Understanding the penalty tax regarding qualifying health insurance

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One of the main objectives of the health-care reform law, the Patient Protection and Affordable Care Act (ACA), is to encourage uninsured individuals to obtain health-care coverage.

As a result of the ACA, everyone must have qualifying health insurance coverage, qualify for an exemption, or pay a penalty tax. This requirement is generally referred to as the individual insurance or individual shared responsibility mandate.

Health insurance plans that meet the requirements of the ACA generally include employer-sponsored health plans, government health plans, and health insurance purchased through state-based or federal health insurance exchange marketplaces.

Individuals who are exempt from the individual insurance mandate include:

  • Those who qualify for religious exemptions
  • Certain noncitizens
  • Incarcerated individuals
  • Members of federally recognized American Indian tribes
  • Those who qualify for a hardship exemption

Individuals may also qualify for an exemption if:

  • They are uninsured for less than three months
  • The lowest-priced insurance coverage available to them would cost more than 8% of their income
  • They are not required to file an income tax return because their income is below a specified threshold

For tax year 2014, the penalty tax equals the greater of 1% of the amount of your household income that exceeds a specific amount (generally, the standard deduction plus personal exemption amounts you’re entitled to for the year) or $95 per uninsured adult (half that for uninsured family members under age 18), with a maximum household penalty of $285. In 2015, the percentage rate increases to 2%, the dollar amount per uninsured adult increases to $325, and the maximum household penalty increases to $975.

 Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

15 ways to save on your next vacation

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It’s that time of year again. Many of us are gearing up to take a summer vacation. Whether your vacation budget is big or small, there’s no need to spend more than necessary when traveling. Below are some tips that can help you save on your next trip.

Air travel

  • Pick your travel times wisely. Popular wisdom holds that Tuesday and Wednesday are the least expensive days to travel, but this isn’t necessary the case in all markets or at all times of the year. Search for airfares within two or three days of your ideal departure date and consider off-peak flight times.
  • Search for flights at more than one airport. If you’re willing to depart from any airport near you or arrive at any airport relatively close to your destination, you’ll have a better chance of snagging a lower-cost flight.
  • Sign up for fare alerts. Online travel agencies, travel websites and airlines can notify you when airfare hits a low price point or drops by a certain percentage.
  • Compare baggage charges. Don’t settle on a fare before seeing how much extra you’ll have to pay to check your luggage.
  • Save on parking. At many airports you have the option of parking in an economy lot. At larger airports, you may be able to save even more by parking offsite in a private lot.

Lodging

  • Check hotel websites. Many list their rate calendars on their reservations page.
  • Look for freebies. Does the hotel offer complimentary transportation to the airport, restaurants, or local attractions? Does the rate include breakfast?
  • Share amenities. Love the amenities at a luxury resort but not the price tag? Book a room at a lower-priced hotel that allows you to use the facilities of a higher-priced sister property.
  • Watch out for taxes. Though you can’t avoid them, lodging taxes vary by location and are based on the room rate. Save on taxes by booking a lower rate or by choosing a property located just outside the city.
  • Compare extra person charges. Hotel chains often allow up to two adults and two children to stay in one room for the same rate, but policies vary.

Rental cars

  • Look for coupon codes or discounts through your road and travel plan, insurance company or credit card issuer.
  • Choose the vehicle class that offers the best value. Smaller cars are often less expensive, but not always. Although you can’t count on getting one, it never hurts to ask for a free upgrade at the rental counter.
  • Pay attention to fuel costs. If you’re planning to drive long distances, make sure the rental car has good fuel economy.
  • Consider insurance before you get to the rental counter. Avoid buying duplicate coverage by checking with your insurer to see how your policy covers you in a rental vehicle. Some credit card companies also offer insurance protection for rentals.
  • Compare extra driver fees. You may pay a surcharge if you add an extra driver. Fees and terms vary by company and location.
 Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

Factors that can negatively impact your credit report

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Having a good credit report is important when it comes to personal finance, because most lenders use credit reports to evaluate the creditworthiness of a potential borrower. Borrowers with good credit are presumed to be more creditworthy and may find it easier to obtain a loan, often at a lower interest rate.

Below are 4 key factors that can negatively impact your credit report:

  1. A history of late payments — Your credit report provides information to lenders regarding your payment history over the previous 12 to 24 months. For the most part, a lender may assume you can be trusted to make timely monthly debt payments in the future if you have done so in the past. Consequently, if you have a history of late payments and/or unpaid debts, a lender may consider you to be a high credit risk and turn you down for a loan.
  2. Too many credit inquiries — Each time you apply for credit, the lender will request a copy of your credit history. The lender’s request then appears as an inquiry on your credit report. Too many inquiries in a short amount of time could be viewed negatively by a potential lender, since it may indicate the borrower has a history of being turned down for loans or has access to too much credit.
  3. Not enough good credit — You may have good credit, but not enough of it. As a result, you may need to build up more of your credit history before a lender deems you worthy to take on any additional debt.
  4. Uncorrected errors on your report — Uncorrected errors on a credit report could make it difficult for a lender to accurately evaluate creditworthiness, and could result in a loan denial. If you have errors on your credit report, it’s important to take steps to correct your report, even if it doesn’t contain derogatory information.

Finally, if you are ever turned down for a loan, there is a way to find out the reason behind it. Under federal law, you are entitled to a free copy of your credit report as long as you request it within 60 days of receiving notice of a company’s averse action against you. For more information, visit the Federal Trade Commission’s website at http://www.ftc.gov.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.