Tax provisions of the Affordable Care Act

The Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that are currently in effect and others that will be implemented over the next several years. Here is a brief summary of some of the tax related provisions that we will see:

• Flexible spending accounts will have a $2,500 limit on health FSA salary reduction effective 12/31/12 and will be indexed for cost-of-living adjustments beginning 12/31/13.
• Starting in 2012, employers will be reporting the cost of coverage for health plans on W-2’s in box 12.  The amount reported does not impact tax liability.
• Beginning in 2011, insurance companies were required to spend a specified percentage of premium dollars on medical care and quality improvement, meeting a medical loss ratio (MLR) standard. Insurance companies that are not meeting the MLR standard will be required to provide rebates to their consumers beginning in 2012.
• Starting in 2014, certain employers must offer health coverage to their full-time employees or may be subject to a shared responsibility payment.
• Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums.
• Beginning in 2014 if the coverage offered by your employer fails to provide a minimum value (as defined by the IRS), an employee may also be eligible to receive a premium tax credit.

Joe Arena

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

IRS CIRCULAR 230 NOTICE:

As required by U.S. Treasury Regulations, please be advised that any written tax advice contained in this communication was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

Bargain Hunting

Last Tuesday, the S&P 500 closed below its 50-day moving average for the first time since December, 2011. A sign of trouble, this came after the markets have pulled back recently, due to factors such as European sovereign debt fears and a sluggish jobs report last week.  Wednesday saw a nice rebound, however, as the Dow Jones Industrial Average was up about 100 points and the S&P 500 about 12 points as of 3:00pm. Excellent earnings reports from Alcoa and a positive homebuilding report have helped fuel today’s rally. 

 What does this mean to the individual investor?  While stocks are still in positive territory for the year, and many are still near their historical highs, the recent pull-back means there are some bargains to be had. 

 Remember that nothing has changed in terms of the fundamental keys of successful investing…diversification, buy and hold good dividend-paying companies, buy low and sell high and dollar cost-averaging (among others).   This is a good opportunity to dollar cost-average into quality companies that are now a little more attractively priced.  This means putting a little money at a time into the market, thus lowering your average cost.  It also is a lower risk method of getting participation in a rocky market than dumping all of your money in at once.  Companies that I like include Bristol-Myers Squibb (BMY, $32.65.sh., 4.16% dividend), Coca Cola (KO, $72.21/sh., 2.835% dividend) and Intel (INTC, $27.89/sh., 3.01% div.). 

 The use of quality mutual funds is a great way to get exposure to a large basket of great companies like these with a small sum of money.  They are very conducive to setting up an automatic periodic dollar cost-averaging program.

 If you would like a complimentary review of your portfolio or to discuss comprehensive financial planning (retirement, insurance, retirement income, long term care, disability, survivor, estate and college planning) please contact me at (585) 340-2229.  Thank you.

Susie L. Light
Financial Advisor

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

When is the last time you had an “Insurance Check-Up”?

It’s a good idea to periodically have your life, disability and long term care insurance policies reviewed by an insurance professional.  An analysis may determine that your policies are just fine and that they fit your financial goals.

In some cases, though, a review uncovers internal problems with your policies, such as the fact that they may lapse prematurely without additional, unanticipated premiums.  It may also be determined that the policy no longer fits your needs.

There are also two major factors at play.  Many older policies were designed using mortality tables from the 1950’s, which assumed people died fairly young.  Newer policies incorporate the use of updated mortality tables.  Assuming that the “pool” of insured people live longer has driven down premiums for many policies.  Additionally, the life insurance business is more competitive than ever, lowering premiums.

A review can identify opportunities to do a policy “replacement”, and move the existing cash value of the policy into a new policy, in a tax-free fashion.  Sometimes such a move results in lower policy premiums going forward and/or additional death benefit.  Of course, there are many issues to be considered when doing such a change, such as the fact that starting a new policy may mean starting a new “surrender period” where there will be a (declining) penalty if you surrender the policy within a certain number of years. 

One of the many services we offer at Brighton Securities is a complimentary insurance review.  Please feel free to call us at (585) 340-2229 if you wish to take advantage of this service, or to learn more.

Susie L. Light
Financial Advisor

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).