UPDATE YOUR LIFE INSURANCE AND RETIREMENT PLAN BENEFICIARIES

Jill received a call from her life insurance agent reminding her to update her beneficiary designation.

A good reminder for all of us. If there has been a change in your circumstances (married, RDPs, divorce, etc.) call your agent to update your insurance documents and your advisor to update your retirement beneficiaries.

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CALIFORNIA AFFORDABLE CARE ACT UPDATE

California’s program is called Covered California (https://www.CoveredCA.com/). Enrollment began October 1 with health insurance being bought to begin January 1, 2014. For this year only, there is a 90-day grace period for enrollment. The last day to purchase insurance is March 31, 2014. Otherwise, there is a penalty.

The chart below applies to a single person.

PLAN LEVEL % of BENEFITS PROVIDED UNDER THE PLAN CO-PAY PREMIUM
Bronze

60%

40% up to $6,350 Lowest
Silver

70%

30% up to $6,350
Gold

80%

20% up to $6,350
Platinum

90%

10% up to $6,350 Highest

 

While there are several plans available under each level, the network of doctors, hospitals, deductibles for prescriptions (including generic vs. brand names) may differ. Various medications may be covered differently.

Subsidies to pay for the premiums are offered up to many. For instance, a family of four making $94,000 has a credit on the premium. Now, you cannot be turned down for pre-existing conditions.

Helpers called “navigators” are being trained to help you compare plans. Insurance agents are being certified to help you through the program. This is the biggest medical insurance legislation since Medicare was created. People need to be patient as the kinks are worked out of the new system.

We suggest anyone who has an individual policy review what is available on the Exchange. If you have an employer group plan, it should be as good as or better than the Exchange plans. A good article for more detail was written by Tara Siegel Bernard, “A Guide to the New Exchanges for Health Insurance,” New York Times, September 27, 2013.

If you are a client of Financial Connections and would like to review your options, please give us a call. We can put you in touch with some people certified in the program.

Posted in General, Life Planning, Middle Class | Comments Off

INVESTMENT VERSUS SAVINGS

Some people confuse the two terms. Savings are money you accumulate.

  • Saving money for an emergency fund is something we all should do. You save for a vacation or a car.
  • Investing requires spending the saved money, with the objective of a return on your investment at a later date.

Individuals invest money for retirement. The value fluctuates and includes risk, but the return over a long period offers more than just savings.

The idea of investing in order to grow also applies to countries. Europe has been on a steady diet of austerity (i.e. cutting of services and benefits) with nothing being invested for growth. Germany has been one of the drivers forcing austerity. Yet interestingly, Germany offers a prime example of spending money by investing for a return.

A NY Times article on July 7, 2013, “Austerity Won’t Work If the Roof is Leaking” by Robert H. Frank, economics professor at Cornell University, takes to task the U.S. propensity to cut without regard to public investing. As a contrasting example, he cites Germany’s investments.

Germany borrows money to invest in infrastructure because of the payoff in the future. With this investment, its unemployment rate was reduced to 5.3% and is still falling (during the financial crisis unemployment was 9.2%).

It is one thing, Frank explains, to inject stimulus to build such things as houses, but an entirely different matter to invest in overdue repairs of infrastructure.

Is repairing a small leak not easier than waiting until you have to replace the roof? Is this not a parallel for our infrastructure? When’s the last time you drove down a road without potholes?

We would offer another example. Remember when East and West Germany were re- unified? Germany had a 10-year plan to invest in East Germany’s infrastructure, education system, etc. The dividends of this investment took over a decade to reap but the return made the united Germany one of the strongest economies in Europe.

Cutting spending just to reduce the deficit offers little return to the taxpayer. Why not invest in infrastructure, education, etc.? The increased employment reduces the need for a social net; more money pours into Social Security coffers, a better educated work force can only help us. This is what we try to do on an individual basis when we invest instead of saving. Perhaps Washington should take note.

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