Healthcare

Paid Sick Leave in NJ? What You Need to Know

Another change in New Jersey that affects both employers and employees in the state is paid sick leave, which was effective starting October 29, 2018. Here are the details:

Number of sick days: The New Jersey Earned Sick Leave Law allows employees to accrue 1 hour of sick leave for every 30 hours worked, up to a maximum of 40 hours each year. An employee is eligible to use the earned sick days beginning 120 days after commencing employment.

Permitted usage of sick leave: Sick days can be used for diagnosis, care, treatment or recovery from an employee’s mental or physical illness or for the needs of a family member. The time can even be used by an employee in connection with their child to attend a school-related conference, meeting, or function.

Alternatives: An employer is in compliance if they offer paid time off, including personal days, vacation days, etc. that can be used as sick days, as long as they are accrued at the same or greater rate.

Carry forward: The employer shall not be required to permit the employee to accrue or use in any benefit year, or carry forward from one benefit year to the next, more than 40 hours of earned sick leave.

The interesting aspect of this law is that as an employee-owner, you have to include yourself. When do owners take a sick day?!

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Are there Alternatives to Traditional Health Insurance?

My last post titled, “Did You Know that NJ Now Requires All Residents to Have Health Insurance?” gave a few exceptions to the new New Jersey mandate that requires all New Jersey residents to have health insurance. One of the exceptions to the mandate is health care cost sharing, which almost no one has ever heard of. It may be a good fit for you or maybe not, but here are some details regarding health care cost sharing to help you decide.

Examples of health care cost sharing ministries: Solidarity Healthshare (my family and I are currently members), United Refuah, and Christian Healthcare Ministries

What is health care cost sharing: This is taken from Solidarity Healthshare’s website https://www.solidarityhealthshare.org/ :

“Health care sharing ministries provide a way to pay for health care costs that is different than traditional health insurance.

As a member of a health sharing ministry, you pay a Monthly Share Amount. This monthly share is then used to pay for the health care needs of other members. When you have a health care need and if you have met your Annual Unshared Amount, other members will pay for your health care needs.

Members also agree to a common set of beliefs that help determine which medical costs the community will share towards. With Solidarity HealthShare, guidelines on the medical expenses that members share towards are primarily guided by the moral teachings of the Catholic Church. These beliefs help define what is and is not eligible for sharing.”

What is the cost: For Solidarity, the monthly cost to join ranges from $149 for a single person under 30 years of age to $449 for a family under age 65. The amount that each member is responsible for before their costs are eligible for sharing is between $500 for a single person to $1,500 for a family. Each health care cost sharing ministry encourages and supports healthy behaviors and lifestyles and encourages you to be in charge of your own health care. This is what enables the ministries to be so cost effective.

What’s covered/not covered: All three healthcare sharing ministries seem to be very transparent about what expenses they cover and do not cover. Their websites list medical expenses that are covered, which is very comprehensive.  Items that are generally not covered are:  pre-existing conditions may be limited, dental, vision, and other expenses that are outlined as not eligible for sharing. Each health care cost sharing ministry has difference guidelines.

Caveats: Unfortunately, the cost of your monthly membership is not tax deductible. Additionally, you want to make sure that you thoroughly review what is covered and what is not covered according your situation and needs. Also, it seems that health care cost sharing makes most sense for individuals that are not covered with health insurance by their employers, such as self-employed individuals.

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Did You Know that NJ Now Requires All Residents to Have Health Insurance?

Starting this year, New Jersey is requiring all residents to have health insurance. Even though the Federal government has gone in the opposite direction, there are a handful of states that have their own mandates or are considering a mandate. What are some of the requirements, exceptions, and penalties regarding this new law?

Requirements: The law requires you to have minimum essential health coverage or qualify for an exemption of coverage. If you do not have coverage or qualify for an exemption, then you will incur a shared responsibility payment when you file your 2019 New Jersey tax return next year.

Exceptions: There is a whole list of exemptions, and some of them are as follows: income related, such as marketplace affordability and income below filing thresholds, gaps in coverage of less than two consecutive months, hardships, and group memberships, such as being a part of a health care sharing ministry.

Penalties: The minimum penalty is the greater of 2.5% of your household income or $695 for an individual taxpayer. This increases to a maximum of $15,060 for a family of two adults and three dependents with a household income greater than $400,001.

The penalties are steep so make sure that you are properly covered or are able to receive an exception to the penalties. For those who are looking for non-traditional coverage options, health care sharing ministries such as Solidarity HealthShare or Christian Healthcare Ministries may prove to be good, low-cost options. However, make sure to perform your due diligence to make sure that these can be the right fit for you.

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5 Financial Truths

There is a lot of information out there about finances, and it’s hard to figure out what is exactly true or not true. Always seek the truth, especially from someone that is not trying to sell you something. Here are some examples:

College: We are led to believe that all of our children must go to college to be successful and make a lot of money. While I am a big believer in education and college, it is not the only route and it is not for everybody. With the high cost of college, the decision to attend college should not be automatic. There are alternatives, such as becoming a tradesman, learning a special skill that does not require college, starting a business, sales positions, military or government positions that do not require college, stay at home parent (yes, this is a vocation), etc.

Retirement savings: Saving for retirement is a good thing, however, it should be balanced with both short and mid-range needs. For example, if you allocate virtually all of your savings towards retirement accounts and ignore having a cash cushion, then your risk of financial catastrophe increases. If a financial crisis arises or a large purchase needs to be made, then you will have to withdraw from your retirement accounts, which is one of the worst financial decisions to make due to both income taxes and penalties on the withdrawals. Furthermore, if you do not have withholdings taken from your distributions, then you will probably end up with a tax problem once you file your return. The prudent action is to have a cash cushion of 3 to 6 months of expenses for emergencies and to save for mid-range goals, such as a house purchase.

Debts: Debt truly is a double-edged sword. There are some who advocate staying away from debts at all costs and others who encourage you to leverage yourself to make more money. The truth is that debt should be used wisely and sparingly, if necessary and as a last resort, and it should not cripple you. If you are able to avoid debt, then that is excellent, as debts increase your risk and they also encourage risky behavior and increased spending in many cases.  To prove this point, why do you think McDonald’s started to accept credit cards, why do auto loans have 7 year terms, and why can young adults take out massive loans for college?  It is to get you to spend more than you would have otherwise.  As you mature financially you should seek to decrease your debts.

Most people would not be able to afford a house without obtaining a mortgage, and if they waited to purchase a house and rented instead, then they would most likely be worse off financially over the long term. Also, some businesses may need to incur debts to purchase expensive equipment, inventory, or improvements that would not be possible if they did not incur debts. To emphasize, it should be used wisely and sparingly.

Expenses, income and savings: Most likely your expenses are way too high. If you are able to save 15- 20% of your income and have no debts then spend whatever you want. Otherwise, set aside money towards savings to steadily increase the percentage that you save each time you get paid. This way you will spend whatever is left over. If you are not able to do this then you need to take a serious look at decreasing your expenses and increasing your income. The truth is that it is really not that hard, but most people have a hard time doing this. As Yogi Berra said, “Baseball is ninety percent mental. The other half is physical.”

Home and health = wealth: In the quest for success, don’t ignore your most valued relationships or your health. Nothing can cripple your finances as quickly as health or family issues, such as divorce. With either of these issues your expenses increase exponentially while your income suffers at the same time. Make sure to prioritize.

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IRS and NJ Taxation Highlights

 

Yesterday I attended a continuing professional education seminar with speakers from both the IRS and the State of New Jersey. Here are some highlights after all of the recent Federal changes and also many New Jersey changes that most people are not aware of:

Your paycheck may be under withheld: After the new Federal tax law changes, many people have seen an increase in their take home pay due to the tax cuts, but it is quite possible that too little has been withheld. If you want to be safe then ask your employer to increase your withholdings, and you can also use the withholding calculator at irs.gov. Beware that it is really meant for simpler tax situations versus being self-employed, having rental income, and investments. If you are one of our business clients that we already prepare a year-end tax projection for, then we will take care of this for you.

Private debt collectors: The IRS uses private debt collectors, and the State of New Jersey has already been doing this for years through Pioneer Credit Recovery. This can cause concern especially with all of the fraud that is taking place nowadays. By the way, the IRS will not ask you to drop off cash somewhere, send a money order, or purchase gift cards to settle your debts.

New Jersey tax amnesty: There are many unknowns to all of the changes that NJ has made, including the start date of a tax amnesty program. The program will likely start on November 15th of this year and end on January 15, 2019, and allows a reduction of interest charged and elimination of penalties for old tax debts from February 1,  2009 through September 1, 2017. You should receive a notification on this program if you have old debts, but you can file and pay your old debts even if you do not receive a notice from the State.

New Jersey property tax deduction increase : The property tax deduction on your New Jersey tax return has been raised to $15,000 from $10,000.

Penalties for not having health insurance in New Jersey: New Jersey now requires residents to have health insurance or they have to pay a tax penalty. New Jersey has taken the opposite approach of the Federal government.

Increased pension exclusions in New Jersey: This will be phased in over the next several years, however, there is an income limitation of $100,000, which has not increased.

There are many, many more changes related to New Jersey, including reinstatement of Urban Enterprise Zones, increased tax rates on income over $5,000,000, taxes on ride sharing, taxes on liquid nicotine, and changes to payments plans.

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What is the Best Type of Business to Own?

What’s the best type of business to own? One that makes money of course, but let’s dig a little deeper . . .

Simple: The more complex a business is then the harder it is to operate. For example, if your business requires the talents of very technical people, then this complicates the delivery of your products and services. Unfortunately, it also requires more time and expertise of the owner. Such businesses include engineering, law, healthcare, IT consulting, accounting, and other technical fields.

Low capital requirements: If you need to invest heavily in equipment, real estate, or large amounts of inventory, then this can create a drain on your cash. Supposedly, lack of capital is one of the main reasons for business failures.

Repeat business: A perfect example of a business that receives repeat, recurring sales is a subscription based software company. An example of the opposite type of business is a general contractor. There is a wonderful book called, “The Automatic Customer” by John Warrillow that outlines the value of a having a business with predictable, steady, recurring sales. He gives numerous examples on how this can be applied to many businesses, and not just software companies. I’m a big advocate of businesses trying to maximize their recurring sales.

Easily duplicated: Any business that can easily replicate the tasks that the owner performs is a plus. Did you ever notice that many of the chain restaurants do not serve overly complex dishes? If they did, then it would complicate the way the run their business.

If you are thinking of starting a new business, an additional business, or even a side business, then you should strongly consider a business with these traits.

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What if You Just Don’t Feel Like It?

Ever have one of those days? It’s a struggle to get out of bed, and once you do you feel like you are walking around with weighted boots on your feet? What’s the solution to this common problem aside from going back to bed? Because your energy levels and health have a significant impact on your productivity and the ability to achieve successful results, here are a few tips to overcome sluggishness when it comes about.

Just start: Even though you don’t feel like getting out of bed, starting a project, or exercising, you must resist the temptation to give in to these feelings. All you need to do is get past that initial resistance and just start doing. Once you are out of bed, you just won the first battle against sluggishness. Did you ever notice that after you start something then you end up continuing the task and finishing?

Routine and daily scheduling: The more you schedule important tasks the more you will eliminate the thought process of what to do. For example, if you wake up at 6 AM every morning to go for a run then it will be easier and easier to do as this becomes a habit. Also, if you schedule tasks on your calendar then it creates a sense of importance and things get done.

Avoid sluggishness: The best way to overcome sluggishness is to avoid it in the first place. Take a look at your life, including habits, routines, schedule, diet and anything that impacts your energy levels. Years ago, I dramatically cut sugar out of my diet by reducing the amount of sugary beverages I drank and my energy levels skyrocketed. I do miss drinking sweetened iced-tea and soda, but I sure don’t miss the drain on my energy.

Look around you and take notice of the energy levels of people around you. Generally those with higher energy levels are more productive and quite possibly more positive to be around.

Don’t Worry if the Timing is Not Right to Conquer the World

Ever feel frustrated that your business or your career isn’t going as well as it should? I’m sure that most people feel like this from time to time, but sometimes there are valid reasons for this. Not excuses, as the “success” coaches may call them, but as human beings we have many moving parts to our lives. Some reasons for not being able to conquer the world right now and what to do include the following:

Health Issues (Physical & Mental): They may come at any time and can be minor, permanent, or severe. Health issues can put you out of work for months or even years. The main objective should be to focus on getting your health back so that you can take care of yourself and your family. Next, you should look into how future health problems may be prevented, if possible. You may also find that you have to attend to family members that get sick, such as spouses, children, and aging parents. First things first.

Raising Children: Raising children is not an easy task and many parents feel the tug between working and taking care of their children, especially mothers. This is especially true when both parents work, which is the majority of parents nowadays. I’ve written about the trap when both parents work full-time as the financial benefit is not usually as great as it seems when factoring in taxes, additional expenses, etc. Some options to help juggle responsibilities are to change your work schedule, have a flexible schedule, or work part-time, especially during school hours.

Addictions: Addictions can be in the form of alcohol, drugs, pornography, and gambling to name the major ones. No one likes to talk about this because of the stigma of addictions, but these will have a devastating impact of your business or career, even if you are indirectly impacted by addictions, such as with a child or spouse. Healing and overcoming addictions needs to take place.

Family Issues: Divorce or separation is a common family issue and may go hand in hand with the other examples above. Marriage struggles, especially divorce, will not only impact you and your children emotionally and spiritually, they tend to destroy family finances. Who care if they are successful if their family is torn apart? Marriage therapy, family therapy, or spiritual guidance from a priest or minister can help to save your marriage. Also, all kidding aside, they are much less expensive then a divorce attorney.

We are not machines, but people that have problems, emotions, and are all fighting our own battles. Some battles are greater than others, but we must build a solid foundation before conquering the world.

If You Want More Success Then Know the Difference Between Important vs Urgent

Important vs. urgent. Many people confuse the two, but if you want to be more successful, then you need to be able to discern between them. Important items have great significance or value while urgent items require our attention immediately. Here are some examples:

Important:  These are items that you need to do, but do not have to be done today, such as projects and assignments, planning, exercising, learning/training, saving for the future, etc.

Urgent: These usually have to do with grabbing your attention immediately, such as text messages, social media, doing dishes (our spouses may disagree with this one), interruptions, emails, most telephone calls, etc.

The problem arises when the urgent items seem to be important because they are pulling at us, and then we ignore all of the important items that we should have done. This is probably why many people say that they didn’t get anything done because their attention was diverted to urgent items. Even worse is when we procrastinate and make the important items both important and urgent.

What are some solutions? If an item is important, then you should set aside time either daily, weekly, or monthly to take care of it and actually put it on your calendar. Once an important item is scheduled there is a high probability it will get done. As for the urgent items, you can schedule these as well to take care of them at specified times or on a specific day. If you want to be bold then try this experiment for one week or even one month: shut off all of your alerts, emails, etc. while you are working, and designate a time to check them, say twice a day. Then, see if your productivity improves, and let me know what happens.

Do You Have Too Many Customers?

What do you think is better, 100 customers or 200 customers? It might actually be the lower number, and I’ll explain why.

Let’s say that a small business provides landscaping and maintenance services for both businesses and for residential customers. Most of the customers are within a reasonable driving distance from the main office, and the total amount of customers they have is 200 (50 businesses and 150 residential customers). In order to serve their customers the business has 10 employees and several business vehicles.

After reviewing the amount of services provided to each customer, the owner realizes that it is either unprofitable or only slightly profitable to service a small residential customer, especially if they are more than 15 miles away.

Furthermore, the owner realizes that if an employee performs work for a business customer it tends to be much more profitable because only several are being serviced in one day for a total of eight hours of service performed. For residential customers, only four hours of service is performed after factoring in travel time, plus there are additional costs of travel. Also, the work for business customers tends to be steadier and provides overall higher revenue.

What is one possible solution? The owner may decide that it makes sense to only service business customers. By decreasing the number of customers from 200 to 100, it means that 50 more business customers were acquired, while discontinuing service to 150 residential customers. If each business customer usually receives $5,000 of services per year while each residential customer receives only $1,000, then revenues will actually increase by 25%, while actually decreasing costs.

All you have to do is substitute the type of business with your own, such as computer consulting, printing, medical practices, all types of contractors, and you will get the same results. I believe that serving too many customers even leads business owners to feel that they are busy all of the time without having anything to show for it.