Monthly Archives: January 2018

The NY Times reported on January 30 thatAmazon, Berkshire Hathaway and JPMorgan Chase announced on Tuesday that they would form an independent health care company to serve their employees in the United States.”  Few details are available as the initiative seems to be in the planning stages. 

 

Tax Reform affects 401k matching

Posted by John Sullivan on 1/26/18 in 401k specialist magazine:

 

The controversial tax reform legislation recently passed is paying off in the form of a boon for to corporate pay and benefits, and Willis Towers Watson is attempting to gauge just how much.

The company surveyed a swath of large and midsize employers and found that nearly half (49 percent) are considering a change to employee benefits, compensation, total rewards and executive pay programs either this year or next.

“The tax reform law is creating economic opportunity to invest in their people programs,” John Bremen, managing director, human capital and benefits, Willis Towers Watson, said in a statement. “While a significant number have already announced changes to some of their programs, the majority of employers are proceeding to determine which changes will have the highest impact and generate the greatest value.”

Two-thirds of those (66 percent) surveyed are planning or considering making changes to their benefit programs or have already taken action.

The most common include expansions to personal financial planning (34 percent), increasing 401k contributions (26 percent) and increasing or accelerating pension plan contributions (19 percent).

Other potential changes include increasing the employer health care subsidy, reducing or holding flat the employee payroll deduction, or adding a new paid family leave program in accordance with the Family Medical and Leave Act’s tax credit available for paid leave for certain employees.

Sixty-four percent of employers are also planning or considering taking action on their broad-based compensation programs or have already taken action.

The most common include conducting a review of their compensation “philosophy” (43 percent), addressing pay-gap issues (36 percent) and introducing a profit-sharing or one-time bonus payout to all employees (21 percent).

About four in 10 companies (41 percent) are planning or considering changes to their executive pay programs.

The most common include spending more time and analysis on this year’s incentive target (33 percent) and increasing the use of discretion in 2018 incentive plans (19 percent.

Uninsured increased in 2017

A New Gallup poll released this week found that 12.2% of all Americans age 18 and older did not have health insurance coverage, an increase of 1.3% over 2016. These findings are based on a nationwide survey of over 25,000 people living in all 50 states and D.C. with margin of error of +/- 0.4%. Gallup did not release state-specific data.

The annual increase in the uninsured rate is the largest reported since 2008 and means approximately 3.2 million more Americans were without health insurance in 2017 than 2016. Notably, the largest decline in coverage was among those indicating they purchased coverage on the individual market, down 1% from 2016.

A Look at HSAs

Health Savings Accounts may provide you with remarkable tax advantages.

 

Provided by Reeve Conover

 

Why do higher-income households inquire about Health Savings Accounts? They have heard about what an HSA can potentially offer them: a pool of tax-exempt dollars for health care, a path to tax savings, even a possible source of retirement income after age 65. You may want to look at this option yourself.

 

About 26 million Americans now have HSAs. You must enroll in a high-deductible health plan (HDHP) to have one, a health insurance option that is not ideal for everybody. In 2018, this deductible must be $1,350 or higher for individuals or $2,650 or higher for a family. In exchange for accepting the high deductible, you may pay relatively low premiums for the coverage.1,2

You fund an HSA with tax-free contributions. This year, an individual can direct as much as $3,450 into an HSA, while a family can contribute up to $6,900. (These contribution caps are $1,000 higher if you are 55 or older in 2018.) Some employers will even provide a matching contribution on your behalf.1,2

 

HSAs offer you three potential opportunities for tax savings. Your account contributions are tax free (that is, tax deductible), the earnings in your account grow tax free, and you can withdraw funds from your HSA, tax free, so long as they are used to pay for qualified health care expenses, such as deductibles, co-payments, and hospitalization costs. (HSA funds may not be used to pay health insurance premiums.)1,3

 

At age 65, you can even turn to your HSA for retirement income. Currently, federal tax law allows an HSA owner 65 or older to withdraw HSA funds for any purpose, tax free. Yes, any purpose. You can use the money to pad your retirement income; you can use it to pay Medicare premiums or long-term care insurance premiums. No Required Minimum Distributions (RMDs) are ever required of HSA owners. (Prior to age 65, an HSA withdrawal not used for qualified medical expenses is assessed a 20% I.R.S. penalty.)3

Why is an HSA less attractive for some people? Well, the first thing to mention is the related high-deductible health plan. When you enroll in one of these plans, you agree to pay all (or nearly all) of the cost of medicines, hospital stays, and doctor and dentist visits out of your pocket until that high insurance deductible is reached.1

The other hurdle is just saving the money. If you pay for your own health insurance, just meeting the monthly premiums can be a challenge, especially if your household contends with other significant financial pressures. There may not be enough money left over to fund an HSA. Also, if you are a senior (or a younger adult) with a chronic condition or illnesses, you may end up spending all of your annual HSA contribution and reducing your HSA balance to zero year after year. That works against one of the objectives of the HSA – the goal of accumulation, of growing a tax-advantaged health care fund over time.

If you would like to explore opening an HSA, your first step is to consult an insurance professional to see if you can enroll in a qualified HDHP, unless your employer already sponsors such a plan. Finding an HSA provider is next.

 

Reeve Conover may be reached at 843-800-8190 and reeve@reevewillknow.com

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

«RepresentativeDisclosure»

 

Citations.

1 – tinyurl.com/y9lbk7s7 [2/2/17]

2 – trustetc.com/resources/investor-awareness/contribution-limits [1/3/18]

3 – thebalance.com/hsa-vs-ira-you-might-be-surprised-2388481 [8/13/17]

 

Childrens Health Plan renewed for 6 years

For the full article, click here.

A brief, partial shutdown of the federal government ended Monday, as the Senate and House approved legislation that would keep federal dollars flowing until Feb. 8, as well as fund the Children’s Health Insurance Program for the next six years.

President Donald Trump signed the bill Monday evening.

The CHIP program, which provides coverage to children in families who earn too much to qualify for Medicaid but not enough to afford private insurance, has been bipartisan since its inception in 1997. But its renewal became a partisan bargaining chip over the past several months.

Funding for CHIP technically expired Oct. 1, although a temporary spending bill in December gave the program $2.85 billion. That was supposed to carry states through March to maintain coverage for an estimated 9 million children, but some states began to run short almost as soon as that bill passed.

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
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