Tuesday, September 21, 2010
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OBAMACARE IS HERE
With the controversy still swirling, Thursday, September 23rd marks
the start of healthcare changes enacted with the sweeping reform
package approved by Congress.
Here are the changes that become effective this week.
Employer plans created before the Act will be grandfathered in and
won't have to abide by some of the reform requirements. Certain costs
are associated with both maintaining their current plan and adopting
the reform. Many businesses will choose to revise their plan
regardless of the grandfather status based on individual economics.
Several preventive healthcare services and screenings will be
covered with no co-payment. Immunization vaccines and screenings for
colorectal cancer for those over 50, depression, high blood pressure
for diabetics and autism in children 18 to 24 months fall into this
category. Also covered fully are mammograms for women over 40 and
smoking cessation programs.
New private insurance plans that offer dependent coverage must allow
parents to cover their children until age 26. If the adult children
can get insurance through their own employer, they can't switch to
their parents' existing job-based coverage if it's grandfathered. But
if they're not eligible for work coverage, they can move to their
parents' plan even if their employer is continuing their current plan.
Children with pre-existing conditions can no longer be denied
coverage. Insurers were afraid that parents wouldn't apply for
coverage until it was necessary but options to avoid this are being
Consumers now have a right to appeal their insurer's denial of
treatment coverage with an external party if they're not satisfied
with their decision. The consumer must first appeal to their provider
and exhaust all internal options before enlisting an impartial
reviewer. Details of this provision are still being worked out.
New high-risk pools are available for uninsured patients declined
coverage for pre-existing conditions. New Jersey law does not permit
this, but other states don't offer their citizens such protection.
While the coverage is now available nationwide, it doesn't come
cheap. Consumers aged 55 and older can expect to pay $773 for basic
This high-risk pool is only a temporary measure to fill the gap
before final regulations become effective in 2014.
Starting January 1st, insurers of large groups will be required to
spend 85 percent of premiums on healthcare in an effort to reign in
money spent on executive salaries, marketing and profits. Small group
providers will have to spend 80 percent of their premiums collected
for this purpose. If they fail to meet these requirements in 2012,
they must offer rebates to their customers.
Businesses with no more than 25 workers with average annual wages
under $50,000 can get tax credits of up to 35 percent of the costs of
premiums beginning this year.
Sound confusing? It is. The Act itself is over 2,000 pages with
hundreds more devoted to implementation of the new regulations. It
will take quite some time before those in the insurance industry sort
this all out, much less consumers understand their new rights.
Stay tuned. We'll do our best to guide you through it.
SOCIAL SECURITY 2010
Planning for your retirement years can get tricky, particularly when
the rules keep changing. But, as Winston Churchill once said, "He who
fails to plan is planning to fail."
So whether we have hard facts available or not, we have to estimate
the best we can. And for the majority of American workers nearing
retirement age, that means Social Security. Let's take a look at
factors that impact us mid-year 2010, with the certainty that they
are subject to change.
Social Security is frequently scrutinized as lawmakers try to secure
long-term funding. Those born prior to 1960 will likely receive
benefits provided by current regulation. But changes will certainly
be implemented to keep the program running past 2037 when funding is
predicted to fall short of its obligations.
Who is eligible for Social Security retirement benefits? Most
anybody who has earned a minimum income of $1,000 per quarter for 40
quarters of employment can collect. Federal employees hired before
1984 are not eligible. Pastors may choose whether or not to pay into
the system. Railroad workers are covered through a separate
Your benefit is based on a series of calculations. The Social
Security Administration calculates your Average Indexed Monthly
Earnings (AIME), and then adjusts for inflation and whether you take
benefits before or after your normal retirement age. That age is now
66, or 67 for those born after 1954.
If one partner in a marriage earns less than the other, they can
collect spousal benefits rather than payouts on their own earnings
history. The spouse is entitled to the greater of their own benefit
or 50 percent of the other spouse's. But until the higher-earner
starts to collect benefits, the lower-earning spouse is only eligible
for their own.
A divorced spouse who was married for more than 10 years and never
remarried can collect on the ex-spouse's work history. Widows and
widowers can receive the higher of their own or their spouse's
monthly payment, but not both.
So now you're collecting benefits that you've earned throughout your
working years. This income may be taxable come April 15th.
Back to the calculator. Figure your modified adjusted gross income.
This includes income aside from Social Security like pensions, wages,
interest and dividends. Add in tax-exempt interest. Now add one-half
of the Social Security benefits you receive for the year. The number
you'll get is considered "provisional income."
The IRS considers amounts over $32,000 for married couples filing
jointly or $25,000 for single filers to be taxable income. Tax
percentage rate is based on your income. IRS Publication 915 provides
worksheets to compute the tax. Talk to your tax advisor about
strategies you can use to offset your tax bill.
If you're considering Social Security's payback option, you'd better
act fast. Your opportunity may be lost within the next few months if
program changes are implemented.
The option allows recipients who started to collect benefits at a
younger age to repay benefits already received and re-apply for the
higher benefit amount at full retirement age. They could claim a tax
credit for any income taxes they paid on those benefits.
The proposed change would allow retirees to withdraw their
application for Social Security benefits only once during their
lifetime, and within 12 months of first receiving benefits. They
would have to pay back what they had already received and restart at
the appropriate time.
The face of retirement is changing. The multitude of baby-boomers
leaving the workforce around the same time was destined to impact
retirement as we knew it. But the recession and unemployment crisis
couldn't be foreseen, adding even more haze to an already cloudy
future. It may seem fruitless to plan with all the variables. Set
your course anyway, and once those clouds part you'll find yourself
on the road to success.
The Federal Reserve met today and said that it was ready to provide
more help to the economy if necessary. Although it would ease
monetary policy, it was not prepared to issue more government debt at
the moment. The Fed noted that inflation remains below levels for a
"healthy" economy, saying that it might provide "additional
accommodation" to support the recovery. That could mean more
purchases of Treasury bonds or other debt, which would keep interest
rates low and hopefully encourage borrowing.
In the meantime, economists generally do not predict that interest
rates will go up until at least the end of 2011. For those that are
able to refinance, mortgages remain at historically low rates.
However, credit-card companies are taking a harder line assessing
higher rates more frequently. This follows the loss of fee income due
to recent legislation.
Americans have reduced their consumer debt since the start of the
recession. Although this is the healthy picture individually, as a
country that debt feeds the economy. Certainly, reducing the high
interest rate debt is a win for both the economy and the individual!
Today’s Market Rates
Tuesday, September 21, 2010
Dow Jones Industrial Average
(Up 332.98 or 3.19% since 12/31/09)
(Up 24.68 or 2.21% since 12/31/09)
(dOWN 19.80 or 0.87% since 12/31/09)
|10 Year Treasury Bond Yield
On The World Wide Web
Learn about the Affordable Care Act. Find healthcare insurers in
your state and learn how to protect your health at healthcare.gov.
One of the hardest parts of planning for retirement is predicting
how long you need your savings to hold out. Nobody can predict how
long they'll live, but you can estimate your life expectancy. Take this calculator to learn
There may be no such thing as a free lunch, but there is a list of
things that really are free here.
Tip of the Week
Be certain to read credit card offers carefully before applying. In
order to circumvent new restrictions placed on consumer credit cards,
providers are offering "professional" cards in their place. These are
actually business credit cards, which are not covered by the
protections of the Credit CARD Act of 2009.
"Being right half the time beats being half-right all the time." -
Today in History
1970 - Monday Night Football is broadcast on ABC for the first time.
More than 37 million retirees and their dependents currently collect
Social Security benefits.
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