Open Enrollment Health Insurance Tips

                                          

If you are one of the lucky employees who have a job and have health insurance soon you are probably getting ready to participate in Open Enrollment.  Open Enrollment is an open benefits option for employees to make corrections or updates to their current health insurance benefits.  Health insurance companies are required to accept any changes or updates without questions or documentation of changes.  Health insurance benefits account for approximately 30% of an employee’s salary.

For those currently employed, you can make changes during your employers Open Enrollment which usually begins each year in October for:  prescription drugs, dental, health, flexible spending account, term life insurance, long-term care insurance and accidental death insurance but varies by employer.  Pick the options you know you will use.  Skip the ones you don’t need. 

To take full advantage of Open Enrollment, verify all of your information is accurate.  If you have benefits that will no longer be paid in 2014, ask your health plan provider if you can pay for the services using a Flexible Spending Account. Read all of the information provided to you prior to making any changes to make sure you pick the option that is best for you.

You may qualify for a health savings account (HSA) if your health insurance policy has a deductible of at least $3,300 for individual coverage or $6,550 for families.  Money is put in a pre-tax account which grows tax-deferred and can be used to pay for co-payments, deductibles, and other medical expenses. You can roll over the unused money each year and take the balance with you if you leave your job. Some employers contribute to employee HSAs. 

If you don’t qualify for a HSA you can sign up for a flexible spending account (FSA) which allows you to save money to pay for out-of-pocket medical expenses. In 2014, the maximum amount employees can contribute to a FSA will be $2,500 per year.  Your FSA contributions do not have to pay state and federal income taxes or Social Security payroll tax. The catch is you have to spend the remaining money by the end of the year or you lose the money.

The Government's Budget: The Debt Ceiling

What is a debt ceiling? The US debt ceiling is a cap that is set by Congress on the amount of debt the federal government can legally borrow. The cap applies to debt owed to the public or anyone who buys U.S. bonds in addition to debt owed to federal government trust funds such as those used for Social Security and Medicare.
Every day the federal government spends more money than it takes in and makes up the difference by borrowing money. As a result, every day, the government’s debt increases. This is why the government is considering raising the debt ceiling or the government will have to stop spending more than it takes in which requires balancing the budget. Balancing the budget will require reducing spending by approximately 40 – 44%, raising taxes or a combination of reducing spending and raising taxes.
If the debt ceiling is not increased the government has to pay more money to borrow money which adds up very quickly and could cost taxpayers hundreds of millions of dollars. This can cause taxpayers to lose confidence in the government. If lenders lose confidence in the government that it can’t repay its debts, interest rates will start to increase.

The government generates money by selling debt through Treasury bonds which is the government's IOU. A taxpayer, a foreigner or a hedge fund manager purchases a Treasury bond (bill) and the government promises to pay the bond at a later date, paying the buyer back with a small amount of interest. As of January 2011, foreigners owned $4.45 trillion of the U.S. debt.

As long as Treasury bond buyers are confident that the government will repay them, they accept the lower interest rate of return. However, if bond buyers feel that the government will not be able to repay them, the market will demand a higher interest rate on the bonds which decreases the number of buyers who want to buy them. Taxpayer money is used to pay the bond interest rate so higher interest rates will result in higher taxes. A lack of confidence has already been seen in the stock market decreases over the past week as we approach the current debt ceiling.

If the interest rates on Treasury bonds increases this will have a domino effect and cause the interest rates of other products such as cars, student and mortgage loans and credit cards, business loans or lines of credit to increase. There could also be an increase in personal products such as electronics, clothes, food, household goods and company products and services. This will cause the value of the dollar to decrease causing an increase in costs to purchase foreign imports as well as gasoline for cars.

The less money that is approved for loans or credit will cause taxpayers and business owners to spend less and save more which will hurt the economy.

If Congress doesn't raise the debt ceiling, the government will reach the debt ceiling and max out its borrowing power which will prevent the government from paying its debt. This would affect Social Security, Medicare, military salaries, tax refunds, and unemployment insurance, government grants, and other funding.

Is Your Budget Too Tight

A budget is only restrictive if you don't have any extra cash left over after you pay your bills. Stars and athletes have budgets; they hire accountants to keep track of their money so why shouldn't you keep track of yours? 70% of Americans live paycheck to paycheck and 40% of Americans live above their means. This statistic shows there is a serious problem in America.

A budget frees you from stress, worry and anxiety because you know what you have, what you are spending and have the money available to buy the things you need and occasionally the things you want.

A budget helps keep your finances in balance. When your budget is out of balance you use credit cards, go into debt and this can lead to serious financial problems such as foreclosure, bankruptcy, etc. If you know how much money you earn you should also know how much you spend.

How to Develop a Budget
1. Subtract monthly expenses from your monthly income. If the total is negative or less than 5% of your total monthly income that is a red flag that you need to make some major adjustments to your budget.
2. Track daily, weekly or monthly
3. Keep all your receipts and reconcile your bank accounts
4. Use automated software tool, pen and paper or the envelope method
5. Include some wiggle room.
6. Create short and long term goals
7. Use money left over in budget to create a savings account and pay down debt

How Budgets Can Prepare You for Future Events
1. Is your financial roadmap
2. Helps to deal with unexpected expenses
3. If you work every year and don't have money to take a vacation or get your car repaired or buy a needed pair of shoes because the one you have squeeze when you walk, or don't have enough money to buy health insurance then you need a budget.
4. What you do today will affect your future
5. Can help you plan for the future
6. Frees up cash to achieve financial goals: plan for vacations, home renovations, your children's college education, and plan for retirement

Benefits of a Budget
1. Prevents you from spending more than you have
2. Reduce usage of credit cards
3. Reduces fees (bounced checks, overdraft, over-the-limit, late fee, etc.)
4. Prevents arguments with your spouse or significant other and helps reduce blame
5. Helps you save money when making purchases because you don't have to worry about credit card interest and finance charges
6. Prevents harassing calls from creditors
7. A budget is needed even if you pay your bills on time. The best athletes have personal trainers and coaches to help them remember the best, so if you want to get better with your finances start a budget

Does This Describe You?

Does this article describe you, if so, it's time to scale back.
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/01/AR2008020103934.html?hpid=topnews


1. Create a flexible spending plan.
2. Reconcile receipts with monthly statements.
3. Identify at least financial goals (short-term and long-term).
4. Identify needs vs. wants and see what areas you can reduce expenses.

When Will You Decide to Change Your Spending Habits?

I was recently talking to a woman who is unable to pay her necessity bills (utility, car note, car insurance, food, gas for car, etc.). She is working but is not making a lot of money. I wonder at what point does a person say enough is enough. I am tired of being broke, busted and disgusted. Are you tired of having no food, living paycheck to paycheck, charging groceries and gas, unable to pay for basic necessities?

Times are hard and you have to wake up and realize that you have to change your mindset if you want to stop living paycheck to paycheck. There are many ways to save money and reduce basic expenses. First you have to decide if you want to live a better life, if you do then you have to change the way you think about money, spending money and saving. Saving money is your safety net, your emergency fund in case you get sick or lose your job you can use your savings to hold you for a few months until you can go back to work or get a new job.

Even if you are not making a lot of money you can still save money and reduce your expenses. Here are 10 tips to help you reduce expenses:
1. Cancel you cable service or reduce your services to basic and/or expanded basic service.
2. Reduce your cell phone service down to the cheapest plan and don't use the phone until non- peak time when the rates are free.
3. Turn off lights, televisions, computers, etc. at home when you are not using them.
4. Bring your lunch to work.
5. Catch the bus, subway or carpool to work. If you don't mind walking walk to the subway or walk to the next subway stop (saving a few cents now will add up later).
6. Have a yard sale to sell things you haven't used in the past year.
7. Donate things you aren't using anymore or didn't sell at the yard sale to a charity (you can write the donations off on your taxes).
8. Donate that old abandoned car in the garage to a charity and write it off on your taxes.
9. Shop at superclubs such as Costo, BJ's or Sam's Club.
10. Use coupons when grocery shopping.

This is just a sample of the information I provide in my debut self-help book entitled, How to Get Out of Debt: Get an "A" Credit Rating for Free Using the System I've Used Successfully with Thousands of Clients available online now at Amazon.com and all bookstores in Dec. 2006. I hope these tips help you lead a better financial life!