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The Affordable Care Act Upheld by the High Court

On June 28, 2012, by a Supreme Court vote of 5-to-4, President Obama’s much debated landmark health care bill signed into law on March 23, 2010, known as the Affordable Care Act (ACA), was found constitutional. The majority opinion, including Chief Justice John Roberts, upheld the individual mandate, (the requirement for all Americans to purchase health insurance), under the provision of the government’s right to tax people who chose not to purchase insurance. What will this mean to you?

As a financial planner I know the financial risks associated with health care costs. Increasing health insurance premiums, lack of adequate insurance due to unaffordable premiums, and most critically – the inability to purchase any insurance at all due to a pre-existing medical condition have all led to financial strain or possibly bankruptcy for many American families and individuals. A 2009 Harvard study found that medical expenses contributed to over 60% of US bankruptcies. Within my practice I have personally counseled a client who was considering a possible bankruptcy due to medical expenses and felt frustration with another client in her early fifties who simply could not buy insurance after her deceased husband’s plan would no longer insure her. She remained uninsured for several years until she qualified for Medicare. Most financial planners are intensely aware of the need to consider substantial health care costs within a financial plan. Will the Affordable Care Act provide a level of financial security and medical coverage that so many currently do not have?

There are many provisions to the law as detailed at Several provisions that have been most popular have already been implemented such as…….

  • Young adults can stay insured on their parents’ health plan until the age of 26. It is estimated that this provision has insured approximately 3 million young adults.
  • Children with pre-existing conditions cannot be denied coverage.
  • Insurance companies cannot rescind your coverage due to an application error or other technical mistake.
  • Lifetime limits of coverage are eliminated. A family will not have to worry about exceeding their benefit limits in the case of a catastrophic or long-term illness.
  • Small business tax credits have been established to help employers provide insurance coverage for employees.
  • A menu of free preventative services is now available.
  • Prescription drug discounts for seniors.

Many additional consumer protections will be implemented over the next 18 months. The final provisions effective on January 1, 2014 will include prohibiting discrimination due to pre-existing conditions or gender and eliminating annual limits on insurance coverage. Learn more about the timeline of the Act’s provisions.

With the Supreme Court decision, Americans will be required to purchase health insurance or pay a tax for non-compliance. Individuals of limited means will receive assistance under the law. Some may call this personal responsibility; others may say this provision of the Affordable Care Act is unconstitutional, – but no matter one’s opinion, it seems that the ACA is law.

As a financial planner, I am anxious to see how this law may impact the financial lives of my clients. Will health care become affordable and easily obtainable for American families – will insurance claims be paid when submitted – will buying health insurance really translate into “health care”? I am optimistic. Our current system has left many behind – I hope this new Act will actually provide “Affordable Care”.

Pamela SandyPamela Sandy, CFP®
CONFIANCE, LLC, Financial & Investment Advisors
Cleveland, OH


Prepaid Cards Get a Look From the Consumer Financial Protection Bureau

In today’s economic world cash isn’t king – plastic is! Consumers swipe credit or debit cards for just about everything, including their morning cup of coffee or their fast food lunch of burger and fries. Certain financial transactions require you to have a debit or credit card. But not everyone qualifies for a traditional bank-sponsored debit card – a card linked to an account that may be checking or savings at your local bank, – or a credit card based upon a great credit score.

Since 2008 the weak economy has created many long-term unemployed and record home foreclosures. Many people and families that had never experienced financial hardship before found themselves struggling to make timely debt payments. Individuals with prior good credit may have found themselves to be “unbankable”, as banks and card companies simply said no to any new credit for those consumers whose credit scores just went south. Additionally, some people simply have a difficult time staying out of trouble when using credit or may have left a previous bank with a pile of overdraft fees that were never paid. A new bank may not allow you to open a new account thanks to Chex Systems, a network of member financial institutions that contribute and share information on mishandled checking and savings accounts. When your financial history follows you, it is difficult to manage your finances in our plastic-based financial world of today. Enter……. prepaid cards.

Prepaid debit/credit cards are exactly that – prepaid. The user must deposit their own funds for use or withdrawal. No credit is actually extended and no bank account is necessary. Such a card allows an individual to financially operate in our world of plastic. A user can pay bills online, rent a car, easily buy airline tickets or order something on Amazon. Additionally, many card issuers allow or encourage direct deposit of a person’s paycheck into their prepaid account, (no bank account required), making it easy for an individual to have immediate access to their funds. Cards are available online or you can even purchase and “reload” them at many local stores such as CVS or Walgreen’s.

Growing in popularity, these cards have caught the attention of the Consumer Financial Protection Bureau, (CFPB). Prepaid debit cards can carry a monthly fee and a menu of other fees based upon the card owner’s number of transactions or deposits. By their nature these cards are most often used by those consumers that have little financial resources or understanding, but need a way to transact their personal finances. According to the CFPB over 7 million consumers currently use prepaid cards and the dollars loaded onto these cards is expected to grow by an average annual rate of 42% from 2010 to 2014. Last year over 57 billion had been loaded onto prepaid cards through November according to information on the CFPB website. Because prepaid cards are not subject to the same federal rules that protect consumers that use other similar types of financial products, the CFPB is considering proposing new rules surrounding these cards. The bureau is encouraging comments from consumers and you can submit your comments to the CFPB online.

The popularity of prepaid cards has grown as certain consumers have been shut out of the traditional banking system. Additionally, some people have opted to use prepaid cards to keep themselves out of financial trouble. There are many possible reasons for the use of a prepaid debit card. But, with this rapidly growing market it is important to understand the terms of a card you may be considering. As with any financial product, small fees can add up to big dollars over time. Cash may no longer be king – but it’s still your cash!

Pamela SandyPamela Sandy, CFP®
CONFIANCE, LLC, Financial & Investment Advisors
Cleveland, OH


April is Financial Literacy Month

In a Presidential Proclamation on March 31, 2011, President Obama established April as Financial Literacy Month, urging all Americans to use the month toward activities that will enhance their understanding of everyday financial principles and habits. The President responding to the devastating Wall Street meltdown, wanted American families to become more informed to allow them to make better financial decisions in their lives. What will you do during Financial Literacy Month 2012?

A good place to start is There are 22 Federal Agencies that have collaborated to create and provide unbiased information about any financial area starting with creating a simple budget or spending plan. I too, recommend that financial literacy start with the basics. Even in the most comprehensive financial plans, it is first important to find out about your money – where it comes from, and how you spend it. How you spend it, most often times leads to the area of credit and debt. Irresponsible use or lack of understanding credit and debt can derail any future goals you may have, such as planning for retirement or obtaining a future mortgage. And knowing your credit score is essential.

With the launch of the Consumer Financial Protection Bureau, consumers now have a resource to learn more about credit. The bureau’s Know Before You Owe program allows you to learn about credit cards, mortgages and student loans. The bureau also offers consumers the opportunity to file a complaint should you need assistance on a financial issue. The Office of the Comptroller of the Currency is also a good source through the website’s Financial Literacy Resource Directory.

Getting a good understanding of your money and how you spend it is an important first step to your own personal financial literacy, but don’t forget your own “personal” resources of information. Take this month to review and get a good understanding of your own bank statements and the fees associated with your accounts. Review you retirement plan statements or online resources and get educated about the investment options available to you. Finally a good source for all things financial is the Financial Planning Association’s own consumer website, There you can ask a financial question that is specific to your own personal situation.

There is a treasure trove of information available to the consumer who is committed to being financially educated. As we begin Financial Literacy Month 2012, start at the beginning and fully learn about your own personal finances. Improving your financial literacy is a good investment in yourself and your financial future.

Pamela SandyPamela Sandy, CFP®
CONFIANCE, LLC, Financial & Investment Advisors
Cleveland, OH

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Earned Income – Work Required

Recently I received an email from a client wanting clarification of his earned income. The school district that he and his wife live in had failed to pass a property tax levy in 12 previous attempts, and now the school district was taking a different approach. The new proposed levy is to tax earned income at 1%. My client and his spouse are retired – does he have earned income?

Obviously at tax time, individuals are in the process of combining different tax forms representing all kinds of household income, but I am asked to clarify the definition of “earned” income many times throughout the year. I would imagine it is the same for many of my fellow professional planners as well. Quite simply – earned income is what you EARN from working – or is attributable to “work-related” activities.

The IRS defines earned income as all the taxable income and wages you get from working. There are two ways to get earned income: You work for someone who pays you OR you work in a business you own or run.

The IRS also defines taxable earned income to include:

  • Wages, salaries, tips, and other taxable employee pay;
  • Union strike benefits;
  • Long-term disability benefits received prior to minimum retirement age;
  • Net earnings from self-employment if
    • you own or operate a business, or
    • you are a minister or member of a religious order (Special Rules apply here):
  • Gross income received as a statutory employee

Nontaxable Combat Pay election. You can elect to have your nontaxable combat pay included in earned income for EITC – Earned Income Tax Credit – see below.

Examples of Income that is Not Earned Income:

  • Pay received for work while an inmate in a penal institution
  • Interest and dividends
  • Retirement Income
  • Social security
  • Unemployment benefits
  • Alimony
  • Child support

Why is it important to know your earned income from other income?

Earned income is used in the calculation to determine if you qualify for other types of credits or income. For example, the Earned Income Tax Credit, sometimes called EITC is a tax credit to help you keep more of what you earned. It is a refundable federal income tax credit for low to moderate income working individuals and families. The IRS website can help you determine if you qualify for the EITC.

What about earned income in retirement? If you are a retiree that has decided to work part-time, your earned income may reduce your social security benefits if you earn too much. If you have attained your full retirement age, you can work and earn as much as you like and receive your full social security benefits – BUT if you are younger than your full retirement age and receiving social security, during tax year 2012 you can only “earn” up to $14,640 and receive your full benefits. Any amount higher will result in reducing your current social security income, although the current reduction will add to your deferred benefits that you receive in the future – you can learn more here at the Social Security Administration.

In the case of my clients, all their income is of the UNEARNED categories. Knowing the difference, particularly at tax time will give you a better understanding of your personal tax situation. As far as the previously mentioned school tax levy, it will be interesting to see if pitting retirees against working families in the district will result in a levy finally being passed.

Pamela SandyPamela Sandy, CFP®
CONFIANCE, LLC, Financial & Investment Advisors
Cleveland, OH


The New Consumer Financial Protection Bureau Puts Consumers First

In a recess appointment on January 4th, President Obama appointed Richard Cordray as the first director of the Consumer Financial Protection Bureau, (CFPB). The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank  Act) established  the consumer bureau. Former TARP Chair, Elizabeth Warren is widely credited for her middle-class advocacy, and relentless persistence that led to the creation of the new agency. Warren, who is now running to become a US Senator representing Massachusetts, led the establishment of the agency, building the structure and organization with the goal to protect consumers from financial tricks and traps often hidden in mortgages, credit cards and other financial products.

The bureau states its central mission as the following:

The central mission of the Consumer Financial Protection Bureau (CFPB) is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.

Upon his appointment as director Mr. Cordray hit the ground running, and that very afternoon emails asking average Americans to “share their story” went out to the agency’s growing database of consumers. Consumers were asked for and given access to submit a mortgage complaint or credit card complaint. Once submitted, consumers can check their complaint status. The website also helps consumers find the appropriate agency to contact on other financial issues through the Get Help Now link.

It’s clear that the bureau was intent of making their website consumer friendly. The website is extremely easy to read and use – with larger type than you would normally see and simple understandable language. The simplicity (in the best sense) is in direct opposition to the various complicated financial documents most consumers find too confusing to understand – the very documents that the bureau hopes to push to make more understandable to everyday consumers.

But beyond the ability to get help with a financial complaint, the bureau’s website provides useful consumer information on the use of various different everyday financial concerns, particularly in the areas of banking and credit. Consumers can also get information on the following:

  • Bank accounts
  • Budgeting Credit cards
  • Credit counseling agencies
  • Credit reports and credit scores
  • Debt collection
  • Gift cards, stored-value cards
  • Home foreclosure
  • Home ownership
  • Investments
  • Service members, veterans, and their families
  • Seniors
  • Student loans
  • Young adults

Visit the CFPB at to learn more.

Pamela SandyPamela Sandy, CFP®
CONFIANCE, LLC, Financial & Investment Advisors
Cleveland, OH


Consider This Before Holiday Spending

“We have been persuaded to……

Spend money we don’t have
On things we don’t need
To create impressions that won’t last
On people we don’t care about”

Tim Jackson~

Black Friday has come and gone. Cyber Monday deals are over. We have already seen the news reports of the many people who opted to camp out on the street to await Thanksgiving Day “deals” with many major retailers and have heard about the women willing to pepper spray her fellow shoppers in what law enforcement called “competitive shopping” – are you kidding! Maybe a few of these shoppers should take a moment to read the Tim Jackson quote above.

This quote was the core of my seasonal commentary to clients last year – and this year I once again believe it bears repeating. Who is Tim Jackson? A good friend of mine had sent me a web link to a presentation given at a TED conference. TED stands for Technology, Entertainment, and Design and is a non-profit devoted to “ideas worth spreading”. The organization holds conferences all over the world. Tim Jackson presented at the July 2010 TEDGLOBAL Conference and has authored a controversial and groundbreaking book, Prosperity Without Growth, which examines the economic structure and social logic of consumerism.

Ahhhh, consumerism…this time of year causes a good deal of financial stress as many people feel overwhelmed by the season’s obligations. Nevertheless, we American consumers like to enjoy the holiday season and history has shown that many of us spend money we don’t have. Is it to buy things we don’t need, to create impressions that won’t last, on people we don’t care about? Is that the case for you – does Tim Jackson’s quote land too close to home? Then maybe this is the year that you reassess what the season is about for you.

If finances are difficult and you are feeling strapped, let go of any guilt you may feel for not living up to “self-created expectations”. This holiday season give yourself permission to spend only what you can reasonably afford. It is the people that you DO care about that will understand the most and they do not expect or want you to overextend yourself financially. Even if you can well afford your holiday spending budget, consider making smaller more meaningful purchases and look to local business owners for interesting gift ideas. Most recently the nation supported local businesses on Small Business Saturday. Consider making more or all your purchases at these local small businesses. They will appreciate your patronage and you will be making an impact in your own community.

So as you prepare to complete your gift list and before you step foot in any store, say to yourself the words of Tim Jackson. Hopefully, you will spend money you can afford, on things that are truly needed, which will leave a cherished impression, on people you care about. Doing so may allow you to enjoy your holiday season and begin the New Year with a better financial outlook.

I wish you and yours a wonderful holiday season.

Pamela SandyPamela Sandy, CFP®
CONFIANCE, LLC, Financial & Investment Advisors
Cleveland, OH


Can You Refinance Your Underwater Mortgage?

On October 24th President Obama announced a new plan to help borrowers refinance their existing mortgages to new loans with lower interest rates and cheaper monthly payments.

The plan is an expansion of the current program called HARP, The Home Affordable Refinance Program initiated in 2009 to let homeowners refinance their mortgages to lower rates. This new expansion is meant to help borrowers who are current on their home mortgage payments, but cannot refinance because they do not have enough equity in their home, or are underwater – which means they owe the bank more than their home is worth. According to CoreLogic, a real estate data firm, approximately 22.5% of U.S. homeowners are underwater representing about 11 million.

When the Obama administration launched HARP in 2009, it was hoped that the program would help 4 to 5 million homeowners. But as of August 31st fewer than 900,000 homeowners had been assisted by the program. The Obama administration hopes that this expansion will help as many as 800,000 additional homeowners. But will it help struggling homeowners and strengthen the housing market – a market that is a corner stone to any sustainable economic recovery.

Many believe that this new opportunity to refinance will be most helpful to those borrowers that owe less than their original mortgage, but not the 20% or more in equity that banks now require. But the program is primarily aimed at borrowers that are current in their mortgage payments, but owe more than their homes are worth – underwater. The problem since 2009 with the “old” HARP is that banks are under no obligation to refinance a mortgage underwater and this does not change with this new plan.

So are you eligible to refinance your mortgage – even if you are underwater? If you have a mortgage loan backed by Fannie Mae or Freddie Mac you may qualify for the refinancing program if your loan was sold to Fannie or Freddie BEFORE June 2009. You can find out if your loan was sold by going online at  or If your mortgage was refinanced over the past 2 ½ years, you will not be eligible for refinancing – you probably already have a good interest rate anyway. Additionally, you MUST be current on your mortgage. One late payment in the past six months or more than one in the past year makes you ineligible.

What are the new program changes? Homeowners may be eligible no matter how far their home value may have fallen. Some fees for closing, title insurance and other processing fees will be eliminated making refinancing less expensive and the number of homeowners that will need appraisals will be reduced. This biggest incentive for banks – they won’t have to buy back the mortgages from Fannie or Freddie as they previously had to do, even if the bank considered the loan risky. This change alone may spur banks to work with people sincerely trying to keep their homes. Fannie and Freddie are due to release the full details of the plan on November 15 and the program could be offered as early as December 1, 2011.

If you believe that you may be a candidate for this expanded refinancing program, plan to contact your bank in the coming weeks to determine if they are willing to work with you to lower your monthly payments. This additional help for homeowners is long overdue, but it will take some time to see if this enhanced program will be a success.

Pamela SandyPamela Sandy, CFP®
CONFIANCE, LLC, Financial & Investment Advisors
Cleveland, OH