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Hiring in November & December Bolsters Job Picture

November and December surveys indicate hiring in both service and manufacturing sectors has increased when compared to the previous year, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey.

In November, both the service and manufacturing sectors saw significant increases compared with 2012. A net of 34.1 percent of service-sector companies expanded payroll in November, and a net of 40.4 percent of manufacturers added jobs.

“Our survey shows the highest net hiring rates of November in both sectors in four years,” said Jennifer Schramm, manager of the SHRM’s workforce trends and forecasting, in late October upon interpreting the survey information for November 2013.

While December projections for service-sector hiring were not as bright – it is the first month since July 2012 that hiring will not increase compared to the previous year – manufacturing job creation continued to increase compared with a year ago.

The LINE report not only examines employers’ hiring expectations, but also new-hire compensation, difficulties in recruiting top-level talent and job vacancies.

Results indicated a net of 18 percent of manufacturing respondents had a tougher time recruiting in October, an increase of 6.1 points from the previous year. And a net of 17.4 percent of service-center HR professionals found recruiting more challenging, up 5.9 points from a year ago.

This trend continued with the following month’s LINE report. In November, a net of 13.6 percent of manufacturing respondents had difficulty recruiting, an increase of 0.2 points from the previous year. And a net of 18.7 percent of service-sector HR professionals had more trouble recruiting, up 8.5 points from 2012.

Schramm noted in November that “new-hire compensation also inched up slightly in both sectors, suggesting that employers are starting to feel at least some pressure to increase the compensations packages on offers for hear-to-fill positions.”

For more information on hiring projections, read the articles in the November and December reports this information was taken from.

Health Coverage Premiums Rise Slowly Again this Year

Despite a relatively slow rise in costs again this year, premiums for employer health coverage reached above the $16,000 mark for the first time, according to a major survey.

The 4% increase in the cost of a family plan represents the same rate of growth as last year, rising from a cost of $15,745 in 2012 to $16,351 this year. The slowed rate likely reflects employees’ continued tendency to limit the use of health care, said Gary Claxton, vice president of the Kaiser Family Foundation, which performed the annual poll.

However, the exact reason for the relative lull in the continued upward march of health care costs is a topic of debate among health care economists. Some people believe that it is largely a result of the recession, and the effect will likely end when the economy rebounds.

Other economists prescribe to the idea that the downshift may be more tied to permanent changes in how health care is being purchased. For example higher deductibles and increased efficiency among health care providers overall may be slowing the rise in costs.

Claxton said this year’s results showed minimum impact from the federal health law. Most of the major provisions take effect next year, and other, smaller conditions, such as the addition of children up to the age of 26 to their parents’ plans, have already been incorporated into the cost of coverage.

The survey also showed that higher-deductible plans are retaining popularity. The share of employees enrolled in plans that have an annual deductible of $1,000 or more for single coverage hit 38% in 2013, an increase from 34% last year.

For more information on 2013 health care costs, see the article by Anna Wilde Matthews this information was taken from.

ClaimLinx is proactively ready for the many changes of Health Care Reform. For more information, please contact Tom Quigley at tquigley@claimlinx.com or (800)858-1772 X 25.

ClaimLinx Publishes, “How to Beat Obamacare”

CINCINNATI–(BUSINESS WIRE)–ClaimLinx recently published a timely new book entitled, “How to Beat Obamacare.” The book briefly covers the most important parts of the Patient Protection and Affordable Care Act signed into law in 2010 by President Obama. It gives individuals and employers a framework for making smart choices in the new healthcare environment. The book also reveals the secret to saving money on individual health insurance plans for employers.

The authors, Edward A. Lyon, JD CTC, Michael J. McCormick, CPA, ETC, Thomas J. Quigley, Jr. and Christy A. Quigley have over 80 years combined experience in the tax and insurance industry.

In writing the book, Ed Lyon makes it clear that “we’re not here to debate the merits of the law, but we can help by outlining what the law means for you, for your healthcare, and for your taxes.”

Back In 2010, President Obama signed the “Patient Protection and Affordable Care Act” and companion “Health Care and Education Reconciliation Act of 2010.” Together those two acts, better known by Republicans and Democrats alike as “Obamacare,” represent the biggest change in how we finance healthcare since Medicare was created in 1965. They also include some of the most significant tax changes in a generation. Polls show even today most Americans are confused and concerned about how the Affordable Care act directly affects them – what it is and how much it’s going to cost. Michael McCormick adds, “One poll taken in August of 2013, revealed that four out of ten believed the law was repealed, overturned, or were unsure if it was still law.”

The book outlines a plan which takes advantage of a 55-year-old tax law, Internal Revenue Code Section 105b, that allows employers to reimburse their employees for medical costs incurred by themselves, their spouses, and their dependents. This, in turn, lets employers buy less expensive, higher-deductible insurance coverage – then reimburse their employees directly for the difference between the old deductible and the new. Average yearly savings per employee are $2,000. This program is available in all 50 states and can be implemented and administered fully by ClaimLinx consultants.

For more information about “How to Beat Obamacare,” please visit amazon.com or www.claimlinx.com.

The Health Care Overhaul – What You Need to Know

The Affordable Care Act’s financial protections and coverage requirements are likely to help older adults (50+) the most.

State-based health-insurance exchanges created by the 2010 Patient Protection and Affordable Care Act opened for business on October 1. For those who can’t get insurance coverage through work, or for the self-employed who have been buying coverage as sole proprietors, the exchanges will serve as clearinghouses for evaluating and buying health plans.  These policies take effect Jan. 1 and must cover 10 “essential benefits,” including: preventative services, hospitalizations, mental health and prescription drugs. Also, insurers can no longer exclude people with pre-existing conditions.

Going Without

  • This is good news for individuals ages 50 to 64, who typically have more health problems than those who are younger.
  • Twenty percent of the 50-to-64 demographic went without health insurance for at least part of 2012, up from 15% in 2005, says the Commonwealth Fund, a New York-based nonprofit that focuses on health-care issues.
  • 20%-29% of people in that age group were rejected when applying in 2008, the latest year for which figures are available.
  • Many older people with insurance at work would like to make a change but are clinging to their jobs for the health coverage
  • Because insurers can no longer turn people down, it is much easier to obtain coverage under the new law.

Young Subsidize Old

Employers now have until 2015 to provide coverage for their workers in order to avoid a penalty.  Individuals are not so fortunate, however, as they must purchase a policy for 2014 or face a $95 or 1% of income tax penalty.  (This will rise to $695, or 2.5% of income in 2016).

  • Timothy Jost, a law professor at Washington and Lee University in Lexington, Va.  notes that the new policies taking effect in January will benefit older consumers who tend to spend more on health care, because they will provide more comprehensive coverage with lower premiums.
  • Insurers can no longer charge higher premiums based on health status, nor can they charge the oldest consumers more than three times the average premium paid by a 21-year-old (a possible savings of $1,800 per year).
  • “Early retirees will benefit most from the health-care law,” says Prof. Jost in Virginia. Younger, healthier people will “pay higher premiums to subsidize the rates of those who are older and sicker,” he adds.
  • If however, younger, healthier people decide to pay penalties instead of buying insurance, it could drive the cost of coverage up in 2015 and beyond.

Tax Credits

  • Tax credits also factor into the premium equation. Individuals with incomes of up to $45,960 and couples earning up to $62,040 may be eligible for tax credits that cap their premiums between 2% and 9.5% of income.  Older people will benefit the most from these caps, since they are usually charged higher premiums by insurers.
  • For example, a 55-year-old Denver resident who earns $45,000 a year and picks a policy that Anthem Blue Cross & Blue Shield plans to offer there for $597 a month would be eligible for $240 in monthly tax credits. A 27-year-old with the same salary and policy would pay $281 a month and receive no tax credits, according to the nonprofit Colorado Consumer Health Initiative.

Please click here to read the article in its entirety written by Ann Tergesen. You may also want to visit the ClaimLinx Exchange as well as the interactive guide to health reform for additional resources and information.

Lending Money to Family? Make it a Tax-Smart Loan

One of our tax advisors, Dave Toney of AccountTax, offers these tips when lending money to family.
While lending money to a cash-strapped family member or friend is a noble and generous offer, you need to plan ahead before handing over the cash to avoid tax complications.

Let’s say you decide to loan $5,000 to your daughter who’s been out of work for over a year and is having difficulty keeping up with the mortgage payments. While you may be tempted not to charge an interest rate, you should resist the temptation because:

  1. When you make an interest-free loan to someone, you will be subject to “below market interest rules”.  IRS rules state that you need to calculate imaginary interest payments from the borrower, which are then paid to you.  You will be required to pay taxes on these interest payments when you file a tax return. Further, if the imaginary interest payments exceed $14,000 for the year, there may be adverse gift and estate tax consequences.
  2. The exception is for small loans of $10,000 or less. The IRS lets you ignore the rules for small loans as long as the aggregate loan amounts to a single borrower are less than $10,000 and the borrower doesn’t use the loan proceeds to buy or carry income-producing assets.
  3. In addition, if you don’t charge any interest, or charge interest that is below market rate, then the IRS might consider your loan a gift, especially if there is no formal documentation (i.e. written agreement with payment schedule). It is best to have a written promissory note that includes the interest rate, a repayment schedule showing dates and amounts for all principal and interest, and security or collateral for the loan, such as a residence. Make sure that all parties sign the note so that it’s legally binding.

As long as you charge an interest rate that is at least equal to the applicable federal rate (AFR) approved by the Internal Revenue Service, you can avoid tax complications and unfavorable tax consequences.

If you have questions about the tax implications of loaning a family member money, don’t hesitate to contact us at dat.accountax@fuse.net or view our website here.