I’m pretty tired of hearing about the end of the world that’s on its way because of the new health law. I’d prefer to see how everything plays out once it starts kicking in. But I did notice an article last week on CNNMoney.com about how employers may start having dependent eligibility audits done in an effort to weed out those who shouldn’t be part of an employee’s family coverage. Eligibility audits typically boot 10% of listed dependents. Of course, the new health insurance law will allow parents to keep their kids (up to age 26) on their health plan.
Some employers will be moving toward the “spousal carve out” plan. If your spouse can get coverage through his/her employer, then your employer may deem him/her ineligible or add a surcharge to your coverage. Actually, I’ve seen that already for domestic partners coverage. Eliminating ineligible dependents can save companies between 4% and 6% of their annual health care premiums. That’s not chicken feed.
So, going forward, you may see a request for a copy of your marriage license…or divorce decree. Apparently, some employees continue to claim their ex-spouse on their health coverage, even though the divorce paperwork says otherwise. Some divorces require continued coverage for the ex. Bottom line, don’t try to fudge coverage for someone. If your company has a code of conduct, you might end up losing your job. Is it worth losing your job just to cover your daughter-in-law? Until next time, here’s to good planning!
President Obama is scheduled to sign the new Wall Street Reform and Consumer Protection Act this week. Some in Congress have already started yapping about repealing it. Good luck to them. It’s not as tough as some of us would have liked, but, in politics, you gotta do the best you can (hello, you on the left). So, if you’re a consumer, here’s a few highlights that will help protect you down the road:
- Debit/Credit Cards – merchants will be allowed to offer a discount to customers who pay with debit cards that carry lower transaction fees, something that’s never been possible. The Federal Reserve will also have the authority to cap the fees that Visa and Mastercard charge for processing transactions, currently averaging between 1.6% – 2%. In Europe, these fees are as low as 0.2% so that should give the Fed some leverage, thereby helping to save struggling merchants some dough (and you, too, hopefully)
- Consumer Financial Protection Bureau – part of the Federal Reserve, it will have sweeping powers to regulate lending from the biggest banks down to pawn shops (but not car dealers). The big question right now is who will head this agency. Like many, I’m pulling for Elizabeth Warren, a professor at Harvard Law School. Here’s her explanation last year why a Consumer Protection Agency was needed: http://www.youtube.com/watch?v=lYd08e5Cjvs
- Investor Advocate – the new law will create an Investor Advocate within the Securities and Exchange Commission (SEC) that will represent the interests of retail investors
- Investor Disclosure – there will be increased disclosures required for retail investors before they invest in financial products
- Office of Financial Literacy – programs will be developed to teach Americans about savings, loans, fees and liens. This will establish standards for financial advice programs and help Americans from becoming victims of scams
- Free Credit Scores – you’ll still be able to get a free peek at your credit histories annually from the three credit bureaus. But now, the definition of “adverse action” is expanded to include not only denial of a loan or credit, but also being charged a higher interest rate than the one offered those with excellent credit
- Mortgages – no more easy mortgages or pre-payment penalties. Full documentation will be required by lenders. No more incentives to mortgage brokers who then push loans with unfavorable terms on borrowers
I’ll keep you updated as things start kicking in. Until next time, here’s to good planning!
It seems like every time I turn around I’m learning about another part of the Patient Protection and Affordable Care Act of 2010 (health care reform). You probably haven’t heard about the reinsurance program that reimburses employers for providing health benefits to retirees who are over 55 and not eligible for Medicare. Starting on June 1st with $5 billion, the program gives an 80% subsidy for retiree claims between $15,000 and $90,000. It’s supposed to terminate on January 1, 2014 but early estimates indicate the dough may be gone by the end of next year. Early retiree health benefit programs cover nearly 1.5 million people, either as retirees (ages 55-64) or their spouse and dependents.
The Employment Benefit Resources Institute did a study last month of 245 large employers (more than 500 employees) and found that 76% plan to pursue reimbursement through the plan. These companies better act quickly, given the program’s projected demise. The program encourages employers to retain their early retiree benefits, rather than just letting folks fend for themselves. Many of these workers got laid off and haven’t been successful in finding another job, which I suspect they’d prefer. Until next time, here’s to good planning!
I spent some time on Memorial Day on Boston Common, where 20,000 American flags had been placed on a gently sloping hill. It was a very moving experience and certainly got me thinking about my dad who, while stationed in India, was a Sargeant in, what was then, the Army Air Force during World War II. Thankfully, he made it home. I always think it’s a good thing when the government can provide special benefits to help members of the military and their families.
So, file this under “It’s the Least We Can Do for Those in the Military”: an extension of the $8,000 first-time homebuyer credit and the $6,500 credit for existing homeowners. Those in the military who serve outside the U.S. for at least 90 days between December 31, 2008 and May 1, 2010, have until June 30, 2011 to close on a new house. Normally, if homeowners don’t live in the new house for at least three years, they have to repay the tax credit. But, that’s not the case for members of the military who have to move because of government orders. I know there are many sacrifices for those in the armed services. I hope this extension of the homebuyer tax credit helps many of their families.
There’s also a possibility the credit thats set to expire on June 30 will be extended for everybody until September 30th. Legislation to that effect was introduced yesterday in the U.S. Senate. We’ll see if Congress can “get ‘er done”. Until next week, here’s to good planning!
The news keeps coming out in dribbles and drabs. Some you’re going to like and others will probably make you angry. But that’s just the way it’s going to be when it comes to the Patient Protection and Affordable Care Act, the healthcare reform bill. Many of us will have to stock up on Form 1099’s. Huh?
Section 9006 of the law says that, beginning January 1, 2012, all businesses must issue 1099 tax forms not only to freelancers and vendors, but also to any individual, business or corporation from which they purchase more than $600 in goods or services in a tax year. So, if you go on a business trip and your hotel bill is more than $600, you’ll have to give the hotel (and the IRS) a 1099 for your visit. You buy new office furniture and spend $900? Two more 1099’s. I’m sure the Chamber will be squawking about this (probably already have). You’ll have to have the taxpayer ID numbers for all these people/businesses. There’ll probably be a whole new cottage industry that crops up to help us deal with this new requirement.
The government is doing this to have better reporting of income. It’s as simple as that. The IRS estimates there’s $300 billion of tax revenue that’s never reported or paid. Think what a difference that would make. And I’m sure all the details will get worked out in Congress (after the mid-terms this fall). It’ll be fun to watch! Until next time, here’s to good planning!
And I’m not talking about using a stick here. But I do want to cheer on Congress for shining their legislative light on some of the onerous fees that we all pay. Last Thursday night, the U.S. Senate passed an amendment to the Wall Street Reform Bill that would cap the charges on the so-called “interchange fees”. These are transaction fees, usually between 1% – 3% of every purchase. Mastercard and VISA, etc., take a small amount. But the bulk of the fee goes directly to the credit or debit card issuer (usually a bank). Need I say more? Interchange fees amounted to roughly $35 billion in 2007, according to the government. Under the amendment, the Federal Reserve will have the authority to determine what’s a reasonable fee. It would also permit retailers to offer discounts to customers who use cards with lower fees.
The other great idea introduced as an amendment would cap ATM fees to 50 cents. Currently, banks and other ATM operators can charge whatever they want. Last year on vacation, an ATM wanted to charge me $3. After I calmed down, I walked down the street to another financial institution and was proud to have paid $2. Of course, if these fees go down, the number of ATM machines might decrease, too. It’s easy to site more ATM machines when you’re making a killing every time someone pulls out some cash. It may not be worth the banks’ while to maintain so many machines if they’re only “maiming”. Go Congress….go Congress. Until next time, here’s to good planning!
I have to admit that I hadn’t heard the term “liar loans” until the U.S. Senate voted to prohibit them a couple of days ago. These mortgages got their name because (during the height of the most recent real estate boom…in the mid-2000’s) borrowers didn’t have to provide any documentation about their income or even disclose what their income was. So, it became pretty easy for someone to just…uh…fib about their financial situation (perhaps) knowing they’d never be able to keep up with the payments. Before the bottom dropped out of the housing market, a lot of people probably thought they’d never have a problem making their mortgage payments. But then, you lose your job, fall behind in your bills and your house goes into foreclosure. It’s happened to millions of Americans. The House has already approved a similar measure.
Also on the chopping block were those incentives to real estate brokers which had been designed to steer borrowers toward loans with higher interest rates and prepayment penalties. All of these provisions are part of the sweeping financial regulatory reform bill that’s moving through Congress like molasses. Ever watched molasses? Painful…especially when it goes around a corner. Until next time, when I expect to have posted new photos, here’s to good planning!
There’s been so much going on lately, what with the markets and Greece, etc. But I want you to know about 2010’s Equal Pay for Equal Work Day…..April 20th. In order to make the same money that a man did in 2009, the average woman had to work the additional 100 days in 2010. Ladies, don’t we work hard enough as it is?
For those of you keeping track, it’s almost 50 years since the first Equal Pay Act was passed by Congress, yet women working full time still only earn 77 cents for every dollar a guy pockets. African American women earn 61 cents; Latinas, 52 cents.
There’s another move at the federal level, with bipartisan support, to level the paying field. The House has already passed the Paycheck Fairness Act (S.182) which would require employers to set wage differentials based on anything other than gender. It’s now on the Senate side. So, come on folks, call your Senators and ask them to support the Paycheck Fairness Act. Higher wages mean a higher benefit from Social Security. I’m sure I don’t have to tell you how important that is. Until next time, here’s to good planning!
It’ll be a packed house on Thursday in a federal courtroom in Boston. On the docket is the constitutionality of the Defense of Marriage Act, that draconian law that defines marriage as between one man and one woman. Gay couples believe DOMA disciminates against them by denying more than 1,100 benefits of marriage that have always been afforded to married heterosexual couples.
This will be the first time opponents of DOMA will be able to present their case against the law in court. I think it’s fitting the first courtroom arguments are here in Massachusetts, where gay marriage first became legal. Gay & Lesbian Advocates and Defenders sued on behalf of three widowers and seven married gay couples here in the Bay State. It was a lawsuit by GLAD that delivered marriage equality in 2004.
Even though the Obama Administration says it agrees DOMA should be overturned, government attorneys say it’s still law and they want the suit thrown out (huh?). GLAD attorneys want the court to throw out DOMA by ruling in their favor without a trial. Stay tuned. Until next time, here’s to good planning!
I hope you’ll be paying attention on Thursday when the President makes a speech in New York on why financial reform must be passed by Congress. If it were me, I’d sit atop that famous bull that epitomizes the Wall Street culture. Probably wouldn’t be very presidential.
I swear I heard people cheering last Friday when the news broke about the civil lawsuit by the Securities and Exchange Commission (SEC) against Wall Street powerhouse Goldman Sachs. (OK….maybe it was just me making the noise.) The timing was pretty interesting, don’t you think? Did the SEC wait until the economy and markets were strong enough to withstand such news? Or, maybe, the Friday before Congress started debating ways to rein in Wall Street, as a way to influence the final vote? Sorry to be so cynical. Either way, it’s about time!
Back in 2007, there were people in the Goldman Sachs mortgage division, reportedly backed by management, bundling together bonds, backed by residential mortgages to homeowners who couldn’t afford their payments (sub-prime mortgages). When the mortgage payments stopped coming, the loans defaulted, and the results, as you know, were disastrous. Everything went south. But not the pinheads at Goldman Sachs. Knowing things would go south (but not disclosing that to investors), they had used complicated investments known as derivatives, to bet against their own bonds, thus making billions when the bottom fell out of the housing market. And now there are some in Congress (the minority) that thinks we don’t need financial reform. They must have owned some of those derivatives, because I can’t imagine why anyone wouldn’t want to prevent such a disaster in the future. Call your senator or congressperson. I suspect more shoes will drop from this centipede before it’s all over. Until next time, here’s to good planning!
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