Monday, February 7, 2011

10 Documents You’ll Forget To Give To Us

  1. W-2s - Many times clients work multiple jobs or change jobs during the year. Because clients are anxious for refunds they forget one or more W-2s.
  2. 1099-INT - Does your client have multiple bank accounts? Did you compare the current year 1099-INTs to the previous years Schedule B?
  3. 1099-DIV – Clients buy and sell investments all year-long. Did you compare the current year 1009-DIVs to the previous years Schedule B?
  4. Capital Gains/Losses – 1 in 10 returns submitted to us is missing basis information.
  5. 1099-SSA – older clients often mistake these documents for other correspondence they received form the Social Security Administration. Clients will often say “I get $600 per month so just multiple that by 12”. Unfortunately, these amounts are net of Medicare premiums.
  6. Tuition Deduction – Form 1099-T is often mistaken as a college financial aid document. For families with college students, we can’t calculate the deduction without the form.
  7. Real Estate Taxes – clients that don’t have their real estate taxes escrowed by the mortgage lender often forget to bring the municipal tax bills with them. A quick review of the previous years Schedule A would reveal the omission.
  8. Sales Tax – sales tax on autos, campers, motor homes and other large purchase are often forgotten.
  9. Mortgage Interest – interest on family-financed mortgages are often overlooked because clients think they are doing the family member a favor by not reporting the interest. Also, clients that re-finance during the year sometimes forget about the previous lender.
  10. Non-Cash Charitable Contributions – Clients often do not keep or lose detailed records of these types of contributions. Dates, description, name and address of the charitable organization are all necessary for proper deduction.

Thursday, February 3, 2011

ObamaCare Makes a House Call to My House

The health care crisis in this country made an unannounced, uninvited visit to my house. I had no idea that it was coming. It never called ahead; never wrote. The least it could have done was "drop a dime" and called from the rest area at Kennebunk. I didn't have any groceries. The house was a wreck. The sink was full of dishes. It was definitely an unwelcome visit. What are you gonna do? It was there at the door. No matter how much I wanted to be rude and send it on its way, I couldn't. I wanted to but, I couldn't. It was here to stay; for how long I have no idea.

We hear about the crisis from Brian Williams of NBC News every week. You never think that it will affect you until it knocks on your front door. I got the shock of my life when I opened the door. I wished that I hadn't opened the door. It's not like it's going away. It's just going to sit on the front porch. So, we'll all probably face the beast at one time or another. The beast is health care insurance and the issue is whether or not you can afford the premiums.

My small company employs 6 people at the busiest time of our business cycle. I offer health insurance to my staff. The company pays 50% and the employee pays the balance. For $250 per month, (the company pays $125 and the employee pays $125) we get a $5,000 deductible, with $30 co-pays for office visits and prescriptions. As long as you don't have a chronic illness or an accident, you have enough comfort that you can sleep at night. It's not great insurance but, it's better than going without. I was clear about what it was when I agreed to buy the policy. I'm paraphrasing Shakespeare when I say that "it doesn't matter what you call it, it doesn't change what it is." The what "is" catastrophic insurance. You really have to be terminally ill or hit by a bus before you'll meet the deductible. If you were in an accident or had a heart attack, the ambulance ride to the hospital will cost $5,000. That's a good thing, right? The deductible would be met and the insurance would kick-in and all is well as long as you survive and recover from the incident, right? Not so fast, the insurance only pays 80% of covered costs after the deducible. The $5,000 ride to the hospital and the 20% balance is yours to pay. Assuming that you survive and recover, the next challenge you'll have is the financially devastating hospital bills and the almost certain realization that you'll spend the rest of your life paying a nominal amount to the multiple health care providers that saw to your care while you were laid up. I can understand why some people would want to end their lives facing that mess. I guess it's better than no insurance at all.

Here's how the ugly beast revealed itself: I got the policy renewal for the next policy period starting March 1st. The monthly premium doubled. That's right, double. The single employee will now have to pay $250 per month and the company will pay the other half. I was carrying the premium for myself and my domestic partner, Mary Lou. I thought I could manage the $455 per month but, now the $989 is completely out of the question. That amount is greater than the monthly mortgage payment on my house which includes principle, interest, taxes and insurance. Imagine that, more than my mortgage payment. What if I was supporting a family? What would be the premium cost?. I can't even think about it.

Why did the premium double? What happened? How could this happen? The health care crisis is a very , very complicated beast with many, many faces and tentacles. I don't understand the everything about the issue but, I understand more than most. I have a first-hand connection to the issue. My "domestic partner", Mary Lou is a Registered Nurse working in the Emergency Departments at two major hospitals in this area. I hear the stories about parents bringing their children to the ER for rashes and other non-emergency maladies. Why do they come? Shouldn't they call their family doctor? They cant because they don't have a doctor, insurance or money. There's enough there for a totally separate article. I'll save that part for another day.

With this issue at my front door, I wondered what we, as consumers, can do to help reduce the cost of health care. For that, I turned to Maureen Hedges, CEO and Founder of Health Benefits Insurance & Consulting, LLC and asked for five ways to reduce health care costs. Here's what she had to say:

The first thing that most people need to recognize is the Health Care Reform legislation is really only addressing some insurance issues … and totally ignoring the actual COST of health care.

  • One of the biggest problems is the inappropriate use of Emergency Rooms – especially by those without commercial health insurance. More than 60% of ER visits are non-emergency situations – frequently for upper respiratory distress [colds]. Free standing out-patient clinics such as Concentra and offices in many WalMart stores need to be expanded – and public programs such as Medicaid need to penalize patients for non-emergency visits to hospital emergency rooms [just like the insurance companies do].

  • The federal and state governments pay providers of Medicare and Medicaid services significantly less than their cost to provide those services … forcing cost shifting to private patients and insurers. As baby boomers start to increase the Medicare rolls this is only going to increase exponentially. Public programs need to pay equitable sums to providers. This is, in my opinion, the greatest short coming of all current and proposed government health care programs, and one that almost no one is addressing realistically.

  • We need to change the way health care services are delivered. More video/telephonic visits with a provider. Greater use of physician assistants and nurse practitioners and off site testing locations [example: get the EKG at WalMart in Houlton transmitted directly to your cardiologist in Bangor and then discuss results on the phone]. We should encourage creativity in this area … rather than imposing more and more regulations to “protect” the consumer, resulting in higher costs not commensurate with any risk these innovations might bring.

  • Many people have no idea what medical services cost … a $20 or even a $30 office visit isn’t enough to make people really think about whether or not a visit is really necessary or appropriate. This is where phone/video conferencing with a provider could significantly reduce medical cost … especially where there are long term relationships with a primary care provider.

  • Physicians often tend to be overly cautious and order more tests than might be immediately necessary - to ensure not missing even remote diagnoses [malpractice]. Patients should be more involved, inquire about the reasons for tests, and be part of the decision making process as a consumer as well as a patient.

Maureen Hedges is a Certified Employee Benefits Specialist and consults with individuals and businesses regarding health insurance and other employee benefits. She can be contacted at:

P.O. Box 1172
Bangor, ME 04402-1172
Voice: (207)v223-1233
Fax: (866) 363-0876
http://www.healthbenefitsmaine.com/