The Blog Of TL Wall Accounting

Archive for April, 2014

3 Areas You Need Insurance Coverage For

Because it’s the newest topic, we’ve spent a lot of time talking about health insurance around here. However, not only is there other insurance, but some of it it pretty important for you to start thinking about, if not necessarily critical.

We won’t spend any time talking about car insurance because that’s mandatory, at least in almost every state in the nation. We won’t talk about compensation insurance because not every business needs it and not every state has it.

Instead, we will concentrate on insurance for individuals and families, those that we feel are the most crucial to have, even if you don’t think you need it. Part of this also takes into account what you’ll get the most benefit from. That discounts dental insurance where, though you’ll get some coverage, if you need anything serious most of the insurances only cover $2,000 a year, which would barely make a dent in any serious dental work you’d need.

1. Homeowners/rental insurance. If you’re a new homeowner insurance is a mandatory thing, but if you’ve owned a home previously, at least in some states, it’s an option. There’s absolutely no reason not to pay for insurance coverage for your home. All it takes is one bad winter of damage for you to realize how crucial having insurance is to take care of something you never saw coming. Not that you’ll have damage every year but when something happens to your home, minor or major, insurance can help you get those bills paid, if not take care of the entire thing.

The same goes for rental insurance. The fire could come from another apartment and you could lose just 25% of your assets, which usually means furniture or clothing, and the cost of replacing it would be totally on you. The costs are negligible when compared to what you’d have to pay out of pocket to replace things.

2. Life insurance. We hear from people all the time about not needing life insurance because they’re either too young or they’re single. We even know of families where parents don’t buy insurance to protect their kids or spouses.

One of the realities of life insurance is that if you get in early not only will your costs remain low, even if you have health issues later on in life, but if you buy the right type of insurance at a certain point it’ll start paying for itself while still continuing to grow, although you’d probably want to continue putting more into it for your own lifetime protection.

Life insurance could help you make sure your home is paid for if you’re not around anymore. Life insurance can help pay for your burial. Life insurance can give your family a boost to get used to losing your income and allow them time to get on their feet. Do this for those you love, and do it early.

3. Long Term Care insurance. You need to know this now; at some point in your life, you or your spouse might need to either go into a nursing home or need some home care help when you get old. Costs are not only astronomical, but for the majority of people what happens is their assets have to be sold off before Medicaid kicks in.

If you start long term care insurance early, when it doesn’t cost much and you get locked into a rate, there’s the possibility that you could put away enough money to pay for home care and never have to go into a nursing home, while protecting your assets for your family. You certainly help them out greatly.

5 Things To Know About The Affordable Care Act

Last October we did a quick piece on the new federal health insurance plan, known as the Affordable Care Act, and how it might affect taxes. This isn’t necessarily a follow up piece but it offers 5 things that could affect finances that maybe some folks haven’t considered before.

1. For many people there’s a negligible difference between what they were paying out of pocket for their health insurance and what they might have to pay now. Because of the wide range of discounts offered in many states some people might even end up paying less for their insurance. However, it also depends on where you live because if your area doesn’t have at least 4 competing offers you’ll see your costs go up.

2. It turns out that even with a deductible certain things are being paid, even if not at 100%. Diabetic supplies, lab tests, and even some doctor visits for specialists are receiving some kind of payment. While most insurances cover the same thing, the rate of payment is different so it’s worth checking with your insurance company to see what they might pony up for you (this has always been true by the way).

3. If you’ve never saved receipts for medical services this is the year you should do it. It looks like you can write off any payments you make for the year as long as it comes to at least 10% of your adjusted gross income.

If you have a high deductible plan because it’s what you could afford you’re probably going to fall into this category if you’ve had a few doctor visits or even prescriptions you’ve had to buy that you got minimal discounts for. If you got an adjusted fee owed based on income that will be taken into account, but you’ll need to see your accountant to figure out how it will all work out.

4. Even if you qualify for discounts on your insurance premiums, you should be cautious in accepting them if you feel your financial situation might improve. Those tax breaks you get will become payments you need to make back to the government if you end up not qualifying for those same discounts the next year; in essence it’s considered more of a loan. If you’re not getting at least 50% adjusted off, and you know you’re going to be going for a much better paying job, it might be smarter to not accept any assistance.

5. We haven’t talked about it here so it’s time to mention what happens if you decide not to get insurance. For 2014, the penalty starts at around $900 if you’re single, $3,800 if you’re a family. That’s considered “taxable income“, not how much you’ll actually pay.

Depending on your income it’ll start around $95 and go up from there for individuals and couples, and start around $383 for families. There’s a max limit the first year, which is helpful, but it goes up drastically for 2015 and eve higher for 2016.

The thing is, if you’re unemployed or under employed, and you don’t qualify for Medicaid, this is a great option because you could end up with little to no premiums coming out of your pocket and still have health care coverage until you get back on your feet. At the very least, it’s worth looking into, no matter what your finances look like. But hurry up, otherwise you’ll have to wait until November to start over.