New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Essential Estate Planning Insights for Cigna Employees: Unlocking New Opportunities in 2024

Healthcare Provider Update: Healthcare Provider: Cigna Cigna is a global health services provider that offers a broad range of health insurance plans, including individual and family plans, employer-sponsored group plans, disability insurance, and dental, behavioral health, and pharmacy management services. Known for its commitment to connecting customers with care, Cigna also emphasizes wellness and preventive health options in its offerings. Healthcare Cost Increases in 2026 As the healthcare landscape evolves, consumers can expect substantial increases in health insurance premiums for 2026. Recent forecasts indicate that Cigna will raise individual market premiums by an average of 29.4% in states like Colorado. This surge is attributed to a combination of factors, including rising medical costs, anticipated losses of federal premium subsidies, and aggressive rate hikes across the industry. If enhanced tax credits expire as expected, over 22 million ACA marketplace enrollees could face out-of-pocket premium hikes exceeding 75%, compounding the financial strain on American families seeking affordable coverage. Click here to learn more

New changes in federal gift and GST tax exemptions provide a unique opportunity for proactive estate planning, especially for Cigna employees who want to transfer wealth without incurring significant taxes,' says Kevin Landis, a representative of The Retirement Group, an affiliate of Wealth Enhancement Group.

Brent Wolf from The Retirement Group, a division of Wealth Enhancement Group, encourages Cigna employees to take advantage of the temporary increase in gift and GST tax exemptions as a means of effective estate planning.

In this article, we will discuss:

1. The role of Inflation Adjustments: How the 2024 inflation adjustments to federal gift and GST tax exemptions create new opportunities for tax efficient wealth transfer.

2. Strategies for Estate Planning: An overview of various estate planning strategies including SLATs, GRATs, and Dynasty Trusts that can be useful for Cigna employees.

3. State Tax Consequences: How state taxes affect estate planning and what this means for residents of New York, New Jersey, and Connecticut.

The federal gift and generation-skipping transfer (GST) tax exemption amounts have been raised due to the latest inflation adjustments from January 1, 2024. This adjustment presents new possibilities for sophisticated estate planning especially for the benefit of Cigna employees. It is now possible to exclude $13,610,000 for an individual and $27,220,000 for a married couple from federal gift and GST taxes. In the present economic environment of low asset values these changes present a good opportunity to move wealth across the generations.

The federal estate and gift tax exclusion, as well as the GST tax exemption, were initially heightened by the Tax Cuts and Jobs Act of 2017 and then heightened again by the 2024 inflation adjustments. This enables many assets to be transferred without tax consequences during the owner’s lifetime or at their death. However, these higher exemption levels are only temporary and will return to their pre-2018 levels (adjusted for inflation) beginning January 1, 2026.

The new regulations increase the amount that can be gifted in 2024 by an extra $690,000 for individuals and $1,380,000 for married couples if other exemption thresholds have been used. This update is important as it provides opportunities for taking full advantage of tax-deferred wealth transfers while the tax laws permit it. The American Taxpayer Relief Act of 2012 also allowed the surviving spouse to use the deceased spouse’s unused federal estate tax exclusion in paying for the deceased’s lifetime gifts or estate planning.

The annual federal gift tax exemption has also been increased to $18,000 per recipient, or $36,000 for married couples who choose to gift together. This increase expands the opportunities for tax planning to gift and still leave some exemption available to pay for tuition or medical expenses — important for Cigna employees who are helping to pay for their families’ education or health care. It also helps with the possibility of gradual giving.

State Specific Factors to Consider:

This is especially important for residents of New York, New Jersey, and Connecticut because of state tax consequences. For instance, New York does not have a gift tax but has many opportunities to take advantage of large federal exemptions in order to avoid state estate taxes, especially in light of recent market conditions. New Jersey has no gift or estate taxes, but does have an inheritance tax on transfers to non-lineal descendants at rates up to 16%. Connecticut is the only state with a gift tax, but because of the synchronization of federal and state exemptions, the burden is reduced.

Estate Planning Techniques:

In the present tax regime, the following strategies should be considered for Cigna employees:

1. Spousal Lifetime Access Trusts (SLATs): These enable the client to invest and grow assets outside the taxable estate while ensuring that the spouse is well provided for through the use of exemption amounts.

2. Grantor Retained Annuity Trusts (GRATs): These provide for the transfer of any appreciation in the assets to beneficiaries without incurring tax on the amount retained in the annuity, which is particularly advantageous in a volatile market.

3. Dynasty Trusts: These trust arrangements are created to take full advantage of the GST tax exemptions and hold assets beyond estate, gift, and GST taxes for multiple generations, providing a long-standing protection against creditors’ claims.

4. Intrafamily Loans and Sales to Grantor Trusts: These methods use valuation approaches and low-interest rates to move the wealth and at the same time reduce the value of the estate that will be taxed, while the assets grow.

Income Tax Considerations:

Grantor trusts are quite efficient from the perspective of income taxes as the trust’s income is reported on the grantor’s return, allowing the assets to grow without being taxed. This structure can be very useful for asset swaps that may reset the basis for capital gains after the grantor has died. In conclusion, the temporary increase in federal tax exemptions presents an important opportunity for Cigna employees to plan their estates. Using these exemptions together with sophisticated gifting and trust arrangements can lead to substantial tax savings and wealth protection.

It is, therefore, important to have a clear understanding of both state and federal tax laws and to have an appropriately tailored estate plan to meet personal and family objectives. The state estate taxes can significantly influence estate planning and therefore cannot be ignored, particularly for people nearing retirement or who are already retired. This is especially important in states such as Massachusetts and Oregon where the estate tax starts at $1 million in value and it is imperative to use federal exclusions to avoid state tax consequences while maximizing on federal tax benefits.

Featured Video

Articles you may find interesting:

These adjustments to the GST and federal gift tax exemptions are like steering a ship through a rapidly changing sea. Like a good captain, Cigna employees can take advantage of these temporarily higher exemptions, now at their highest ever, to steer their retirement.

Disclosure: Not tax advice. Please consult with a qualified tax professional regarding your unique situation.

Sources:

1. 'IRS Provides Tax Inflation Adjustments for Tax Year 2024.' Internal Revenue Service, 9 Nov. 2023, www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024 .

2. 'How Do the Estate, Gift, and Generation-Skipping Transfer Taxes Work?' Tax Policy Center, Jan. 2024, www.taxpolicycenter.org/briefing-book/how-do-estate-gift-and-generation-skipping-transfer-taxes-work .

3. 'Estate, Gift, and GST Taxes.' American Bar Association, 2024, www.americanbar.org/groups/real_property_trust_estate/resources/estate_gift_and_gst_taxes .

4. Driessen, Grant A., and Jane G. Gravelle. 'Overview of the Federal Tax System as in Effect for 2024.' Congressional Research Service, 2024, crsreports.congress.gov/product/pdf/R/R45145.

5. 'What's New — Estate and Gift Tax.' Internal Revenue Service, 2024, www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax .

As an employee of CIGNA Corporation, what steps should you consider taking to understand the implications of the pension plan amendments established under recent legal interpretations? CIGNA Corporation has experienced significant changes in its pension plan, which resulted from the Amara case. In light of these changes, what should employees examine regarding their accrued benefits, and how might the historical context of these amendments impact their retirement planning?

Employees of CIGNA Corporation should thoroughly review their accrued benefits under the pension plan amendments following the Amara case, which reformed the employer's cash balance plan. It's essential to analyze how these changes affect the value of their pension benefits, especially for employees who joined the company before 1997. Understanding these amendments can significantly impact retirement planning(CIGNA Corporation_May 2…).

In what ways does the concept of ""wear-away"" as discussed in the context of CIGNA Corporation's pension plan amendments affect current employees nearing retirement? Understanding how this mechanism operates within the pension plan can help employees better strategize their retirement. Employees at CIGNA Corporation should analyze whether they could potentially experience delays in benefit accrual as a result of these changes and the legal principles that underpin them.

The "wear-away" concept, introduced in CIGNA’s pension plan amendments, can delay benefit accrual for employees nearing retirement. This mechanism often results in a period where no additional benefits are accrued, which could affect employees' retirement timing. Employees should carefully evaluate whether this delay might affect their pension expectations and strategize accordingly(CIGNA Corporation_May 2…).

How can CIGNA Corporation employees determine whether the current pension plan accurately reflects their rights under ERISA? With ongoing legal interpretations and potential reforms stemming from court rulings, employees need to assess how these rulings apply to the pension plan's amendments. This may require looking into the details of the summary plan descriptions and how to clarify their rights to future benefits.

To ensure that CIGNA’s pension plan reflects their rights under ERISA, employees should examine the summary plan descriptions and other relevant documents. Legal rulings like the Amara case can lead to reforms, so employees must clarify how these decisions impact their future benefits(CIGNA Corporation_May 2…).

What resources are available to CIGNA Corporation employees wishing to seek personalized advice regarding their specific retirement scenarios, particularly in light of changes brought about by the Amara case? Understanding the complexities of retirement benefits is crucial, and employees may benefit from tapping into CIGNAâ€™s human resource department or designated benefits counselors for guidance tailored to their circumstances.

Employees seeking personalized advice regarding retirement planning, especially in light of the Amara case, should consult CIGNA’s human resource department or designated benefits counselors. These professionals can provide guidance tailored to individual retirement scenarios, ensuring a clear understanding of pension and 401(k) options(CIGNA Corporation_May 2…).

How does the restructuring of the CIGNA Corporation's pension and 401(k) plans impact the overall retirement benefits landscape for employees who joined before and after the 1997 changes? Employees should look at the comparative advantages and disadvantages provided by both plans to make informed decisions regarding their retirement savings strategies and expected outcomes.

CIGNA employees who joined before and after 1997 should analyze the restructuring of the pension and 401(k) plans. The changes led to different retirement benefits, with cash balance plans affecting post-1997 employees. Comparing both plans’ advantages and disadvantages is crucial for making informed decisions about savings and retirement strategies(CIGNA Corporation_May 2…).

To what extent are CIGNA Corporation employees safeguarded against the financial impacts of fluctuations in interest rates in relation to their pension benefits? Employees should be aware of how the pension plan uses interest rate assumptions and their potential implications for the valuation of their pension benefits, particularly those who have been affected by the changes introduced in 1998.

Employees should understand how interest rate fluctuations impact the valuation of their pension benefits, especially those affected by the 1998 changes. Interest rate assumptions play a crucial role in determining the value of cash balance pensions, and employees must stay informed about these variables(CIGNA Corporation_May 2…).

What procedural steps must CIGNA Corporation employees follow to contest any discrepancies or misunderstandings about their pension benefits? Knowledge of CIGNA Corporation's dispute resolution process can empower employees to take action when they feel their rights have not been adequately represented or upheld, particularly in the wake of significant plan amendments.

To contest discrepancies in their pension benefits, CIGNA employees must follow the dispute resolution procedures laid out by the company. This process is especially important after the significant amendments resulting from the Amara case, as employees may need to defend their rights to accrued benefits(CIGNA Corporation_May 2…).

How has the legal environment surrounding pension plans, particularly through cases like the Amara lawsuit against CIGNA Corporation, influenced the benefits structure offered to employees? This question encourages employees to explore how changes at the judicial level redefine what retirement benefits can look like and the implications for their long-term financial security.

The Amara lawsuit influenced CIGNA’s pension structure by leading to a judicial reformation of the pension plan. Employees should explore how these legal decisions have reshaped the benefits landscape, as it directly affects their long-term financial planning and retirement security(CIGNA Corporation_May 2…).

What specific changes in eligibility criteria for early retirement benefits should current CIGNA Corporation employees be aware of, especially regarding the transition to the cash balance plan? Employees need to scrutinize the implications of these changes and how they may affect their decisions about early retirement and associated benefits.

Employees should be aware of changes to early retirement eligibility resulting from the transition to a cash balance plan. These adjustments, introduced after 1997, may alter the terms under which early retirement benefits are accessible, impacting decisions about retirement timing(CIGNA Corporation_May 2…).

How can CIGNA Corporation employees effectively reach out to the HR department or benefits specialists to get more information about their retirement options? Understanding the channels of communication established within the company for discussing benefits will be crucial for employees seeking clarity on their rights and the provisions of the pension plan following the recent amendments.

CIGNA employees can reach out to the HR department or benefits specialists for more information on their retirement options. These channels provide crucial insights into pension plan amendments and can clarify how the Amara case and other legal changes affect employees’ retirement benefits(CIGNA Corporation_May 2…).

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Global health service company

Cigna offers RSUs and stock options to certain employees. The RSUs vest over a specific period, encouraging retention.