Insured New Yorkers Set to Pay $4.8 Billion in Taxes
February 20, 2013
A recent report published in The Post-Standard estimates that state health insurance taxes will reach $4.8 billion for New Yorkers with private health insurance this year. The number is expected to increase to $6.5 billion next year, as “Obamacare” takes full effect.
According to the report, the $4.8 million tab is the result of four separate taxes:
- Covered Lives Assessment: $1.08 million – This is a flat-rate surcharge on those New Yorkers who are privately insured.
- Surcharge on Health Services: $3.02 million – The surcharge on health services is essentially a sales tax collected from health insurance plans. Proceeds from this tax are used to reimburse hospitals for losses incurred in providing care for those who cannot or do not pay.
- Assessment on Insurers: $331 million – The assessment on insurers is collected to provide funds for the state Department of Financial Services.
- Premium Tax: $406 million – This tax goes to New York’s general treasury fund, and is levied on the premiums of commercial health insurance policies.
In a statement released with the study, president and CEO of the Business Council Heather Briccetti said, “New taxes and fees in the federal health care law will add a financial burden on New York families and small businesses at a time when they can least afford it.”
One-of-a-Kind Families Need One-of-a-Kind Plans
September 3, 2012
According to statistics the average U.S. family size is 3.2 members. The median age of a man upon his first marriage is 28.1, 47% of women aged 75 or older live alone. Also according to statistics, approximately 60% of couples own their home, 70.7% of mothers with children under the age of 18 go back to work, 6% of men are likely to be unemployed, and approximately 485,000 grandparents aged 65 or more have the primary responsibility for their grandchildren.
Do these statistics accurately portray your family?
“Average,” “median,” and “approximately” may be fine for statistics, but it’s certainly not what you want from your estate plan. Your estate plan should represent your family; your hopes for the future as well as your current needs. This may include a nomination of guardian and education trust for young children, it may include a special needs trust for a disabled child or parent, or it may include incentive trusts for unambitious heirs. Alternatively, you may find that you need none of these, and that a will and simple ancillary documents will serve you just fine.
Whatever your family’s needs may be, you want them to be met by a keen, compassionate, and knowledgeable attorney; someone who will meet you face to face and listen to your concerns with an open mind, not a machine which will spit out a standard document based on numbers and averages. Estate planning may be a business, but it’s also an art, and as such it takes a real person to help create the plan that will provide for you and your family now and in the years to come. The members of our firm have our own families, we understand that you want the best for your family, and we want to help.
Finding A Trustworthy In-Home Caregiver May Not Be As Easy As It Sounds
August 10, 2012
As American seniors age and find that they need more and more help with daily tasks, many of our parents and grandparents are choosing NOT to go into nursing or retirement homes, opting instead to age at home with the help of in-home care. Of course, deciding that you want to age at home is one thing, but finding the right in-home aide—and figuring out how to pay for that aide—is easier said than done.
Hiring a home health-aide means bringing a stranger into your home during a vulnerable time; and according to this recent article published on the Northwestern University website, not all aides or agencies are created equal. “A troubling new national study finds many agencies recruit random strangers off Craigslist and place them in the homes of vulnerable elderly people with dementia, don’t do national criminal background checks or drug testing, lie about testing the qualifications of caregivers and don’t require any experience or provide real training.”
While it’s true that finding a trustworthy and experienced aide may be difficult, the good news is that there are plenty of excellent caregivers out there, and simply knowing the right questions to ask can make your search a whole lot easier. The article mentioned above lists 10 questions to ask an agency before hiring a caregiver, including questions such as:
* How do you recruit caregivers, and what are your hiring requirements?
* What types of screenings are performed on caregivers before you hire them? Criminal background check—federal or state? Drug screening? Other?
* Are the caregivers insured and bonded through your agency?
* If there is dissatisfaction with a particular caregiver, will a substitute be provided?
* Does the agency provide a supervisor to evaluate the quality of home care on a regular basis? How frequently?
Hiring a caregiver or aide to come into your home can be fraught with stress and second-guessing, but knowing that you don’t have to go through it alone—that there are trustworthy friends, agencies and advisors who can help you—can not only make the process a whole lot easier, but can also make you and your entire family feel much more comfortable with the person you eventually choose to hire.
Tax Law Allows Married Couples to Reduce Their Estate Taxes
August 8, 2012
Married couples take note: Congress passed a law in 2010 that can significantly reduce the amount your estate pays in estate taxes. Unfortunately, most couples are either completely unaware of this opportunity for savings, or they find out about it too late to take advantage of it.
This recent article in the Wall Street Journal gives an example to explain the law both under the previous law and the newer, 2010 law: “A husband and wife together have $7.5 million of assets, $6 million of it in a business owned by him and the rest owned by her. Under prior law, if they died and each partner left everything to the other (with no trusts), the estate of the second-to-die partner would owe federal tax on $2.5 million—even though the law gave each spouse a $5 million exemption. Under the new rules, when the first partner dies—say it’s the wife—the executor files an estate-tax return preserving the value of her $5 million exemption. The result: At the husband’s death, the wife’s exemption is added to his, and the entire $7.5 million passes to heirs tax-free.”
Taking advantage of this opportunity isn’t difficult to do… but only if married couples (or their financial/legal advisors) are aware of the law. And in this case it’s not enough to be simply aware of the law, couples will need to be made aware of the law in time to take advantage of it within the limited time frame. “An estate-tax return must be filed soon after the first partner’s death—usually within nine months—in order for a couple to get this new benefit.”
For more information about this beneficial tax law, or to find out how to take advantage of it before it’s too late, please contact our office.
Prudential to Stop Offering Group Long-Term Care Insurance, Giving Buyers One Less Option
July 25, 2012
If you have been thinking about investing in long-term care insurance when planning for the future, you now, unfortunately, have one less option to consider. Recent news reports that as of August 1 of this year, Prudential Financial Inc will stop selling group long-term care policies in all but five states. According to news sources this makes Prudential the latest in a line of insurers to stop selling the product.
While the growing inevitability of the need for long-term care and how to pay for it is a rising concern for the American public, offering long-term care insurance has not been a profitable practice for insurers. “Most insurers that offer [long-term care insurance] have suffered through sizeable losses. In the early days of the product, insurers underestimated the size and length of claims, and more recently the rate environment has exacerbated the problem.”
If you already have long-term care insurance through Prudential don’t panic, “Prudential said coverage under existing policies would not change, and would remain renewable.” It will be in your best interest to be vigilant, however, considering that Prudential “cautioned that premiums could change, subject to regulatory review.”
If you do not yet have long-term care insurance, never fear, there are still plenty of companies you can turn to for coverage. The National Care Planning Council has an excellent online guide to many aspects of long-term care, but your options and requirements will vary depending on your health, your age, your state of residence, and other factors. Please contact our office for the most up-to-date and relevant options for your family.
Affordable Care Act Likely to Improve Situations of People with Disabilities
July 23, 2012
The Affordable Care Act (ACA) is a hot topic lately, and of great concern to people of all walks of life; but people with disabilities, or who rely on government benefits to help them pay for health care and living expenses, have even more at stake in the game and more reason to be concerned. It is this population of elderly or disabled individuals who, according to this recent article in Forbes, have had to (in some states) limit their income in order to continue receiving affordable health insurance through federally funded programs. But hopefully, the ACA is about to change all that.
“The most obvious and most significant health industry reform important to [elderly or disabled individuals] is the elimination of pre‐existing conditions as a bar to purchasing private health insurance. However, ACA also eliminates annual or lifetime caps, rescission of insurance policies, non‐renewability, and higher premium costs for persons with pre‐existing conditions.”
Before the passage of the ACA many disabled persons couldn’t qualify for health insurance from private insurers, leaving public programs such as Medicaid as their only option. The problem with relying on Medicaid is that once your income reaches a certain amount you no longer qualify. For disabled persons with “pre-existing conditions,” losing Medicaid benefits while still unable to qualify for private insurance was equal to disaster, and resulted in many people self-limiting their income.
Now, however, private insurance companies will no longer be able to bar individuals with pre-existing conditions. Thankfully, this should “open the door to many more people to confidently join the workforce, knowing they will not do so at the cost of having medical needs met.”
If you or a loved one has a special needs trust, or would like to know how the ACA may affect your government provided health insurance or benefits, please contact our office.
Changing Tax Law and the Presidential Campaign
July 18, 2012
Curiosity and excitement are always to be expected in an election year—especially curiosity about taxes. We all know that each presidential candidate has very different philosophies about where the tax burden lies, how much should be paid, and by whom; but all most of us really want to know is how the implementation of each philosophy might affect us personally.
CNN Money recently published an article which attempts to explain just this: each candidate’s position on various tax policies and how it might carry over to our own wallets. The entire article is very informative, but of course the section that will be of most interest to our office and our clients is what the candidates have to say about the Estate tax. Here’s the scoop:
“Estate tax: Until the end of this year, estates valued at more than $5.12 million are subject to an estate tax up to a 35% top rate. Barring congressional action, the value of estates subject to the tax will fall to $1 million and be subject to a top rate of 55% next year.
“Obama: Would reinstate the estate tax at 2009 levels — meaning estates worth more than $3.5 million would be subject to the tax and face a top rate of 45%.
“Romney: Would repeal the estate tax but preserve the gift tax rate at 35%.”
The thing to keep in mind when reading this is that the tax cuts from a few years ago are set to expire at the end of this year. This means that no matter who gets elected, estate tax laws will be changing come January 1st. Now is the time to get your assets in order, take note of any big changes in your life (either personally or financially) and get in touch with your estate planning attorney. Everyone will want to review/update their estate plan this winter, and the earlier you start preparing the better off you’ll be.
With $5 Million Gift Tax Exclusion Set to Expire, Is Now the Time for You to Give?
July 9, 2012
When legislation in 2010 raised the lifetime gift tax exclusion amount from $1 million to $5 million many wealthy families rejoiced, expecting that they would now be able to give large gifts to children or grandchildren and be able to save millions in taxes at the same time. But for all the rejoicing, the unsteady economy has made many people cautious, and has parents and grandparents thinking twice before giving away wealth that they may need themselves in later years.
According to this article in Bloomberg Business Week, however, the time has come for families to take a careful look at their finances and decide if they want to take advantage of the $5 Million gift tax exclusion before it expires. “Legislation enacted in 2010, which raised the lifetime gift-tax exclusion to $5 million from $1 million for each person starting last year, is set to expire. For 2012, the inflation- adjusted figure is $5.12 million for each person. It will drop to $1 million on Jan. 1 unless Congress acts.”
Parents who want to take advantage of the gift tax exclusion, but who worry that their children may not yet be ready to handle such a large financial gift, do have options. As the article points out, “Many [families] are setting up irrevocable trusts for children or grandchildren and transferring assets such as second homes that have the potential to appreciate.” This not only allows the assets to appreciate, but also allows parents and grandparents to breathe easy while young children or grandchildren have time to mature before receiving a gift or inheritance.
If you think your family may benefit from taking advantage of the gift tax exclusion before the end of the year, please contact our office. We can help you explore your options and learn more about what legal changes may be in store in the coming year.
How the Supreme Court Ruling on Health Care Reform May Affect Seniors
July 6, 2012
The recent Supreme Court ruling of the constitutionality of the new health care reforms has many seniors breathing a sigh of relief. The ruling has ensured that, at least for the time being, senior citizens will continue to receive their currently existing benefits from programs such as Medicaid and Medicare; but the ruling also paves the way for changes—some good and some not so good—in the way various home-based and long term care services are paid for and provided.
This article in Forbes explains some of the ways that the ruling on the Affordable Care Act will impact senior citizens or adults with disabilities:
According to the article, Medicaid “currently funds nearly half of all paid long-term care services.” This current coverage will continue under the 2010 health law, but states can refuse to provide new coverage to individuals if they choose.
The Medicare program is currently under some considerable financial strain, and the Affordable Care Act “includes a small increase in the payroll tax that is aimed at increasing revenues for Medicare.” This should be a great help to the program, and a relief to seniors who receive benefits from Medicare.
For seniors and adults who require long-term care services and have been frustrated by numerous roadblocks to getting that care at home instead of in a nursing facility, good news is on the horizon; the ACA “includes important new incentives for states to expand Medicaid long-term care services for people living at home.”
And finally, the law is giving more attention to seniors and adults with chronic and long-term illnesses. The ACA “creates a new office to coordinate the health and long-term care of people who receive both Medicare and Medicaid. . . It also includes important incentives to encourage hospitals, nursing homes, doctors, and other providers to work together to improve care for people with chronic disease.”
Do You Know How Much Your 401(k) Is REALLY Costing You?
July 2, 2012
Do you know how much your 401(k) is costing you? Are you sure? What most people don’t know is that many employees with “free” retirement plans through an employer actually pay a number of hidden fees. According to a recent article in the Huffington Post, “71 percent of plan participants don’t think they pay any fees for their company’s retirement plan. In reality, they pay a variety of fees including investment management, administrative and advisory fees, and more — investment management fees usually comprising the bulk of the expenses.”
All of this is about to change, however, thanks to new laws being enacted by the Department of Labor. CNN Money reports that “A new federal rule took effect July 1 that requires 401(k) plan providers to disclose certain 401(k) fees, and employers to distribute these disclosures to plan participants by Aug. 30.” The hope with this new disclosure rule is that it will increase transparency, and help both employees and employers stay aware of how much their “free” 401(k) may or may not be costing them in administrative fees.
We live in a culture of constant demands and distractions, and it is all too easy to fill out the paperwork to set up a 401(k) with an employer and then forget about it, assuming that as long as nothing changes, everything will keep working the way it’s supposed too. Things do change, however, both in the world of investment and in our own lives. All too often we see clients who miscalculate their 401(k) growth in relation to their retirement needs, or whose valuable retirement savings is lost to taxes when the owner passes away unexpectedly. In all cases, it is important not only to be aware of what’s happening to your savings, but also to be proactive about protecting it, and this is where our office can help.
Whether you are already retired or just getting started with your savings, our firm can help you evaluate your assets, plan for their growth and upkeep, and ensure that they end up in the right hands if something should happen to you. The temptation to procrastinate or bury your head in the sand can be strong, but the knowledge of the consequences of inaction can be stronger. Contact our office and let us help you protect your retirement savings for yourself and your loved ones.