Tax season is upon us and it seems that every year Uncle Sam takes more and more of your hard-earned money. This year, throw a little extra cash in your retirement account and reduce your taxable income as much as possible. Regardless of what type of retirement account you have, this year you are allowed to contribute up to $16,500 of your salary tax-deferred. If you are 50 years old or older you can add an additional $5500 in catch-up contributions this year, raising your yearly total to $22,000. That’s up from $15,500 last year ($21,000 if your over 50), but limits will not increase in 2010 so make sure you take advantage of the boost during this tax year.
If you are self-employed you can shelter even more of your income. As long as you have no employees (other than your spouse) you can open a solo 401k and contribute up to $16,500 ($22,00 if you are over 50) plus your business can kick in up to 20% of your total net income until the total reaches $49,000. If you don’t have the cash to spare right now, you’ll have until you file your ’09 tax return to max out your contribution.
Source
http://www.kiplinger.com/printstory.php?pid=18927
Monday, February 1, 2010
Don't Be Fooled By Cut Rate Policies
These days we would all like to find a way to save a little money on our health insurance but before you sign-up for a cut rate insurance policy, consider these factors. If you focus on premium savings alone, you may actually end up paying more out of your pocket each years rather than less. When researching plan designs you must take into consideration maximum out-of-pocket limits and co-pay amounts. Saving a few hundred dollars a year makes sense when the benefits still line up, but unfortunately this is rarely the case.
Taking things into consideration like out-of-pocket limits, co-pay amounts, coverage limits, coverage exclusions, and limitations requires some homework but it can pay dividends in the long run. Many carriers create policies with the intention of bringing premiums down by cutting coverage where it’s not likely to be noticed. Many shoppers simply compare premiums, deductibles, co-pays and miss the underlying factors that can run your health tab up each year. Here are a few things to look for when you’re shopping plans.
Check the coverage limits. Is there a lifetime limit on the policy? Sometimes cut rate policies will have extremely low lifetime coverage limits like $50,000 or $100,000. This may seem like a lot of coverage until you realize that fairly common treatments, like a hospital visit due to a heart attack, can cost well over $50,000. With a cut rate policy you have just exhausted your entire lifetime benefit and will probably incur additional out-of-pocket expenses. A full coverage plan may cost you more in monthly premium but their lifetime coverage limits of $1 million dollars or more could save you thousands down the road. Another thing to look over closely is per-illness limits. Some policies will have a higher lifetime limit but may place limits on each individual claim. Again, these can cost you on a large claim.
Another area some carriers skimp on in plan design to lower the premium is prescription drug coverage. Most top plans cover generic, brand-name, and specialty drugs with co-pays but it is becoming increasingly common to see cut rate plans cover prescriptions with co-insurance rather than co-pays. If you take monthly prescriptions this could end up costing you big in the long run. Also keep in mind that some plans have a prescription drug deductible that has to be met before your co-pays come into play and they can be as high as $500 a year.
Before you sign on with any plan, cut rate or not, call your physician and make sure that he accepts the plan you are considering and ask the agent or call the carrier and find out whether or not your doctor is in network or out of network. If you physician is not in the plan’s network you could end up spending thousand of extra dollars each year. Most plans have much higher deductibles and out-of-pocket maximums for out of network visits and many cut rate plans have a very limited physician network.
While cut-rate plans may seem like a good deal, and some in-fact are good deals, make sure that you do all of your homework before you sign on with any insurance plan regardless of the premium price. Looking over these critical benefits can save you thousands in the long run.
Source
http://www.kiplinger.com/printstory.php?pid=16262
Taking things into consideration like out-of-pocket limits, co-pay amounts, coverage limits, coverage exclusions, and limitations requires some homework but it can pay dividends in the long run. Many carriers create policies with the intention of bringing premiums down by cutting coverage where it’s not likely to be noticed. Many shoppers simply compare premiums, deductibles, co-pays and miss the underlying factors that can run your health tab up each year. Here are a few things to look for when you’re shopping plans.
Check the coverage limits. Is there a lifetime limit on the policy? Sometimes cut rate policies will have extremely low lifetime coverage limits like $50,000 or $100,000. This may seem like a lot of coverage until you realize that fairly common treatments, like a hospital visit due to a heart attack, can cost well over $50,000. With a cut rate policy you have just exhausted your entire lifetime benefit and will probably incur additional out-of-pocket expenses. A full coverage plan may cost you more in monthly premium but their lifetime coverage limits of $1 million dollars or more could save you thousands down the road. Another thing to look over closely is per-illness limits. Some policies will have a higher lifetime limit but may place limits on each individual claim. Again, these can cost you on a large claim.
Another area some carriers skimp on in plan design to lower the premium is prescription drug coverage. Most top plans cover generic, brand-name, and specialty drugs with co-pays but it is becoming increasingly common to see cut rate plans cover prescriptions with co-insurance rather than co-pays. If you take monthly prescriptions this could end up costing you big in the long run. Also keep in mind that some plans have a prescription drug deductible that has to be met before your co-pays come into play and they can be as high as $500 a year.
Before you sign on with any plan, cut rate or not, call your physician and make sure that he accepts the plan you are considering and ask the agent or call the carrier and find out whether or not your doctor is in network or out of network. If you physician is not in the plan’s network you could end up spending thousand of extra dollars each year. Most plans have much higher deductibles and out-of-pocket maximums for out of network visits and many cut rate plans have a very limited physician network.
While cut-rate plans may seem like a good deal, and some in-fact are good deals, make sure that you do all of your homework before you sign on with any insurance plan regardless of the premium price. Looking over these critical benefits can save you thousands in the long run.
Source
http://www.kiplinger.com/printstory.php?pid=16262
2010 Small Business Outlook
No matter which way you look at it, 2009 was a dismal year in most business sectors. While the administration has made promises of “green shoots” and painted a fairly rosy picture of the economy in 2010, many economists are questioning their predictions. The last few months have brought an increase in the unemployment rate despite the good news earlier in the fall. So here is a look at what local small businesses should expect for 2010.
Many economists believe that with all of the pending legislation, most significantly healthcare reform and carbon cap and trade, business owners are trying to keep the budgets trim until they find out what is coming in the next year. Many business owners are afraid to begin hiring again because the economy is standing on shaky legs and coming legislation has the potential to knock it off its feet. It’s also critical to understand that any increased demand from slight economic growth can be handled by increasing the work week or switching part time employees to full time. It may not be necessary for small businesses to begin hiring again for quite some time. It is certainly possible that the unemployment rate could remain in the double digits all the way through 2010. While high unemployment is a telling indicator on the national economy, it may not be the biggest concern for local business owners.
The main concern for most small businesses in our area revolves around the tight credit situation many businesses and their customers find themselves in. Despite massive taxpayer funded packages aimed at increasing the amount of credit available from for homeowners and businesses most have found it nearly impossible to wrangle a loan in the last year. Hopefully that will change in the next few months but with the foreclosure rate increasing and a disproportionate amount of commercial loans coming due in the next few years you can bet that banks will be reluctant to dole out much cash. Safe prospect is a relative term for loan officers these days. What used to be a quick and easy transaction for a business owner in good standing with a good credit rating has turned into a laborious task for all involved. Unfortunately conditions in this sector are unlikely to improve until creditors are feeling confident in the direction of the economy. You can bet that many of them will still be waiting it out next year.
With credit tight and unemployment remaining high it may seem a dismal picture, but there are a few indicators that may give some hope. Both consumer and corporate confidence is on the rise and holiday spending saw a small bump this year. That may mean that Americans are beginning to loosen their purse strings, which is good news regardless of the other indicators. A good chunk of the American economy depends on the amount of faith American consumers and businesses have in the future.
Source
http://www.kiplinger.com/printstory.php?pid=18940
Many economists believe that with all of the pending legislation, most significantly healthcare reform and carbon cap and trade, business owners are trying to keep the budgets trim until they find out what is coming in the next year. Many business owners are afraid to begin hiring again because the economy is standing on shaky legs and coming legislation has the potential to knock it off its feet. It’s also critical to understand that any increased demand from slight economic growth can be handled by increasing the work week or switching part time employees to full time. It may not be necessary for small businesses to begin hiring again for quite some time. It is certainly possible that the unemployment rate could remain in the double digits all the way through 2010. While high unemployment is a telling indicator on the national economy, it may not be the biggest concern for local business owners.
The main concern for most small businesses in our area revolves around the tight credit situation many businesses and their customers find themselves in. Despite massive taxpayer funded packages aimed at increasing the amount of credit available from for homeowners and businesses most have found it nearly impossible to wrangle a loan in the last year. Hopefully that will change in the next few months but with the foreclosure rate increasing and a disproportionate amount of commercial loans coming due in the next few years you can bet that banks will be reluctant to dole out much cash. Safe prospect is a relative term for loan officers these days. What used to be a quick and easy transaction for a business owner in good standing with a good credit rating has turned into a laborious task for all involved. Unfortunately conditions in this sector are unlikely to improve until creditors are feeling confident in the direction of the economy. You can bet that many of them will still be waiting it out next year.
With credit tight and unemployment remaining high it may seem a dismal picture, but there are a few indicators that may give some hope. Both consumer and corporate confidence is on the rise and holiday spending saw a small bump this year. That may mean that Americans are beginning to loosen their purse strings, which is good news regardless of the other indicators. A good chunk of the American economy depends on the amount of faith American consumers and businesses have in the future.
Source
http://www.kiplinger.com/printstory.php?pid=18940
Healthcare Legislation Update
Following the stunning republican victory in the recent Massachusetts special election healthcare reform legislation has been dead in the water for days. Without their critical 60th vote in the Senate, democrats are having a hard time figuring out just how they will pass their bill. They have a few options available to them. First, the House can simply pass the bill that has already come out of the Senate. This method is the most direct, but based on the noise coming out of the democratic caucus in the House there are not enough votes to pass the Senate bill in its current form. The other option would be to break up the bill and pass the items individually using the fast-track reconciliation rules in the Senate which only require 51 votes to pass.
Despite the fact that Democrats have a clear path towards passage, they still have a long road in front of them. Many Democrat representatives and senators from swing districts see the writing on the wall. They know that pursuing the party leadership’s agenda could quite possibly cost them their seat in the 2010 election cycle. The party holds the key to surviving the election cycle for members in safer districts, but for Democrats that find themselves facing ever-more hostile crowds at home, their choice lies between the party and re-election. It is hard to imagine that very many of them will choose party loyalty over their seat. While it may seem a noble cause, if history is any indicator most politicians, regardless of ideology, will choose their seat over principle if forced to pick.
The most likely outcome will be a watered-down version of the current bill. Democrat leadership will be forced to but out some of the more audacious programs to get conservative democrats on board. If they try and pass the current bill through fast-track reconciliation they risk alienating nearly every American voter. Polls show overwhelmingly that American voters do not like it when politicians use loopholes to pass unpopular legislation. The next few weeks will hold the answer, but the longer they take to pass the bill, the less likely it will pass. The closer we get to November the less motivated anyone in congress will be to pass any sort of legislation.
Source
http://www.politico.com/pelosi-floats-two-track-health-reform.htm
Despite the fact that Democrats have a clear path towards passage, they still have a long road in front of them. Many Democrat representatives and senators from swing districts see the writing on the wall. They know that pursuing the party leadership’s agenda could quite possibly cost them their seat in the 2010 election cycle. The party holds the key to surviving the election cycle for members in safer districts, but for Democrats that find themselves facing ever-more hostile crowds at home, their choice lies between the party and re-election. It is hard to imagine that very many of them will choose party loyalty over their seat. While it may seem a noble cause, if history is any indicator most politicians, regardless of ideology, will choose their seat over principle if forced to pick.
The most likely outcome will be a watered-down version of the current bill. Democrat leadership will be forced to but out some of the more audacious programs to get conservative democrats on board. If they try and pass the current bill through fast-track reconciliation they risk alienating nearly every American voter. Polls show overwhelmingly that American voters do not like it when politicians use loopholes to pass unpopular legislation. The next few weeks will hold the answer, but the longer they take to pass the bill, the less likely it will pass. The closer we get to November the less motivated anyone in congress will be to pass any sort of legislation.
Source
http://www.politico.com/pelosi-floats-two-track-health-reform.htm
Thursday, October 29, 2009
Now Is a Good Time to Go Back to School
Counterintuitive though it may be a downturn in the economy generally signals an upturn in higher education. Otherwise qualified individuals who have lost their jobs over the past year have been looking to higher education as a way to occupy their time productively and give them an edge when searching for a new job. In fact, many two and four year institutions are expanding their class offerings to fit the schedule of part-time students looking to boost their resume. Higher education is, indeed, the answer for many Americans who have had their hours reduced or eliminated. Of course, renewed education can be an expensive endeavor, but the digital age has given us a few tools to make higher education more affordable.
Many universities are now taking advantage of online technology to allow users to access lectures and course materials online for free. For instance, many schools are taking advantage of a program called iTunesU. iTunesU allows universities to post audio and video clips of their lectures in the iTunes store where users can download them to their iPod for free. This is a good option for individuals who do not posses the time or the resources to actually attend classes at a university. This also allows you to tailor your learning to your specific career field. This method does not, however, give you any credit that would be visible on a resume; it is simply a way of bringing your education up-to-date in your field.
Some two-year colleges and universities are offering course materials online for free as well. Visiting departmental websites for universities such as UNC Chapel Hill will yield a surprising amount of course work for some classes. You can use study guides and lecture notes to educate yourself on new techniques and theories in your field. Unfortunately this also does not provide a tangible benefit for your resume. Do not be fooled though, increased knowledge in your field will be evident to employers during an interview.
Perhaps the most effective way to redefine your career skills during a downturn is to attend a two-year institution. There are over 1900 community colleges in the United States and many of them are making special efforts to accommodate laid-off employees and part-time employees from local industries. For instance, some community colleges are offering classes that begin as early as 6 a.m. and as late as midnight to accommodate working individuals or individuals with families.
For more information on programs available here in our area you can check out Cape Fear Community College (http://cfcc.edu) or the University of North Carolina Wilmington (http://uncw.edu).
Source
http://money.cnn.com/2009/10/29/pf/online_classes.moneymag/?postversion=2009102904
http://www.nytimes.com/2009/10/28/education/28community.html?_r=1&pagewanted=p
Many universities are now taking advantage of online technology to allow users to access lectures and course materials online for free. For instance, many schools are taking advantage of a program called iTunesU. iTunesU allows universities to post audio and video clips of their lectures in the iTunes store where users can download them to their iPod for free. This is a good option for individuals who do not posses the time or the resources to actually attend classes at a university. This also allows you to tailor your learning to your specific career field. This method does not, however, give you any credit that would be visible on a resume; it is simply a way of bringing your education up-to-date in your field.
Some two-year colleges and universities are offering course materials online for free as well. Visiting departmental websites for universities such as UNC Chapel Hill will yield a surprising amount of course work for some classes. You can use study guides and lecture notes to educate yourself on new techniques and theories in your field. Unfortunately this also does not provide a tangible benefit for your resume. Do not be fooled though, increased knowledge in your field will be evident to employers during an interview.
Perhaps the most effective way to redefine your career skills during a downturn is to attend a two-year institution. There are over 1900 community colleges in the United States and many of them are making special efforts to accommodate laid-off employees and part-time employees from local industries. For instance, some community colleges are offering classes that begin as early as 6 a.m. and as late as midnight to accommodate working individuals or individuals with families.
For more information on programs available here in our area you can check out Cape Fear Community College (http://cfcc.edu) or the University of North Carolina Wilmington (http://uncw.edu).
Source
http://money.cnn.com/2009/10/29/pf/online_classes.moneymag/?postversion=2009102904
http://www.nytimes.com/2009/10/28/education/28community.html?_r=1&pagewanted=p
An Individual Mandate for Healthcare Coverage
Analysts, industry experts, insurance companies, congressional Democrats, and the Obama administration all feel that the only way to make healthcare reform a viable option is to include an individual coverage mandate. This means that Americans who do not have or are not offered health insurance through their employer will be forced to purchase individual coverage or face a penalty levied by the IRS. Unfortunately this is true, the type of healthcare reform that is currently making its way through our legislature would depend on convincing uninsured individuals that they needed health insurance despite the cost. While the government subsidies will easily convince the segment of the uninsured that currently cannot afford health insurance, it is the millions of Americans who already qualify for government subsidized healthcare (Medicaid) and choose not to participate or those that can afford insurance but choose not to purchase it that will take some convincing. The only way to convince these latter individuals is to impose a financial penalty on them for choosing not to participate.
The insurance industry has also clamored for the inclusion of an individual mandate because, they argue, if healthcare reform requires carriers to cover individuals despite pre-existing conditions then it will encourage individuals to go without coverage until they need it and then buy it. This practice goes against the very basis of health insurance which requires premiums from healthy individuals to help offset the costs of unhealthy individuals. The only way to lower health insurance costs while in-turn guaranteeing coverage for every American is to mix risk in the overall insurance pool. Unfortunately this means that healthy Americans who choose to go without health insurance will be forced to participate in the pool for the benefit of the unhealthy. While congressional Democrats and the Obama administration have gone to great lengths to convince voters that this mandate and accompanying penalty is not a tax, it is, by the very definition of the word, a tax.
Despite shifting phrases from the administration, you can bet that any healthcare reform bill that passes this year will include an individual mandate. It will not affect those of us who already have coverage, but it will affect anyone who chooses to go without coverage for any period of time. The only interests that stand to gain from an individual mandate are politicians and insurance companies. The more Americans that politicians can force onto healthcare, the better their statistics will be come next election cycle. And an individual mandate represents potential windfall profits for insurance companies. For those of us that it actually affects, the taxpayers, its just one more burden.
Source
http://www.msnbc.msn.com/id/31782553/ns/health-health_care/
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/21/AR2009072103410.html
http://www.aishealth.com/Bnow/hbd102209.html
The insurance industry has also clamored for the inclusion of an individual mandate because, they argue, if healthcare reform requires carriers to cover individuals despite pre-existing conditions then it will encourage individuals to go without coverage until they need it and then buy it. This practice goes against the very basis of health insurance which requires premiums from healthy individuals to help offset the costs of unhealthy individuals. The only way to lower health insurance costs while in-turn guaranteeing coverage for every American is to mix risk in the overall insurance pool. Unfortunately this means that healthy Americans who choose to go without health insurance will be forced to participate in the pool for the benefit of the unhealthy. While congressional Democrats and the Obama administration have gone to great lengths to convince voters that this mandate and accompanying penalty is not a tax, it is, by the very definition of the word, a tax.
Despite shifting phrases from the administration, you can bet that any healthcare reform bill that passes this year will include an individual mandate. It will not affect those of us who already have coverage, but it will affect anyone who chooses to go without coverage for any period of time. The only interests that stand to gain from an individual mandate are politicians and insurance companies. The more Americans that politicians can force onto healthcare, the better their statistics will be come next election cycle. And an individual mandate represents potential windfall profits for insurance companies. For those of us that it actually affects, the taxpayers, its just one more burden.
Source
http://www.msnbc.msn.com/id/31782553/ns/health-health_care/
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/21/AR2009072103410.html
http://www.aishealth.com/Bnow/hbd102209.html
Friday, October 23, 2009
Issues at Stake for Small Businesses
Over the last few months we have heard a lot of rumors about the affect that healthcare reform might have on small businesses. Some claim that the proposed legislation will have no effect on small groups, while others claim is will make it easier for small groups to afford coverage, while yet others claim that it will force small businesses to provide coverage that they cannot afford. The truth probably lies somewhere in between, but until the actual text of the bill is laid out we will have no way of knowing who is right. Unfortunately all that the Senate committees are releasing are gilded summaries of what is supposedly in the draft legislation rather than the actual wording.
Many experts contend that people may lose their employer sponsored coverage if a play-or-pay mandate system was enacted. The argument being that if given the choice between sponsoring expensive healthcare and paying a fine, many companies will just choose the fine. The truth of the matter is that while companies that do not currently offer benefits may choose to pay the fine rather than take on coverage, most groups that currently have coverage will see no reason to get rid of it just to pay an fine, whether it is less than the cost of a policy or not.
The real area that may come in to play for small business owners is the proposed tax on what lawmakers are calling “cadillac” health care plans. Basically, this means that if your plan has a richer schedule of benefits than the proposed national standard, you may pay a penalty tax. Until the actually wording of the bill is released we will not know what constitutes a cadillac plan and depending on the wording of the bill it is impossible to know how many small businesses will be affected by this penalty. Senate Democrats have marked up the section concerning the taxing of cadillac plans to allow employees in high risk fields such as mining to be exempt after heavy pressure from labor unions and lobbyist. Small business owner really do not have a powerful lobby to support them in Congress, so it is unlikely that they will be making exceptions for any small businesses.
Hopefully in the next few weeks the final wording of the bill will be presented, but by then it may be too late for any change.
Source
http://www.bloomberg.com/apps/news?pid=20670001&sid=ajWDP_UCYBoo
http://boss.blogs.nytimes.com/2009/09/30/will-health-care-reform-encourage-small-business-to-drop-health-coverage?htm
Many experts contend that people may lose their employer sponsored coverage if a play-or-pay mandate system was enacted. The argument being that if given the choice between sponsoring expensive healthcare and paying a fine, many companies will just choose the fine. The truth of the matter is that while companies that do not currently offer benefits may choose to pay the fine rather than take on coverage, most groups that currently have coverage will see no reason to get rid of it just to pay an fine, whether it is less than the cost of a policy or not.
The real area that may come in to play for small business owners is the proposed tax on what lawmakers are calling “cadillac” health care plans. Basically, this means that if your plan has a richer schedule of benefits than the proposed national standard, you may pay a penalty tax. Until the actually wording of the bill is released we will not know what constitutes a cadillac plan and depending on the wording of the bill it is impossible to know how many small businesses will be affected by this penalty. Senate Democrats have marked up the section concerning the taxing of cadillac plans to allow employees in high risk fields such as mining to be exempt after heavy pressure from labor unions and lobbyist. Small business owner really do not have a powerful lobby to support them in Congress, so it is unlikely that they will be making exceptions for any small businesses.
Hopefully in the next few weeks the final wording of the bill will be presented, but by then it may be too late for any change.
Source
http://www.bloomberg.com/apps/news?pid=20670001&sid=ajWDP_UCYBoo
http://boss.blogs.nytimes.com/2009/09/30/will-health-care-reform-encourage-small-business-to-drop-health-coverage?htm
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