Big Mouth Benefits - Benefits You Can Understand!
Big Mouth Benefits is a resource designed for employers and independent contractors that will provide simple explanations, trends and updates on the various benefit programs in the market today. Understandable explanations and access to information will be the focus. Questions concerning these programs will be detailed and answered. A sample of questions is below:
- What are my retirement options?
- What are my retirement funding options?
- Are there ways to guarantee my retirement income for life?
- What are my health insurance options?
- What if I do not have health insurance, is there any way to reduce my health care costs?
- What are my life insurance options and which one fits my situation?
Big Mouth Benefits is designed to be your resource in the benefits arena. We hope you find it useful and look forward to serving you! Please feel free to let us know of any questions or topics you wish to discuss.
View Our BenefitsLIFELINE – A New Series to Help with Benefits Recovery
Today is the start of a new benefit series entitled LIFELINE. It will hopefully help serve as a guide or lifeline through the current economic maelstrom taking place. By definition, a LIFELINE is:
1. A rope or line for saving a life
2. A rope or line strung along or above a vessel to provide a handhold in rough weather.
3. A commercial route of great importance
4. A vital line of access or communication
Each part of this series will focus on key benefit programs that will provide a safety and security Lifeline for you to use in your planning. Please note that we are a little late in setting up these lifelines as lifelines are built into the ships in their initial design, not during the middle of the storm. Hopefully you will have already built the framework for these lifelines into your benefit plans. If not, you better start now!
The vital lifelines we will discuss are:
1. Health Insurance
2. Life Insurance
3. Disability Insurance
4. Retirement Planning
5. Long term care
6. Emergency Fund
7. Trusted Adviser- while not a benefit plan itself, this is a vital lifeline for you to make the right decisions in your planning.
Each one of the benefits plans are key ingredients in building your benefit lifelines in order to protect and provide for you and your family no matter what storms of life occur!
Retirement Accounts-Tough Choices-Safety or Growth
Tough times call for tough choices. Many of us were just cruising along towards retirement with our accounts growing each year with little or no thought involved. Then something happened! Our economy crashed with little notice and little time to react. Before we could think, our precious retirement accounts had dwindled significantly. Now we are having to rethink and refocus with new priorities in mind. We must clearly define our goals for retirement. Will our retirement account be our main source of lifetime income? Will it be needed to supplement our other income producing assets? Will it just pass on to our children and heirs?
All of these questions must be considered along with our investment goals and risk tolerance in order to best determine where our retirement funds should be invested. Evaluate your goals on a scale of 1-5 with 1 being safe, secure and guaranteed and 5 being a scenario where you could lose the whole investment. If retirement is not in your near future, you may want to assume more risk. If you are within 10 years of retirement you may want look at more safe and secure investments so as not to lose your principle. As the current economy remains in a state of flux, my personal preference at this time is safety and security-preserve what you have until the economic picture stabilizes and the current unknowns become clearer. Below is a list of what may be considered “safe” investments
- Bank Savings Accounts
- Certificates of Deposit
- Government issued securities
- Money Market Accounts
- Guaranteed Fixed and Indexed Annuities-if your main goal is income, there are some exceptional products currently available
1. Bank Savings Accounts
2. Certificates of Deposit
3. Government issued securities
4. Money Market accounts
5. Fixed and Indexed Securities- if you are looking for retirement income, there are some exceptional products available.
Take a moment to discuss your situation with your adviser. It will be worth the time spent!
Health Savings Accounts – Are they right for you?
Many questions are being asked about Health Savings Account, or HSA’s, and I thought it would be a good idea to briefly explain what they are and how they work. To begin, do not confuse a Health Savings Account (HSA) with a Flexible Spending Account as they are totally separate from each other and are governed by a different set of rules and regulations. Our discussion below is going to focus solely on Health Savings Accounts.
What is a Health Savings Account or HSA?
A Health Savings Account is an account that is set up to help you pay for out of pocket medical expenses on a tax favored basis. In other words, pre-tax dollars are used to fund the account. It is set up in conjunction with a high deductable medical insurance plan and can not be a stand alone program.
How do I set up a Health Savings Account or HSA?
A Health Savings Account is set up at the time you choose a high deductable medical insurance plan and is usually established through the insurance carrier with a bank or credit union.
How do I fund my Health Savings Account or HSA?
Your HSA contributions are paid monthly along with your medical insurance premiums and accumulate in your HSA account. Interest is usually paid on the account based on the account balance.
How do I access the funds in my Health Savings Account of HSA?
You will normally be issued a PIN protected MasterCard or Visa debit card that is associated with your account. This card would then be used to directly pay any out of pocket expenses at the point of sale.
What expenses can be covered with my Health Savings Account of HSA?
You may use your HSA debit card to pay for any “qualified medical expense” including co-pays, insurance deductibles, prescriptions, over the counter medications, dental and vision expenses to name just a few.
What happens if I don’t use all the money I put in my HSA by the end of the year?
Unlike Flexible Spending Accounts, any money that is not spent during the year is not forfeited but is rolled over and continues to earn interest as it accumulates. As long as the money is withdrawn for qualified uninsured medical expenses, no tax liability is incurred.
Can I access the money for non-medical expenses if needed?
Yes, but any amounts used for purposes other than to pay for “qualified medical expenses” are taxable as income and subject to an additional 10% tax penalty. After you turn age 65, the 10% additional tax penalty no longer applies. If you become disabled and/or enroll in Medicare, the account can be used for other purposes without paying the additional 10% penalty.
It is important to note that since HSA’s are funded by pre-tax dollars, the IRS sets the guidelines and requirements to be considered a qualified HSA. Minimum deductibles and out of pocket expenses are specified each year by the IRS and adjusted to take in to account the cost of living increases from year to year. In addition, guidelines exist for how much can be put in to these accounts on an annual basis. Please contact your professional advisor or the benefits department at Big Mouth Consulting for further details.
This blog is not intended as tax advice and is a plainly worded explanation of HSA’s. It is not intended as tax advice and you should contact your professional advisor or accountant for a detailed explanation to see if a Health Savings Account is right for you.
Benefits in a Changing World – Plan and Proceed
“What role do benefits such as health insurance, life insurance and retirement plans play in our rapidly changing world?“.
The importance of this question can not be overstated due to the fact that these benefits not only impact our current lives, but greatly affect what we will be able to do in the future when we start to consider slowing down or maybe retiring. With changes taking place in virtually every area of our lives including, but not limited to, our business, our family, the economy, the political landscape and our finances, it is vitally important that we have a clear picture as to the role benefits play so we can begin the process of planning, then implementing our plan. The optimum goal is to correctly allocate our current finances in the best products that will not only protect us now, but will maximize our earnings in a safe environment so when we need them in the future, they are readily available and more than enough to meet our needs at that stage in our life.
Below are a few thoughts that may help as you begin to plan for 2010 -
1 - Health Insurance – Look to a higher deductible and HSA option. If you want to decrease your premiums, choose to bear the cost of well check-ups and a higher portion of the cost when you are sick and let your health insurance cover the major health items that may arise. Look to offset up front costs of prescriptions, medical, vision and dental with a discount program. Realize that this is not an “either – or” but these products can be used in combination to save on your out of pocket expenses.
2 – Life Insurance – It is important that you maintain the responsibility for providing for your family and business upon your death, no matter when that may occur. Your best options include:
- Term Insurance – Rates are at historical lows for this temporary coverage. If your needs are temporary or cash flow is an issue, look to this option for coverage for 10, 15 or 20 years.
- Guaranteed Death Benefit Universal Life – This moderately priced product guarantees the death benefit until age 100 or beyond at a guaranteed rate. This is a very good option for permanent needs.
3 – Retirement – Review your options. Take a look at 401-K plans if your employer matches your contribution. If not or if a 401-K is not available, look to a Roth IRA for tax free retirement funds.
In closing, a principle comes to mind that holds true – “you reap what you sow, later than you sow and greater than you sow”. Wise benefit planning now will reap great rewards in bringing a sense of both emotional and financial security to both you and your family for the future. Therefore, once you have reviewed last year, renewed yourself for 2010 – plan and proceed with confidence in your decision.
Just in case you missed the last post…. “Review and Renew”
2010 Review & Renew!
Note: Benefits consulting for real estate agents is just one of the services BMC provides. This is the first contribution from our benefits consultant.
As 2010 opens, we find the dawning of a new year filled with unresolved issues and uncertainty, but at the same time, full of hope of renewal and new beginnings. January is always a good month to review where you have been the last year, examine the opportunities placed before you in the coming year, set your goals, renew your dreams and march forward. It is even more important that this be done this year as we are in the process of unprecedented change………a change that should not be feared.
Change, as uncomfortable as it may seem, is not always a bad thing. It takes us out of our “business as usual” mentality into a full array of new opportunities which, if we don’t fight it, allows us to become more creative, more engaged and more focused. We jump from a sometimes stagnant life where we have become far too comfortable, into a whirlwind of new venues, new outlets, new communication tools and new products. Don’t get caught like a deer staring at the headlights…..begin now to position yourself and your company to take advantage of opportunities that will arise in the coming days, months and year.
As a start -
- Review your business plans to accomodate the changes taking place
- Review your finances and adjust where needed
- Review your insurance as rates have decreased over the last 5 years and your circumstances may have changed
- Review your retirement accounts to insure your assets are placed in an account which gives maximum benefit to you both now and in the future, especially taking the possibility of increase tax rates in the years ahead in to account.
Change……it allows us to begin anew – correct mistakes we may have made in the past or open up whole new avenues. You have a choice – move forward or look back……..choose wisely!
Let January be the time you REVIEW, RENEW AND REFRESH for a successful 2010!! Enjoy and embrace…….
