The Senate version of the GOP health care bill has now been reviewed by the Congressional Budget Office (CBO). The bill, called The Better Care Reconciliation Act was developed in secret meetings by a small handful of Republican Senators. When it finally saw the light of day the public learned that it differed only in small ways from the House version that had been floated earlier in the year to disastrous consequences.
There has been a lot of publicity about the severe impacts of both bills on individual health insurance policyholders and to Medicaid recipients. The CBO estimates that the Senate version will cost 22 million Americans their health insurance, only slightly better than the 23 million estimated for the House bill. Both bills cut Medicaid funding to the states which will impact millions of people who rely on that system to obtain even the most basic of medical care.
What has not really been addressed in the media is that these bills have as much to do with granting tax cuts to the richest Americans as it does to cutting health care to the middle and lower income population. The Affordable Care Act (ACA) had instituted taxes on insurance companies and medical device manufacturers to help fund the subsidies that reduce premiums to lower and middle-income policyholders. The reasoning was that both categories of corporations would see a direct benefit from the ACA because more people would be insured. In addition, a tax was imposed on Net Investment Income, a Medicare surtax and a tax on “Cadillac” high-cost employer health plans. The result of cutting all these taxes is a phenomenal gift to the wealthiest among us. CNBC reports that almost half of these tax cuts will go to households making over $875,000! The total amount of the tax cuts? $701 Billion! The CBO report calculated that the Senate bill would save $1.02 Trillion primarily through those cuts to Medicaid. However, once the loss in income due to the tax cuts were figured in, the net savings to the government is just $321 Billion over a decade.
While most of the media coverage has been about those unfortunate millions of people who are going to lose health insurance and access to health care, an equally important story seems to be that this is really a tax cut disguised as a health care bill.
Many people buy life insurance when they are young, perhaps when getting that first good job, but then never review it again. This is a mistake! Although there can be many reasons that your need for life insurance may change, there are some key events in life that can indicate the need for more or less life insurance coverage.
An article in US News and World Report last month highlighted several of these notable events:
- Marriage: Some couples wait until they either have children or purchase a home to think about life insurance but this overlooks some key liabilities. Marriage creates a union in finances and each person is now exposed to the total liabilities as well as the assets of the couple. Usually, two incomes are being used to finance a certain lifestyle and consideration must be given as to what would happen if one of those incomes suddenly disappeared.
- Children: The birth or adoption of children immediately creates financial commitments. These can range from making sure that a surviving spouse can raise the children with just one income to providing for higher education down the road.
- Home Purchase: Most people get this one because it is such a large financial commitment and you want to be sure that a surviving spouse has enough money to continue ownership of the home. What is sometimes missed, however, is when the second or third home is purchased. Often the new home is more valuable than the last and the mortgage is even higher. It is important to review life insurance at each new purchase or refinance to make sure there is still enough coverage.
- Starting a Business: When a person starts a business they often max out their resources and credit in order to get the fledgling enterprise off the ground. That simply means that if the person were to suddenly die, a surviving spouse or perhaps business partner would be left unable to move ahead without a significant amount of cash. In addition to coverage for a spouse, there are specialized policies for business partners to protect each other from disaster.
- Over 50(ish) and Retirement: As they age, people often find themselves as “empty nesters” when the house is paid for, the kids are gone and college is no longer a worry. This is a time when life insurance can be reviewed and either decreased or possibly shifted to another type of coverage. Usually, the need for extremely large amounts of coverage has passed. At this time a person might do away with large term policies and perhaps look at either Long Term Care policies or Final Expense policies.
With regard to life insurance, every person’s situation is unique. Just because a co-worker or relative carries a certain amount of coverage, that has absolutely no bearing on how much you should carry. Any change in your financial or personal life can signal a review of your life insurance, but the times mentioned above should be your minimum benchmark. If you want to review your insurance, you may find my ebook Do You Really Need Life Insurance can be of great help.