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Insurance cancellations and the president’s response

Over the past several months, many people have received cancellation notices from their health insurance carriers, often accompanied by the explanation that their current insurance plan doesn’t meet the minimum requirements of the Affordable Care Act (ACA) scheduled to take effect January 1, 2014. In many instances, insurers are offering to replace the cancelled insurance plan with more expensive coverage that presumably offers more benefits.

The president, in response to growing numbers of consumers whose policies have been cancelled, announced that insurers could (though they need not) elect to allow consumers to keep noncompliant policies through 2014. On November 14, 2013, in a letter to state insurance commissioners, the Centers for Medicare & Medicaid Services (CMS) outlined the conditions insurers must meet in order to continue offering noncompliant policies. The letter is available on the CMS website, www.cms.gov.

Grandfathered health insurance plans

The ACA includes provisions that allow consumers to keep their current health insurance. The ACA provides that policies in place on March 23, 2010 (the date of enactment of the ACA) that have not been materially changed, and that meet certain minimum coverage and other requirements of the ACA, may be “grandfathered” even though they do not meet all of the ACA’s requirements for health plans. But it is important to note that the ACA does not require that insurers continue to offer grandfathered plans; insurance companies can stop offering these plans at their discretion.

According to the government health-care site, www.healthcare.gov, there are two types of grandfathered plans: job-based grandfathered plans, which allow for enrollment after March 23, 2010, and individual grandfathered plans, which can’t have new enrollees after March 23, 2010 (insurers can continue to offer grandfathered plans to individuals who were enrolled on March 23, 2010).

A grandfathered plan can lose its status if it makes significant changes, such as significantly reducing benefits, decreasing the annual dollar limit of coverage, or increasing out-of-pocket spending above what it was on March 23, 2010.

So can I keep my current insurance plan?

The provisions of the ACA allowing for grandfathered plans provide the basis for the premise that consumers can keep their current health insurance if they like it. Yet, as we have seen, insurers can choose to cancel noncompliant plans even if they are grandfathered. So if you like your current insurance plan, but it doesn’t meet all of the requirements of the ACA, the bottom line is this:

  • If your plan is grandfathered, you can keep it–unless your insurer decides to cancel it, which it can do
  • If your plan isn’t grandfathered, you still may be able to keep it, at least through 2014–unless your insurer chooses to cancel it

 

Content from Forefield & cms.gov.

Randy Carver named one of Best Advisors in Country by Barrons

Barrons top 1000 10 2013October 28, 2013  Barrons Magazine named Randy Carver as one of  America’s best financial advisors. The rankings are based on data provided by over 4,000 of the nation’s most productive advisors. Factors included in the rankings: assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. Investment performance isn’t an explicit component because not all advisors have audited results and because performance figures often are influenced more by clients’ risk tolerance than by an advisor’s investment-picking abilities.

Given the headlines in the media , it’s no wonder there is concern and confusion among investors.

Washington 1

 

“Recession Continues to Ravage State Budgets”     

 “Airline Industry Still Weak”

 “Smaller Pay Raises Expected as Economic Slump Persists”

 “U.S. Industry Now Operating at Only About 2/3 of Capacity – A Fact that Bodes Ill for Capital Goods Industries”

 What is not immediately clear is that this is all old news.  These headlines  appeared in the January 1983 editions of the Wall Street Journal – thirty years ago!  The gloomy New Year headlines were followed by periods of moderate-to-strong economic growth and large growth in the broader stock markets.

While the October 2013 s government shutdown may feel like a once-in-a-lifetime, event it is not.  The U.S. government has shut down with quite some regularity. The most recent such instance came in December 1995, when a standoff between President Clinton and the House Republicans “shut down” the government for a record 21 days.   But consider the following facts:

 

  1. Since 1976, the government has shut down a total of 18 times. On average, stock markets declined 0.6% over the course of a shutdown.
  2.  Many of the shutdowns in America — seven out of the past 18 — begin as budget disputes, and accordingly begin on Oct. 1 of a given year.
  3.  The second most popular reason for shutting down the government is a dispute over defense spending, which happened five times — all during the Reagan administration.
  4.  President Bush “43,” was the only president since President Ford to suffer no government shutdown at all during his administration.
  5.  Shutdowns under Democratic presidents, however, tend to last longer than those under Republican presidents. President Carter’s administration was offline for 57 days total, and President Clinton’s by 26 days. President Reagan, in contrast, despite having the most shutdowns, was actually only “closed” a total of 14 days.    (Source Dailyfinance.com)

As we get closer to the November elections  and the debate in Washington over budgets continues the political noise is increasing.  Clearly there is a disconnect between many of the sound bites given by political candidates and the facts.  At the very least the information is misleading and in many cases it is simply incorrect.  The bottom line?  The economy remains strong.   Inflation, interest rates and  unemployment remain low by historical standards  while productivity is increasing.   This is not to say that everyone is better off or that things will remain as they are – but the headlines and commentary my not reflect some of the pertinent facts.   Nor are they anything new!

The manufacturing sector is now growing at the fastest rate in two decades, but no one mentions this.  In addition, the service sector that accounts for about 85% of employment is growing at a near record clip. What this all means is that the economy is headed for its best year in two decades. Moreover, corporate profits will likely set a new record in 2014.

What about jobs overseas?  US Gross Domestic Product  share of the world economy has continued to grow over the last century.  The United States is first in the world in terms of GDP per person – generating more than twenty percent of the world’s total output with just  five percent of the population (source CIA Factbook).

Finally, we are a leader in new technology for both consumers and industry.  Additive manufacturing—the industrial version of 3-D printing—is already used to make some niche items, such as medical implants, and to produce plastic prototypes for engineers and designers.  Advanced robotics and nano technologies continue to create efficiencies for which we are the worldwide leader.

Despite hype about deficits, terrorism, etc.  we live in a free society that is the envy of the world today.  You do not hear about the “Swiss Dream,  “French Dream”, or  any other nationalities dream.  It is the “American Dream” where people can live freely and for the most part prosper to any extent they wish through hard work and persistence.  We have become the envy of, and a model for the rest of the world.

As always pleases contact us with questions, concerns or if we can otherwise be of service.  We understand that these may be unsettling times but are here for you.

 

 

 

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Randy Carver and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Stocks up despite budget impasse, government shutdown

The third quarter of the year proved quite eventful. The Federal Reserve opted to wait a little longer before beginning to dial back its bond purchases, and a budgetary showdown in D.C. resulted in a partial government shutdown on the same day the private healthcare exchanges mandated by the 2010 Affordable Care Act (ACA) opened. Political tensions arose over whether to defund or delay major provisions of the ACA. Additionally, lawmakers have until October 17 to raise the debt limit and avoid a default.

It remains to be seen what effect the first shutdown in almost two decades will have on the economy. But with more than 800,000 “nonessential” federal workers cut off from their paychecks, some are estimating the shutdown could cost the economy billions per week. “The longer a shutdown lasts, the greater the reduction in income for federal workers and the larger hit to overall consumer spending,” wrote Raymond James Chief Economist Scott Brown. “Unless the debt ceiling is raised, the government may miss a debt payment, kicking off a chain reaction in the financial markets.”

Uncertainty about the budget and debt ceiling negotiations played a role in the Federal Reserve’s decision to delay the initial tapering in its pace of asset purchases, according to Brown. The central bank said it is also keeping an eye on employment. The next jobs report was due this week, but its release will be delayed for an indefinite period of time if the government is still shut down. Other data could also be delayed, although we did see a report from the Institute for Supply Management that U.S. manufacturing grew at its fastest pace in almost two years. Investors are also waiting for hundreds of companies to report their quarterly results, which many analysts predict will show improved earnings.

While the last week of September saw a downturn among the domestic equity markets as politicians battled back and forth, all three major indices ended the quarter and the month higher. The NASDAQ showed the biggest gain for the three-month period, up more than 10%, and was the biggest gainer (up more than 5%) for the month. The broad market S&P 500 rose 3% in September, and the Dow Jones Industrial Average gained 2.2%. Historically, the markets also have gained ground in the 12 months after a government shutdown, albeit with some volatility, according to Bloomberg data.

 

9/30/13 Close

6/28/13 Close

Change

Gain/Loss
DJIA

15,129.67

14,909.60

+220.07

+1.5%
NASDAQ

3,771.48

3,403.25

+368.23

+10.8%
S&P 500

1,681.55

1,606.28

+75.27

+4.7%

 

Despite political bickering toward the end of September, the third quarter of 2013 finished in positive territory, as the rest of the economy continues to show signs of improvement. Still, when the markets react to headline news, it can be concerning and may warrant a discussion to check in on your portfolio and ensure it’s still aligned with your longer-term goals.

Please feel free to reach out to me if you have any questions about the economy, the financial markets and how they may impact your long-term financial plan. I look forward to speaking with you.

 

 

Investing involves risk, and investors may incur a profit or a loss. Past performance is not an indication of future results. Investors cannot invest directly in an index. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The performance mentioned does not include fees which would reduce an investor’s performance.

Lake-Geauga Fast Track 50 Winner

September 25, 2013 Carver Financial was once again  recognized as one of the The Lake-Geauga Fast Track 50 winners for 2013. The Fast Track 50  recognizes the contribution of local companies to Lake and Geauga county economies. The Fast Track 50 Committee compiles a list of the fastest-growing companies in Ohio’s Lake and Geauga counties. Companies are ranked by sales and employment growth over the previous five-year period and the top 50 are recognized.  In 2011 Randy Carver was recognized by the Committee as the Entrepreneur of the year .  The company was also nominated in 2012.

Congress Returns

  • The only difference between death and taxes is that death doesn’t get worse every time Congress meets.   Will Rogers Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself.
    Mark Twain
  • After the usual August recess Congress has returned to Washington facing a number of pending issues ranging from what action to take with Syria to Obamacare funding.  Two critical deadlines are pending with regard to operating the government. First, Congress has appropriated funds to keep the federal government operating only through September 30, 2013. If Congress does not appropriate additional funds during September, on October 1st the federal government will shut down. House Speaker Boehner has said he will propose short-term “stop gap” legislation without conditions that would fund the federal government for a few more months at 2013 levels.  Whether or not a short term solution is passed we feel a government shutdown is unlikely for political reasons.Even if a government shutdown is avoided – either in the near term or via a permanent solution- Congress will still have to deal with a second deadline. The United States government has once again hit its borrowing limit. Congress had authorized the federal government to borrow only through May 18, 2013. Since that date, the government has continued to operate using current tax receipts and funds in accounts set aside for future expenses.  According to the Treasury Department, by mid-October the government will need to borrow additional funds to pay its bills, including interest on its outstanding debt. By that time, Congress will have to raise the debt limit or the United States, unable to borrow to pay interest; will default on the national debt.

    We feel it is extremely unlikely that Congress will allow the United States government to default on its national debt.  Most likely a compromise on how to fund the government will be reached. How will all this affect the markets? The last debt limit crisis, in August 2011, produced a difficult month for the markets in what was otherwise a strong year.  Any uncertainty combined with media hype is likely to impact the markets in the short term.

    It is interesting to note, however, that the implementation of the “sequestration” spending cuts did not really slow down the market run-up this spring despite dire predictions in the press.  This is indicative of the strength in the markets.   None-the-less the dual issues of a government shutdown and debt default–fueled by predictably overwrought media reports of Washington malfunction–could roil the markets, particularly if the government does shut down. This will be against the backdrop of the Obamacare spending debate and any other current issues.

    A volatile fourth quarter may be in store but we do not think people should make changes to their portfolios in anticipate of a market drop. Trying to time markets is difficult if not impossible.   We believe that any downturn based on Washington dysfunction should be temporary, reversing when a compromise is reached. The underlying fundamentals of good corporate earnings and high levels of cash remain in place.  When there is a disconnect between perceptions and fundamentals an opportunity can exist for investors.  In this regard market volatility due to a perception of Washington dysfunction could be a buying opportunity.  As always we recommend keeping enough cash on hand for any near term (12 – 18 month) expenses. By doing so short term market volatility should not be an issue.

    As always please contact any advisor on our team with questions, concerns or whenever we may be of service.

     

     

    The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of  Randy Carver and not necessarily those of RJFS or Raymond James.

Investors looking for answers from the Fed, government

August saw all three of the major U.S. stock market indexes fall into negative territory, as investors become more concerned about the possibility of rising rates and potential military action in Syria. Emerging markets, particularly Brazil and India, also took a hit in August as their economies weakened and their currencies fell against the dollar.

Jeff Saut, chief investment strategist for Raymond James, wrote in his regular commentary this summer that mid-July to mid-August was the first window of the year for a “meaningful decline to begin.” The domestic equity market did, in fact, lose steam over this period and could continue to do so, but “such pullbacks are within the context of a bull market,” according to his analysis.

 

 

7/31/13 Close

8/30/13 Close

Change

Gain/Loss
DJIA

15,499.54

14,810.31

-689.23

-4.45%
NASDAQ

3,626.37

3,589.87

-36.50

-1.01%
S&P 500

1,685.73

1,632.97

-52.76

-3.13%

 

 

 

Meanwhile, investors seem to be looking for answers to several key questions, including when interest rates will rise and by how much. We may know more about where interest and mortgage rates will go after the Sept. 17-18 meeting of the Federal Reserve. This week’s August jobs report, expected to be released Sept. 6, is considered an important indicator of third-quarter strength and may factor into the Fed’s decision. If the report comes in strong, the central bank could set a date to begin dialing back its bond-buying program.

Investors’ eyes are also turned to Washington for answers on two main fronts. First, the world is waiting for clarification on whether the U.S. will engage in any military action in response to allegations that Syria used chemical weapons.

Second, Congress is expected to enter another debt ceiling showdown. They’re debating how to fund the federal budget before the debt ceiling is reached, which the Treasury department estimates will happen in early October. The administration has also raised the possibility of overhauling Fannie Mae and Freddie Mac to reduce the government’s role and risk in the mortgage markets, but no clear path has been outlined as of yet.

Questions also remain about who will become the next Fed chair and how the housing recovery may be affected if interest rates rise.

We did get clarity on student loan rates when the Bipartisan Student Loan Certainty Act of 2013 became law on Aug. 9. The new terms, retroactive to July 1, tie federal student loan rates to Treasury interest rates. Once established, rates will remain the same for the life of the loan. This should mean lower rates for current students, but future students could see an increase as Treasury rates likely will rise. The upper limit is capped, however. For example, undergraduate rates can’t go any higher than 8.25%.

September should bring some answers to outstanding questions that linger over the direction of the economy. In the meantime, please feel free to reach out should you have questions of your own about the economy, the markets or any other financial matter. I look forward to speaking with you.

 

Beyond Taxes: 5 Reasons a Trust May Make Sense

Whether or not a trust makes sense for you is largely dependent on what your personal  estate planning goals and objectives are.   Moreover, the type of trust will be dependent on what you are trying to achieve.

Taxes are rarely the only reason, and usually not the most important reason, why people have comprehensive estate plans.    In fact, there are many non-tax reasons to utilize a trust within an estate plan.

Raymond James has recently published a white paper that details trust strategies designed to help you with five specific estate planning issues:

  1. Maintaining control
  2. Protecting assets
  3. Planning for a disability
  4. Philanthropic giving
  5. Avoiding probate

Trust planning can be complex, but it also can be very effective at meeting specific goals and helping provide peace of mind throughout your lifetime.    To view the full white paper Click here .

We recommend working with a attorney who specializes in estate planning to make sure your current estate plan, and associated documents, are consistent with both your personal objectives and current law.    We recommend that most people review their estate plan every 3 – 5 years and those who have more complex situations do so every 2 – 3 years or whenever there is a major change in your objectives.

A volatile end to a great first half of 2013

During the first half of 2013, the U.S. stock markets had their best five-month start since 1999, but then came June. Through mid-May, investors continued to buy on news of higher home prices, record corporate earnings and improving job numbers, sending the Dow Jones Industrial Average and the S&P 500 indices to new all-time highs. But volatility crept back into the markets in late-May, and after Federal Reserve Chairman Ben Bernanke announced that the central bank could begin to wind down its stimulus program later this year, investors reacted to make June the first negative month in 2013.

When the dust settled, the Dow gained 2.2% in the second quarter and 13.8% for the first half of the year. The Nasdaq was up 3.9% for the quarter and 12.7% since year-end. The S&P 500 posted a 2.3% gain in the second quarter and 12.6% for the first half of the year.

 

6/28/13 Close

3/28/13 Close

Change

Gain/Loss
DJIA

14,909.60

14,578.54

+331.06

+2.20%
NASDAQ

3,403.25

3,267.52

+135.73

+3.99%
S&P 500

1,606.28

1,569.19

+37.09

+2.31%

 

And while these numbers are certainly good for investor portfolios, reaction to the Fed’s comments sent all three indices down roughly 1% in June and, more importantly, may have lasting effects not only in the equity market, but the bond market as well.

 The 10-year Treasury yield rose sharply from 1.6% in late May to as high as 2.65% in late June. Investors pulled an estimated $80 billion from bond funds in anticipation of the negative impact of rising interest rates. Even the commodities market took a tumble, as gold prices dropped 13% in the last month.

 Nevertheless, favorable economic data is likely coming during the first week of July, especially in manufacturing activity and construction spending. And while this combined with another expected drop in the unemployment numbers may gin up further concern about the Fed’s intentions, some market observers, like Raymond James Chief Economist Scott Brown, feel that investors and the markets are overreacting to Bernanke’s comments.

 “Bernanke said if growth picks up, unemployment declines and inflation moves gradually back to the 2% target, then the Fed would likely step down the pace of asset purchases later this year. He is not espousing a more restrictive monetary policy, just taking the foot off the stimulus spending pedal,” said Brown.

Despite the volatility of the last month, the second quarter of 2013 did finish in positive territory, extending the double-digit gains of the domestic equities market for the first half of the year. Still, when the markets exhibit this kind of unpredictability, it can be concerning and may warrant a discussion to check in on your portfolio and ensure it’s still aligned with your longer-term goals.      

Please feel free to reach out to our team if you have any questions about the financial markets and how they may impact your long-term financial plan.  We  look forward to speaking with you.

Barron’s Names Randy Carver one of Top Advisors in United States again

The May 2013 issue of Barron’s named Randy Carver as one of the Top 1,000 advisors in the United States and top 6 in Ohio.   The rankings are based on data provided by the nation’s most productive advisors. Factors included in the rankings: assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. Investment performance isn’t an explicit component because not all advisors have audited results and because performance figures often are influenced more by clients’ risk tolerance than by an advisor’s investment-picking abilities.

Randy and his team have been recognized by Barrons’ magazine and also Registered Rep Magazine every year since 2008. Registered Rep’s America’s Top 100 Independent Broker/Dealer Advisors award based upon assets under management, and other subjective factors not disclosed by the magazine, for advisors with $150 million in assets or greater.Barrons May 2013