Health Reform Timeline
June 2010: Medicare beneficiaries pay less for preventive services, Tax credits for certain small employers begin
July 2010; Uninsured people with health problems eligible for state insurance program
Sept 2010; Insurers required to cover sick children, Lifetime limits on insurer payouts prohibited, Children allowed to remain on parents policy until age 26
January 2011; Seniors who exceed medicare drug coverage limit receive $250 rebate, Voluntary payroll deduction for long term care coverage starts
January 2013; Medicare taxes rise on incomes above $200,000 per year
January 2014; Medi-Cal eligibility expanded, Insurers barred from denying coverage, Individual requirement to obtain coverage begins, insurance exchange opens for business, Subsidies for buying coverage available
2016; Long term care benefit available
2018; Federal tax on high value benefit packages begins
*data from California Healthcare Foundation
Sometimes everything works out how you want it to!
Recently I worked with a client who was committed to finding the right property that she could afford and also fit into her long-term plans. When she came in looking for an investment property of multiple units, with low down payment, low monthly payments, and in a good rental market near San Francisco I thought that she may just be asking too much.
She interviewed a lot of people, asked questions, listened to their advice and did her own investigations and then, when she felt comfortable she acted decisively and heeded the advice of the professionals working for her. We were able to find her a great four-unit building with only a 3.5% down payment. And, believe it or not, the property even has a positive cash flow with her living for free in one of the units!
The market right now is so varied that even some of the most difficult to find situations have a chance to found. It’s important to know what you’re looking for and to recognize when you’re asking for too much, but always take a chance on finding just the right place because it happens!
Use your discounts!
When comparing your insurance premiums you need to make sure you are looking at the whole picture rather than looking at one mono-policy compared to another. Often the various discounts available through a multiline carrier will make your overall insurance cost less than if you just compared one mono-line policy to another.
For example, your auto/renters discount can save you so much on the auto premium that it can pay for the Renters policy. In other words, you can get two car insurance policies and a Renters, for the same total cost as two auto insurance policies.
Discounts you want to look for are the: Multi Line Discount, Good Driver Discount, Multi Car Discount, Persistency Discount, Safe Driving Discount, Business or Professional Group Discount, Anti-Theft Discount, Passive Restraint Discounts,AntiLock Brake Discount,Alternative Fuel Discount,Senior Defensive Driver Discount,Good Student Discount,Inexperienced Driver Training Discount,and the Electronic Stability Control Discount.
Be sure to compare the cost of the total household insurance premium cost rather than a mono line comparison. That way you can be sure you are getting the best value for your insurance cost!
If you would like a free, objective review, please call me at 650-355-5396!
Mortgage Protection Insurance
Buying a home brings many responsibilities in addition to providing the income to cover the mortgage, and maintain the residence. Along with your Homeowners insurance you also need to consider having Mortgage insurance.
Some Mortgage insurance is called PMI (Private Mortgage insurance) which the lender tacks on to the loan as an additional fee (if you put less than 20% down). This generally protects the lenders from the loan defaulting.
But Mortgage insurance can also be provided by purchasing a Life Insurance policy on one, or both, of the spouses in the household. This protects the families financial future should something happen to either of you.
If a working spouse were to pass away the financial hardship that would put on the household will only compound the emotional hardship. At the very least, Life insurance gives the family time. Time to readjust to the loss of a loved one, and reassess their financial situation.
Ideally it would provide sufficent income to maintain their lifestyle. But, while many families have morbidly joked about being worth more dead than alive, the ultimate factor in calculating sufficient Life Insurance is its affordability.
A non-working spouse’s economic contribution to the household has been calculated to be $30,000 a year. That is what a basic housecleaner, errand runner, baby sitter would cost conservatively. To replace that you need to have enough coverage to conservatively generate that amount of income. At a 5% return that would mean $600,000 in Life insurance.
This is easiest to obtain with a 20 Year Term policy which would cover this expense for the time the children are young and the mortgage is large. And a multi line carrier should provide discounts on your personal lines which will also help defray the cost!
Contact me today and we can discuss how we can be sure your family is sufficiently covered! 650-355-5396, or ctrowbridge@farmersagent.com.
A Smarter way to buy Group Health Insurance
Health Insurance premiums are a topic all over the news these days! Their annual increases have shocked the buying public into demanding some kind of action from the government. What kind of change that will take is somewhat in the air, as the government has put off the effective date several years into the future, and who knows what will end up actually being incorporated into the rules and regulations? But, there is a strategy that you can take advantage of right now, that can lower your premium by 30%!
This strategy takes into account the actuarial knowledge gleaned from years of experience and thousands of different types of customers. It is based on the reality that only 4-7% of your employees will max out their deductibles in a given year, and 50-70% of your employees will not use their health insurance, or will use it so little as to have little effect on its costs.
It entails using a high deductible plan, from any of the main carriers in the market today, and using the impressive savings they produce to pay for the actual deductibles used through a pooled company owned savings account (not an HSA which is individually owned). After deductibles, and a small fee to the TPA to administer and coordinate the plan, the net effect is a 30% savings off what the typical plan costs.
This strategy is currently being used by over three thousand companies, in all different types of businesses. I call it a “Smarter” way to buy your group health insurance as it is geared more towards paying for what you are actually using.
Your carrier is not motivated to tell you about this because the 50-70% of employees who are currently not using their health insurance are pure profit to them. And, your Broker may not have told you about this because 1) they are not aware of it, or 2) they don’t want to rock the boat and lower their commissions by 30% when they have a good thing going! I just did because I want to earn your business! All your business, including your Business Owners Policy. Workers Comp, Group Life, 401k, etc…
If you would like to see how this works I need to show you a side by side comparison to what you are currently paying. All I need is a census (DOB, Home Zip, Dependent Status and Carrier Plan) along with a copy of a recent bill from each carrier. This is probably your largest overhead expense, after salaries!
Contact me today! 650-355-5396, or ctrowbridge@farmersagent.com.
Understanding the New Taxes Coming in 2013
The health care bill that passed in March 2010 has two new taxes starting in 2013 to help pay for it – an extra 0.9% levy on wages for couples earning more than $250,000 ($200,000 for singles) and a new 3.8% tax on investment income, which in effect adds a “payroll” tax on unearned income.
How does the 0.9% tax work? If a couple earns $350,000 under current rules, they owe 1.45% or $5,075 and their employer owes a matching amount (Medicare tax due). In 2013, the couple will owe an extra 0.9% on any wages above $250,000. For this example couple, that is 0.9% of$100,000 or $900. Their employers pay nothing extra.
How does the 3.8% tax on net investment income work? It is keyed to the “modified adjusted gross income” with a threshold of $250,000 for couples and $200,000 for singles. For example, a couple has $400,000 of adjusted gross income — $200,000 in wages and $200,000 in investment income. Thus, they have $150,000 of income above the $250,000 threshold and they would owe an extra $5,700 in taxes.
To better understand this tax, you need to understand what is considered investment income. Interest, except municipal bond interest, dividends, rents, royalties, capital gains, insurance annuity payouts, passive income, and even gains on the sale of a home above $250,000 (single) or $500,000 (couple) counts. The 3.8% will also be put on trusts and estates.
What is not taxed will be regular and Roth IRAs, retirement accounts, Social Security, life insurance proceeds, and veterans’ benefits.
What steps can you take to minimize these benefits? Examine both your regular and investment income. Look at a Roth IRA conversion as Roth withdrawals don’t raise A&I and aren’t considered investment income.
If you have a small business, consider a defined pension plan, as their payouts don’t count as investment income. If you are selling assets, consider an installment sale as it spreads out the income.
Lastly, life insurance may become more attractive as proceeds at death are not subject to this tax. That means that a taxpayer could buy a policy, borrow from it, and then settle up at death thus avoiding income tax on investment gains.
So, get ready for these new taxes in 2013.
How Much Insurance is the Right Amount of Insurance to Have?
Homeowners may not realize it, but it is their responsibility to make certain they have sufficient coverage to replace their home (if it were to burn down)! Insurance carriers do not offer “Gauranteed Replacement” coverage anymore. They offer “Extended Replacement” coverage. This adds an amount over the rated Dwelling amount to take care of any discrepancies. Typically this is 25-50% over the rated amount.
But, the base amount needed is the responsibility of the Policy holder. Thats not to say a good agent will not be able to give you a good idea of what would be appropriate for the area. But, many people rely on their carriers to tell them, and there is no assurance the voice on the other end of the phone is anything more than an order taker.
The right amount of Dwelling insurance is easily calculated. Just take the square footage of the home, and multiply it by the local construction cost per square foot.
Also, don’t skimp when t comes to liability coverage as you can have a lot more to loose than the cost to rebuild your home if you become involved in hostile litigation. Remember, your Liability coverage protects you from people suing you for monetary damages.
Since the likelyhood of you having someone over who would sue you is not high this coverage is a real bargin, and should be enough to cover your “assets at risk”, (these equal your Equity in property, savings and investments, and 4Xyour annual income).
You face most of your Liability exposure in your car so make certain that your Bodily Injury, and Property damage coverages are sufficent to cover your “Assets at Risk”. Since most homeowners have considerable “Assets at Risk” they may want to consider an Umbrella Policy. That is, a seperate Liability policy, that goes on top of the underlying Liability coverages found in your home, auto and boat policies. They come in increments of $500,000 to $1,000,000 and are exremely cheap considering the peace of mind they provide.
Pay attention to this part of your Insurance policy or you may discover, painfully, that you didn’t have the right amount of insurance coverage. What a miserable way to learn that the cheap insurance you were paying for is insufficient to protect you when you really need it.
Contact your agent today to confirm you have the protection you are paying your hard earned money for? Or, call me, Corrin Trowbridge at 650-355-5396, for a FREE REVIEW!
The importance of doing underground storage tank (UST’s) inspections for homes in San Mateo County
I had the “interesting” experience in 2005 (prior to my becoming a licensed agent) of learning first hand the process behind removing underground storage tanks. Unfortunately, unlike in San Francisco which recommends sellers or buyers have underground storage tank testing for older homes as a point of sale procedure, the same recommendation is not in place in San Mateo County
To make matters worse, some believe that the natural & environmental hazards report (you may hear it called a JCP report) indicates if there are tanks on a property. This is somewhat incorrect; the report only indicates if there are known tanks on a property, typically those which have an open case & are either being repaired or removed/decommissioned.
Tanks more typically are found at the obvious commercial businesses such as gas stations or car rental/automotive shops but were also common on pre-1950′s homes as storage for heating oil.
To determine if a property has tanks, one must do a tank inspection. I sure would have appreciated knowing this nuance of San Mateo County property prior to my purchasing a home (via a local agent) which had not one but two UST’s! The discovery came about a few months after moving in while the old concrete driveway was being removed.
One tank had heating oil (this was the fuel for furnaces in older homes prior to gas) & the second tank had gasoline (probably an original homeowner fueled a car in the garage).
We quickly had a tank inspection company confirm tank presence including above ground evidence (fill pipes in the driveway, formerly covered with a concrete cover, vent pipes at the side of the property, & a former dispenser pipe in the garage).
For the record we did have property inspections. There was personal property of the sellers obscuring this above ground evidence in addition to general property inspectors are not trained to inspect for UST’s, that is a separate type of inspection.
It cost about $30,000 to remove both tanks followed by removal of contaminated soil & pump out of contaminated water over a period of ~12 months. Further joy when we had to under go one of the wettest winters resulting in having a mud swamp for a front yard/driveway.
Additional legal costs were incurred as we pursued the sellers for non-disclosure (we happened to find the owner who confirmed that sellers were aware of the tanks; prior to more stringent environmental regulations, UST’s were commonly removed by homeowners & taken to the dump & weren’t considered a big deal.
More good times & astronomical legal costs followed during the legal process of mediation & arbitration; the judge did rule in our favor and the sellers are on the financial hook. Still, would rather have just known upfront about this “nuance” in this county because I sure would not have purchased a property knowing tanks were present.
Open & closed UST sites can be found at GeoTracker which includes residences.
For a reasonable $150 or so, protect yourself & have a tank inspection!
West Portal, SF Market Trends as of July 23, 2010
If you have a West Portal home that you are thinking about selling now may be the perfect time. There is solid buyer demand, the properties that are well priced & show well are receiving multiple offers and inventory is really low (a balanced market is considered 6 months of inventory; <6 mos.is a sellers market; >6 months is a buyers market).
Trying to buy your dream home in West Portal? Be prepared, it’s going to take time, patience and perhaps writing an offer on more than one property to get in.
Eco-Friendly Driveway
Considering a new driveway? There are lots of options available ranging from stamped concrete, to brick, to pavers, to permeable.
We went the route of a pebble driveway to replace the concrete driveway for a few reasons. It was economical, fast to install and permeable thereby reducing runoff & pollutants entering our storm drains.
My understanding is that storm runoff is one of biggest pollutants of our waterways. I’m in full support of making choices which will offset our impact on the environment.
Our initial thought was to install porous concrete pavers which have openings that can be filled with gravel or grass. We then decided on decomposed granite for the ease of installation and maintenance. It is also available in a few colors.
It’s been two plus years and we’ve been really happy with the result. There is no worry about future cracking and settling as there is with a concrete driveway. No worries about staining either since we can move around or rake the gravel.
The drawback is the occasional required sweeping of stray pieces that end up on the path way or sidewalk and the difficulty in walking to the car in heels. Stray pieces can end up in the house on our wood floors if shoes aren’t properly wiped at the door, but our floors have been getting a fair amount of abuse from two active dogs. It’s a house well cared for and well lived in!
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