If enacted, Obamacare would extend coverage to 32 million people who currently do not have insurance.  The healthcare industry already accounts for about 18% of our nations economy.  Toppling this law would be the biggest overturn that the Supreme Court has tackled since the 1930s when it voided parts ofFranklin D. Roosevelt’s New Deal.

The court will most likely make its decision in late June.

Anyone who buys thier own health insurance, or anyone who sells it, knows that the system is terribly broken.  Insurance companies are turning down coverage for thousands of people who would normally be considered healthy.  If they don’t turn them down completely, then coverage is often limited by not covering certain conditions.  For example, I recently helped a gentleman who is taking cholesterol medication obtain some health insurance.  He was accepted for coverage but with the condition that medication for cholesterol would not be covered.  He decided to accept the coverage that was offered and just pay for his cholesterol medication himself.  The plan is going to cost him over $500 per month, just for him.  For his age, this was actually a good rate.  He is in the red zone:  too young for Medicare, but old enough that insurance companies consider him an expensive risk.

Now lets say that this gentleman could not afford an extra $500 per month for health insurance and did not want to buy it.  Obamacare would force him to buy it, or something like it.  And if he did not buy it, he would be penalized with a tax/fee/penalty.  Can anyone explain to me how that fixes the problem of the high cost of healthcare?  Yes, it would put more money into the insurance companies pockets.  And it would put more people into doctors offices because now they can see a doctor for a mere copay.  But it doesn’t seem to address the real problem of how expensive healthcare and health insurance really is.  Forcing more people to buy it would also mean forcing insurance companies to cover everyone, which may actually make insurance premiums go higher.  Unless the government is going to subsidize the cost of it with more taxpayer money.  I think we all know that is not a good solution.  But what is the right answer?  If the government can make us buy health insurance, then why couldn’t they make us also brush our teeth and go to the gym every day.  Sure, those are good things to do.  But is that the government’s role?  I welcome your comments and suggestions.

Many retirees are getting ready to pay more for your Medicare.

Medicare recently announced it’s 2011 rates for Part B coverage of doctor’s visits and outpatient treatments and for Part D prescription drug coverage.  Higher income individuals have always paid more for Part B premiums, but for the first time, they will also pay a surcharge for Part D drug coverage.

Also, new Medicare beneficiaries in 2011 will pay higher Part B premiums than current beneficiaries, who are protected from premium increases in year like this in which Social Security cost-of-living adjustments aren’t large enough.

Here’s what you’ll pay in monthly premiums in 2011, depending on your income level and year of enrollment:

Modified adjusted gross income less than $85k for individuals, and less than $170k for married couples:

Modified adjusted gross income from $85k to $107K for individuals, and married couples filing jointly with incomes from $170k to $214k:

Individuals with income from $107k to $160k and married couples filing jointly with incomes from $214k to $320k:

Individuals with income from $160k to $214k and married couples filing jointly with income from $320k to $428k:

Individuals with income of more than $214K and married couples filing jointly with income of more than $428K:

With Medicare, every beneficiary gets the same coverage and benefits no matter who you are.  I would love to hear if you think this is a good way to help pay for Medicare.  Or, do you think this is penalizing those who have worked and saved to put themselves in a position to have higher incomes during retirement.  What is your opinion?

People paying taxes into the program will have premiums/taxes as high as $240 per month in the first year.  And you would have to pay into the program for at least 5 years to get any benefits from it.  The benefits would be at least $50/day, which isn’t going to go very far when it comes to long-term care.  So that’s the first problem. 

According to some recent statistics, many North Carolina baby boomers in the 55 – 64 age bracket are not in good shape, both physically and financially. 

Overall Health

Researchers say that NC residents in this age bracket exercise less than younger groups, with more than a third of them being obese.  85% of this group admit to getting no exercise at all.  One in six has been told by a doctor that diabetes has affected their kidneys.  There’s a great website about healthy living that I like, written by my good friend Spencer Iacono at www.SuperiorCleansing.com . You should check it out sometime.

“My sense is that we are in denial about aging,” said Joan Pellettier, director os the Triangle J Area Agency on Aging, a group that coordinates programs for older people in central North Carolina counties.  Pelletier also urges boomers to start thinking about long-term care insurance, coverage that’s been made more accessible through recent state and federal legislation.  Pelletier wants to get the word out about the things people have to learn before they get to retirement.  “I am thinking of moving our focus from people who are 60 to people that are 50 and older” she said.

Financial Health

The financial health of baby boomers in general is not so good, and that’s not just in North Carolina.  About three-quarters of baby boomers nationally say their retirement plans have been negatively affected by the current financial downturn, which is no surprise.

Mauricio Soto, a researcher at the Urban Institute, has estimated that nationally retirement accounts initially lost $2.8 trillion, or about a third of their value, in the stock market, although some of that ground has been recovered (but not all).

There is a great majority of baby boomers in the country who have not saved enough towards retirement.  These people need assistance, but many are reluctant to ask for it.  If you feel like you might be in trouble financially, then there’s a good chance you are.  Now is the time to get your finances in order and start catching up.  Working with a Certified Financial Planner professional will ensure that you develop a realistic plan to get you on track.  You want to work with an advisor who is not afraid to give you bad news.  You need to be realistic about your future.  If you don’t have enough money saved, and you’re spending too much, the last thing you need is an advisor who tells you that you’re doing a great job.  That’s a recipe that will end up with you living in your kids basement one day.

Call us today to set up an appointment for a financial health check-up.  We will tell you if you are on track for success, or disaster.  Call us at 1-800-983-4222 today.

For more information on state health statistics visit http://tinyurl/34ncww8

Health insurance companies make you fill out very detailed applications that ask you for details about your complete medical history.  And the questions are getting tougher these days.  Most companies used to ask if you had been diagnosed or treated for conditions in the last 5 or 10 years.  Now, many are asking if you have EVER had those conditions.  If you have had something (depending on the condition), there’s a good chance you’re going to be declined for coverage.  This is making it harder and harder for many people to obtain health insurance.

I recently had a client who applied for coverage for the whole family:  mom, dad & two kids ages 9 and 6.  The mother had a mild complication during her son’s pregnancy 10 years ago, but no other problems since then, and was on no medications.  The 9 year old son had a short period of time about a year ago where he was feeling dizzy and they didn’t know why.  They did an MRI and it was normal.  He was told by the doctor that it was some kind of vertigo.  He had no other health conditions before or since then, and was on no medications.  The dad and daughter were approved for coverage, but the son and mom were declined.  Both the family and I were shocked.

Many states now have Insurance Risk Pools that provide somewhat affordable, individual health insurance coverage.  In North Carolina it’s called Inclusive Health, also know as the North Carolina Health Insurance Risk Pool (NCHIRP), created in 2007.  If you are someone who doesn’t have access to a employer-based plan, or you’ve been declined for coverage, or you’ve been quoted a rate that is too expensive due to an existing medical condition, then you can apply to your state’s health insurance risk pool.  Many of these plans also offer coverage to people who have lost their jobs due to the effects of international trade and are eligible for the health coverage tax credit under the Trade Adjustment Assistance (TAA) program.

Keep in mind that not all states have a health insurance risk pool such as this.  You can call your state’s insurance commisson to find out.  If you would like to learn more about North Carolina’s program, you can find it at www.inclusivehealth.org or just give us a call today at 866-983-4222, and we can help you apply.

Health insurance is a very important part of your personal financial plan.  If you have a story about someone who has been declined for health insurance, I’d like to hear about it in the comments section below.  Maybe if enough people hear about this problem we can get it fixed.

Small businesses that provide health insurance to their employees now qualify for a
special tax credit (up to 35%), due to recent health care reform legislation.  The
credit, provided under the Patient Protection and Affordable Care Act, is designed to
encourage small employers to offer health insurance for the first time, or maintain
coverage they already have.

Who is eligible?

Groups with fewer than 25 full-time equivalent employees are eligible.  The employer
must pay for at least half of the employees health insurance premiums (can include
dental and vision coverage) and must pay out less than $50,000 in average annual
wages to employees.  The total number of employees does not include the business
owner or family members.

Can an employer with 25 or more employees qualify for the credit of some of
the employees are part-time?

Yes.  Because the limitation on the number of employees is based on Full-Time
Employees, and employer with 25 or more employees could qualify for the credit if
some of its employees work part-time.  For example, an employer with 46 half-time
employees (meaning they are paid wages for 1,040 hours) has the equivalent of 23
Full-Time Employees and therefore may qualify for the credit.

How does the employer claim the credit?

The credit is claimed on the employer’s annual income tax return.

Where can an employer find out more?

Beginning in early June 2010, anyone can call Turning Point Benefits Group at 704-
887-4984 to find out more information and see if they qualify for this credit.  You can
also visit www.irs.gov to get more details.

How long will this tax credit be available to small businesses?

The tax credit is effective for the 2010 tax year, and is currently scheduled to run
through 2014.  In 2014 the tax credit increases from 35% to 50% for qualifying
businesses.

Can other organizations qualify for the credit?

Tax exempt organizations can also qualify for the tax credit.  Those organizations can
earn up to a 25% credit for the same guidelines as the small business.  That rate
increases to 35% on Jan. 1, 2014.

How would the tax credit look in real dollar amounts?

The Internal Revenue Service provided the following fictional business as an example:

Main Street Mechanic, an automobile repair shop with 10 employees, can get
$24,500 in tax credits for 2010.

Here’s how:

Tax Credit for 2014:  $35,000

Will

A will is probably the most important document that you’ll ever sign.  Among other things, it determines who gets your possessions when you die, things like your cars, house and personal property.  If you don’t have one, the probate court will decide who gets your things, and also who will take care of your children.  There may be someone in your family who you would prefer to take care of your children, and there may be someone else who you really DON’T want to have your kids.  These are decisions not to be left to a judge.  A will does NOT determine who gets your IRA’s, annuities, or life insurance death benefits.  Those types of accounts have beneficiaries named on them, and are NOT directed by a will.  In fact, you need to make sure your beneficiary designations are correct.  Even if your will is more current than your beneficiary designations, the beneficiaries named on IRAs and life insurance is who will get that money.

Living Will

A living will is a document in which you state your wishes regarding medical treatment, especially treatment that sustains or prolongs life by extraordinary means (life support).  This document is used when the signer becomes mentally incompetent or unable to communicate (such as a coma).  If you don’t have this document, the doctors are going to keep you alive as long as possible.  It will then turn into a court battle if your family feels that it is better to take you off of life support.  If you are married, your spouse may feel differently than your parents do about it, so then you have a family feud/court battle going (remember the Terri Shaivo case?).  Having this document written up in advance will save everyone a lot of guessing and heartache.

Power of Attorney (POA)

This is a document that is also very important to have.  It gives someone else permission to make financial and legal transactions in your behalf.  So obviously, your POA needs to be someone that you trust very much.  It can either be a Durable POA, which means that person can sign things for you at any time, or a Springing POA, which means that it only comes into effect if you become incapacitated.

These are a few of the most important legal documents that are important for everyone to have.  For these simple documents you can use a website like www.legalzoom.com or even an off-the-shelf software like Quicken Willmaker Plus 2010  for under $50.  However you get them done, the most important thing is just GETTING THEM DONE!

SEC Chairwoman Mary Schapiro

Lawmakers and regulators are jumping on the fiduciary-duty bandwagon after the Securities and Exchange Commission’s fraud charges against Goldman Sachs and subsequent hearings. Several senators have or plan to introduce amendments to the financial overhaul legislation, and SEC Chairman Mary Schapiro has backed the standard. “I believe that broker-dealers and investment advisers providing the same services, especially to retail investors, should meet that same high fiduciary standard,” Schapiro said.

Many of the firms who bought investments from Goldman Sachs and other broker-dealers could have avoided huge losses had their been a fiduciary standard in place at the time.  A fiduciary is required to act in the best interest of their clients.  They also have to fully disclose sources of compensation and any possible conflicts of interest.  This way the client knows more fully what they are getting into, and why the advice or recommendation is being made.

This is the standard that investment advisors and Certified Financial Planner certificants are held to, and it protects the client. 

I don’t agree with everything that the SEC does.  They totally ignored the Madoff scandall even though they were given many clear warnings, tips and documentation about what was going on.  But I do have to agree with them on this point, that anyone giving investment advice should have to act as a fiduciary to their clients.  There are too many ways that financial companies and brokers can take advantage of consumers, and many of them do.  Sure, if an investment is a registered mutual fund, the fees and expenses are all disclosed in the perspectus.  But most people won’t read them, or if they do read them it’s too confusing to understand.

If you are working with a Certified Financial Planner Certificant, you know you have someone who is held to a higher standard.  Now that doesn’t mean that all CFP’s are honest, you should always check out someone’s backround and complaint history.  But if a CFP doesn’t act in the best interest of a client, he won’t be a CFP for long.  The CFP Board will strip someone of the designation if they are found to be acting dishonestly.  If you’re working with an independant CFP who doesn’t have sales goals that they have to meet, then you know they don’t have someone looking over their shoulder to make sure they’re selling enough of this or that.

This all comes down to doing the right thing for the client.  When you’re putting your faith and trust in an “expert”, you shouldn’t have to worry about someone lining their pockets for the “expert advice” they are giving you.  It’s definitely getting better out there, but we have a long way to go.

The biggest fear that we all face with regard to long-term care insurance is, if you end up not needing it (which you hope that you won’t) then all your insurance premiums have gone down the drain.  So when you buy long-term care insurance, you’re betting that something bad is going to happen to you, but at the same time hoping that it doesn’t.  But that’s the reality of buying any kind of insurance.  It’s protection against a risk that could potentially damage your financial well-being.

A New Way To Protect Yourself

A few years ago, insurance companies started developing a new type of protection against the risks of long-term care that eliminate the biggest fear people have about buying insurance for it.  That is, the fear that if you end up not needing long-term care, you’ve wasted your money.  This new type of protection is called “Asset-based” long-term care benefits.  The concept is very simple, and yet very different from paying traditional long-term care insurance premiums.

Asset Based Long-Term Care Benefits

This type of protection combines a deferred fixed annuity with build in long-term care benefits.  A deferred fixed rate annuity is a financial planning tool that can help you save more money for retirement.  It earns a fixed rate of interest and grows tax-deferred until you start taking income payments from it.  And, in addition to helping you save more money, it can provide you with up to three times the annuity value in long-term care benefits if you need them.  This will help preserve your other hard-earned assets while it pays for up to 6 years of long-term care.  It will also protect your spouse and children from the emotional, physical, and financial toll of caregiving.  And with it, you have a choice of care options which include in-home care, assisted living, adult day care, homemaker services, personal care, respite care, hospice care, and nursing home care.

What If You Don’t Need The Care?

If you end up not needing any of this type of care (which is a very good thing), your money is not gone or wasted.  In fact, this is the best part of this type of long-term care protection.  If you don’t need the care, you’ve still:

1.  Earned a guaranteed rate of interest on your savings

2.  Taken advantage of tax-deferred growth (this will be more important as tax rates go up)

3.  Had access to your principal through partial withdrawals or lifetime income options

4.  Had a death benefit for your beneficiaries that is equal to the annuity value at the time of death

5.  Avoided probate on these funds

The chances of a 65 year old person needing some type of long-term care during retirement is very high, above 50%.  And the cost of this care is very costly.  The average nursing home in our country today costs about $5000 – $6000 per month, depending on where you live.  This can eat up a retirement nest egg in no time at all.  But still, many people hesitate to pay the premiums each month for traditional long-term care insurance.  You can see that the benefits of asset-based long-term care are many.  You have the protection if you need it, and if you don’t need it, you get all your money back.  I think everyone should consider puting part of their “safe money” into one of these types of vehicles.

If you would like more information on this, and other types of asset-based long-term care protection, please contact us today.

Many people don’t realize that you can, and should do the same thing for healthcare related services and low cost health insurance.   The reason most people don’t think of this is that for most services you receive, you just pay a co-pay and that’s it.   Once you pay your co-pay, you don’t really care what it costs, and neither does the doctor.   In fact, the doctor has more than one incentive to perform as many tests and scans as possible.  The more he does, the less likely he is to get sued by you, and the more money he makes.  However, depending on where you receive the service and how it’s billed, may be covered by a co-pay, or it may go towards your deductible (which means you’ll have to pay for it out-of-pocket).

Let me give you a recent PERSONAL example of this.

My wife was told by her doctor that she needed to go have a CT scan done.   The doctor scheduled the appointment for her at an imaging center owned by the same hospital network that he worked for.   Now this was after we had told him that we wanted to have to test covered by a co-pay if possible, and not have it go towards our deductible.   We also told him that she had previously had some imaging done at a certain center where we knew it was covered by a co-pay.   We thought that was the place he had scheduled the appointment. When we arrived at the imaging center for her appointment, she was not on the schedule. They made some phone calls and found out that she was scheduled at another nearby imaging center, the one owned by the same hospital network that my wife’s doctor was in.   So we went over there and spoke to them, and found out that if she had the scan done there, it would go towards her deductible and would cost us about $2,000 out-of-pocket.   But if she had the scan done at the other imaging center that was not part of that hospital network, all it would cost us is a $15 co-pay.  What a difference!

This is why I am writing a blog post about saving money on healthcare on this personal financial planning site.   Health care costs have become a huge part of a person’s finances, and it’s very important for everyone to understand how to save money on these services. The more you can save on healthcare and on low cost health insurance, the more you’ll have to pay off debt or invest for you future retirement.  Healthcare professionals and hospitals are running businesses, and are trying to make them as profitable as possible.  This recession is hurting the healthcare industry just like everyone else.   Because of this, you really should not assume that your doctor is going to always act in your financial best interest. You need to take responsibility to do your homework and shop around to make sure you’re getting the best possible price for the service you will receive.

The fact that the same service could cost your either $2,000 or $15 depending on where you get it is ridiculous and should tell you that there is a lot of work to be done to straighten out our healthcare system.  That would take a whole other web site to cover that topic.  Maybe doctors need to start being worried about getting sued for charging a patient $2,000 for a scan when it could have been done for a $15 co-pay.