Cheat Sheet Q&A:


Today’s Topic:  Bailing out insurance companies under ACA


Here’s the listener note:


(Last week) you were talking about Aetna announcing it will lose money because of ACA.  Section 1342 mandates taxpayer Bailouts of Insurance Companies. When the law was written they knew this would happen, it is just another step along the rocky road to "Single Payer" aka Socialized Medicine.  Here is a link to his source material:

Bottom Line:  So is it true that bailouts of insurance companies was built into ACA?  I suppose it’s how you view the “safety net” put in place under ACA.  Here’s what you should consider: 

  • Technically it’s a Government backed reinsurance program
  • The effective period of the reinsurance program is 2014-2016
  • The states and Federal Government both play a role in the administration of reinsurance if needed

So… is it a bailout? 

  • Some of the funding does come from the insurance companies themselves, some from the plan administrators and if needed the Government

In other words it’s TBD if it would be a bailout.  Companies are promised that they won’t be allowed to lose money offering policies through the exchanges for the first three years.  If the money collected by the companies and administrators cover losses that would be sustained by insurance companies, then no, no bailout would occur.  If losses exceed the reinsurance pool collected by the companies, then yes, we’d be in bailout territory.  So will it occur? 

  • As the number of signups under ACA continue to track well below the 7 million threshold and the demographics of the those signing up for polices continues to skew older, we are at a higher risk of “bailing out” insurance companies but that remains to be seen. 

With regard to characterization of socialized medicine and single payer… 

  • We’re already at the point of socialized medicine.  In a literal sense, not with regard to political rhetoric
  • Under the exchange based ACA policies you literally have younger  and healthier users subsidizing the policies of older heavier users of healthcare
  • Single payer would be the Government takeover of the insurance and healthcare market place (obviously) so the two aren’t interchangeable…  In other words to buttress your point we’re already 50% of the way towards single payer in a socialized healthcare environment

If you have a topic or question you’d like me to address email me:

Audio Report:


Your odds of being audited in 2014:

Bottom line:  2014 will be very similar to 2013 in terms of your odds of being audited.  So what does that mean to you? 

  • Your odds of being audited are…  1% this year

However that’s a bit misleading.  It will average out to 1% but you’ll actually be in one of two different classes of audit likeliness…

  • If you earn less than $200,000 your odds are actually about 1 in 200 or 0.5%
  • If you earn more than $200,000 your odds of being audited will be nearly 4% (at 3.7%)

Audio Report:

Don't fall for these popular tax scams:

Bottom Line:  Staying on the tax theme for a moment…  Beware of these common tax related scams that are occurring right now (aside from the ID theft problems):

  • Fake phone calls from people impersonating IRS agents (if you get a call from someone claiming to be from the IRS, get their info, hang up, go to IRS.Gov and use the phone number on the site to call them back)
  • Tax preparers that promise to get you a refund (if they say they can get you a refund without having prepared your taxes, that’s a really bad sign that they could be crooked)
  • People who advertise moving your assets offshore to limit your tax exposure
  • And of course anyone who says you don’t have to file taxes if you’ve earned income

Those are the biggies right now.  If you come across any of those your radar should be tipped off.

Audio Report:


Cost of living by city & why real-estate is still affordable here:

Bottom Line:  There is a Fannie Mae, Freddie Mac report that came out yesterday asserting the property in SFL was no longer affordable for the average full-time employed person.  That didn’t sound right and I decided to seek additional information.  I don’t have the specific Palm BeachCounty information available right now but I do have the info for the three largest metros in Florida and they point towards real-estate still being plenty affordable for the average person.   Here is the current affordability of housing based on data from

  • Tampa:  Salary needed to buy the average home:  $24,600, avg. salary in Tampa is $45,000
  • Orlando:  Salary needed to buy the average home:  $28,300, avg. salary in Orlando is $46,700
  • Miami:  Salary needed to buy the average home:  $43,900, avg. salary in Miami is $47,300

So clearly real-estate is super affordable in Tampa and Orlando and still very affordable for the average person in Miami.  I haven’t performed a deep dive on Palm BeachCounty since November but based on the data I was looking at a few months ago, PBC is still generally affordable for the average person earning the average full-time salary.

Audio Report:


Florida islands among the best in the world:

Bottom Line:  Trip Advisor is the most popular travel review website in the world.  For that reason their annual Travelers choice awards are significant from a marketing standpoint.  The travelers themselves are responsible to the rankings rather than some “travel expert”.   In the top Islands category Florida ranks extremely well in the US and one Florida island ranks in the top 5 worldwide. 

First the US list:

Top 10 Islands in the U.S.:

1.       Marco Island, Florida

2.       Chincoteague Island, Virginia

3.       Anna Maria Island, Florida

4.       San Juan Island, Washington

5.       Maui, Hawaii

6.       Kauai, Hawaii

7.       Island of Hawaii, Hawaii

8.       Nantucket, Massachusetts

9.       Hilton Head, South Carolina

10.   Key West, Florida


Now the worldwide list:

Top 10 Islands in the World:

1.       Ambergris Caye, Belize

2.       Providenciales, Turks and Caicos

3.       Bora Bora, French Polynesia

4.       Marco Island, Florida

5.       Lewis and Harris, Scotland

6.       Naxos, Greece

7.       Aitutaki, Cook Islands

8.       Nosy Be, Madagascar

9.       Easter Island, Chile

10.   Ko Tao, Thailand


So we’re well represented throughout our state.  Hopefully this positive PR will serve tourism well in 2014. 

Audio Report: