwriting risks. We have seen several insurers in non-life segments that telematics in motor segments. However, technology can bring in much relief for insurers and policyholders in terms of claims settlement. This is one of the significant areas in which technology can improve for an insurer is claims segment.

Claims are a significant aspect for insurers. Insurers are embracing wearable technology to improve claims such as costs, exposure, fraud detection, customer interaction and satisfaction, whilst also identifying associated risks.

With accordance to the intervention of technology in the claim cycle, there was seen considerable growth in Net Incurred Claims Ratio (ICR). According to IRDAI annual report 2016-17, the trend of increase in net incurred claims ratio continued in 2016-17.

The Net ICR has consistently gone up from 94% in 2012-13 to 106% in 2016-17. Among the various classes of health insurance business, the Net ICR is high for Group Business (Other than Government Business), which was more than 100% for each of the preceding five years and consistently increasing over the same period.

However, with insurers getting data of policyholders there might be frauds or data misused, which should be addressed by insurers in a serious way. There can be likely challenges if insurers use the data gathered from wearable’s or portables for purposes other than those permitted. Insurance companies shall develop healthy internal monitoring mechanisms to ensure that data leakages do not take place as this data could be changed for some monetary benefits.

Along with handling the security concerns, it is also significant to launch insurance plans at an economical plan with added benefits. The introduction of such plans would help in increasing the penetration of Health Insurance in India.

One such initiative was taken by the government which came up with Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) last year. The announcement of Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) last year has provided hospital treatments to 6.85 lakh patients. With much-needed changes in the insure-tech space, Indians are likely to get health insurance at an affordable price in the years to come.

Here’s how to use insurance plans to save income taxes

Mahavir Chopra

Two is always better than one, without any doubt! Insurance policies contribute to the dual benefit of meeting your long-term financial objectives and also act as a tax saver! Let’s know how…

Knock! Knock! The email from the HR department about submitting your investment proofs for saving tax must have already arrived in your inbox. If not, it would definitely be on its way. Now, each and every one of you must be thinking about the much-neglected investments and looking for ways by which we can achieve maximum tax saving. What many people often forget is, a simple product like Insurance is one of the ways by which one can achieve all-out tax savings and financial protection together.

In order to get the maximum benefits, one must also be fully aware of the applicable tax rules. While tax rules and limits are dynamic in nature, we must know the exact limits at which an investment qualifies and applicable taxation rules to get the most tax-saving out of an Insurance product.

Let’s understand each section and related insurance products which can help save the maximum amount of taxes from investing in them:

Section 80C of the Income Tax Act, 1961
The premiums paid under a Life Insurance Plan is eligible for tax deduction under this section. The maximum deduction one can avail from it is Rs. 1.5 Lakh. The premiums paid for the policies taken for self, spouse or dependent children can also be taken into account. The limit of Rs. 1.5 Lakh is the combined limit of all the life insurance plans which could be Term Insurance Plans, Traditional Plans like Endowment/Money Back or ULIPs.

For availing deductions under this section a few conditions have to be kept in mind like:

The person claiming tax deduction under this section must be a Resident Individual and not a Foreign National.

The deduction is available only to Individuals and Hindu Undivided Families (HUF).

If the life insurance plan has been purchased before April 1, 2012, the premium should not exceed 20% of the sum assured and if the policy is purchased after April 1, 2012, the premium should not exceed 10% of the sum assured to be eligible for tax benefits from this section.

If the policyholder surrenders the traditional plan before two years and the ULIP plan before five years the tax benefit will get reversed.

Section 80D of the Income Tax Act, 1961

The premiums paid towards Health Insurance Plans, Mediclaim Plans, Critical Illness Plans, Top-up Plans, Super Top-up Plans and Health Riders attached to Life Insurance plans like Critical Illness Benefit Rider, Hospital Cash Rider, Surgical Care Rider and so on makes an individual qualify for claiming deductions under this section.

Under this section premium paid towards any or all policies taken for self, spouse, dependent children up to Rs 25,000 can be claimed. If the same individual pays premiums for the health insurance taken for the benefit of his parents, he can claim an additional deduction of Rs 25,000. This brings his combined tax deduction under Section 80D to Rs 50,000.

But the benefit does not end here, if parents are senior citizens then the deduction allowed for the premium paid for senior citizen parents is Rs 50,000, thus increasing the total deduction to Rs 75,000. Similarly, if you are a senior citizen and your parents are also senior citizens, then the combined benefit goes up to Rs 1 lakh. Expenses incurred up to Rs 5,000 towards preventive health check-ups can also be included in the total amount while calculating the overall tax deduction amount.

In short, deductions under Section 80D can be summarised as below:

Just as Section 80C had some conditions that needed to be complied with, similarly claiming tax deduction under Section 80D also requires compliance of a few conditions like:

-Individuals and HUFs can claim deduction under this section.
-The person can be a Resident of this country or an even an NRI or even Foreign Citizen.
-Premiums paid towards Personal Accident Insurance Plans do not qualify for deductions under this section.
-Premiums should have been paid in any mode other than cash i.e. Cheque, Netbanking, Credit Card, ECS, Auto Debit, etc.

-Payment made in cash only towards preventive health check-ups is acceptable for deduction in this section.

An important point to remember here is that for long term health insurance plans premiums have been paid for a policy period of 2 to 3 years in one go. Under such cases, the premium applicable for that year is considered for deduction. The remainder premium will be considered for deduction in the next applicable year.

Now, an insurance cover for marathon runners

Running marathons is no mean feat. Apart from the physical strains, it involves the risk of injuries as well. To offer an insurance cover to those running such long distances, digital insurance broking firm Symbo India Insurance Broking has launched marathon insurance. Here, Reliance General Insurance will be offering insurance cover.

Under this product, event ticketing company Goeventz is a partner. So, whenever one registers for a marathon through this website, one can opt for an insurance cover for Rs 49.

Here, the insured is provided a personal accident sum insured of Rs 1 lakh, apart from a medical emergency sum insured of Rs 50,000. The event cancellation sum insured is Rs 10,000. Further, if you lose your baggage, you will be paid out Rs 5,000.

The policy also offers runners cover in case of event cancellation by an organiser or if the participant cannot run due to health issues, accident or bereavement, along with a flight cancellation or loss of checked-in baggage during transit. The expected claims settlement period is 10 days.

Here, Symbo’s technology platform will also handle all customer service and claims activity for policyholders.

“More Indians are taking up running and the number of marathon participants are growing exponentially, with several hundred thousand runners now participating in races every year,” said Anik Jain, Co-Founder and Chief Executive Officer, Symbo India Insurance Broking, adding  that this insurance will be relevant for these individuals.

“This innovative product marks our broader commitment to keep pace with the evolving needs of India’s consumers and deliver insurance that is contextual and relevant,” he stated.

In addition to marathon insurance, Symbo had previously launched vision insurance as part of its lifestyle-based portfolio. The vision-related products, available through a network of opticians, offer protection for cataract surgeries, eye care and spectacle damage.

Now, you can get an insurance cover for mental health

The insurance regulator has asked insurance companies to make health insurance available for mental illnesses. As per the Mental Healthcare Act, 2017, it is mandatory for insurance companies to offer medical insurance for mental illness treatments similar to the ones offered for treatment of physical illness.

The order by Insurance Regulatory and Development Authority of India (IRDAI) will mean therapy for mental health issues as well as medications and hospitalisation will be covered by health insurance. Therapy, one of the common treatments for mental illnesses costs about Rs 1,500-2,000 per session and is excluded from medical insurance policies.

Currently, almost all insurance companies exclude treatment for mental illnesses from health insurance. Only companies like New India Assurance offer specialised products that will cover mental illness.

Jyoti Punja, Chief Operating Officer and Customer Officer, Cigna TTK Health Insurance said the insurance of mental health is a progressive step in right direction.

“We believe it will certainly create awareness, acceptance, and inclusion when it comes to mental illness as any other ailment, while bringing mental health disorders at par with physical illnesses will ‘normalize’ diagnoses, reducing associated myths and stigma,” she added.

All insurance companies have been asked to comply with the provisions of the Mental Healthcare Act, 2017 with immediate effect.

Dr S Prakash, chief operating officer, Star Health Insurance said that mental health-related issues are most commonly faced by people in the age group of 18-35 years.

“Addressing mental health will influence economic productivity of our nation. The mental health insurance is a move in the right direction by IRDAI as this will ensure increased focus in this area,” he added.

In the next few weeks, insurance companies are expected to launch specialised products to cover mental health.

Singapore:Proposal for long-term care insurance plan to be made mandatory

The government-backed ElderShield, a severe disability insurance scheme which provides basic financial protection to those who need long-term care, should be made compulsory, according to the ElderShield review committee.

In an interim update released yesterday, the committee made the following key recommendations:

  • ElderShield to be a universal and inclusive scheme for future cohorts
  • Inclusion age to be lowered to 30 to ensure more affordable premiums
  • ElderShield should be administered by the government as a key pillar of the social safety net
  • The ElderShield claims process should be made more accessible and convenient for policyholders and their caregivers.

The panel said that in carrying out the review, it heard a wide representation of views from over 800 Singaporeans, across 26 focus group discussions. These include long-term care service providers, financial advisors, academics, industry professionals, community partners such as unions and self-help groups, and youths. Public feedback, suggestions submitted to the ElderShield website’s online feedback form and email recommendations have also been taken into consideration. The full set of recommendations is expected to be finalised by the middle of this year.

The committee, appointed in 2016 by the Ministry of Health, recommended that people join the scheme at age 30 rather than 40 (as is the case at present) and suggested that the government, rather than private insurance providers, should be the single administrator. It also called for the claims process to be simplified.

The update said: “With a rapidly ageing population and shrinking family sizes, there is a need to plan ahead for our future long-term care needs. The demand for long-term care is set to increase. About one in two Singaporeans who is healthy at the age of 65 is at risk of having a severe disability over their lifetime.”

It added: “Universal ElderShield coverage for future cohorts is aligned with our principle of collective responsibility and supports our aim to be a caring and inclusive society.

“With universal coverage, Singaporeans in future cohorts with pre-existing severe disabilities would be included in the enhanced ElderShield scheme. This supports our aim to be a caring and inclusive society, and the low prevalence of severe disability at younger ages means that this can be achieved without significant impact on premiums.”

The panel recommended that the government provide premium support for low-income Singaporeans and those in financial difficulties, so that no Singaporean will lose ElderShield coverage due to financial difficulties.

Currently, ElderShield is administered by three private insurers on behalf of the Health Ministry. Singaporeans are auto-enrolled onto ElderShield at age 40 and are randomly assigned to one of the three private insurers—Aviva, Great Eastern or NTUC Income—and allowed to switch insurers at the point of enrolment.

Money is paid out when people cannot perform three of the six “activities of daily living”, which are: washing oneself in the bath or shower; wearing and unfastening all garments and putting on braces, artificial limbs or medical devices where required; to eat and drink without help; use the toilet to relieve themselves and manage the use of any protective undergarments or surgical appliances; move from room to room on level surfaces; and to transfer oneself from a bed to a chair or wheelchair, and vice versa.

RESILIENT INSURANCE INVESTMENTS

For an industry built around risk management, insurers have been slow to react to the risks of climate change. As we’ve seen, the industry may be at an inflection point on this issue. Insurers are developing climate change-specific products and working with clients and governments to manage risk.

While the impact of such actions is significant, the most powerful tool at the disposal of insurers is the capital they manage, which is estimated at over US$30 trillion. This post will look at how insurers might change asset management strategies as the industry reorients around climate change.

Climate change and insurance asset management

Insurance is an inherently competitive industry. Insurers receive premiums up front and pay claims later, if at all. This business model leaves insurers holding large amounts of capital that will eventually go to others. In the meantime, it can be invested for the insurers’ benefit. This structure attracts an understandably elevated level of competition. Indeed, competition in P&C underwriting can be so intense that the Economist projects a net underwriting loss for the industry in 2016. Investments are the real sources of profit for much of the industry.

But climate change has major implications for investors of all sizes. The famous Stern Reviewprepared for the British government in 2006, found that climate change could reduce global GDP by five to 20 percent per year by 2100. More recently, the BlackRock Investment Institute argued last year that “investors can no longer ignore climate change,” and “all investors should incorporate climate change awareness into their investment processes.”

Three ways of making resilient investments

Research from ClimateWise details what that could mean for insurers. ClimateWise is a partnership between the University of Cambridge’s Institute for Sustainability Leadership and the insurance industry. Its “Investing for Resilience” report, released in late 2016, urges insurers to consider “resilience” within their investments. The report highlights three principal ways of doing this:

  • Select investments that boost climate resilience directly. These include flood mitigation infrastructure, public health projects, or drought defense measures.
  • Invest in resilient assets, like property that is resilient to climate risks or the equity of resilient companies.
  • Invest in “resilience boosters”—that is, companies which enhance the resilience of their clients.

As the report’s introduction acknowledges, the industry has not done much to promote climate resilience to date. But the size of companies associated with ClimateWise—which include Allianz, Aon, Aviva, Hiscox, Marsh, Llloyd’s, Navigators, Prudential, and Zurich—may indicate that this will soon change.

Climate change bonds

Some insurers are also developing financial instruments to boost investment in resilient infrastructure. Swiss Re partnered with the Rockefeller Foundation and RMS to develop “resilience bonds,” which aim to mitigate the financial risk of catastrophes while promoting investment in resilient infrastructure.

So-called “green bonds,” which have a more expansive definition than resilience bonds, have also attracted some attention from insurers. In 2013, Zurich Insurance pledged to invest US$1 billion in green bonds. Three years later, it raised its expectations to US$2 billion. Other notable green bond insurers include Aviva, Manulife, and Mercer.

Yet these firms are still in the minority. A Ceres report from October 2016 found that while most American insurers “are improving their disclosure and management of climate risks, most are still giving it minimal attention, both in terms of risks and opportunities.” Whether the industry is at a tipping point in this regard will only become clear in hindsight.

EMPOWERING THE WORKFORCE

In this series, I’ve been discussing seven important insurance trends emerging out of the Efma-Accenture Innovation in Insurance Awards 2017.

While the first four trends described new models by which innovative insurers are leveraging digital technologies to connect with their customers. We also observed modes by which insurers are harnessing digital technologies to transform their corporate cultures by empowering their workforces. These tools are helping them and their distributors learn new skills and provide new service levels to their customers.

Insurers must retrain, reskill, and redeploy their own people as part of their innovation agenda.

It’s not enough to create products and technologies to put customers at the center of the insurance business model. Insurers must also retrain, reskill, and redeploy their own people as part of their innovation agenda. It’s not only technologies that are changing, but also the very makeup of the workforce itself.

These three Efma-Accenture Innovation in Insurance Awards 2017 entrants are among the insurance leaders that are empowering their workforces through cultural change and new technology.

RSA (Canada)’sonline training tool ‘Wise Up’ provides workforce education and training modules that can be completed via any connected device. Brokers can complete course work at their own pace and convenience, receiving accredited hours without having to attend workshops in person. 

With its ‘Genesis’ project, South Africa’s Standard Bank Group has developed an empowering new approach for its workforce that leverages customer data to problem solve for their clients. By analyzing customer insights, the insurer has transformed its business model and entire culture in the process. A cross-functional team developed new tools by challenging conventional ways of doing business. Half the team was brought in from the traditional business to provide deep understanding of the conventional framework, while the other half came from outside the industry to provide fresh thinking. The result was a strategic transformation process they are applying across the business.

Meanwhile, Belgium’s KBC Verzekerigen’s workforce has developed its ‘Digital Driver’s Licence’ to help its workforce navigate its digital transformation. Employees and managers obtain their license by completing an enhanced learning module and tests, and joining their colleagues in this standardized certification. The learning combines theory and practice to help the workforce solve customer issues.

My next post will discuss the Plug-and Play Insurance trend.

Separating Fact From Fiction When It Comes to Long-Term Care Insurance

Few people are prepared to handle the financial burden of long-term health care. In fact, many people have a false sense of security when it comes to long-term care. Let’s separate fact from fiction:

“Medicare and my Medicare supplement policy will cover it.”

FACTS:

  • Medicare and “Medigap” insurance was never intended to pay for ongoing, long-term care. Only about 12% of nursing home costs are paid by Medicare, for short-term skilled nursing home care following hospitalization. (Source: Guide to Long-Term Care Insurance, AHIP, 2013)
  • Medicare and most health insurance plans, including Medicare supplement policies, do not pay for long-term custodial care. (Source: 2017 Medicare & You, Centers for Medicare & Medicaid Services)

“It won’t happen to me.”

FACTS:

  • Almost 70% of people turning age 65 will need long term care services and supports at some point in their lives. (Source: LongTermCare.gov, November 2016)
  • About 67% of nursing home residents and 70% of assisted living residents are women. (Source: Long-Term Care Providers and Services Users in the United States, February 2016, National Center for Health Statistics)

“I can afford it.”

FACTS:

  • As a national average, a year in a nursing home is currently estimated to cost about $92,000. In some areas, it can easily cost well over $110,000! (Source: Genworth 2016 Cost of Care Survey, April 2016)
  • The average length of a nursing home stay is 835 days. (Source: Centers for Disease Control and Prevention, Nursing Home Care FastStats, last updated May 2014)
  • The national average cost of a one bedroom in an assisted living facility in the U.S. was $43,539 per year in 2016. (Source: Genworth 2016 Cost of Care Survey, April 2016)
  • Home health care is less expensive, but it still adds up. In 2016, the national average hourly rate for licensed home health aides was $20. Bringing an aide into your home for 20 hours a week can easily cost over $1,600 each month, or almost $20,000 a year. (Source: Genworth 2016 Cost of Care Survey, April 2016)

“If I can’t afford it, I’ll go on Medicaid.”

FACTS:

  • Medicaid, or welfare assistance, has many “strings” attached and is only available to people who meet federal poverty guidelines.

Whether purchased for yourself, your spouse or for an aging parent, long-term care insurance can help protect assets accumulated over a lifetime from the ravages of long-term care costs.

6 Age Milestones That Impact Your Retirement

Legally significant ages seem to cluster early in life — you can drive at 16, vote, smoke, and enlist at 18, and drink at 21. After that, you might think that there are no more important age milestones to reach.

But there are more important milestones you’ll reach as you near retirement. Here are the important ages that can impact your retirement, and the reasons why they were chosen.

Age 50 — Take advantage of catch-up contributions

IRAs and 401(k) retirement plans are tax-advantaged, which means you receive a tax-break by contributing to them. For traditional IRAs and 401(k)s, you contribute pretax income, which means you lower your overall tax burden for the year, and the money grows tax-free. With Roth IRAs and 401(k)s, you contribute post-tax dollars, and the money still grows tax-free. Since high income earners could potentially avoid paying any taxes at all if they simply contributed a large enough portion of their income, there are limits to the amount of money you can contribute each year. As of 2017, you can contribute an annual total of $5,500 to an IRA and $18,000 to a 401(k).

However, there is something called a catch-up provision for anyone over age 50. If you’ve reached your half-century mark, you can contribute an additional $1,000 to an IRA (for a $6,500 total contribution) and an additional $6,000 to a 401(k) (for a $24,000 total contribution). Taking advantage of these catch-up provisions can help you to make sure your retirement is more secure.

Age 59½ — Take penalty-free withdrawals from tax-sheltered accounts

Since you fund traditional IRAs and 401(k)s with pretax income, every withdrawal you make will be taxed at your ordinary income tax rate. But if you try to withdraw money from either of these types of accounts before you have reached age 59½, then you will also owe a 10 percent early withdrawal penalty on the amount you withdraw, in addition to the ordinary income tax.

You are not required to take withdrawals as of age 59½ — that is just the earliest age that you are allowed to do so without incurring a penalty.

You might be wondering why 59½ is the magic number. Congress decided to use this age because life insurance actuarial tables consider you to be 60 years old once you have reached age 59 and six months, and at the time that the rules were put in place, 60 was a relatively common age for retirement.

Age 62 — Take early Social Security retirement benefits

Social Security beneficiaries reach eligibility as of age 62. This is the very earliest that you can access your benefits from Social Security, although taking your benefits the moment you’ve blown out 62 candles is not necessarily a good idea.

Social Security changes the benefit amount based on whether you retire before or after your full retirement age. This means the longer you wait, the more money you will see in your benefit checks — to the tune of about an additional 8 percent per year. If you take benefits before hitting your full retirement age, your payments will be permanently reduced.

These early benefits have been around for quite some time. Early retirement at age 62 was introduced for women only in 1956, and the option was extended to men in 1961. Women were offered this benefit first because of the concern for widows without an income, although it became clear that men were also very interested in the option of taking early benefits.

Age 64 and 9 months — Enroll in Medicare

The initial seven-month enrollment period for Medicare spans from the three months before your 65th birthday, through the month of your birthday, and the three months following your birthday. Enrolling during this period means you will pay no fees or penalties for enrollment, and enrolling within the three months before your 65th birthday means that you will have Medicare coverage starting on the first day of your birthday month. Enrolling during your birthday month or afterward will result in a delayed start for coverage.

If you miss the initial enrollment period for Medicare, you can still sign up during the general enrollment period between January 1 and March 31 of each year, and your coverage will begin July 1 of that year. However, there is a late penalty for missing your initial enrollment period. For Medicare Part A, your monthly premium will increase by 10 percent for twice the number of years that you could have had Part A but didn’t sign up.

If you miss the initial enrollment period for Part B, you will have to pay the late enrollment penalty for as long as you are a Medicare beneficiary. The monthly premium will increase by 10 percent for each full 12-month period that you were eligible for Part B but did not sign up.

Age 66 or 67 — Reach full Social Security retirement age

Your full retirement age is the point at which you receive your full benefits from Social Security. When Social Security was first enacted, 65 was chosen as the retirement age. In 1983, to deal with the coming demographic shift that would occur when baby boomers started to retire, Congress gradually increased the full retirement age from 65 to 67, based on birth year:

Birth Year Full Retirement Age
1943-1954 65
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 and later 67

Age 70½ — Begin taking required minimum distributions

When you put money into a tax-deferred account like a traditional IRA or 401(k), you don’t have to pay taxes on that money until you withdraw it. While this helps your tax burden during your career, you do need to remember that Uncle Sam will want his cut eventually.

This is why the IRS requires each account holder to begin withdrawing money during the year he or she reaches age 70½. There is a minimum withdrawal you must take, and failing to take out the minimum means the IRS will take 50 percent of the amount you should have withdrawn.

To figure out your required minimum distribution (RMD), you need to calculate it based upon the balance of each of your tax-deferred accounts as of December 31 of the previous year, and the correct IRS distribution table. These tables calculate life expectancy based upon your age and give you a number (corresponding to the number of years they expect you to live), by which you will divide your balance to determine your RMD.

It may seem that 70½ is an arbitrary number, but there is a lot of thought put into this milestone age. The IRS makes a distinction between people born in the first half of the year, and those born in the second half. If your birthday falls between July 1 and December 31, you don’t officially have to take an RMD until the year you turn 71. This means that those with birthdays in the first half of the year take their first RMD the year they turn 70, and those with a later birthday take their first RMD the year they turn 71 — which averages out to 70½.