News & Views
Late Spring Edition |
Greetings!
I hope all is well. In this edition of News & Views, I discuss what's on my radar and the Affordable Care Act. As always, please contact me with any questions or suggestions you may have.
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| On My Radar | |
Japan
Over the past couple of years, a lot of attention has been given to the financial troubles in Europe. Persistently high unemployement coupled with large amounts of debt have caused the European Central Bank to take unprecedented action to hold the Eurozone together.
What's gone largely unnoticed until very recently, is Japan. Japan is still reeling from a stock market and real estate bubble that burst back in late 1989. The Japanese stock market traded at nearly 39,000 then compared to 13,500 today and Japanese real estate prices are still 75% below their peak. Meanwhile, the Japanese government, through various "stimulus" programs has accumulated a massive amount of debt. Interest payments on that debt is currently more than 25% of Japan's tax revenue.
What's the solution to the problem? Newly elected Prime Minister Shinzo Abe's solution (so called "Abenomics") is to double the monetary base (print money) over the next two years in an attempt to stimulate the economy and keep interest rates low. The problem is that interest rates have actually started to rise. Rising interest rates will increase the government's interest payments on their massive debt perhaps to a breaking point that will negatively impact global markets.
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| Affordable Care Act is coming in 2014 ! | |
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The Good
- Health plan benefits will be uniform across all insurance companies so it will be easier for consumers (individuals or businesses) to shop for the best premium.
- Individuals with pre-existing conditions will pay the same premium as healthy individuals.
- Tax credits will be provided to offset health insurance premiums for individuals making less than $44,680 and families of four making less than $92,000 per year.
The Bad
- Premiums will increase because all health plans must now include "free" preventive care services and maternity coverage for women.
- Health insurance companies will pass along new taxes to consumers in the form of higher premiums.
- Higher earning individuals and families will be subject to an increased Medicare payroll tax and a surtax on some of their net investment income (interest, dividends, capital gains, etc.)
The Unintended Consequences
- If the "penalty" for not having health insurance coverage in 2014 is 1% of my income and I can get health insurance coverage at any time regardless of my health condition, why wouldn't I wait until I needed substantial medical care to purchase health insurance?
- If you are a member of a multi-employer union and your health plan does not qualify for subsidies under the new law, won't you be forced to find health insurance elsewhere?
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Sincerely,
Paul Hewitt
(949) 727-4734 x1 |
