Happy New Year! 🤩
Who else is feeling fresh and ready to tackle the new year with renewed energy and enthusiasm?
Maybe that’s just the sparkling grape juice talking…😆
Listen. Financial/insurance planning is hard. My goal is to make the risk management part of your job a little easier.
Hopefully you and your top 100 clients experience all the health and prosperity possible in 2024.
At the risk of being a wet blanket…that is almost certainly not going to happen.
We have work to do. That’s the reality.
14 years specializing in disability planning and I still see this pattern play out at least once a month—
1. Client has health concerns.
2. Client approaches their financial planner asking if they can get life or disability insurance.
3. The financial planner reaches out to an insurance broker who can barely spell DI.
4. The client applies and is declined or postponed due to health concerns.
5. The financial planner is caught with their pants down and faced with a looming decision.
6. Client’s condition worsens and the financial planner has to liquidate resources to maintain the client’s lifestyle.
7. Client’s retirement fund is raided, robbing from their future.
This can all be prevented with simple planning measures before the client encounters health conditions.
Protecting a clients’ potential earnings is the same as protecting their future net worth, their yetworth.
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Now that it’s 2024, let’s check in on legislative issues happening in California.
California State DI tax is no longer capped
Before: all W-2 employees pay 1.1% of their paycheck based on the first $150k of wages into the California State DI fund. This allows you to access baby bonding benefits and up to 12 months of disability coverage.
After: same coverage on the disability front but now it's 1.1% of all wages.
What it means: Someone earning $300k is going to see that withdrawal double this year. $450k? your tax just tripled. Enjoy!
Medi-Cal expands eligibility
Before: in 49 states you have to be impoverished to be eligible for Medicaid.
After: But in CA we do things differently. 🤠 Now you can theoretically have $5 billion in assets and still qualify for Medicaid (which we call Medi-Cal in CA because of course we do).
What it means: An already impacted system is now going to have to service all people on a first-dollar basis. This is great for people who want to keep their money and live in a vacant Medi-Cal facility somewhere in the state. Not great for California's bottom line.
CA LTC law may be officially drafted (whether it passes will be subject to formidable debate)
Before: A task force was created to study the need for a state-run LTC system (outside of Medi-Cal)
After: The task force made their recommendation at the end of 2022 where they considered five varying plans. They just completed a fiscal review of each plan design (it's quite good) and have fulfilled their duties.
What does it mean: Legislators get to use this document if anyone feels moved enough to draft legislation (due in February) and create a new law that would construct a new tax to support a new entity to administer care to 40-50 million Californians who already have access to a new Medi-Cal system that is open to just about everyone. I don't see the political urgency. I don't know why a legislator would stick their neck out for a new 4% tax (even if it's 2% employer and 2% employee), and I don't know if they would even allow opt-outs for private LTC because every savory morsel of tax would be required to make this thing work effectively.
Anything else worth noting?
To a healthy and prosperous year!
-Max