A Note To Employers--Health Insurance Report Is Due…And MoreVolume 16, No.4, Fall 2008
By Sheila Curtis
November 15–December 31.
Mark these dates! They represent the annual open enrollment period in which one can enroll, disenroll, or switch to another Medicare Advantage Plan (HMO, PPO, PFFS). You can also enroll, disenroll or switch to another Medicare Prescription Drug Plan (Part D).
If your plan does not cover all your medications; if you’re not satisfied with the plan you have; or if you just want to find a plan that will cost less…now is the time to make a change.
New plans may be offered for 2009, so carefully review each alternative before you make any changes. The Medicare website, www.medicare.gov, has a drug plan finder that will show you which options cover your medications, the monthly premiums and what your cost is for each medication. In 2009, the Part D plan works like this:
There are programs to help with your prescription costs. If your income is less than $15,600/single or $21,000/couple and assets (not counting your home or car) are less than $11,990/single or $23,970/couple you may be eligible for “extra help.” Call Social Security for an application at 1-800-772-1213 or apply online at www.socialsecurity.gov.
The state also has a program, Prescription Advantage, which acts as a supplement to the Medicare Part D drug plan or other credible drug coverage you may have, such as a retirement plan. Prescription Advantage may help with the Part D premium, deductible, coverage in the gap, co-pays and out-of-pocket expenses. There is no premium to pay. However, if your income is greater than $31,200/single or $42,000/couple there is a $200 enrollment fee.
The amount of help you receive depends on your income category. Prescription Advantage does not count assets and you now can join any time of the year.
For more information or assistance in reviewing your options please call your local Senior Center to make an appointment with a SHINE (Serving the Health Information Needs of Elders) counselor or call the regional SHINE office at 1-800-334-9999.
(Ms. Curtis is Regional Director of SHINE, a division of the Massachusetts Executive Office of Elder Affairs.)
By G. Robert King II, CFP®, AIF®
“I gave everything I could to make my business a success. And ever since my kids joined me in the effort, I have felt a huge sense of satisfaction in building my dream with them by my side. Now, I want nothing more than to pass my business to my family, so they can continue to grow my legacy.”
This is the sentiment of many family business owners. Sounds easy, right?
But the odds do not favor intergenerational longevity. According to the Small Business Administration, only 30 percent of the country's 21 million family-owned small businesses make it to the second generation. A mere 15 percent make it to the third. Often, a lack of leadership and entrepreneurial spirit in the next generation can cause the business to flounder. Sometimes, it’s a lack of retirement planning; or the strain of funneling profits to the retired owner may stifle risk taking, creativity, and expansion. Nothing impacts a business like the sudden death or disability of its owner.
Transferring a business within a family raises a host of complex issues, but developing a formal succession plan can help you address these issues up-front.
A variety of strategies can be used to transfer your business to the next generation.
The most obvious way to pass your business to your family is through your will. But with an estate tax that can be as high as 45 percent, your heirs could be forced to sell the business to pay Uncle Sam. One way to avoid this is to establish a trust to buy an insurance policy on your life. Upon your death, the policy's proceeds can be used to pay the tax bill.
If you transfer ownership to the children at your death, consider your spouse's income needs. Your salary stops at your death, and your spouse will now rely on profits from the business. Will the company be able to maintain the same level of profits after losing your leadership?
Another issue arises if you leave your company and your heirs have different levels of interest in management of the business. Friction can occur when active members want to reinvest profits while inactive members want profits to be distributed. Or, sometimes inactive members simply want to sell their portion and walk away with cash. This could cause a serious cash flow crunch if the business buys the shares back.
Things get even trickier if you are leaving your business to grandchildren. In this case, they'll get slapped with the generation-skipping transfer (GST) tax, which ensures that the government doesn't miss out on estate taxes when assets skip a generation.
Sell upon death with a buy-sell agreement. If you want to maintain control of your business indefinitely, you can create a buy-sell agreement to trigger the sale of the business upon your death at prearranged terms and pricing. (To ensure that your kids can afford the purchase, have them buy an insurance policy on your life; you can gift the insurance premiums to them.)
Sell with a financing strategy. If you are financially reliant on your company, but you want to retire or pursue other interests, you may wish to sell the business to your children. The key challenge is whether they can come up with the money.
Fortunately, several financing strategies can minimize this burden. These include installment sale, self-canceling installment notes (SCINs), transfer with gifting strategies and family limited partnerships (FLPs) or family limited liability companies (LLCs).
As you can imagine, each of these strategies involves complicated financial, estate, tax, and legal considerations. That's why it's not a good idea to tackle succession alone. Establish a team of experienced professionals to help you develop your succession plan.
(Mr. King is a Certified Financial Planner in Hyannis, 508-790-7100 or info@capitalportfolios.net.)
A Note To Employers--Health Insurance Report Is Due…And More This from the Cape Cod Chamber of Commerce:
Employers with 11 or more “full-time equivalent” employees are required, under the Health Care Reform Law, to file their annual Fair Share Contribution Report and Employer HIRD form by November 15. Whether employers receive a notice from the Division of Unemployment Assistance (DUA) directing them to file or not, it is the employer's responsibility to file if they have 11 or more “full- time equivalent employees.” All filings must be completed electronically at https://fsc.detma.org.
Changes to the Fair Share Contribution reporting schedule now require quarterly reporting for all future filings. The First Report and Payment period is January-February 15, 2009, using data from the employment period from October 1-December 31, 2008. Reports and payments of fair share contributions owed will then be due as follows: Second Report and Payment by May 15; Third Report and Payment by August 15; Fourth Report and Payment by November 15.
Under the "expanded eligibility" section of Health Care Reform, effective since 2007, parents have been able to insure—under their health plans—their adult dependent children until age 26 or for up to two calendar years following the last year in which the parent(s) provided at least half of the dependent's support. This coverage is exempt from Massachusetts taxes, but is taxable under federal tax law in some cases.
Employers should review with employees whether a dependent meets the IRS tax code section 106 definition of either a "qualifying child" or "qualifying relative". (Check with your accountant or the tax codes for these definitions.)
The fair market value of the premium paid by the employer is taxable federally as imputed income if a dependent does not meet the federal definition of either a "qualifying child" or a "qualifying dependent" for a tax year. Employers providing a group insurance plan are responsible for calculating the federally taxable amount, reporting that amount as income, and deducting the tax owed.
Any business that has 50+ full-time equivalent employees will be subject changes to the Fair Share Contribution regulation of the Health Care Reform Law beginning January 1, 2009. Employers with 50-plus employees, 75 percent of whom are enrolled in the company's group insurance plan, will automatically comply with the regulation. For all other businesses with 50-plus full-time employees, the regulation requires a 25 percent take-up rate AND an employer premium contribution of at least 33 percent. Businesses with fewer than 50, but at least 11, full-time equivalent workers are subject to the original Fair Share requirement to enroll 25 percent of their workers OR pay 33 percent of their premiums. Businesses will initially use these new compliance tests for their Fair Share Report to DUA (Division of Unemployment Assistance) during the reporting period April 1-May 15, 2009 for the January-March fiscal quarter.