WOMEN NEED LONG-TERM CARE INSURANCE

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A couple recently paid their annual long-term care annual premium. For the two of them, she is age 59 and he is age 64, they paid almost $3,500. Sounds like a lot for a year’s worth of insurance, especially for two people who are on the verge of retirement. Right?

But then, they are reminded of a friend who celebrated her 100th birthday last December. There’s a woman for whom good retirement planning has been very important. Myra loves fun and is already planning her 101st birthday party, but she can’t do it by herself. She lives in a pleasant condo with help from two health care providers, one or the other of whom are with her most of the time.

Until a year or so ago, Myra got by with less assistance, but since she was in an automobile accident, she needs more help getting dressed, bathing, etc.

The total annual bill for this kind of assistance in the city where Myra lives is close to $100,000.

If Myra chose a nice nursing home instead, the bill would be about the same. But she would rather be independent and in her own home – just like most people would.

So, when looked at it this way, the couple’s long-term care insurance bill doesn’t seem like very much and they realize that it’s probably a small price to pay for good reliable care and help when needed.

Since the burden of family caregiving almost always falls on women, long-term care, or lack of it, can have a big impact on retirement finances. If part of a couple’s retirement plan relies on a younger wife continuing to work, the illness of the older husband can be a significant financial and physical burden.

Long-term care insurance that replaces her income or allows her to hire someone else to help with the caregiving so she can work, can be especially important.

POLL: YOUNGER AMERICANS MORE RECEPTIVE THAN SENIORS

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The Republicans proposal to change Medicare that has been championed by GOP vice presidential candidate Paul Ryan remains unpopular with Americans, although younger people are more receptive to it than older ones, according to a new poll.

This survey of 1,534 adults was conducted between September 13-19, 2012. It has a margin error of +/- 3 percentage points.

Only 37 percent say that the program should be changed to a “premium support” system in which the government provides beneficiaries with a fixed amount of money to buy coverage, either from traditional Medicare or private insurers, the poll by the Kaiser Family Foundation found.

Fifty-five percent support keeping Medicare as it is today, with a guaranteed set of health benefits. Only a quarter of Americans aged 55 or older want the program to change, and even a majority of older Republicans opposed the proposal backed by the GOP-controlled House.

However, the poll found that younger Americans are less resistant. Among adults between 18 and 54, 50 percent favor keeping Medicare as it is, and 44 percent believe it should switch to the premium support model, which is also called a defined contribution.

Even among Democratic adults under 55, 41 percent supported the Republican approach; the survey question did not iindicate that it’s a GOP plan.

The age gap is somewhat ironic, because those who are most opposed to the proposed new system would be least affected. Ryan’s plan would exempt those over 55 and allow them to remain in traditional Medicare, a feature supported by Mitt Romney. Nonetheless, this carve out has not won over the elderly – who are among the most reliable voting blocs – the poll shows.

The poll found that many voters on both sides switch their views depending on how the program is described to them.

For instance, when told about the exemption for people over 55, 19 percent of Americans said they were “more interested” in making the change – giving the premium support side a 53 percent majority.

“It’s important to note that opinion on the defined contribution plan, as is often true when it comes to majority policy changes that are difficult to explain, is still quite malleable,” the pollsters wrote.

Supporters of traditional Medicare were most likely to reconsider when told that changing to a premium support system was needed to sustain Medicare for future generations.

The poll found that Democrats also have influential arguments for those Americans leaning toward supporting the change. Between 14 percent and 19 percent said they were less interested in making the change after being told either that it would shift the cost from the government to seniors; that it would give the insurance industry “too much influence over seniors’ health care; that it would turn Medicare into a “voucher” program or that it would end “traditional Medicare as we know it.” The cost shift argument was the most persuasive of those tested by the pollsters.

Overall, most voters believe the federal deficit can be dealt with without reducing Medicare spending, but they also believe some sort of changes will be necessary for Medicare regarding its long-term sustainability.

The poll found that many Americans were not familiar with the terms used in this debate. Less than a quarter of people knew what either “premium support” or “defined contribution” means. Only half of voters recognized the term “voucher.” 

The poll found that Medicare remains an important issue for voters: less critical than their concerns about the economy and the budget deficit but more pressing than any other topic, including the 2010 health care law.

The poll also found that generally the public trusts President Barack Obama on health issues more than Mitt Romney, although elderly voters are about evenly split on which candidate would do a better job with Medicare.

Independent elderly voters thought Romney would do a better job guiding the program’s future.

The poll continued to find the public split on the health law. In September 2012, 45 percent favored it and 40 percent did not. Older Americans are more negative than younger ones.

The poll found that knowledge of what’s in the law remains weak: Less than half of those polled knew about components such as closing the Medicare prescription drug “doughnut hole gap” and making more affluent people pay more in premiums and payroll taxes for Medicare.

Only 39 percent are confident that the law does not include government “death panels” that make decisions about end-of-life care.

 

OBAMA VS. ROMNEY: 6 KEY DIFFERENCES ON TAXES AND REGULATION

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The two candidates offer voters starkly different ideas on how to reform the tax and financial systems. When GOP presidential candidate Governor Mitt Romney chose Republican Paul Ryan of Wisconsin as his running mate, pundits pondered over the idea that the campaign would be transformed to be one of ideas rather than insults. 

It only took a few days before that was exposed as wishful thinking, but that didn’t change the fact that the Romney-Ryan vision of how the nation’s tax and investment laws should be shaped offers a stark contrast to the one presented by President Barack Obama and Vice President Joe Biden.

Much has been made about various aspects of the candidates’ budget plans, with a particular emphasis on the fate of Medicare. While all the details can be tough to come by, it’s possible to divide just what a win by each side might mean to investors.

Here is a comparison on six key tax and regulation categories:

1. Investment Income

The battle over the rate at which capital gains are taxed often plays out along what sounds like class lines. Many say keeping them low helps the wealthy at the expense of the middle class because they will pay a disproportionate share. Others say low tax rates on the wealthy helps create jobs.

Obamahas proposed raising the tax on long-term capital gains from 15% to 20%. He would maintain the current rates of 0% and 15% on qualified dividends and long-term capital gain for couples earning less than $250,000. He would maintain the 3.8% Medicare tax on long-term capital gains that is scheduled to take effect in 2013.

Romney proposes maintaining the 0% and 15% rates on qualified dividend and long-term capital gains. He would eliminate taxes on capital gains, dividend and interest for taxpayers with adjusted gross income below $200,000. Romney would eliminate the 3.8% Medicare tax on capital gains.

2. Income Taxes

Income tax rates are another area of contention that exposes the split between the left and right.

Under the Obama plan, those couples earning more than $250,000 a year would see their rate move back to 39.6% after the expiration this December 31st of the Bush-era tax cuts that lowered it to 35%.

Romney calls for setting the highest rate at 25% and the lowest at 8%, down two percentage points from the current level.

Ryan’s plan offers a clear choice when compared to Obama’s. He calls for creating two tax rates, 10% and 25%, to replace the six that currently exist.

Tax preferences are another matter.

The Republicans would pay for lowering ordinary tax rates by eliminating certain deductions and credits. However, they have not said which of these would be targeted.

The Democrats call for a cap of 28% on itemized deductions as well as on health insurance provided by employers, municipal interest, and retirement plan contributions and student loan deductions and expenses for higher education.

3. Estate and Gift Taxes

This is another area that exposes the rift between the two parties’ vision for the future of the country.

The president’s plan would raise the estate and gift taxes to 45%, the pre-2009 level, while proposing a $3.5 million exemption.

Both Romney and Ryan would eliminate the estate and gift taxes.

4. Regulation of Financial Services

The Obama administration has backed major reforms for the financial services industry from the Dodd-Frank Act to the Volcker rule.

Romney for his part has called for what he describes as a new, modern set of financial regulations, but has not offered any details. He has called for the repeal of Dodd-Frank.

On the one hand, Ryan is seemingly more aligned with those wanting to reform the banking industry. He has said some banks are too big and has called for a new regulatory system that, according to The Washington Post, “does not put the government in the way of adding more moral hazards to the marketplace and triggering higher likelihood of taxpayer bailouts.” On the other hand, Ryan is on the record against Dodd-Frank.

5. Corporate Taxes

The current corporate tax rate is 35%. Candidates for both parties advocate reducing it, although the details differ greatly.

Obama wants to trim the rate to 28%, while adding a minimum tax on profits. The president advocates a tax break for businesses that shift work to the U.S., while deductions for moving work out of the country would be scuttled. Obama also would seek higher taxes on oil and gas companies, while easing taxes on manufacturers.

Romney and Ryan want to lower that even further than does Obama, to 25%. Romney would also lower taxes on overseas profits, as would Ryan.

6. Alternative Minimum Tax

The AMT has been problematic for years. Established in 1969 to ensure that wealthy taxpayers hand over a minimum amount of their income to the government, the formula used to determine it, which has changed over the years, has managed to threaten middle class earners because the amount was never adjusted for inflation.

Several times, Congress has been forced into action to make short-term fixes. By 2008, the AMT was raising $26 billion in revenue, which is why it has been difficult to eliminate.

With Obama’s focuson raising taxes on the wealthiest Americans, it’s no surprise that he advocates a law mandating that households with earnings of $1 million or more pay at least 30% of their income taxes.

Ryan and Romney, on the other hand, have called for eliminating the AMT.