COBRA Premium Assistance Affects Employees and Employers
Posted by: BeamaLife Editor on 28 Apr, 2009
The American Recovery and Reinvestment Act (the Act) provides COBRA premium assistance, which offers a temporary 65% reduction in COBRA premiums for eligible beneficiaries. This new provision will affect former employees receiving or eligible to receive COBRA health insurance coverage and their families, as well as employers.
COBRA is a federal law that allows employees, their spouses, and dependent children who lose health insurance benefits due to involuntary termination of employment to elect to continue that coverage for up to 18 months. Qualified beneficiaries are obligated to pay up to the full cost of coverage plus a 2% administrative fee. However, under the COBRA premium assistance provisions, the employee’s cost of COBRA insurance premiums is reduced to 35% of the total premium cost, including the 2% administrative fee. However, if the employer pays any portion of the premium, no subsidy is payable on that portion.
The COBRA premium reduction is available to assistance-eligible individuals (AEIs). These include the employee (and members of his or her family) whose employment is involuntarily terminated between (and including) September 1, 2008 and December 31, 2009, and is otherwise eligible for, and elects COBRA continuation coverage. The coverage subsidy is payable for a maximum of 9 months and is not available prior to February 17, 2009.
Other provisions applicable to AEIs include:
AEIs who lost their jobs between September 1, 2008 and February 17, 2009, but either didn’t apply for COBRA coverage or ceased coverage after a short time due to its cost have a new 60-day period within which to elect coverage and obtain premium assistance.
The subsidy isn’t taxable as income to the recipient, however it is phased out for individuals with adjusted gross incomes between $125,000 and $145,000 ($250,000 to $290,000 if married filing jointly).
If an AEI pays COBRA premiums for March and April, the employer may either refund the amount of premium paid in excess of 35% or credit the amount against future premiums for the AEI.
If the AEI becomes eligible for other group health insurance or Medicare, the subsidy is terminated. The Department of Labor has established a website (www.dol.gov/ebsa/cobra.html) that provides information to beneficiaries of COBRA insurance.
The premium assistance provisions also affect employers. Most importantly, the employer of the AEI must pay up to 65% of the premium to the insurer. The employer then gets credit for the amount of COBRA premium paid against payroll taxes. If the subsidy is greater than the tax liability, the excess amount is either paid to the employer or applied against future payroll taxes. The IRS has a website (www.irs.gov/newsroom/article/0,,id=204709,00.html) to help employers address COBRA premium assistance requirements. Other provisions important to employers include:
Form 941 (Employers Quarterly Federal Income Tax Return) has been revised to address the payroll tax credits.
Plan administrators must communicate the availability of the subsidy to eligible COBRA beneficiaries by April 18, 2009.
Employers must maintain documentation of the AEI’s 35% contribution and provide proof of payment to the insurer (if the plan is not self-insured).
Do You Need Life Insurance If You’re Single?
Posted by: BeamaLife Editor on 18 Apr, 2009
Single people with no children often don’t need life insurance because no one is relying on their income. But there are some reasons why you might need life insurance if you’re single.
If you died, who would pay for your funeral? Even a simple ceremony could be costly. If you don’t have life insurance, someone else for example your relatives may have to foot these bills. Even if you have only a small policy, the death benefits could be used to cover these expenses.
Do you have debts in excess of your assets, or do you owe money together with someone else? Perhaps you’re a joint debtor with your sister on her mortgage. If you died, she’d be responsible for the entire debt. Would she be able to make the monthly payments on her own? A life insurance policy naming her as your beneficiary could give her enough funds to cover your share of the mortgage, or perhaps to pay off the entire debt.
Finally, is it possible that your health will deteriorate? Maybe you have a family history of cancer or heart disease. If that’s the case, you might have trouble buying life insurance later when you’re older, especially if your health has begun to decline. Also some policy like whole life insurance can be a great savings vehicle. Even if you’re single now, you may be wise to buy life insurance now before it gets too expensive or you become uninsurable. After all, you may not stay single forever.
My child is in a college, am I entitled to any education tax credits?
Posted by: BeamaLife Editor on 14 Apr, 2009
There are two education tax credits, the Hope credit (renamed the American Opportunity credit for 2009 and 2010) and the Lifetime Learning credit. To claim either credit in a given year (you cannot claim both in the same year), you must list your child as a dependent on your tax return. In addition, you must meet income limits. For 2009, a full American Opportunity credit is available to single filers with a Modified Adjusted Gross Income (MAGI) below $80,000 and joint filers with an MAGI below $160,000. A partial credit is available to single filers with an MAGI between $80,000 and $90,000 and joint filers with an MAGI between $160,000 and $180,000. For 2009, a full Lifetime Learning credit is available to single filers with a MAGI below $50,000 and joint filers with an MAGI below $100,000. A partial credit is available to single filers with an MAGI between $50,000 and $60,000 and joint filers with an MAGI between $100,000 and $120,000.
The American Opportunity credit applies to the first four years of undergraduate education. In 2009, it is worth a maximum of $2,500. It is calculated as 100 percent of the first $2,000 of your child’s annual tuition and related expenses, plus 25 percent of the next $2,000 of such expenses. One final point: To qualify for the credit, your child must be attending college on at least a half-time basis.
The Lifetime Learning credit is worth a maximum of $2,000 per year. It is calculated as 20 percent of the first $10,000 of your child’s annual tuition and related expenses. Unlike the American Opportunity credit, the Lifetime Learning credit is available even if your child is enrolled on less than a half-time basis.
If you are eligible to take the credits, remember that you cannot claim both credits in the same year. As a result, you will need to determine which credit offers you the most benefit in a given year. In this analysis, you must consider an important distinction between the two credits. The American Opportunity credit can be taken for more than one child in a given year, provided each child qualifies independently. For example, if you have two children in college, one a freshman and the other a sophomore, you can take a $5,000 credit on your tax return. By contrast, the Lifetime Learning credit is limited to $2,000 per tax return, even if you have multiple children who would qualify independently in the same year. learn more about college savings plans by calling at (877) 972-3262 now.
Isn’t Estate Planning only for the rich & famous people?
Posted by: BeamaLife Editor on 10 Apr, 2009
Estate planning allows you or anyone to implement certain tools now to ensure that your concerns and goals are fulfilled after you die. Your objective may be to simply make sure that your loved ones are provided for. Or you may have more complex goals, such as avoiding probate or reducing those dreaded estate taxes.
Estate planning can be as simple as implementing a will and purchasing life insurance, or as complicated as executing trusts and exploring other sophisticated tax and estate planning techniques. Therefore, estate planning is important whether you are wealthy or whether you have only a small estate. In fact, estate planning may be more important if you have a smaller estate because final expenses will have a greater impact on your estate. Wasting even a single asset may cause your loved ones to suffer from lack of financial resources.
You may also want to plan your estate if you have special circumstances such as any of the following:
• You have minor or special needs children
• Your spouse is uncomfortable with or incapable of handling financial matters
• You have property in more than one state
• You have special property, such as artwork or collectibles
My parents can’t manage alone anymore. What should I do?
Posted by: BeamaLife Editor on 8 Apr, 2009
This is an increasingly common scenario. Perhaps one or both of your parents are having health problems, suffering mental lapses, or just slowing down with age. The problem may not go away or get better, but there are several ways you can deal with it. First, talk with your parents and any siblings you may have.
Sometimes the best option is to have your parents move in with or closer to you. That way, you avoid having to use our parents’ assets or your own to pay for a nursing home or other facility. You won’t have to worry about your parents receiving inadequate care from strangers. And your parents will probably appreciate the gesture of love and self-sacrifice on your part. However, the cost of feeding, clothing, and caring for your parents can be high, especially if you’re forced to give up a job to be home with your parents. And don’t underestimate the emotional and psychological impact.
What if your parents’ care is more than you can handle? You may then wish to consider some type of assisted-living arrangement. The broad term assisted living encompasses a range of facilities and services designed to help seniors who can’t live independently. The assistance provided may be short or long-term and may focus on social services, medical care, or some combination of the two. Depending on your parents’ conditions and needs, one or more of the following assisted-living arrangements may be worth considering:
Nursing homes
Assisted-living communities
Continuing care retirement communities
Alzheimer’s/dementia care specialty facilities
Retirement communities
Active senior communities
Home health care
Hospice care
Adult day-care services
Ask a social worker, your parents’ physicians, or other professionals for information about these assisted-living arrangements. Such individuals can also offer you support and recommend solutions that best meet your parents’ needs. Finally, if you have an employee assistance program at work, contact your human resources department for help and suggestions.
Please visit BeamaLifeinsurance.com for long term care insurance quotes and disability insurance quotes now.
New law will allow you to manage Long Term Care expenses.
Posted by: BeamaLife Editor on 3 Apr, 2009
A new tax law with some very favorable tax treatment for long term care insurance benefits from annuities and life insurance has been passed. As of January 2010, any withdrawals or early distributions from life insurance or annuity products to pay tax-qualified long-term care expenses will be tax free – yes, tax free!
