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Has day-to-day complexity overwhelmed our ability to adapt? November 14, 2014

Posted by forwardfinancialplanning1 in Financial Planning, Health Insurance, Personal Budgets, Retirement Savings.
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Those who study evolution stress that the species that survive are not always the strongest, but rather, the species that can best adapt to change. One has to wonder if “a failure to adapt” is at work in present day America.

Being a child of the 1950’s I can’t help but reflect back to the financial/health care world in which I grew up. My parents did a respectable job of providing for us, without needing to know a single thing about IRA’s, 401k’s, variable annuities, Health Maintenance Organizations or insurance company pharmaceutical formularies. But, in order to thrive in the USA of 2014, learning about these and other financial/health care concepts is an essential survival skill, This blog has often lamented about the abysmal state of financial literacy in today’s working age population. A recent Kaiser Foundation study has provided me with similar concerns regarding health insurance literacy.

The Kaiser Foundation found that given appropriate data, only 16% of respondents could accurately calculate out-of-pocket costs for an out-of-network lab test. Only 33% could define a formulary while just 51% could calculate out-of-pocket costs for a hospital stay. Further, only 72% could define a health care deductible and 76% could define a health care premium. Since only 4% answered all ten survey questions correctly, it’s probably safe to say that a lot of mistakes and poor decisions are being made in this facet of day-to-day living.

So my question arises once again, “Has the complexity of our modern financial/health care world exceeded the general population’s ability to learn and adapt???”


“And the winner is……………….” November 25, 2013

Posted by forwardfinancialplanning1 in Federal Income Taxes, Health Insurance, Income Taxes.
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As we watch the debacle known as ObamaCare attempt to get launched, one can only hope that they’ll soon “get it right.” It’s particularly discouraging to contemplate that the government will essentially throw unlimited amounts of money at the problematic web site in an attempt to fix its problems. (Imagine how many heads would roll if Microsoft, Apple, Oracle, et al had they spent such enormous amounts to get one of their new products to work?). Several of our recent posts (October 13, October 23) have commented on the federal government’s poor stewardship of our tax dollars. A recent report on the Pentagon’s lack of fiscal accountability appears to set a new standard for governmental ineptitude.

A Reuters investigation by Scot Paltrow found that the Defense Department cannot account for a mere $8.5 TRillION in taxpayer funds since 1996. The report notes that 1996 was the first year that the Pentagon should have been audited under a law requiring audits of all government departments. It further notes that the Department of Defense makes a regular practice of inserting billions of dollars of “plugs” which are the accounting equivalent of stating, “we don’t know where it went.”

This makes the current fiasco in Health & Human Services look like the minor leagues!!

The tip of the iceburg…………. October 23, 2013

Posted by forwardfinancialplanning1 in Education Planning, Health Insurance, Income Taxes.
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As the negative press reports pile up regarding the roll-out of the Affordable Care Act (“ObamaCare”) insurance exchanges, the appearance of two seemingly unrelated articles cause me to ask the philosophical question, “Can the government get anything right?”. Detractors of the ACA are already asking, “Do you think a private sector company could get away with the roll-out a new product with as many problems as this one?”

The first article by the Associated Press quoted a US Treasury Department report which found that the IRS paid out more than $110 billion (yes, billions!!) in tax credits over the last decade to people who didn’t qualify for them. IRS Inspector General J. Russell George said more than one-fifth of all credits paid under the Earned Income Tax Credit went to people to were not eligible to receive them. This situation is particularly troubling in that the Earned Income Credit is a “refundable” tax credit. This means that people who have no federal tax liability still get sent a check for the amount of the credit. One can call this situation “welfare” or “a negative” effective tax rate—-either way it’s blatantly unfair to those who dutifully pay their taxes.

The second article in The Wall Street Journal cites Department of Education figures that show that the default rate on student loans has increased for six straight years and currently, one in ten students defaults within two years of starting repayment. Outstanding student loans in the US now exceed $1 trillion with the vast majority being originated by the federal student loan programs. It’s noteworthy that anyone can get a federal student loan with no credit check whatsoever and the taxpayer gets stuck holding the bill when default takes place.

Getting back to the ACA roll-out, one has to wonder that if the federal government is such a poor steward of taxpayer dollars with regard to refundable tax credits and student loans, how can we expect any better with the ACA? Many ACA applicants are counting on federal subsidies to reduce the cost of their newly acquired insurance policies. These subsidies will be administered via the IRS.

Retiree Health Costs October 30, 2009

Posted by forwardfinancialplanning1 in Health Insurance.
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In a 2008 survey conducted by Medco Health Solutions, one in three retirees stated that they are spending more on medical expenses than they anticipated.¬† The Obama administration¬†recently forecast that they will use millions in planned reductions in Medicare costs to fund universal healthcare.¬† Since Medicare currently provides most of the health care received by retirees, it will be interesting to observe how this “one-in-three” ratio changes in the future.