Most economists are predicting the recession our economy has entered to last at least two years. Learning to cope with, and even capitalize on, a slow economy my mean the difference in remaining viable in your market or having to find a new line of work. If you manage to implement tactics that are successful in a slow economy you may find even more success than expected when the market returns. (See our article from our Fall Newsletter Growing Your Business for more).
Convincing Your Customers to Buy
As the market continues to slow one thing is for sure, your customers will become much more frugal with their spending. Understanding this is of particular importance if you are in the retail sales business, but the lesson can be applied to an industry. Your customers have less money to spend than they did this time last year, so it’s important that you convince them to spend their money with you.
Help them understand the alternatives to buying your product or service. For instance, if you sell cars let them know that putting off buying a newer, more efficient vehicle may mean higher fuel and maintenance costs down the road. Now is the time to help your customers understand why it is important for them to invest their money in your product or your service.
Recognize that your products and services are not only competing with others like your own. With your buyers in a frugal mindset, they will be comparing spending their money with you and their other desires. Again, if you sell cars your customers may be trying to decide if they want to put a down payment on a new car or make a contribution to their IRA. It’s your job to convince them that your product is the right choice.
Remember that even though your customers are thinking their purchases through more thoroughly, they will still be buying things that they feel the benefits of outweigh the costs. Help your customers justify their purchases by telling them about potential emerging savings, lower maintenance costs, or more features. It also helps to understand why your customer is interested in purchasing from you so that you will know what they find valuable about the product.
Another key is to understand your customer's timing. For instance, most people who are purchasing a car prefer to take their time to do some research so that they can make sure they get the car that they want. People who are purchasing air conditioners, on the other hand, are most often reluctant customers who are uninformed about the product and just wish to get the purchase over with. Understanding how your customers view their purchase will help you understand how to present the product in a favorable light.
What Does the Future Hold?
So, what can we expect once the economy does turn around? We can expect that some of the budget-conscience habits that buyers will form over the next few years will become permanent. Buyers who are in their twenties and thirties now are forming their buying habits in a much less secure economy than their parents did and it will likely affect their spending habits even after the markets recover.
It is unlikely that buyers who are forced to shop at large-scale retailers like Wal-Mart will return to the smaller retailers once the economy stabilizes. In fact, many of them will find that the quality of goods found at the big-box stores is adequate considering the price point. These shoppers are not likely to abandon the values they have come to expect at the large-scale retailers, in fact, they will likely search for similar values in other products.
The economic slow-down will also force all businesses to focus on customer service. With less money to spread around, the companies that focus on treating their customers right will remain viable while the others will fall by the way-side. Once the economy turns up, buyers will still expect the level of customer service to remain high.
As you prepare your business for lean times, keep these things in mind. They may just make the difference.
Source
http://www.kiplinger.com/businessresource/summary/archive/2008/customer-marketing-fuel.html
http://www.kiplinger.com/businessresource/forecast/archive/whats_next_for_retailers_081124.html
http://www.kiplinger.com/businessresource/summary/archive/2008/Spending_Sullivan.html
Thursday, December 18, 2008
Don't Micromanage Your Employees
Learning to manage your company is a trial and error process. There is no tried and true formula that works for each company or even for each employee in a company. There is, however,one management technique that you will be sure to want to avoid.
The most common mistake that many managers, especially first-time managers, make is to try and be involved in every aspect of the business. It is difficult to properly manage your business and your employees if you are constantly distracted with the small details of the day to day business. That is why you have employees in the first place. In fact, micromanaging your employees can actually hinder their performance. Scott Reeves of Forbes Magazine says “Micromanaging is the surest way to kill and employee’s enthusiasm. To succeed, employees need to know that they’re trusted and their work is valued. Micromanaging tells the employee just the opposite, and constant checks are as annoying as a fussy elementary-school teacher telling you to print your name and the date in the upper right-hand corner of every assignment.”
Allowing your employees to do their jobs has many benefits. First, you may find that they become much more productive without you leaning over their shoulder. Often times the presence of a supervisor will make employees hesitate to offer new ideas for fear of being shot down. Sometimes these new ideas can trigger efficiency and growth that would otherwise go undiscovered.
Delegating responsibility will also allow you to recognize the weak spots in your company. Occasionally when a died-in-the-wool micromanager finally decides to allow his employees some independence, things go south quickly. This does not affirm micromanagement as a viable management technique, but it does mean that the newly independent employees may not be up to the task of running the business.
Delegating responsibility to your employees will also allow you free time to pursue other aspects of business. Use your new found freedom to focus on finding new customers, start a new company, or improve your golf game!
Source
http://www.forbes.com/2006/02/01/training-employees-management-cx_sr_0202bizbasics.html
http://online.wsj.com/article/SB122566866580091589.html.html
The most common mistake that many managers, especially first-time managers, make is to try and be involved in every aspect of the business. It is difficult to properly manage your business and your employees if you are constantly distracted with the small details of the day to day business. That is why you have employees in the first place. In fact, micromanaging your employees can actually hinder their performance. Scott Reeves of Forbes Magazine says “Micromanaging is the surest way to kill and employee’s enthusiasm. To succeed, employees need to know that they’re trusted and their work is valued. Micromanaging tells the employee just the opposite, and constant checks are as annoying as a fussy elementary-school teacher telling you to print your name and the date in the upper right-hand corner of every assignment.”
Allowing your employees to do their jobs has many benefits. First, you may find that they become much more productive without you leaning over their shoulder. Often times the presence of a supervisor will make employees hesitate to offer new ideas for fear of being shot down. Sometimes these new ideas can trigger efficiency and growth that would otherwise go undiscovered.
Delegating responsibility will also allow you to recognize the weak spots in your company. Occasionally when a died-in-the-wool micromanager finally decides to allow his employees some independence, things go south quickly. This does not affirm micromanagement as a viable management technique, but it does mean that the newly independent employees may not be up to the task of running the business.
Delegating responsibility to your employees will also allow you free time to pursue other aspects of business. Use your new found freedom to focus on finding new customers, start a new company, or improve your golf game!
Source
http://www.forbes.com/2006/02/01/training-employees-management-cx_sr_0202bizbasics.html
http://online.wsj.com/article/SB122566866580091589.html.html
Wednesday, December 17, 2008
Voluntary Benefits Explode in Popularity
As our national economy continues to slip into recession, employers are beginning to scale back on health benefits in an effort to maintain their bottom line. As employers reduce their health benefits many are adding new, voluntary-based benefits for their employees. Voluntary benefits are traditionally offered in addition to benefits that are partially paid by the employer, but as the recession puts a squeeze on employers many are favoring the voluntary benefits to save money.
Voluntary benefits are also popular with employees. They offer many of the same advantages of employer-paid benefits such as streamlined administration and lower prices that are not available with consumer based products. Also, because payroll deductions for benefits are taken out before taxes, the cost of the benefit is reduced even further below the cost of comparable consumer based plans.
Increasingly, employers are also finding that offering voluntary benefits may aid with retention of current employees and recruitment of new employees. Employers are offering voluntary benefits ranging from traditional plans like accident, life, home, and auto coverage as well as new plans that offer shopping discounts, identity theft programs, wedding protection, and group legal plans.
If you would be interested in offering voluntary benefits to your employees, give us a call and we will design a package for you.
Source
http://www.kiplinger.com/businessresource/summary/archive/2008/benefits_HealthPlanWeek.html
Voluntary benefits are also popular with employees. They offer many of the same advantages of employer-paid benefits such as streamlined administration and lower prices that are not available with consumer based products. Also, because payroll deductions for benefits are taken out before taxes, the cost of the benefit is reduced even further below the cost of comparable consumer based plans.
Increasingly, employers are also finding that offering voluntary benefits may aid with retention of current employees and recruitment of new employees. Employers are offering voluntary benefits ranging from traditional plans like accident, life, home, and auto coverage as well as new plans that offer shopping discounts, identity theft programs, wedding protection, and group legal plans.
If you would be interested in offering voluntary benefits to your employees, give us a call and we will design a package for you.
Source
http://www.kiplinger.com/businessresource/summary/archive/2008/benefits_HealthPlanWeek.html
Small Business Wellness Program
Americans are bombarded day in and day out with news about the dismal economy. Very few industries remain unaffected and it is hard to imagine that anyone does not have the recession on their mind. Most analysts believe that we will not begin to see a recovery until at least 2010. With economic troubles ahead, many small businesses are focused on how to cut their expenses in an effort to maintain their bottom line. For most small businesses, one of their chief expenses is health insurance and we have designed a program that will allow companies to take steps to reduce their costs over the next few years.
Employee wellness has become a part of large businesses culture over the last ten years. Unlike most small businesses, many larger employers self-insure so the health of their employees is directly related to their bottom line. Since small businesses generally insure through large carriers, they do not have direct control over their insurance premiums, but the same principles that large businesses apply to employee wellness can help small businesses reign in their healthcare spending.
Our plan is to provide our customers with a turnkey wellness program designed around the federal government’s suggestion that Americans should get 30 minutes of cardiovascular exercise five times a week to maintain a healthy lifestyle and have each group provide a small incentive to their employees to encourage participation in the program. The benefits will not be immediate, but we believe that over a three year period our customers will see savings on their total healthcare costs, increased workforce productivity, a reduction in sick days, and lower employee turn-over. Our program will be offered free of charge for each of our clients as a value-added service.
Source
http://www.washingtonpost.com/wp-dyn/content/story/2008/10/13/ST2008101300741.html
Employee wellness has become a part of large businesses culture over the last ten years. Unlike most small businesses, many larger employers self-insure so the health of their employees is directly related to their bottom line. Since small businesses generally insure through large carriers, they do not have direct control over their insurance premiums, but the same principles that large businesses apply to employee wellness can help small businesses reign in their healthcare spending.
Our plan is to provide our customers with a turnkey wellness program designed around the federal government’s suggestion that Americans should get 30 minutes of cardiovascular exercise five times a week to maintain a healthy lifestyle and have each group provide a small incentive to their employees to encourage participation in the program. The benefits will not be immediate, but we believe that over a three year period our customers will see savings on their total healthcare costs, increased workforce productivity, a reduction in sick days, and lower employee turn-over. Our program will be offered free of charge for each of our clients as a value-added service.
Source
http://www.washingtonpost.com/wp-dyn/content/story/2008/10/13/ST2008101300741.html
The Universal Coverage Mandate and What It Means For You
The Universal Coverage Mandate and What It Means For You
President-elect Barack Obama’s sweeping victory in November has Democrats in Washington itching to pass healthcare reform as soon as he takes office. As it turns out, the Democrats in Washington are not the only ones. Recently the Associated Press reported that the trade group America’s Health Insurance Plans (AHIP), which represents 1,300 companies in the insurance industry, released a statement saying that they would support legislation requiring guaranteed coverage for every American if it included a an enforceable requirement that everyone have a policy. In addition, the Blue Cross Blue Shield Association, which represents thirty-nine companies that cover over 100 million Americans, released a similar statement.
What Does It Mean?
Essentially, by mandating that all Americans have coverage while guaranteeing that all Americans will be eligible for coverage, the private insurance companies would be able to spread the risk across a larger base of customers. Alissa Fox, vice-president of the Blue Cross and Blue Shield Association, said “Insurance works best when everyone is in the pool. You need healthy people in the insurance pool to help pay for the sicker individuals who are much more motivated to buy coverage.” This system would most certainly guarantee an increase in revenue for the private insurance industry, but that might not necessarily translate into higher profits. The insurance industry contends that any mandate for guaranteed issuance would have to be combined with a mandate for coverage. Ms. Fox told reporters that an individual mandate was an indispensable corollary of any approach forbidding insurers to reject applicants because of health status.
Private insurers fear the ramifications of guaranteeing coverage without mandating coverage for everyone. Donald Hamm, president of Assurant Health, said “If they know they can obtain coverage at any time, many will wait until they get sick to apply for it. That increases the price for everyone.” The insurers claim that in states that require guaranteed coverage, they have already seen these problems.
The Politics of Universal Coverage
Mr. Obama supported a universal coverage guarantee during his run for the presidency this year, but he stopped short of calling for a mandate to require every American to have health insurance. Many on Capitol Hill also question the feasibility of requiring coverage due to the high cost and the difficulty of enforcement.
Senator Charles Grassley, a Republican from Iowa, said that mandated coverage would likely inflate the federal budget deficit. He said, “Increasing the record-breaking deficit is not a legitimate option. Ignoring the burden of inefficient spending that health care places on our economy is also not an option.” Other members of Congress tend to agree. Grassley participated in a closed-door meeting on Capitol Hill with other Senators concerned over the direction of the nation’s health insurance industry, including Democratic Senators Max Baucus and Edward Kennedy as well as Republican Senator Orrin Hatch among others.
Alternatives to Federally Mandated Universal Coverage
The mandated universal coverage plan has found support on Capitol Hill with Democratic Senators and in the president-elect but not everyone in Washington is behind it. While just about everyone agrees that universal coverage should be the ultimate goal for our health insurance industry, not everyone agrees on how to get there. The Republican candidate for the presidency this year, John McCain, ran on a healthcare platform that opposed universal healthcare mandated by the federal government. McCain, and other conservatives in the Republican Party, believe that any federal health insurance program would be an overexpansion of government involvement in private industry. McCain proposed a consumer-driven model for the health insurance industry, spurred by tax credits from the federal government to encourage coverage.
Many insurance industry analysts tend to agree. They believe that government-based health insurance is generally much less efficient than private-based insurance. Matthew Coffina, an analyst with Morningstar, said “Government plans tend to be much less profitable than commercial insurance. To the extent that they’re insuring more people, it’s good. To the extent that they are insuring people through government options instead of through commercial options would tend to depress margins.”
Change Is Coming
Regardless of what happens on Capitol Hill in the next four years, we will see some sort of reform in the healthcare industry soon. Our nation cannot afford to continue on with our current arrangement. Each year healthcare costs become a larger and larger portion of our spending. Without some change in the current system, we will eventually be spending more money on healthcare than anything else. Our nation has to commit to improving our overall health along with reforming our healthcare system. This change will affect us all, so it is certainly any issue that deserves our attention.
Source
http://www.nytimes.com/2008/11/20/us/20health.html?ref=us
http://www.bloomberg.com/apps/news?pid=20601202&sid=axooOa9vVGnc&refer=healthcare
http://www.google.com/hostednews/ap/article/ALeqM5jplyo5XCZt-sbgL21ggOoqg5nC3QD94I8HP80
President-elect Barack Obama’s sweeping victory in November has Democrats in Washington itching to pass healthcare reform as soon as he takes office. As it turns out, the Democrats in Washington are not the only ones. Recently the Associated Press reported that the trade group America’s Health Insurance Plans (AHIP), which represents 1,300 companies in the insurance industry, released a statement saying that they would support legislation requiring guaranteed coverage for every American if it included a an enforceable requirement that everyone have a policy. In addition, the Blue Cross Blue Shield Association, which represents thirty-nine companies that cover over 100 million Americans, released a similar statement.
What Does It Mean?
Essentially, by mandating that all Americans have coverage while guaranteeing that all Americans will be eligible for coverage, the private insurance companies would be able to spread the risk across a larger base of customers. Alissa Fox, vice-president of the Blue Cross and Blue Shield Association, said “Insurance works best when everyone is in the pool. You need healthy people in the insurance pool to help pay for the sicker individuals who are much more motivated to buy coverage.” This system would most certainly guarantee an increase in revenue for the private insurance industry, but that might not necessarily translate into higher profits. The insurance industry contends that any mandate for guaranteed issuance would have to be combined with a mandate for coverage. Ms. Fox told reporters that an individual mandate was an indispensable corollary of any approach forbidding insurers to reject applicants because of health status.
Private insurers fear the ramifications of guaranteeing coverage without mandating coverage for everyone. Donald Hamm, president of Assurant Health, said “If they know they can obtain coverage at any time, many will wait until they get sick to apply for it. That increases the price for everyone.” The insurers claim that in states that require guaranteed coverage, they have already seen these problems.
The Politics of Universal Coverage
Mr. Obama supported a universal coverage guarantee during his run for the presidency this year, but he stopped short of calling for a mandate to require every American to have health insurance. Many on Capitol Hill also question the feasibility of requiring coverage due to the high cost and the difficulty of enforcement.
Senator Charles Grassley, a Republican from Iowa, said that mandated coverage would likely inflate the federal budget deficit. He said, “Increasing the record-breaking deficit is not a legitimate option. Ignoring the burden of inefficient spending that health care places on our economy is also not an option.” Other members of Congress tend to agree. Grassley participated in a closed-door meeting on Capitol Hill with other Senators concerned over the direction of the nation’s health insurance industry, including Democratic Senators Max Baucus and Edward Kennedy as well as Republican Senator Orrin Hatch among others.
Alternatives to Federally Mandated Universal Coverage
The mandated universal coverage plan has found support on Capitol Hill with Democratic Senators and in the president-elect but not everyone in Washington is behind it. While just about everyone agrees that universal coverage should be the ultimate goal for our health insurance industry, not everyone agrees on how to get there. The Republican candidate for the presidency this year, John McCain, ran on a healthcare platform that opposed universal healthcare mandated by the federal government. McCain, and other conservatives in the Republican Party, believe that any federal health insurance program would be an overexpansion of government involvement in private industry. McCain proposed a consumer-driven model for the health insurance industry, spurred by tax credits from the federal government to encourage coverage.
Many insurance industry analysts tend to agree. They believe that government-based health insurance is generally much less efficient than private-based insurance. Matthew Coffina, an analyst with Morningstar, said “Government plans tend to be much less profitable than commercial insurance. To the extent that they’re insuring more people, it’s good. To the extent that they are insuring people through government options instead of through commercial options would tend to depress margins.”
Change Is Coming
Regardless of what happens on Capitol Hill in the next four years, we will see some sort of reform in the healthcare industry soon. Our nation cannot afford to continue on with our current arrangement. Each year healthcare costs become a larger and larger portion of our spending. Without some change in the current system, we will eventually be spending more money on healthcare than anything else. Our nation has to commit to improving our overall health along with reforming our healthcare system. This change will affect us all, so it is certainly any issue that deserves our attention.
Source
http://www.nytimes.com/2008/11/20/us/20health.html?ref=us
http://www.bloomberg.com/apps/news?pid=20601202&sid=axooOa9vVGnc&refer=healthcare
http://www.google.com/hostednews/ap/article/ALeqM5jplyo5XCZt-sbgL21ggOoqg5nC3QD94I8HP80
Tuesday, December 16, 2008
Money Saving Tax Tips
Tax Law Changes for 2008
Each year the United States tax code changes. Sometimes that change is big, and sometimes it’s not so big. Knowing the meaning of these changes can save you money come April 15th.
In 2008 there are several tax code changes that are worth mentioning. The first change of note is that the tax brackets, personal exemptions, and standard deductions have all been adjusted this year for inflation. If you add all these things up, it simply means that if you made the same amount of money this year as you did last year, you will have a smaller tax bill. In addition to this adjustment for inflation there are several new deductions that could put a hefty sum of tax money back in your wallet.
First-Time Home Buyer’s Credit
If you are a first time home buyer and you purchased your primary residence after April 8, 2008, you may qualify for a tax credit that could add up to 10% of up to $75,000 of the purchase price. This tax credit is, however, more like an interest-free loan than a true credit. The IRS requires that the money must be re-paid in full within fifteen years. The IRS will begin collection on the credit two years after the credit is claimed and if you sell the residence before the credit is repaid, the balance is due the following year. Also, if your modified adjusted gross income exceeds $150,000 for joint-filers or $75,000 for single-filers, you do not qualify for this credit. If you buy the home from a close relative or if you have owned a home during any of the three years prior to the purchase of the home, you also do not qualify for the credit.
Additional Standard Deductions for Property Taxes Paid
This year, tax-payers who file standard deductions rather than itemized deductions will be allowed to take up to $1000 for joint-filers and up to $500 for single-filers for real estate taxes paid.
Increased Expense Deductions for Businesses
A new law has increased the amount of equipment expense allowed to be deducted for 2008. Businesses will be allowed to expense $250,000 this year which is a $125,000 increase over 2007.
Reductions in Capital Gains and Dividend Tax Rates
For 2008, the maximum tax rate for long-term capital gains from the sale of assets held longer than one year by a person in the 10% or 15% tax bracket has been reduced from 5% to 0%. This reduction will be in force until 2010. The Dividends Tax has seen a similar reduction for 2008.
State and Local Sales Tax Deductions
Back for 2008 is the option to deduct state and local sales tax payments as opposed to income tax payments.
Tuition Deductions
The deduction of up to $4000 for college tuition has returned for 2008.
Frequently Overlooked Tax Deductions, Subtractions, and Credits
Out-of-pocket Charitable Contributions
Everyone knows that large charitable donations are tax deductible, but one of the often overlooked tax deductions is smaller, out-of-pocket charitable deductions. These expenses can be anything from stamps to food to the miles you drive as long as they involve charitable work. For mileage, the IRS allows you to deduct 14 cents per mile.
Travel Expenses for Military Reservists
If you travel more than 100 miles overnight from your home for your National Guard or Armed Forces Reserves duties you may deduct the cost of your hotel bill, half of the cost of your food bills, and any expenses incurred for tolls or parking. In addition, you are also allowed up to 50.5 cents per mile for the first half of the year and 58.5 cents per mile for the second half of the year.
Reinvested Dividends
If you have dividends from mutual funds that you reinvest into the fund, you can add these to your tax basis, which will in turn reduce your taxable capital gain when you redeem your shares.
State Taxes Paid in the Spring
Remember that if you owed money when you filed your 2007 state tax return you can include that amount with your state-tax deductions on your 2008 return.
It’s easy to miss a deduction when your filing your tax return, and every time you do you turn over more money to the IRS than you should. No one wants to overpay their taxes, so make sure you pay extra attention this year when filling out your tax returns.
Source
http://www.kiplinger.com/features/archives/2007//01/deductions.html
http://www.kiplinger.com/features/archives/2006/09/taxes.html
http://www.irs.gov/newsroom/article/0,,id=186831,00.html
http://www.irs.gov/publications/p529/ar02.html
http://turbotax.intuit.com/support/kb/tax-content/tax-tips/6395.html
Each year the United States tax code changes. Sometimes that change is big, and sometimes it’s not so big. Knowing the meaning of these changes can save you money come April 15th.
In 2008 there are several tax code changes that are worth mentioning. The first change of note is that the tax brackets, personal exemptions, and standard deductions have all been adjusted this year for inflation. If you add all these things up, it simply means that if you made the same amount of money this year as you did last year, you will have a smaller tax bill. In addition to this adjustment for inflation there are several new deductions that could put a hefty sum of tax money back in your wallet.
First-Time Home Buyer’s Credit
If you are a first time home buyer and you purchased your primary residence after April 8, 2008, you may qualify for a tax credit that could add up to 10% of up to $75,000 of the purchase price. This tax credit is, however, more like an interest-free loan than a true credit. The IRS requires that the money must be re-paid in full within fifteen years. The IRS will begin collection on the credit two years after the credit is claimed and if you sell the residence before the credit is repaid, the balance is due the following year. Also, if your modified adjusted gross income exceeds $150,000 for joint-filers or $75,000 for single-filers, you do not qualify for this credit. If you buy the home from a close relative or if you have owned a home during any of the three years prior to the purchase of the home, you also do not qualify for the credit.
Additional Standard Deductions for Property Taxes Paid
This year, tax-payers who file standard deductions rather than itemized deductions will be allowed to take up to $1000 for joint-filers and up to $500 for single-filers for real estate taxes paid.
Increased Expense Deductions for Businesses
A new law has increased the amount of equipment expense allowed to be deducted for 2008. Businesses will be allowed to expense $250,000 this year which is a $125,000 increase over 2007.
Reductions in Capital Gains and Dividend Tax Rates
For 2008, the maximum tax rate for long-term capital gains from the sale of assets held longer than one year by a person in the 10% or 15% tax bracket has been reduced from 5% to 0%. This reduction will be in force until 2010. The Dividends Tax has seen a similar reduction for 2008.
State and Local Sales Tax Deductions
Back for 2008 is the option to deduct state and local sales tax payments as opposed to income tax payments.
Tuition Deductions
The deduction of up to $4000 for college tuition has returned for 2008.
Frequently Overlooked Tax Deductions, Subtractions, and Credits
Out-of-pocket Charitable Contributions
Everyone knows that large charitable donations are tax deductible, but one of the often overlooked tax deductions is smaller, out-of-pocket charitable deductions. These expenses can be anything from stamps to food to the miles you drive as long as they involve charitable work. For mileage, the IRS allows you to deduct 14 cents per mile.
Travel Expenses for Military Reservists
If you travel more than 100 miles overnight from your home for your National Guard or Armed Forces Reserves duties you may deduct the cost of your hotel bill, half of the cost of your food bills, and any expenses incurred for tolls or parking. In addition, you are also allowed up to 50.5 cents per mile for the first half of the year and 58.5 cents per mile for the second half of the year.
Reinvested Dividends
If you have dividends from mutual funds that you reinvest into the fund, you can add these to your tax basis, which will in turn reduce your taxable capital gain when you redeem your shares.
State Taxes Paid in the Spring
Remember that if you owed money when you filed your 2007 state tax return you can include that amount with your state-tax deductions on your 2008 return.
It’s easy to miss a deduction when your filing your tax return, and every time you do you turn over more money to the IRS than you should. No one wants to overpay their taxes, so make sure you pay extra attention this year when filling out your tax returns.
Source
http://www.kiplinger.com/features/archives/2007//01/deductions.html
http://www.kiplinger.com/features/archives/2006/09/taxes.html
http://www.irs.gov/newsroom/article/0,,id=186831,00.html
http://www.irs.gov/publications/p529/ar02.html
http://turbotax.intuit.com/support/kb/tax-content/tax-tips/6395.html
Wednesday, October 1, 2008
Employee Wellness Initiative
Without a doubt, the healthcare system in the United States is flawed. Economists have predicted that within the next seventy-five years our country’s health expenses will equal our country’s gross domestic product. Our nation is aging and our health is declining. Healthcare costs rise with each passing day.
While we understand that our healthcare system will not change overnight, we believe that the change must begin on a smaller scale to ever hope to see a change on a larger scale. In response to this belief we have decided to implement a voluntary employee wellness plan for our clients. We believe that the only way to positively affect the healthcare system over the long-term is to improve the overall well-being of those of us who utilize it.
Over the next few months, we plan to introduce our wellness initiative to each of our clients. If you would be interested in participating in a program to improve the wellness of your employees and reduce your healthcare costs in the long-term, give us a call and we will sit down with you and tailor a plan to fit your business.
Source
http://www.cbo.gov/ftpdocs/89xx/doc8948/01-31-HealthTestimony.pdf
While we understand that our healthcare system will not change overnight, we believe that the change must begin on a smaller scale to ever hope to see a change on a larger scale. In response to this belief we have decided to implement a voluntary employee wellness plan for our clients. We believe that the only way to positively affect the healthcare system over the long-term is to improve the overall well-being of those of us who utilize it.
Over the next few months, we plan to introduce our wellness initiative to each of our clients. If you would be interested in participating in a program to improve the wellness of your employees and reduce your healthcare costs in the long-term, give us a call and we will sit down with you and tailor a plan to fit your business.
Source
http://www.cbo.gov/ftpdocs/89xx/doc8948/01-31-HealthTestimony.pdf
Wednesday, September 24, 2008
Seeding Your Employees' HSA's
The recent boom in health savings account style health plans has lead to some concern that many employees are not utilizing the plans as they are designed to be used. United Healthcare recently made public a study of 212,000 of their HSA customers that shows a few prominent trends in employee usage of health savings accounts.
While there are many tax advantages to contributing money to health savings accounts, many employees are reluctant to do so because they either don’t understand the benefits or they are not willing to put their hard-earned income towards their health expenses before they occur. This can be a problem for many individuals. Health savings accounts are generally paired with high deductible health plans which can mean high out-of-pocket expenses for employees if they have not planned ahead and utilized their HSA.
One easy way to encourage your employees to actually use their health savings accounts is to offer some type of employer contribution, like seed money for the account. The United Healthcare survey showed that 86% of employees opened an HSA when their employer offered a contribution compared to just 27% when their employer did not. United Healthcare’s survey also reported that nearly two-thirds of all employers offering HSA-type accounts to their employees did offer a contribution.
Source
http://blogs.wsj.com/health/2008/09/19/employees-open-hsas-if-their-bosses-kick-in/
While there are many tax advantages to contributing money to health savings accounts, many employees are reluctant to do so because they either don’t understand the benefits or they are not willing to put their hard-earned income towards their health expenses before they occur. This can be a problem for many individuals. Health savings accounts are generally paired with high deductible health plans which can mean high out-of-pocket expenses for employees if they have not planned ahead and utilized their HSA.
One easy way to encourage your employees to actually use their health savings accounts is to offer some type of employer contribution, like seed money for the account. The United Healthcare survey showed that 86% of employees opened an HSA when their employer offered a contribution compared to just 27% when their employer did not. United Healthcare’s survey also reported that nearly two-thirds of all employers offering HSA-type accounts to their employees did offer a contribution.
Source
http://blogs.wsj.com/health/2008/09/19/employees-open-hsas-if-their-bosses-kick-in/
Monday, September 22, 2008
Tax Deduction Tips
They say there are two things in life that are inevitable: death and taxes. While this is certainly true in our society, there are a few ways that you can avoid giving all of your hard earned cash to the government.
If you currently have a Health Savings Account and you are self-employed, you can use an “above-the-line” deduction to reduce your taxable income by the amount of your total contribution, up to the limits set in place for those contributions. If you have a Health Savings Account through your employer, any contributions made by your employer are taken out before your taxable income. If you make any contributions of your own, they can be taken out with an “above-the-line” deduction up to the total contribution limit.
In addition, any medical expenses you incur more than 7.5% of your adjusted gross income can be deducted from your taxes in a similar manner. The Internal Revenue Service defines medical expenses as any expense used to treat or prevent any mental or physical defect. This is a broad definition, for more details refer to the publication listed in the source of this article. While health, dental, and long-term care insurance premiums are deductible, any expense paid out of a health savings account or Archer medical savings account is not deductible.
While there are many expenses associated with your healthcare that are deductible from your taxes, consult a tax professional before filing your return.
Source
http://www.ustreas.gov/offices/public-affairs/hsa/faq_contributing.shtml
http://www.irs.gov/publications/p502/ar02.html
If you currently have a Health Savings Account and you are self-employed, you can use an “above-the-line” deduction to reduce your taxable income by the amount of your total contribution, up to the limits set in place for those contributions. If you have a Health Savings Account through your employer, any contributions made by your employer are taken out before your taxable income. If you make any contributions of your own, they can be taken out with an “above-the-line” deduction up to the total contribution limit.
In addition, any medical expenses you incur more than 7.5% of your adjusted gross income can be deducted from your taxes in a similar manner. The Internal Revenue Service defines medical expenses as any expense used to treat or prevent any mental or physical defect. This is a broad definition, for more details refer to the publication listed in the source of this article. While health, dental, and long-term care insurance premiums are deductible, any expense paid out of a health savings account or Archer medical savings account is not deductible.
While there are many expenses associated with your healthcare that are deductible from your taxes, consult a tax professional before filing your return.
Source
http://www.ustreas.gov/offices/public-affairs/hsa/faq_contributing.shtml
http://www.irs.gov/publications/p502/ar02.html
Friday, September 19, 2008
State Continuation Tips
Employees and their dependents have the option to continue group coverage for 18 months from the date that they cease to be eligible for coverage under the health benefit plan. Employees are not eligible for continuation under the state law if:
• The employee’s insurance terminated because they failed to pay the appropriate contribution.
• The employee or their dependents requesting continuation are eligible for another group health benefit plan.
• The employee was covered less that three consecutive months prior to termination.
The member must notify the group of the intention to continue coverage and pay the applicable fees within 60 days following the end of eligibility. Upon the receipt of the notice of continuation and applicable fees, Blue Cross Blue Shield of North Carolina will reinstate coverage back to the date eligibility ended. The state law continuation benefits run concurrently and not in addition to any applicable federal continuation rights.
Group continuation under state law will end after 18 months or earlier if:
• The employer ceases to provide health benefit plans to employees
• The continuing person fails to pay the monthly fee
• The continuing person obtains similar coverage under another group plan
If an employee elects North Carolina State Continuation, an Enrollment and Change Form stating this fact must be submitted to the carrier.
• The employee’s insurance terminated because they failed to pay the appropriate contribution.
• The employee or their dependents requesting continuation are eligible for another group health benefit plan.
• The employee was covered less that three consecutive months prior to termination.
The member must notify the group of the intention to continue coverage and pay the applicable fees within 60 days following the end of eligibility. Upon the receipt of the notice of continuation and applicable fees, Blue Cross Blue Shield of North Carolina will reinstate coverage back to the date eligibility ended. The state law continuation benefits run concurrently and not in addition to any applicable federal continuation rights.
Group continuation under state law will end after 18 months or earlier if:
• The employer ceases to provide health benefit plans to employees
• The continuing person fails to pay the monthly fee
• The continuing person obtains similar coverage under another group plan
If an employee elects North Carolina State Continuation, an Enrollment and Change Form stating this fact must be submitted to the carrier.
The Number of Uninsured Americans Is On the Decline
You may have read recently that the United States Census Bureau has reported a decrease in the number of uninsured Americans from 2006 to 2007. Here are a few quick facts to put that statement into perspective.
The number of uninsured children declined from 8.7 million (11.7 percent in 2006 to 8.1 million (11.0 percent) in 2007.
The number of uninsured non-hispanic whites declined from 21.2 million (10.8 percent) in 2006 to 20.5 million (10.4 percent) in 2007.
The number of uninsured blacks remained statistically unchanged at 7.4 million while the percentage declined from 20.5 percent in 2006 to 19.5 percent in 2007.
The number of uninsured hispanics declined from 15.3 million (34.1 percent) in 2006 to 14.8 million (32.1 percent) in 2007.
The number of uninsured children declined from 8.7 million (11.7 percent in 2006 to 8.1 million (11.0 percent) in 2007.
The number of uninsured non-hispanic whites declined from 21.2 million (10.8 percent) in 2006 to 20.5 million (10.4 percent) in 2007.
The number of uninsured blacks remained statistically unchanged at 7.4 million while the percentage declined from 20.5 percent in 2006 to 19.5 percent in 2007.
The number of uninsured hispanics declined from 15.3 million (34.1 percent) in 2006 to 14.8 million (32.1 percent) in 2007.
Growing Your Business
Regardless of industry, everyone has felt the economic slowdown of late, whether they are captains of industry or your everyday small business. Do not get discouraged, there are plenty of things you can do to help keep your business viable during the downturn and prepare your business for success during the upturn that is sure to follow.
Discipline as a Foundation
In a recent article from Entrepreneur Magazine, Carol Tice reports that “discipline developed in a downturn can lay the groundwork for long-term success.” Basically, a slowdown in business will often force you to reexamine your business tactics and develop new ways to generate revenue. If these tactics are retained when the market returns your business will often flourish.
Reexamine Your Business Model
Is your business model still viable? Maybe it is, but often as time goes on your business outgrows your original model. Getting a business of the ground can be a challenging task, and once you have successfully launched your business it is easy to allow your plans to become static, especially once you have a steady cash flow. While you are considering new ways to generate revenue, look in to revamping your business model to target unexplored opportunities.
Diversify Your Marketing
When cash flow is an issue, it may be hard to justify spending money on new marketing projects, but when the economy turns down it is imperative that your company’s name remains in front of both your current and potential customers. Remember, a slow economy has everyone looking for ways to cut their spending, so you need to remind your current customers of the value of your product and let potential customers know that their money will be well spent.
In an article titled “Do the Two-Step” written by John Jantsch we can see an innovative marketing technique that may be useful for small businesses trying to diversify their marketing. “…every business needs leads; they’re the lifeblood of your marketing machine.” Jantsch claims that his “two-step” marketing plan can produce new leads without any cold-calling. His plan is fairly simple. Create a free information product, such as a workshop or newsletter, and make it available to your target market. If you direct all of your marketing efforts at signing up customers for your information product, you will be left with a list of prospects who are interested in your company and your product. “…they’re effectively raising their hand and identifying themselves as being interested,” and “the hardest part of [the] sales job is done.”
Stay Positive
Just because the market is down, it does not mean that your business has to be down as well. In fact, Andy Birol of Birol Growth Consulting says that many niches often pull through a downturn completely unscathed. The secret is to find those niches and use them to your advantage. “Don’t assume demand has vaporized,” he says. “It hasn’t, but the way demand is getting met has changed.”
Source
http://www.entrepreneur.com/magazine/entrepreneur/2008/august/195590.html
http://www.entrepreneur.com/magazine/entrepreneur/2008/august/195720.html
Discipline as a Foundation
In a recent article from Entrepreneur Magazine, Carol Tice reports that “discipline developed in a downturn can lay the groundwork for long-term success.” Basically, a slowdown in business will often force you to reexamine your business tactics and develop new ways to generate revenue. If these tactics are retained when the market returns your business will often flourish.
Reexamine Your Business Model
Is your business model still viable? Maybe it is, but often as time goes on your business outgrows your original model. Getting a business of the ground can be a challenging task, and once you have successfully launched your business it is easy to allow your plans to become static, especially once you have a steady cash flow. While you are considering new ways to generate revenue, look in to revamping your business model to target unexplored opportunities.
Diversify Your Marketing
When cash flow is an issue, it may be hard to justify spending money on new marketing projects, but when the economy turns down it is imperative that your company’s name remains in front of both your current and potential customers. Remember, a slow economy has everyone looking for ways to cut their spending, so you need to remind your current customers of the value of your product and let potential customers know that their money will be well spent.
In an article titled “Do the Two-Step” written by John Jantsch we can see an innovative marketing technique that may be useful for small businesses trying to diversify their marketing. “…every business needs leads; they’re the lifeblood of your marketing machine.” Jantsch claims that his “two-step” marketing plan can produce new leads without any cold-calling. His plan is fairly simple. Create a free information product, such as a workshop or newsletter, and make it available to your target market. If you direct all of your marketing efforts at signing up customers for your information product, you will be left with a list of prospects who are interested in your company and your product. “…they’re effectively raising their hand and identifying themselves as being interested,” and “the hardest part of [the] sales job is done.”
Stay Positive
Just because the market is down, it does not mean that your business has to be down as well. In fact, Andy Birol of Birol Growth Consulting says that many niches often pull through a downturn completely unscathed. The secret is to find those niches and use them to your advantage. “Don’t assume demand has vaporized,” he says. “It hasn’t, but the way demand is getting met has changed.”
Source
http://www.entrepreneur.com/magazine/entrepreneur/2008/august/195590.html
http://www.entrepreneur.com/magazine/entrepreneur/2008/august/195720.html
Health Savings Accounts and You
Health plans including Health Savings Accounts (HSA’s) are among the hottest trends in the group health insurance today. There are many reasons for the explosion of popularity HSA’s have seen since they’re creation in 2003 which we will examine, but first let’s look at the numbers.
The Numbers
In November of 2004 the American Health Insurance Providers (AHIP) reported 438,000 individuals enrolled in HSA-type plans. In January of 2008 AHIP reported 6.1 million individuals covered under HSA-type health plans. That’s nearly a 1400% increase in just three years. In the last year HSA-type plans have made up 27% of the new purchases of health insurance products in the individual market and 31% of the new purchases in the small group market. In fact, small group coverage is the fastest growing market segment for HSA-type plans. This rapid growth shows no signs of diminishing either. The US Treasury Department projects 14 million individuals will be enrolled in HSA-type health plans by the year 2010. So what has caused all of this growth? Let’s take a look at what an HSA-type health plan is and its origins.
What is a HSA?
HSA-Type health plans were created by the Medicare bill signed into law by President Bush on December 8, 2003. They were modeled after Archer Medical Savings Accounts, which were discontinued as of December 31, 2003. An HSA is a special account much like your IRA that is used to pay for qualified medical expenses. By law, HSA’s are paired with High Deductible Health Plans (HDHP’s) that do not cover first dollar medical expenses except in the case of preventative care. This simply means these health plans have no co-pay’s and all benefits offered under the plan are subject to the plan’s deductible. To qualify as a HDHP a health plan must have an individual deductible of at least $1100 and a family deductible of at least $2200. Those values are adjusted each year for inflation. Usually the HDHP that carriers pair with HSA’s are 100% coverage after the deductible, so the maximum out of pocket for the plan is the deductible. Many first dollar coverage plans (i.e. co-pay plans) do not cover 100% of the costs after the deductible is met. Many cover anywhere from 80% all the way down to just 50% of total expenses. When this occurs the insured’s costs are subject to the plan’s maximum out of pocket, which can often be two or three times the deductible.
Am I eligible?
Eligibility for an HSA-type health plan has several requirements. The first is the individual must not be enrolled in Medicare. The individual must also not be able to be claimed as a dependent on someone else’s tax returns. There is no income limit for individuals enrolling in an HSA-type plan. Individuals are also not permitted to have any other health insurance except for specific disease or illness coverage, disability coverage, dental care, vision care, and qualifying long-term care insurance. If an individual meets these requirements then he or she is eligible for HSA-type health insurance.
How do I use my HSA?
As stated above, an HSA is like an IRA for your future medical expenses. The contributions that an individual makes to his or her HSA are tax deductible and the medical expenses paid for from an HSA are tax exempt. Any expense paid from an HSA must meet the criteria for “qualified medical expenses.” These medical expenses include most any expense an individual would incur in the treatment of an ailment, including over-the-counter medicine. For a complete list of qualified expenses, check http://www.irs.gov . If funds from an HSA are used for something other than qualified medical expenses they are then added to an individual’s taxable income and a 10% penalty fee must be paid to the Internal Revenue Service. There are also contribution limits for a HSA, much like an IRA. For 2008, the individual plan limit is $2900 which will increase to $3000 next year and the family plan limit is $5800 which will increase to $5950 next year. Individuals who are between the ages of 55 and 65 are allowed to make additional “catch-up” contributions that amount to $900 for this year and $1000 for 2009.
A few things too keep in mind
Once an individual sets up an HSA its contents are fully vested. There are no “use it or lose it” penalties and changing health plans will not forfeit the funds already in an HSA. The same investment options and limitations used for IRA’s apply to HSA’s. Also, rollovers from other HSA’s or older MSA’s are permitted much like an IRA and they are limited to one per year. Tax-free distributions for qualified medical expenses can be taken for the HSA owner as well as their spouse or dependant even if the spouse or dependant is not covered under the HSA owner’s health plan. And one last thing to keep in mind is that qualified medical expenses do not include other health insurance premiums except for COBRA plans, any health plan an individual uses while receiving unemployment payments, and individuals enrolled in Medicare (however Medicare supplement premiums are not covered).
Interested?
So, if you think an HSA-type plan is something you or your company may be interested in, give us a call and we will go over some options with you and let you know what types of plans have worked well for our other clients.
Resources:
http://www.hsabank.com
This site contains an investment calculator and a comparison tool where you can see if an HSA-type plan will save you money in the long-term.
Source:
http://www.ustreas.gov/offices/public-affairs/hsa/pdf/all-about-HSAs-072208.pdf
http://www.ustreas.gov/offices/public-affairs/hsa/pdf/fact-sheet-dramatic-growth.pdf
http://www.ahipresearch.org/pdfs/2008_HSA_Census.pdf
http://www.irs.gov/pub/irs-pdf/p969.pdf
The Numbers
In November of 2004 the American Health Insurance Providers (AHIP) reported 438,000 individuals enrolled in HSA-type plans. In January of 2008 AHIP reported 6.1 million individuals covered under HSA-type health plans. That’s nearly a 1400% increase in just three years. In the last year HSA-type plans have made up 27% of the new purchases of health insurance products in the individual market and 31% of the new purchases in the small group market. In fact, small group coverage is the fastest growing market segment for HSA-type plans. This rapid growth shows no signs of diminishing either. The US Treasury Department projects 14 million individuals will be enrolled in HSA-type health plans by the year 2010. So what has caused all of this growth? Let’s take a look at what an HSA-type health plan is and its origins.
What is a HSA?
HSA-Type health plans were created by the Medicare bill signed into law by President Bush on December 8, 2003. They were modeled after Archer Medical Savings Accounts, which were discontinued as of December 31, 2003. An HSA is a special account much like your IRA that is used to pay for qualified medical expenses. By law, HSA’s are paired with High Deductible Health Plans (HDHP’s) that do not cover first dollar medical expenses except in the case of preventative care. This simply means these health plans have no co-pay’s and all benefits offered under the plan are subject to the plan’s deductible. To qualify as a HDHP a health plan must have an individual deductible of at least $1100 and a family deductible of at least $2200. Those values are adjusted each year for inflation. Usually the HDHP that carriers pair with HSA’s are 100% coverage after the deductible, so the maximum out of pocket for the plan is the deductible. Many first dollar coverage plans (i.e. co-pay plans) do not cover 100% of the costs after the deductible is met. Many cover anywhere from 80% all the way down to just 50% of total expenses. When this occurs the insured’s costs are subject to the plan’s maximum out of pocket, which can often be two or three times the deductible.
Am I eligible?
Eligibility for an HSA-type health plan has several requirements. The first is the individual must not be enrolled in Medicare. The individual must also not be able to be claimed as a dependent on someone else’s tax returns. There is no income limit for individuals enrolling in an HSA-type plan. Individuals are also not permitted to have any other health insurance except for specific disease or illness coverage, disability coverage, dental care, vision care, and qualifying long-term care insurance. If an individual meets these requirements then he or she is eligible for HSA-type health insurance.
How do I use my HSA?
As stated above, an HSA is like an IRA for your future medical expenses. The contributions that an individual makes to his or her HSA are tax deductible and the medical expenses paid for from an HSA are tax exempt. Any expense paid from an HSA must meet the criteria for “qualified medical expenses.” These medical expenses include most any expense an individual would incur in the treatment of an ailment, including over-the-counter medicine. For a complete list of qualified expenses, check http://www.irs.gov . If funds from an HSA are used for something other than qualified medical expenses they are then added to an individual’s taxable income and a 10% penalty fee must be paid to the Internal Revenue Service. There are also contribution limits for a HSA, much like an IRA. For 2008, the individual plan limit is $2900 which will increase to $3000 next year and the family plan limit is $5800 which will increase to $5950 next year. Individuals who are between the ages of 55 and 65 are allowed to make additional “catch-up” contributions that amount to $900 for this year and $1000 for 2009.
A few things too keep in mind
Once an individual sets up an HSA its contents are fully vested. There are no “use it or lose it” penalties and changing health plans will not forfeit the funds already in an HSA. The same investment options and limitations used for IRA’s apply to HSA’s. Also, rollovers from other HSA’s or older MSA’s are permitted much like an IRA and they are limited to one per year. Tax-free distributions for qualified medical expenses can be taken for the HSA owner as well as their spouse or dependant even if the spouse or dependant is not covered under the HSA owner’s health plan. And one last thing to keep in mind is that qualified medical expenses do not include other health insurance premiums except for COBRA plans, any health plan an individual uses while receiving unemployment payments, and individuals enrolled in Medicare (however Medicare supplement premiums are not covered).
Interested?
So, if you think an HSA-type plan is something you or your company may be interested in, give us a call and we will go over some options with you and let you know what types of plans have worked well for our other clients.
Resources:
http://www.hsabank.com
This site contains an investment calculator and a comparison tool where you can see if an HSA-type plan will save you money in the long-term.
Source:
http://www.ustreas.gov/offices/public-affairs/hsa/pdf/all-about-HSAs-072208.pdf
http://www.ustreas.gov/offices/public-affairs/hsa/pdf/fact-sheet-dramatic-growth.pdf
http://www.ahipresearch.org/pdfs/2008_HSA_Census.pdf
http://www.irs.gov/pub/irs-pdf/p969.pdf
Healthcare and Politics: Where the Candidates Stand
Healthcare is becoming a larger issue with each passing year. As our population ages, more Americans are finding the need for proper health insurance and the costs of that insurance are rising each year as well. In the year 2000, a little over 12% of our population was over the age of 65 and the Administration on Aging (AOA) estimates that by 2030 that number will jump to nearly 20%. Although healthcare has been an issue in every major election for the last twenty years, this next election will likely have a significant impact on the healthcare system here in our country. The next four to eight years will almost certainly see considerable changes, and whoever we elect will be the one initiating those changes. Here at Pinnacle Benefits Group we believe in the merit of an informed electorate, so we have done our best to compile a brief comparison of where the nominated presidential candidates stand on the healthcare issue.
A Quick Comparison
Before we delve into the verbiage of each of the candidates’ stances on healthcare reform, let’s take a quick look at where they stand in layman’s terms.
Barack Obama
Senator Barack Obama (D-IL) has proposed a plan that removes the burden of health insurance from the individual and places it on the federal government. Obama believes that we must have a national healthcare plan with guaranteed eligibility for every American while expanding the scope of Medicaid, creating a national watchdog agency to keep tabs on the private healthcare industry, and forcing businesses to either offer competitive health coverage or contribute to the national healthcare program.
John McCain
Senator John McCain (R-AZ) has proposed a plan that places the responsibility of health insurance in the hands of the individual. McCain believes that we should give tax credits to individuals to allow them to purchase their own health plans while encouraging the expansion of Health Savings Account type health plans.
What They Say
“We now face an opportunity, and an obligation, to turn the page on failed politics of yesterday’s health care debates... My plan begins by covering every American. If you already have health insurance, the only thing that will change for you under this plan is the amount of money you will spend on premiums. That will be less. If you are one of the 45 million Americans who don’t have health insurance, you will have it after this plan becomes law. No one will be turned away because of a preexisting condition or illness.”
- Barack Obama in Iowa City, IA May 29th, 2007
“When families are informed about medical choices, they are more capable of making their own decisions, less likely to choose the most expensive and often unnecessary options, and more satisfied with their choices. We took an important step in this direction with the creation of Health Savings Account, tax-preferred accounts that are used to pay insurance premiums and other heath costs. These accounts put the family in charge of what they pay for. And, as president, I would seek to encourage and expand the benefits of these accounts to more American families…
Americans want a system built so that wherever you go and wherever you work, your health plan goes with you. And there is a very straightforward way to achieve this. Under current law, the federal government gives a tax benefit when employers provide health insurance coverage to American workers and their families… Many workers are perfectly content with this arrangement. Their employer-provided health plans would be largely untouched and unchanged.
But for every American who wanted it, another option would be available: Every year they would receive a tax credit directly, with the same cash value of the credits for employees in big companies, in a small business, or self-employed. You simply choose the insurance provider that suits you best. By mail or online, you would then inform the government of your selection. And the money to help pay for your health care would be sent straight to that insurance provider… It would be yours and your family’s health-care plan, and yours to keep.”
John McCain Tampa, Florida April 29th, 2008
What Does It Mean?
There is a fundamental difference in the healthcare plans proposed by Barack Obama and John McCain. Just one look at the basics of these two plans reveals a fundamental difference in the two candidates. This article is not meant to persuade you to one side of the fence or the other, just to provide you with the knowledge to choose for yourself. So what is the disparity between these plans? Let’s start by taking a look at arguably the most important difference.
Who is going to pay for healthcare insurance? Under Senator Obama’s plan for universal healthcare, the program will be funded by the federal government. He also suggests expanding the scope of Medicaid, which is also a federally funded healthcare program. That being said, there are only two ways the federal government can pay for any program: loans and taxes. His plan shifts the responsibility of health insurance from the individual and private business to the federal government, or in other words the tax payers.
Senator McCain proposes giving individuals even greater responsibility when it comes to their healthcare plan. He suggests encouraging the expansion of Health Savings Accounts as well as giving families a tax credit to be applied to paying for health insurance. The majority of the financial burden for Senator McCain’s plan would remain on the individual, but the federal government would take on some of the burden in the form of a tax credit. The addition of this credit to our current tax code without any other changes would obviously require and increase in taxes or a loan, so this plan is not without cost to the tax payers, however it should be significantly less than the cost of Senator Obama’s plan.
Once we get past the responsibility aspect of the issue, there is still some disparity in the plans offered by the two candidates. Senator Obama plans to continue to require businesses to offer benefits, or pay what amounts to a fee to the federal government to help offset the costs of the universal healthcare program (although small businesses under a certain size will be exempt). Senator McCain plans to shift the burden of healthcare insurance off of the employers as well. He believe that it is necessary to allow individuals to own their own healthcare plan, which allows them to take it from job to job without ever experiencing a lapse in coverage or changing benefits. This aspect of the issue obviously holds some importance for business owners across the country.
Where Can I Find Out More?
If you’d like to find out more about the contents of this article, check out the candidates’ websites, which can be found at the bottom of the article or take a look at any of the numerous candidate comparison websites available on the web.
Source
http://www.barackobama.com
http://www.johnmccain.com
http://www.aoa.gov/prof/statistics/online_stat_data/AgePop2050.aspx
A Quick Comparison
Before we delve into the verbiage of each of the candidates’ stances on healthcare reform, let’s take a quick look at where they stand in layman’s terms.
Barack Obama
Senator Barack Obama (D-IL) has proposed a plan that removes the burden of health insurance from the individual and places it on the federal government. Obama believes that we must have a national healthcare plan with guaranteed eligibility for every American while expanding the scope of Medicaid, creating a national watchdog agency to keep tabs on the private healthcare industry, and forcing businesses to either offer competitive health coverage or contribute to the national healthcare program.
John McCain
Senator John McCain (R-AZ) has proposed a plan that places the responsibility of health insurance in the hands of the individual. McCain believes that we should give tax credits to individuals to allow them to purchase their own health plans while encouraging the expansion of Health Savings Account type health plans.
What They Say
“We now face an opportunity, and an obligation, to turn the page on failed politics of yesterday’s health care debates... My plan begins by covering every American. If you already have health insurance, the only thing that will change for you under this plan is the amount of money you will spend on premiums. That will be less. If you are one of the 45 million Americans who don’t have health insurance, you will have it after this plan becomes law. No one will be turned away because of a preexisting condition or illness.”
- Barack Obama in Iowa City, IA May 29th, 2007
“When families are informed about medical choices, they are more capable of making their own decisions, less likely to choose the most expensive and often unnecessary options, and more satisfied with their choices. We took an important step in this direction with the creation of Health Savings Account, tax-preferred accounts that are used to pay insurance premiums and other heath costs. These accounts put the family in charge of what they pay for. And, as president, I would seek to encourage and expand the benefits of these accounts to more American families…
Americans want a system built so that wherever you go and wherever you work, your health plan goes with you. And there is a very straightforward way to achieve this. Under current law, the federal government gives a tax benefit when employers provide health insurance coverage to American workers and their families… Many workers are perfectly content with this arrangement. Their employer-provided health plans would be largely untouched and unchanged.
But for every American who wanted it, another option would be available: Every year they would receive a tax credit directly, with the same cash value of the credits for employees in big companies, in a small business, or self-employed. You simply choose the insurance provider that suits you best. By mail or online, you would then inform the government of your selection. And the money to help pay for your health care would be sent straight to that insurance provider… It would be yours and your family’s health-care plan, and yours to keep.”
John McCain Tampa, Florida April 29th, 2008
What Does It Mean?
There is a fundamental difference in the healthcare plans proposed by Barack Obama and John McCain. Just one look at the basics of these two plans reveals a fundamental difference in the two candidates. This article is not meant to persuade you to one side of the fence or the other, just to provide you with the knowledge to choose for yourself. So what is the disparity between these plans? Let’s start by taking a look at arguably the most important difference.
Who is going to pay for healthcare insurance? Under Senator Obama’s plan for universal healthcare, the program will be funded by the federal government. He also suggests expanding the scope of Medicaid, which is also a federally funded healthcare program. That being said, there are only two ways the federal government can pay for any program: loans and taxes. His plan shifts the responsibility of health insurance from the individual and private business to the federal government, or in other words the tax payers.
Senator McCain proposes giving individuals even greater responsibility when it comes to their healthcare plan. He suggests encouraging the expansion of Health Savings Accounts as well as giving families a tax credit to be applied to paying for health insurance. The majority of the financial burden for Senator McCain’s plan would remain on the individual, but the federal government would take on some of the burden in the form of a tax credit. The addition of this credit to our current tax code without any other changes would obviously require and increase in taxes or a loan, so this plan is not without cost to the tax payers, however it should be significantly less than the cost of Senator Obama’s plan.
Once we get past the responsibility aspect of the issue, there is still some disparity in the plans offered by the two candidates. Senator Obama plans to continue to require businesses to offer benefits, or pay what amounts to a fee to the federal government to help offset the costs of the universal healthcare program (although small businesses under a certain size will be exempt). Senator McCain plans to shift the burden of healthcare insurance off of the employers as well. He believe that it is necessary to allow individuals to own their own healthcare plan, which allows them to take it from job to job without ever experiencing a lapse in coverage or changing benefits. This aspect of the issue obviously holds some importance for business owners across the country.
Where Can I Find Out More?
If you’d like to find out more about the contents of this article, check out the candidates’ websites, which can be found at the bottom of the article or take a look at any of the numerous candidate comparison websites available on the web.
Source
http://www.barackobama.com
http://www.johnmccain.com
http://www.aoa.gov/prof/statistics/online_stat_data/AgePop2050.aspx
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