2009 Stimulus Bill Changes Cobra Plan for Unemployed Workers

As you know employers are required to provide health insurance coverage for 18 months after an employee leaves his job under the Cobra act. What has changed with the Cobra law under the new 2009 stimulus plan from the Obama administration may surprise many people.

The provisions embedded in the over $800 billion dollar stimulus plan that passed, would load employers down with new provisions for Cobra administrators. This will be the biggest change ever since Congress enacted the law in 1986 to help Americans maintain health care coverage. The additional Cobra provision under H.R. 598 has two major measures that have a massive cost for today and tomorrow.

First, if an individual stops working as early as age 55, they could retain Cobra coverage until they reach Medicare eligibility. It also doesn’t matter how long they have worked for the employer either. They would still be eligible under this new twist to the economic stimulus plan pushed through by mostly Democrats.

The law currently allows for health insurance coverage for only 18 months after the employee leaves. Under current Cobra law, the employee must pay 102% of the health insurance premium or the coverage is lost.

Second, the Cobra bill provides for a federal “COBRA Premium Subsidy” for employees that were laid off from Sept. 1, 2008, through Dec. 31, 2009. The subsidy will cover 65% of the health insurance premium payment for up to 9 months through a Cobra plan provider. The provider will receive compensation in the form of a tax credit to cover the shortfall in the insurance premium payment.

There has been little opposition to the plan given the economic slump that started in 2008 and seems to be headed deep into 2009. Most employers agree that to provide assistance with health insurance premiums on a temporary basis is an excellent idea.

Systems Are Go

Discovering Above The Line Tax Reductions for your business in 2009

When it comes to federal internet taxes, your goal needs to be to pay just what is appropriate, nothing more. Since your tax liability is calculated by your net income, the surest way to reduce the taxes you pay is to minimize your income. Of course, you need to do this without illegally reducing your income. You can do this by taking certain above-the-line tax deductions.

Above-the-line-tax deductions are more like tax deductions that are adjustments to your income. They’re identified as above-the-line because they are subtracted on the front page of the tax return just above the bottom line. These deductions reduce your adjustable gross income and ultimately decrease your tax liability.

The following are some above-the-line tax deductions that are discussed in our Tax Guide which you can take if you are eligible.

• Moving expenses, if you relocated for job purposes.

• Self-employment. Half the total of taxes that are paid to Social Security and Medicare.

• Self-employed retirement plans.

• Self-employed health insurance. The total cost you fund in health insurance fees not only for yourself, but for your spouse and dependents as well. Even contributions towards long-term care policies are included.

• Penalties paid for early withdrawal of savings. The account manager of such an account should send you a 1099-INT or 1099-OID form including the early withdrawal penalty.

• Alimony payments. If you are divorced and funding alimony, you can deduct these payments from your income. You must include your ex-spouse’s social security number; otherwise the deduction might be disallowed.

• IRA deductions for amounts contributed to traditional IRAs for people who are self-employed.

• Student loan interest. Up to $2,500 in student loan interest paid can be deducted for single filers making $65,000 or less or joint filers making $135,000 or less.

• Jury duty pay if it was turned over to your employer.

You can obtain many of these above-the-line tax deductions by utilizing the long form, 1040. If you prefer to use the short from, 1040A, you can still take a few of these deductions. Early account withdrawal penalties, IRA contributions, student loan interest and jury pay are the above-the-line-tax deductions that are allowed on the 1040A tax return. Consult with your personal tax consultant for more details or check out this Review of Domain Tax Guides.

Self Employed Calculator, Calculate Self Employment Tax 2009, 2010

The self-employment tax is added on top of the income tax you must pay as a self-employed individual or married couple. This creates a very heavy burden that you probably would prefer to avoid.

In essence, the self-employment tax

 is in place of the share of social security and medicare taxes normally paid by an employer on behalf of an employee. Since the self-employed person is both an employer and employee, he must pay the tax for himself, whether or not he is on the company payroll.

As the tax tracks the income of the self-employed person, it is an additional layer of tax, on top of the income tax itself. This places an even greater premium on planning your business activities to reduce taxable income, even while managing your business for profitability. The good news is that most of what you do to reduce your ordinary taxable income will also reduce your self-employment tax as well.

But there are at least three items to consider that are different from calculating what is taxable for ordinary income tax purposes. First, only the first $102,000 of income is subject to self-employment tax. If you are fortunate enough to have income that is likely to be significantly greater than this, you will not have to worry about this extra layer of tax as you budget and plan for your income.

Second, 50% of the self-employment tax itself is deductible from ordinary income. This creates a negligible planning opportunity because this amount would be deductible for any employee, yet it is worthy of consideration in your individual situation as you are preparing your returns.

The last consideration is that, rarely but occasionally, it can be to your benefit to be treated as an employee who is NOT self-employed in order to avoid the tax altogether. Calculators are available through TurboTax Online or other tools your tax preparer may have to tell you if you have a unique situation where this may apply.

Is Assisted Living right for you?

Assisted living is for adults who need help with everyday tasks. It is not an alternative to a nursing home, but an intermediate level of long-term care appropriate for many seniors. Assisted living exists to bridge the gap between independent living and nursing homes.

How do you know if your loved one needs an assisted living facility (ALF)? ALFs are for people needing assistance with Activities of Daily Living (ADLs) but wishing to live as independently as possible for as long as possible. ALFs offer help with ADLs such as eating, bathing, dressing, laundry, housekeeping, and assistance with medications. Statistically, an assisted living resident needs assistance with an average of three ADLs. ALFs are popular because they are less restrictive and less expensive than a nursing home, which is the last place many older adults want to go. They provide the residents with more freedom.

What should you know about ALFs in general? It is important to know what type of environment each assisted living facility caters to so that your loved one will be comfortable and happy. Find out if the assisted living facility offers any exercise programs, shopping trips, and/or other entertainment. Assisted living residences range in size from 3 to over 200 beds. There is no nationally recognized definition of assisted living in the US. Assisted Living facilities are regulated and licensed at the state level. Some assisted living facilities are part of retirement communities. The Consumer Consortium on Assisted Living (CCAL) is a national nonprofit consumer-based organization nationwide focused on the needs, rights and protection of assisted living consumers, their caregivers and loved ones. For more information about choosing the right Assisted Living Facility, just follow our link.

Assisted living costs less than nursing home care. Most Assisted Living residences charge month-to-month rates, but a few residences require long-term contracts. Medicare does not cover the costs of assisted living. So be sure you understand the costs beforehand.

Want to find our more about Assisted Living? Check out our Assisted Living information at ConcerningAging.com.

Author: Staff Writer at www.ConcerningAging.com

What you should be advise of when registering for Medicare.

If you have reached retirement age, or if you are in need of stable health care insurance, chances are you have considered signing up for Medicare. The federal government backs the Medicare plan, and it is accessible to U.S. citizens or permanent residents who are 65 and older and who have worked for at least a decade through a Medicare-covered employer. People who are unable to work or who are in end-stage renal failure might also qualify for Medicare. Two plans are accessible through Medicare; Plan A and Plan B. Medicare Part A refers to hospital stays, while Medicare Part B covers medical expenditures. Once you are accustomed to the steps, registering for Medicare is an easy process.

If you already get Social Security benefits, you do not need to take additional measures. People who get Social Security benefits already are enrolled for Medicare. Also, as a Social Security recipient, you are exempt from the premium requirements; you may just use the benefits of the program. Questions are best directed to advocates at your neighborhood Social Security Office.

Your first step is to determine that you meet the primary eligibility requirements if you are not already enrolled. You must determine if you or your spouse has labored for a Medicare-providing employers. Do you have paperwork that you are now age 65 or over? Are you currently determined to be unable to work? You may conduct a self-assessment by surfing to the federal Medicare Web site and answering an online questionnaire. Eligibility will be validated, or you will receive instructions about what criterion you need to reach to be eligible.

If you are considered to be entitled, you have a few choices to begin receiving benefits. You may call the Social Security number, and a help person can guide you through the process. You might consider visiting the local Social Security Office where a representative can serve guide you through the paperwork.

Medicare is a means of offering health insurance coverage to those citizens who require it the most. See more about your eligibility for Medicare; getting in is simple, and you can bring about getting those benefits as soon as possible.