Story First Appeared in Crain's Detroit Business.
Campers in national parks are to pull up stakes and leave, some veterans waiting to have disability benefits approved will have to cool their heels even longer, many routine food inspections will be suspended and panda-cams will go dark at the shuttered National Zoo.
Those are among the immediate effects when parts of the government shut down Tuesday because of the budget impasse in Congress.
In this time of argument and political gridlock, a blueprint to manage federal dysfunction is one function that appears to have gone smoothly. Throughout government, plans are ready to roll out to keep essential services running and numb the impact for the public. The longer a shutdown goes on, the more it will be felt in day-to-day lives and in the economy as a whole.
A look at what is bound to happen, and what probably won't:
THIS: Washington's paralysis will be felt early on in distant lands as well as in the capital — namely, at national parks. All park services will close. Campers have 48 hours to leave their sites. Many parks, such as Yellowstone, will close to traffic, and some will become completely inaccessible. Smithsonian museums in Washington will close and so will the zoo, where panda cams record every twitch and cuddle of the panda cub born Aug. 23 but are to be turned off in the first day of a shutdown.
The Statue of Liberty in New York, the loop road at Acadia National Park in Maine, Skyline Drive in Virginia, and Philadelphia's Independence National Historical Park, home of Independence Hall and the Liberty Bell, will be off limits. At Grand Canyon National Park, people will be turned back from entrance gates and overlooks will be cordoned off along a state road inside the park that will remain open.
"People who waited a year to get a reservation to go to the bottom of the Grand Canyon all of a sudden will find themselves without an opportunity to take that trip," said Mike Litterst, a spokesman for the National Park Service.
BUT NOT THIS: At some parks, where access is not controlled by gates or entrance stations, people can continue to drive, bike and hike. People won't be shooed off the Appalachian Trail, for example, and parks with highways running through them, like the Great Smoky Mountains, also are likely to be accessible. Officials won't scour the entire 1.2 million-acre Grand Canyon park looking for people; those already hiking or camping in the backcountry and on rafting trips on the Colorado River will be able to complete their trips. The care and feeding of the National Zoo's animals will all go on as usual.
The shutdown won't affect Ellis Island or the Washington Monument because they are already closed for repairs.
THIS: The Board of Veterans Appeals will stop issuing rulings, meaning decisions about some disability claims by veterans will wait even longer than usual. Interments at national cemeteries will slow. If a shutdown drags on for weeks, disability and pension payments may be interrupted.
BUT NOT THIS: Most Department of Veterans Affairs services will continue; 95 percent of staff are either exempted from a shutdown or have the budget to keep paying them already in place. The department's health programs get their money a year in advance, so veterans can still see their doctor, get prescriptions filled and visit fully operational VA hospitals and outpatient clinics. Claims workers can process benefit payments until late in October, when that money starts to run out.
THIS: New patients won't be accepted into clinical research at the National Institutes of Health, including 255 trials for cancer patients; care will continue for current patients. Federal medical research will be curtailed and the government's ability to detect and investigate disease outbreaks will be harmed. Grant applications will be accepted but not dealt with.
BUT NOT THIS: The show goes on for President Barack Obama's health care law. Tuesday heralds the debut of health insurance markets across the country, which begin accepting customers for coverage that begins in January. Core elements of the law are an entitlement, like Social Security, so their flow of money does not depend on congressional appropriations. That's why Republicans have been trying explicitly to starve the law of money. An impasse in approving a federal budget has little effect on Obamacare. As for NIH operations, reduced hospital staff at the NIH Clinical Center will care for current patients, and research animals will get their usual care.
THIS: Most routine food inspections by the Food and Drug Administration will be suspended.
BUT NOT THIS: Meat inspection, done by the Agriculture Department, continues. The FDA will still handle high-risk recalls.
THIS: Complaints from airline passengers to the government will fall on deaf ears. The government won't be able to do new car safety testing and ratings or handle automobile recall information. Internal Transportation Department investigations of waste and fraud will be put on ice, and progress will be slowed on replacing the country's radar-based air traffic system with GPS-based navigation. Most accident investigators who respond to air crashes, train collisions, pipeline explosions and other accidents will be furloughed but could be called back if needed.
Kristie Greco, speaking for the Federal Aviation Administration, said nearly 2,500 safety office personnel will be furloughed but may be called back incrementally over the next two weeks. The union representing aviation safety inspectors said it was told by FAA Administrator Michael Huerta that nearly 3,000 inspectors will be off work. Greco did not confirm that.
BUT NOT THIS: Air traffic controllers and many of the technicians who keep air traffic equipment working will remain on the job. Amtrak says it can continue normal operations for a while, relying on ticket revenue, but will suffer without federal subsidies over the longer term. FAA employees who make grants to airports, most Federal Highway Administration workers and federal bus and truck safety inspectors will also stay on the job because they are paid with user fees. Railroad and pipeline safety inspectors will also remain at work.
THIS: About half the Defense Department's civilian employees will be furloughed.
BUT NOT THIS: The 1.4 million active-duty military personnel stay on duty and under a last-minute bill, they should keep getting paychecks on time. Most Homeland Security agents and border officers, as well as other law enforcement agents and officers, keep working.
THIS: The Special Supplemental Nutrition Program for Women, Infants and Children, known as WIC, could shut down. It provides supplemental food, health care referrals and nutrition education for pregnant women, mothers and their children.
BUT NOT THIS: School lunches and breakfasts will continue to be served, and food stamps, known as the Supplemental Nutrition Assistance Program, or SNAP, will still be distributed.
THIS: A shutdown that lasts two weeks or more would probably start to slow an already sluggish economy, analysts say. Closures of national parks would hurt hotels, restaurants and other tourism-related businesses. And federal workers who lost pay would spend less, thereby curbing economic growth. A three-week shutdown would slow the economy's annual growth rate in the October-December quarter by up to 0.9 of a percentage point, Goldman Sachs has estimated. If so, that could mean a growth rate of 1.6 percent, compared with the 2.5 percent that many economists now forecast.
BUT NOT THIS: Little impact on the economy if the shutdown only lasts a few days.
THIS: Economic data will be interrupted as the Bureau of Labor Statistics ceases almost all operations. This will leave the stock market without some of the benchmark economic indicators that drive the market up or down. The key September jobs report, due Friday, could still be released on time if the White House authorizes that, but that's not been determined. Statistical gathering also is being interrupted at the Commerce Department and Census Bureau. This means the government won't come out on time with its monthly report on construction spending Tuesday or a factory orders report Thursday.
BUT NOT THIS: The weekly report on applications for unemployment benefits is still expected Thursday. The Treasury Department's daily report on government finances will be released normally and government debt auctions are to proceed as scheduled. And at Commerce, these functions continue, among others: weather and climate observation, fisheries law enforcement and patent and trademark application processing.
THIS: Some passport services located in federal buildings might be disrupted — only if those buildings are forced to close because of a disruption in building support services.
BUT NOT THIS: Except in those instances, passport and visas will be handled as usual, both at home and abroad. These activities of the Bureau of Consular Affairs are fully supported by user fees instead of appropriated money, so are not affected. As well, the government will keep handling green card applications.
THIS: The Federal Housing Administration, which insures about 15 percent of new loans for home purchases, will approve fewer loans for its client base — borrowers with low to moderate income — because of reduced staff. Only 67 of 349 employees will keep working. The agency will focus on single-family homes during a shutdown, setting aside loan applications for multi-family dwellings. The Housing and Urban Development Department won't make additional payments to the nation's 3,300 public housing authorities, but the agency estimates that most of them have enough money to keep giving people rental assistance until the end of October.
BUT NOT THIS: It will be business as usual for borrowers seeking loans guaranteed by Fannie Mae and Freddie Mac, which together own or guarantee nearly half of all U.S. mortgages and 90 percent of new ones.
THIS: Possible delays in processing new disability applications.
BUT NOT THIS: Social Security and Medicare benefits still keep coming.
03 October 2013
Fixing Problems At Water Plant Can't Wait
Story first appeared in Traverse City Record Eagle.
Traverse City officials who worry about the region’s reputation as a vacation destination when e-coli bacteria counts get too high on area beaches should shudder at the thought of what a few cases of giardiasis might do.
That could have been the case at least twice this year during prime tourism season and, it turns out, “many times” in the past decade.
Michigan Department of Environmental Quality officials issued a Significant Deficiency Violation Notice for incidents on July 5 and July 31, when the city failed to use enough coagulant to filter out a pathogen that can cause diarrhea from the city’s drinking water.
The more serious incident occurred July 5 — just as the National Cherry Festival was getting into full swing — because of a pump failure at the city’s water treatment plant.
City commissioners and officials from Elmwood, Garfield, and Peninsula townships, which buy water from the city, didn’t learn of the problem until Monday.
“Shouldn’t that have been done two months ago?” asked Commissioner Jim Carruthers.
The short answer, of course, is yes. If the city’s reputation suffered a black eye when the brand-new splash pad at Clinch Park spewed untreated sewage on some children, imagine what a few cases of “travelers diarrhea” (so named because of its prevalence in nations with less developed water systems) might have done.
This is the kind of thing that must be dealt with swiftly and publicly, to ensure it’s being fixed and to guarantee the public isn’t being kept in the dark.
City workers didn’t consider the incident a public health threat because the pathogen is usually not present in the area of East Bay where the city draws its water. But public officials can’t take that kind of gamble.
DEQ officials said the incidents should have been immediately reported and they would have ordered an increase in chlorine, a partial flush of the system and a public notice. This public notice would also have been read by those with a Golf Course Irrigation Systems.
The superintendent of the water treatment plant said he thought the level of a chemical that helps filter out the pathogen was a DEQ recommendation, not a required minimum. Incredibly, city records show the amount of coagulant has been below that level many times over the last decade.
That’s not acceptable. This is the major source of drinking water for thousands of people and untold numbers of visitors, and its purity must protected at all costs.
Obviously, the city needs to do some major work at the water plant — to better train personnel and upgrade or replace outdated equipment.
This can’t wait. Few public health issues are as crucial as pure potable water. The region’s health literally depends on it.
Traverse City officials who worry about the region’s reputation as a vacation destination when e-coli bacteria counts get too high on area beaches should shudder at the thought of what a few cases of giardiasis might do.
That could have been the case at least twice this year during prime tourism season and, it turns out, “many times” in the past decade.
Michigan Department of Environmental Quality officials issued a Significant Deficiency Violation Notice for incidents on July 5 and July 31, when the city failed to use enough coagulant to filter out a pathogen that can cause diarrhea from the city’s drinking water.
The more serious incident occurred July 5 — just as the National Cherry Festival was getting into full swing — because of a pump failure at the city’s water treatment plant.
City commissioners and officials from Elmwood, Garfield, and Peninsula townships, which buy water from the city, didn’t learn of the problem until Monday.
“Shouldn’t that have been done two months ago?” asked Commissioner Jim Carruthers.
The short answer, of course, is yes. If the city’s reputation suffered a black eye when the brand-new splash pad at Clinch Park spewed untreated sewage on some children, imagine what a few cases of “travelers diarrhea” (so named because of its prevalence in nations with less developed water systems) might have done.
This is the kind of thing that must be dealt with swiftly and publicly, to ensure it’s being fixed and to guarantee the public isn’t being kept in the dark.
City workers didn’t consider the incident a public health threat because the pathogen is usually not present in the area of East Bay where the city draws its water. But public officials can’t take that kind of gamble.
DEQ officials said the incidents should have been immediately reported and they would have ordered an increase in chlorine, a partial flush of the system and a public notice. This public notice would also have been read by those with a Golf Course Irrigation Systems.
The superintendent of the water treatment plant said he thought the level of a chemical that helps filter out the pathogen was a DEQ recommendation, not a required minimum. Incredibly, city records show the amount of coagulant has been below that level many times over the last decade.
That’s not acceptable. This is the major source of drinking water for thousands of people and untold numbers of visitors, and its purity must protected at all costs.
Obviously, the city needs to do some major work at the water plant — to better train personnel and upgrade or replace outdated equipment.
This can’t wait. Few public health issues are as crucial as pure potable water. The region’s health literally depends on it.
The Government Shutdown and Home Loans for Homebuyers
Story first appeared on RiverbankFinance.com.
Buying a home can have many challenges from critical underwriters to conservative appraisers however, on the long list of things that can go wrong with a home loan you would not expect a government shutdown to be a factor. As of 12:00 AM today on October 1st, 2013 the Federal government has now shut down due to a failure of Congress to pass a Continuing Resolution. With over 800,000 Federal employees being furloughed, this may mean home loan delays for home buyers.
Government Shutdown Causing Delays in Home Loan Approvals. This could effect a Grand Rapids Mortgage Refinancing.
While the federal government may not be directly involved with the home loan process, there are several indirect factors that the Federal government has to help with to close a mortgage loan. Large government bodies may all be suffering from furloughed employees and backups in processing approvals. These delays could affect all loan types including FHA Loans, USDA Loans, VA Loans, and even Conventional Loans.
Why will Home Loans be delayed during the Government Shutdown?
Regardless if your bank or mortgage company has stated that delays will not happen, this may not be the case. Delays in third party verifications may cause delays in real estate closings if income, identities or flood zones cannot be verified.
A common verification for any home loan approval is income verification through a 4506-T IRS tax transcript. A standard mortgage process for all mortgage companies and banks, is to obtain an IRS verification of income so that underwriters and quality control teams can verify that the income a mortgage loan applicant has provided is correct and accurate. The IRS has announced that they will be furloughing non-essential personnel including those whom process tax transcripts. If the income cannot be verified through the IRS, the loan will not close on time.
If a borrower cannot fully document their Social Security Number by providing documents such as a Social Security Card, a bank or mortgage company may process a SSA-89 Form for Social Security Number (SSN) Verification. This document is submitted through the Operations Field Officer at the Social Security Administration and processed as a verification of SSN. According to the Social Security Administration’s Shutdown Contingency plan issued on Sept 27th, this will be one of the many activities that will be discontinued.
Another example of possible mortgage delays due to the government shutdown is flood insurance coverage verified through FEMA. FEMA is the government agency that sets the flood zones maps. If lenders cannot verify that homes are not in a flood zone then they may not allow a home loan to close.
List of Government Agencies Affected By the Government Shutdown:
Housing and Urban Development (HUD)
Federal Housing Administration (FHA which insures FHA Loans) (This may effect a Grand Rapids Mortgage.)
Fannie Mae (FNMA a conventional mortgage buyer)
Freddie Mac (FHLMC a conventional mortgage buyer)
Veteran’s Administration (VA for VA Loans)
Internal Revenue Service (IRS which verifies income on tax returns)
United States Department of Agriculture (USDA for Rural Development Loans)
Social Security Administration (SSA which verifies Social Security Numbers)
Federal Emergency Management Agency (FEMA which helps with flood insurance)
Department of Education (DOE verifies minimum student loan payments)
This list of government agencies that will be affected by the government shutdown, provides critical services to fund, verify, insure and close mortgage loans. A furlough of employees could mean long turn times and delays in real estate closings.
Will FHA Loans be delayed?
FHA Loans, a popular mortgage program for First Time Homebuyers, should not be significantly impacted as long as the government shutdown is brief. HUD has issued a memo to banks and lenders explaining that daily operations will be continued. The FHA will continue to endorse single family loans, however with furloughed employees the process may take longer. Only limited FHA staff will be available to responds to questions emails and loan scenarios which may also cause delays. FHA connection will still be open and available to request FHA case numbers and transfer requests. Overall, business should continue as usual for FHA loans providing that they do not run out of commitment authority during the shutdown period. Delays may be expected on third party verifications.
Will VA Loans be delayed?
The Department of Veterans Affairs (VA) has issued a statement explaining that business should continue as usual for VA Loans however 1/3 of the VA Benefits Employees will be furloughed. The Veterans Benefits Administrations has 7,252 employees, of their 21,237, which will be furloughed during the shutdown. Even with the limited staff, the VA encourages banks and lenders to continue to originate loans for homebuyers. Veteran’s Certificates of Eligibility (COE) will still be available to request online through the webLGY. Manual COEs will still be processed and researched through the Atlanta Eligibility Center. Appraisals may still be ordered and processed through the Veterans Information Portal. Delays may be expected on third party verifications.
Will USDA Rural Development Loans be delayed?
USDA Rural Development Loans may be delayed throughout the Government Shutdown. There are no updates from the USDA at this time, however it is likely that they will not issue Conditional Commitments for home loans until a continuing resolution is passed by Congress. This may be a major setback to USDA mortgages as no updates are available.
The overwhelming and increasing popularity of USDA home loans has already created a backlog of 4-5 weeks for processing once a loan has been sent to the USDA for a conditional commitment in some areas such as Michigan in their Traverse City and Mason offices. USDA Home loan pre-approvals and originations will still continue with banks and mortgage lenders, however homebuyers and real estate agents should be cautioned about possible delays. Additional details about USDA Rural Housing delays may soon be available.
Will Conventional Loans be delayed?
Conventional loans are not directly handled through government agencies until after a loan’s funding by a banks or mortgage company. Once a home loan is funded by an institution, it may then be repackaged as a Mortgage Backed Security (MBS) and sold by Fannie Mae and Freddie Mac. Conventional Mortgage loans should not be directly delayed through the government shutdown however third party verifications may cause minor delays.
Will Homebuyers be affected during the Federal Government Shutdown?
Chances are that Congress will quickly pass a resolution to re-fund the Federal Government within three days, however if this does not happen, you may see delays in mortgage loan funding for any home loan type. During this time of uncertainty, it is a wise plan to expect delays and plan accordingly. The details of individual delays may not be immediately available until an issue occurs. Homebuyers and sellers should be vigilant in requesting updates from their loan officers and real estate agents as well as work closely with them to ensure a quick and smooth real estate closing. Unforeseen issues may arise such as IRS transcript verification delays, government insuring delays or even flood insurance delays.
What can I do to ensure my home loan closes quickly?
While many of the factors that could delay your home loan are simply out of your control, there are step you may take to ensure your loan is moving forward as quickly as possible. It is recommended that you keep a great line of communication with your loan officer and real estate agent during the government shutdown. If any documents or requirements are needed for loan approval, be sure to provide the documentation as soon as possible so further delays are not created by you.
The best advice for a homebuyer buying a home during the government shutdown is simply to be patient. Delays in a home purchase would undoubtedly be frustrating, however, there is little a homebuyer or seller can do if the delays are due to the government shutdown. Contingency plans are now in place by all government agencies to reduce delays. Remember, you are not alone in waiting as there are over 60,000 government home loans closed monthly.
The first reaction is to look for whom is to blame and react by pushing them to help move your loan towards closing. It is not your real estate agent nor your loan officer’s fault for the government shutdown, so do not shoot the messenger. We can all agree that Congress has some major issues on their hands, so let’s all hope they do their jobs quickly and get the Federal Government back in business.
Frequently Asked Questions about the Government Shutdown
How long will a government shutdown last?
While this is not the first government shut down that we have had, this is the first government shutdown in the past 17 years. Other government shutdowns are typically over within a few days, while others have lasted up to three weeks (21 days).
Is the Entire Federal Government Shutdown?
No. The government shutdown will affect only non-essential personnel which is estimated at 800,000 of the 3 million Federal Government employees. On the list of those that do not have to worry about their paychecks are military personnel, the president and of course Congress (they write the laws – why wouldn’t they get their paychecks right?).
Will I still get my Mail?
Yes; the US Postal Service (USPS) will still continue to deliver mail throughout the Government Shutdown. While the USPS is essentially ran by the federal government, it is its own separate entity.
Will Universities and Schools be closed?
No however federally funded programs such as Pell Grants and Federal Student Loans could directly affect schools, according to the U.S. Department of Education, if the shutdown should last more than one week. Some schools receive as much as 20% of their funding from Federal programs which could cause major funding issues for schools if congress does not pass a resolution.
Will National Parks and National Museums be closed?
Yes; visitors to National Parks and Museums will be told to leave immediately and then entrances will be sealed off. The @USCONGRESS Twitter page tweeted at 12:00 AM, “Due to a lapse in government funding, this account will not be active until further notice.” Hours before this, they made it clear that Visitor Centers would also be closed, “If there’s a lapse in gov’t. funding, the Capitol Visitor Center will be closed beginning 10/1 & all tours will be suspended.”
Campers at Yellowstone, the Grand Canyon, Joshua Tree and other National Parks have already been asked to leave and travelers at hotels within the parks will be given up to two days to remove their items and exit. National Museums and Presidential Museums such as the Smithsonian, National Zoos and even the Gerald R. Ford Museum will be closed and denying visitors.
Locally, the Gerald R. Ford Presidential Museum in Grand Rapids, MI was closed and will not reopen until the shutdown is ended. This has already affected the World’s Largest Art Festival, Artprize, in Grand Rapids, with several top exhibits are behind pushed to the curb as visitors will not be allowed to enter.
For more information on a Home Loan Grand Rapids, contact Riverbank Finance today.
Article By
Anthony Bird CEO of Riverbank Finance in Grand Rapids Michigan:
Buying a home can have many challenges from critical underwriters to conservative appraisers however, on the long list of things that can go wrong with a home loan you would not expect a government shutdown to be a factor. As of 12:00 AM today on October 1st, 2013 the Federal government has now shut down due to a failure of Congress to pass a Continuing Resolution. With over 800,000 Federal employees being furloughed, this may mean home loan delays for home buyers.
Government Shutdown Causing Delays in Home Loan Approvals. This could effect a Grand Rapids Mortgage Refinancing.
While the federal government may not be directly involved with the home loan process, there are several indirect factors that the Federal government has to help with to close a mortgage loan. Large government bodies may all be suffering from furloughed employees and backups in processing approvals. These delays could affect all loan types including FHA Loans, USDA Loans, VA Loans, and even Conventional Loans.
Why will Home Loans be delayed during the Government Shutdown?
Regardless if your bank or mortgage company has stated that delays will not happen, this may not be the case. Delays in third party verifications may cause delays in real estate closings if income, identities or flood zones cannot be verified.
A common verification for any home loan approval is income verification through a 4506-T IRS tax transcript. A standard mortgage process for all mortgage companies and banks, is to obtain an IRS verification of income so that underwriters and quality control teams can verify that the income a mortgage loan applicant has provided is correct and accurate. The IRS has announced that they will be furloughing non-essential personnel including those whom process tax transcripts. If the income cannot be verified through the IRS, the loan will not close on time.
If a borrower cannot fully document their Social Security Number by providing documents such as a Social Security Card, a bank or mortgage company may process a SSA-89 Form for Social Security Number (SSN) Verification. This document is submitted through the Operations Field Officer at the Social Security Administration and processed as a verification of SSN. According to the Social Security Administration’s Shutdown Contingency plan issued on Sept 27th, this will be one of the many activities that will be discontinued.
Another example of possible mortgage delays due to the government shutdown is flood insurance coverage verified through FEMA. FEMA is the government agency that sets the flood zones maps. If lenders cannot verify that homes are not in a flood zone then they may not allow a home loan to close.
List of Government Agencies Affected By the Government Shutdown:
Housing and Urban Development (HUD)
Federal Housing Administration (FHA which insures FHA Loans) (This may effect a Grand Rapids Mortgage.)
Fannie Mae (FNMA a conventional mortgage buyer)
Freddie Mac (FHLMC a conventional mortgage buyer)
Veteran’s Administration (VA for VA Loans)
Internal Revenue Service (IRS which verifies income on tax returns)
United States Department of Agriculture (USDA for Rural Development Loans)
Social Security Administration (SSA which verifies Social Security Numbers)
Federal Emergency Management Agency (FEMA which helps with flood insurance)
Department of Education (DOE verifies minimum student loan payments)
This list of government agencies that will be affected by the government shutdown, provides critical services to fund, verify, insure and close mortgage loans. A furlough of employees could mean long turn times and delays in real estate closings.
Will FHA Loans be delayed?
FHA Loans, a popular mortgage program for First Time Homebuyers, should not be significantly impacted as long as the government shutdown is brief. HUD has issued a memo to banks and lenders explaining that daily operations will be continued. The FHA will continue to endorse single family loans, however with furloughed employees the process may take longer. Only limited FHA staff will be available to responds to questions emails and loan scenarios which may also cause delays. FHA connection will still be open and available to request FHA case numbers and transfer requests. Overall, business should continue as usual for FHA loans providing that they do not run out of commitment authority during the shutdown period. Delays may be expected on third party verifications.
Will VA Loans be delayed?
The Department of Veterans Affairs (VA) has issued a statement explaining that business should continue as usual for VA Loans however 1/3 of the VA Benefits Employees will be furloughed. The Veterans Benefits Administrations has 7,252 employees, of their 21,237, which will be furloughed during the shutdown. Even with the limited staff, the VA encourages banks and lenders to continue to originate loans for homebuyers. Veteran’s Certificates of Eligibility (COE) will still be available to request online through the webLGY. Manual COEs will still be processed and researched through the Atlanta Eligibility Center. Appraisals may still be ordered and processed through the Veterans Information Portal. Delays may be expected on third party verifications.
Will USDA Rural Development Loans be delayed?
USDA Rural Development Loans may be delayed throughout the Government Shutdown. There are no updates from the USDA at this time, however it is likely that they will not issue Conditional Commitments for home loans until a continuing resolution is passed by Congress. This may be a major setback to USDA mortgages as no updates are available.
The overwhelming and increasing popularity of USDA home loans has already created a backlog of 4-5 weeks for processing once a loan has been sent to the USDA for a conditional commitment in some areas such as Michigan in their Traverse City and Mason offices. USDA Home loan pre-approvals and originations will still continue with banks and mortgage lenders, however homebuyers and real estate agents should be cautioned about possible delays. Additional details about USDA Rural Housing delays may soon be available.
Will Conventional Loans be delayed?
Conventional loans are not directly handled through government agencies until after a loan’s funding by a banks or mortgage company. Once a home loan is funded by an institution, it may then be repackaged as a Mortgage Backed Security (MBS) and sold by Fannie Mae and Freddie Mac. Conventional Mortgage loans should not be directly delayed through the government shutdown however third party verifications may cause minor delays.
Will Homebuyers be affected during the Federal Government Shutdown?
Chances are that Congress will quickly pass a resolution to re-fund the Federal Government within three days, however if this does not happen, you may see delays in mortgage loan funding for any home loan type. During this time of uncertainty, it is a wise plan to expect delays and plan accordingly. The details of individual delays may not be immediately available until an issue occurs. Homebuyers and sellers should be vigilant in requesting updates from their loan officers and real estate agents as well as work closely with them to ensure a quick and smooth real estate closing. Unforeseen issues may arise such as IRS transcript verification delays, government insuring delays or even flood insurance delays.
What can I do to ensure my home loan closes quickly?
While many of the factors that could delay your home loan are simply out of your control, there are step you may take to ensure your loan is moving forward as quickly as possible. It is recommended that you keep a great line of communication with your loan officer and real estate agent during the government shutdown. If any documents or requirements are needed for loan approval, be sure to provide the documentation as soon as possible so further delays are not created by you.
The best advice for a homebuyer buying a home during the government shutdown is simply to be patient. Delays in a home purchase would undoubtedly be frustrating, however, there is little a homebuyer or seller can do if the delays are due to the government shutdown. Contingency plans are now in place by all government agencies to reduce delays. Remember, you are not alone in waiting as there are over 60,000 government home loans closed monthly.
The first reaction is to look for whom is to blame and react by pushing them to help move your loan towards closing. It is not your real estate agent nor your loan officer’s fault for the government shutdown, so do not shoot the messenger. We can all agree that Congress has some major issues on their hands, so let’s all hope they do their jobs quickly and get the Federal Government back in business.
Frequently Asked Questions about the Government Shutdown
How long will a government shutdown last?
While this is not the first government shut down that we have had, this is the first government shutdown in the past 17 years. Other government shutdowns are typically over within a few days, while others have lasted up to three weeks (21 days).
Is the Entire Federal Government Shutdown?
No. The government shutdown will affect only non-essential personnel which is estimated at 800,000 of the 3 million Federal Government employees. On the list of those that do not have to worry about their paychecks are military personnel, the president and of course Congress (they write the laws – why wouldn’t they get their paychecks right?).
Will I still get my Mail?
Yes; the US Postal Service (USPS) will still continue to deliver mail throughout the Government Shutdown. While the USPS is essentially ran by the federal government, it is its own separate entity.
Will Universities and Schools be closed?
No however federally funded programs such as Pell Grants and Federal Student Loans could directly affect schools, according to the U.S. Department of Education, if the shutdown should last more than one week. Some schools receive as much as 20% of their funding from Federal programs which could cause major funding issues for schools if congress does not pass a resolution.
Will National Parks and National Museums be closed?
Yes; visitors to National Parks and Museums will be told to leave immediately and then entrances will be sealed off. The @USCONGRESS Twitter page tweeted at 12:00 AM, “Due to a lapse in government funding, this account will not be active until further notice.” Hours before this, they made it clear that Visitor Centers would also be closed, “If there’s a lapse in gov’t. funding, the Capitol Visitor Center will be closed beginning 10/1 & all tours will be suspended.”
Campers at Yellowstone, the Grand Canyon, Joshua Tree and other National Parks have already been asked to leave and travelers at hotels within the parks will be given up to two days to remove their items and exit. National Museums and Presidential Museums such as the Smithsonian, National Zoos and even the Gerald R. Ford Museum will be closed and denying visitors.
Locally, the Gerald R. Ford Presidential Museum in Grand Rapids, MI was closed and will not reopen until the shutdown is ended. This has already affected the World’s Largest Art Festival, Artprize, in Grand Rapids, with several top exhibits are behind pushed to the curb as visitors will not be allowed to enter.
For more information on a Home Loan Grand Rapids, contact Riverbank Finance today.
01 October 2013
Welfare Benefits To Be Paid, But Lengthy Shutdown Could Affect State Services
Story first appeared in The Detroit News.
Lansing — -- The state took action Monday to ensure food stamps and cash assistance will be paid in October if there is a long federal government shutdown, while thousands of federal workers in Michigan prepared today to go without pay.
President Barack Obama, the Republican-controlled U.S. House and Democratic-led U.S. Senate missed a midnight deadline to agree to a new federal budget to avert a shutdown of an array of government agencies and programs today.
So the state Department of Human Services, through a front-ended payment system, began disbursing millions of dollars that will be loaded onto Bridge Cards for the more than 100,000 Michiganians receiving cash assistance and 1.75 million residents who get federally funded food stamps, DHS spokesman Dave Akerly said Monday. State officials previously feared cash aid might get cut off as early as this weekend for some recipients.
"We're good to go for October," Akerly told The Detroit News. "If (a shutdown) goes further than that, there could be problems."
Officials at the U.S. Department of Agriculture advised the state Monday that monthly food stamp benefits still will be disbursed in October through a continuing funding mechanism in the 2009 Recovery Act, Akerly said.
Michigan gave out a monthly average of $241 million in food assistance in the past fiscal year, Akerly said.
Gilda Jacobs, president and CEO of the Michigan League for Public Policy that advocates for the poor, said a government shutdown will hurt, but the effects could take some time to be visible.
"It's not going to be like a spigot that turns on and off," Jacobs said Monday. "Tomorrow we're not going to have people walking around homeless."
Workers brace for worst
As the specter loomed of the first federal government shutdown since the 1995-96 closings -- which lasted 28 days -- many of Michigan's more than 30,000 civilian federal workers prepared to be furloughed with no guarantee of back pay.
About half of the Department of Defense 800,000 civilian workforce -- or 400,000 employees -- is expected to be furloughed, but they may not get paid retroactively.
The impact will be felt especially hard in Macomb County, where nearly 8,000 full-time Department of Defense civilian employees already were furloughed for six days this year under budget reductions known as sequestration. Workers at the U.S. Army's Detroit Arsenal and Tank Automotive Command, or TACOM, in Warren and Selfridge Air National Guard Base in Harrison Township were bracing Monday for another reduction in pay.
At the Selfridge base, about 650 members of the 127th Wing could face furloughs, said Sgt. Dan Heaton, spokesman for the 127th Wing.
Fearing furloughs
Security and fire personnel will remain at the base during a shutdown, Heaton said.
"One thing about military folks is they're good at taking orders and doing what they're told," he said. "That's the position we're in."
A union spokesman for civilian military workers said more furloughs would be "devastating."
"People aren't going to be able to pay their bills," said Jon Suminski, president of AFGE Local 2077, which represents about 240 civilian workers at Selfridge. "People are now just catching up. A lot of them had to skip their mortgage payment with those six days of lost pay."
About 900 Michigan National Guard military technicians would be furloughed until funding is restored, said Maj. Gen. Gregory Vadnais, director of the Michigan Department of Military and Veterans Affairs and adjutant general of the Michigan National Guard.
State Budget Office spokesman Kurt Weiss said a prolonged government closing would lead to some federally funded state workers being furloughed. Union contracts for some state workers require 14 to 30 days advance notice before employees can be furloughed, he said.
Many services continue
Many essential services will continue under a shutdown such as border patrols and federal prisons. Other programs funded outside the current budget process will still operate, including the mail delivery, payment of Social Security checks and federal health care exchanges set to open today.
Federal courts will remain open for at least 10 days, meaning Detroit's bankruptcy court hearing will proceed as planned Wednesday. However, if a shutdown continues beyond a 10-day window when all operating funds are exhausted, a scheduled Oct. 15 hearing may be affected, said federal court spokesman Rod Hansen.
Rochester Hills resident Carl Wellenkotter expressed frustration at the inability of politicians to come to an agreement but said perhaps a shutdown would force changes.
"Maybe a shock to the system is what it will take," said Wellenkotter, 79. "If all those clowns in Washington say the shutdown is bad, maybe it's good they've gotten us into this problem, and now they're supposed to get us out."
Furlough notices are being prepared for workers staffing Michigan's five national parks -- River Raisin National Battlefield Park, Isle Royale National Park, Keweenaw National Historical Park, Pictured Rocks National Lakeshore and Sleeping Bear Dunes National Lakeshore.
The fall colors are peaking this week at Sleeping Bears Dunes, said Dusty Shultz, park superintendent. But people won't be able to travel on park roads, and the park west of Traverse City will be closed.
At the River Raisin, organizers may be forced to cancel an event Saturday commemorating the 200th anniversary of Battle of the Thames. Staffers are "hoping for the best and preparing for the worst," said Scott Bentley, River Raisin superintendent.
Lansing — -- The state took action Monday to ensure food stamps and cash assistance will be paid in October if there is a long federal government shutdown, while thousands of federal workers in Michigan prepared today to go without pay.
President Barack Obama, the Republican-controlled U.S. House and Democratic-led U.S. Senate missed a midnight deadline to agree to a new federal budget to avert a shutdown of an array of government agencies and programs today.
So the state Department of Human Services, through a front-ended payment system, began disbursing millions of dollars that will be loaded onto Bridge Cards for the more than 100,000 Michiganians receiving cash assistance and 1.75 million residents who get federally funded food stamps, DHS spokesman Dave Akerly said Monday. State officials previously feared cash aid might get cut off as early as this weekend for some recipients.
"We're good to go for October," Akerly told The Detroit News. "If (a shutdown) goes further than that, there could be problems."
Officials at the U.S. Department of Agriculture advised the state Monday that monthly food stamp benefits still will be disbursed in October through a continuing funding mechanism in the 2009 Recovery Act, Akerly said.
Michigan gave out a monthly average of $241 million in food assistance in the past fiscal year, Akerly said.
Gilda Jacobs, president and CEO of the Michigan League for Public Policy that advocates for the poor, said a government shutdown will hurt, but the effects could take some time to be visible.
"It's not going to be like a spigot that turns on and off," Jacobs said Monday. "Tomorrow we're not going to have people walking around homeless."
Workers brace for worst
As the specter loomed of the first federal government shutdown since the 1995-96 closings -- which lasted 28 days -- many of Michigan's more than 30,000 civilian federal workers prepared to be furloughed with no guarantee of back pay.
About half of the Department of Defense 800,000 civilian workforce -- or 400,000 employees -- is expected to be furloughed, but they may not get paid retroactively.
The impact will be felt especially hard in Macomb County, where nearly 8,000 full-time Department of Defense civilian employees already were furloughed for six days this year under budget reductions known as sequestration. Workers at the U.S. Army's Detroit Arsenal and Tank Automotive Command, or TACOM, in Warren and Selfridge Air National Guard Base in Harrison Township were bracing Monday for another reduction in pay.
At the Selfridge base, about 650 members of the 127th Wing could face furloughs, said Sgt. Dan Heaton, spokesman for the 127th Wing.
Fearing furloughs
Security and fire personnel will remain at the base during a shutdown, Heaton said.
"One thing about military folks is they're good at taking orders and doing what they're told," he said. "That's the position we're in."
A union spokesman for civilian military workers said more furloughs would be "devastating."
"People aren't going to be able to pay their bills," said Jon Suminski, president of AFGE Local 2077, which represents about 240 civilian workers at Selfridge. "People are now just catching up. A lot of them had to skip their mortgage payment with those six days of lost pay."
About 900 Michigan National Guard military technicians would be furloughed until funding is restored, said Maj. Gen. Gregory Vadnais, director of the Michigan Department of Military and Veterans Affairs and adjutant general of the Michigan National Guard.
State Budget Office spokesman Kurt Weiss said a prolonged government closing would lead to some federally funded state workers being furloughed. Union contracts for some state workers require 14 to 30 days advance notice before employees can be furloughed, he said.
Many services continue
Many essential services will continue under a shutdown such as border patrols and federal prisons. Other programs funded outside the current budget process will still operate, including the mail delivery, payment of Social Security checks and federal health care exchanges set to open today.
Federal courts will remain open for at least 10 days, meaning Detroit's bankruptcy court hearing will proceed as planned Wednesday. However, if a shutdown continues beyond a 10-day window when all operating funds are exhausted, a scheduled Oct. 15 hearing may be affected, said federal court spokesman Rod Hansen.
Rochester Hills resident Carl Wellenkotter expressed frustration at the inability of politicians to come to an agreement but said perhaps a shutdown would force changes.
"Maybe a shock to the system is what it will take," said Wellenkotter, 79. "If all those clowns in Washington say the shutdown is bad, maybe it's good they've gotten us into this problem, and now they're supposed to get us out."
Furlough notices are being prepared for workers staffing Michigan's five national parks -- River Raisin National Battlefield Park, Isle Royale National Park, Keweenaw National Historical Park, Pictured Rocks National Lakeshore and Sleeping Bear Dunes National Lakeshore.
The fall colors are peaking this week at Sleeping Bears Dunes, said Dusty Shultz, park superintendent. But people won't be able to travel on park roads, and the park west of Traverse City will be closed.
At the River Raisin, organizers may be forced to cancel an event Saturday commemorating the 200th anniversary of Battle of the Thames. Staffers are "hoping for the best and preparing for the worst," said Scott Bentley, River Raisin superintendent.
Uncertainty Greets Michigan Health Exchange
Story first appeared in The Detroit News.
Michigan's uninsured can begin buying health care online today but state officials, health advocates, insurers and hospitals are wondering whether anyone will bother.
The opening of health insurance exchanges on the Internet in Michigan and other states has been complicated by the deadlock in Washington, D.C., over Obamacare. While the marketplaces are expected to be up and running, there is concern that the shutdown could keep consumers away.
Today's opening of the online marketplace is the first in a series of key dates for Obamacare's implementation. Health care policies purchased through the exchanges won't take effect until Jan. 1, and buyers have until March 31 to sign up without penalty.
The Internet-based marketplace at www.healthcare.gov is a one-stop-shop for the uninsured to compare health insurance policies and prices, apply for federal subsidies, and enroll in a plan. All states are required to have an insurance exchange ready to go today, as required under the Affordable Care Act, also known as Obamacare.
Michigan has just over a million uninsured people, and about half of those are expected to qualify for federal tax credits to help purchase insurance on the exchange. The remainder will qualify for Medicaid after Michigan's Medicaid expansion become effective in late March or early April.
Just 1 in 8 uninsured Americans, however, is aware that the exchanges will be up and running today, according to a poll released by the Kaiser Family Foundation over the weekend. The poll also found that the public isn't any more aware of the law's key provisions than they were in 2010.
Those provisions include: dental and vision care, caps on out-of-pocket spending for prescriptions and coverage of pre-existing conditions.
"We're assuming we'll receive a high volume of calls, but we're unsure based on the polling results," said Don Hazaert, director of Michigan Consumers for Healthcare, one of four Michigan organizations that received grants from the U.S. Department of Health and Human Services to help people navigate the new health care system.
Consumers for Healthcare has a statewide network of about 300 "navigators" -- people who have been trained to provide face-to-face assistance to families and individuals who want to sign up for insurance on the exchanges. Michigan's other navigator groups are the Arab Community Center for Economic and Social Services (ACCESS); Community Bridges Management; and American Indian Health and Family Services of Southeastern Michigan.
Consumers can log on to enrollmichigan.com, or call (800) 318-2596 toll free, for phone numbers and addresses of navigators in their communities.
Hazaert said his group's network includes three Detroit organizations with navigators. The Voice of Detroit Initiative, a 14-year-old organization that coordinates health care services provided to Detroit residents, has a trained navigator as well as several Certified Assistant Counselors, people who have less training than navigators but are still able to help consumers with the application process.
"The navigator training is about a 30- to 40-hour process, and the (Certified Assistant Counselor) training is four to five hours," said Lucille Smith, executive director of Voice of Detroit, which plans to have a table set up today at St. John Connor Creek on East Outer Drive, to provide information to the public on the health exchange and how to apply for insurance.
Hospitals, health advocates and insurance agents have also been preparing for today's opening.
Oakwood Health System in Dearborn has a trained navigator on staff and about 10 employees are in the process of being trained to become Certified Assistant Counselors. They also had a town hall on the health reform, and created a video to train their 10,000 employees on the basics of Obamacare. Beaumont Health System is also training Certified Assistant Counselors, and created a website on health reform, which can be viewed at http://www.beaumont.edu/marketplace.
James Brown, owner of the Southfield-based James Brown Agency, said insurance agents are also prepared to help. He said insurance agents are better prepared than navigators to explain the intricacies of insurance to consumers because they've typically had years of experience doing that. But he doesn't expect his phone lines to be burning up today either.
"Everybody's talking about it, but I question if that many people are going to enroll the first day," Brown said Monday. "The people with medical conditions will probably the first ones in line to find out if they can afford health care."
Michigan's uninsured can begin buying health care online today but state officials, health advocates, insurers and hospitals are wondering whether anyone will bother.
The opening of health insurance exchanges on the Internet in Michigan and other states has been complicated by the deadlock in Washington, D.C., over Obamacare. While the marketplaces are expected to be up and running, there is concern that the shutdown could keep consumers away.
Today's opening of the online marketplace is the first in a series of key dates for Obamacare's implementation. Health care policies purchased through the exchanges won't take effect until Jan. 1, and buyers have until March 31 to sign up without penalty.
The Internet-based marketplace at www.healthcare.gov is a one-stop-shop for the uninsured to compare health insurance policies and prices, apply for federal subsidies, and enroll in a plan. All states are required to have an insurance exchange ready to go today, as required under the Affordable Care Act, also known as Obamacare.
Michigan has just over a million uninsured people, and about half of those are expected to qualify for federal tax credits to help purchase insurance on the exchange. The remainder will qualify for Medicaid after Michigan's Medicaid expansion become effective in late March or early April.
Just 1 in 8 uninsured Americans, however, is aware that the exchanges will be up and running today, according to a poll released by the Kaiser Family Foundation over the weekend. The poll also found that the public isn't any more aware of the law's key provisions than they were in 2010.
Those provisions include: dental and vision care, caps on out-of-pocket spending for prescriptions and coverage of pre-existing conditions.
"We're assuming we'll receive a high volume of calls, but we're unsure based on the polling results," said Don Hazaert, director of Michigan Consumers for Healthcare, one of four Michigan organizations that received grants from the U.S. Department of Health and Human Services to help people navigate the new health care system.
Consumers for Healthcare has a statewide network of about 300 "navigators" -- people who have been trained to provide face-to-face assistance to families and individuals who want to sign up for insurance on the exchanges. Michigan's other navigator groups are the Arab Community Center for Economic and Social Services (ACCESS); Community Bridges Management; and American Indian Health and Family Services of Southeastern Michigan.
Consumers can log on to enrollmichigan.com, or call (800) 318-2596 toll free, for phone numbers and addresses of navigators in their communities.
Hazaert said his group's network includes three Detroit organizations with navigators. The Voice of Detroit Initiative, a 14-year-old organization that coordinates health care services provided to Detroit residents, has a trained navigator as well as several Certified Assistant Counselors, people who have less training than navigators but are still able to help consumers with the application process.
"The navigator training is about a 30- to 40-hour process, and the (Certified Assistant Counselor) training is four to five hours," said Lucille Smith, executive director of Voice of Detroit, which plans to have a table set up today at St. John Connor Creek on East Outer Drive, to provide information to the public on the health exchange and how to apply for insurance.
Hospitals, health advocates and insurance agents have also been preparing for today's opening.
Oakwood Health System in Dearborn has a trained navigator on staff and about 10 employees are in the process of being trained to become Certified Assistant Counselors. They also had a town hall on the health reform, and created a video to train their 10,000 employees on the basics of Obamacare. Beaumont Health System is also training Certified Assistant Counselors, and created a website on health reform, which can be viewed at http://www.beaumont.edu/marketplace.
James Brown, owner of the Southfield-based James Brown Agency, said insurance agents are also prepared to help. He said insurance agents are better prepared than navigators to explain the intricacies of insurance to consumers because they've typically had years of experience doing that. But he doesn't expect his phone lines to be burning up today either.
"Everybody's talking about it, but I question if that many people are going to enroll the first day," Brown said Monday. "The people with medical conditions will probably the first ones in line to find out if they can afford health care."
Exchanges open Tuesday: Here's what to do
Story first appeared in USA TODAY.
Don't wait. But don't hurry, either.
That's the best approach to the new health insurance exchanges that are scheduled to open for business Tuesday. Buying insurance is supposed to be easier than ever once several provisions of the Affordable Care Act take effect this fall. That doesn't mean the process is easy or should be done speedily, however, experts say. That's especially true if insurance shopping is new to you.
"Don't be hurried in buying a plan," says Bryce Williams, managing director of global benefits consulting firm Towers Watson Exchange Solutions. "There's no rush."
Williams likens it to buying the first car off an assembly line: It may be best to let the new exchanges — particularly the 31 run by the federal government — iron all the kinks out. Federal exchanges may not be ready, and there may be more and better information and "hand holding" available after a few weeks. Besides, your insurance won't start until Jan. 1, 2014, whether you sign up now or in December.
If you're one of the more than 45 million people who lack health insurance, you can begin the enrollment process Oct. 1, but you certainly don't have to. The deadline to purchase (or face a penalty at tax time in 2015) is March 31, 2014.
Every state has people called navigators who received grants to help guide consumers through the process in an unbiased way. Insurance companies are also increasingly pitching their individual policies online and in stores, where agents are available to help you figure out what plan is right for you — but they obviously have a vested interest in your decision. A key benefit to the new online exchanges is the ability to easily compare different plans — as you might during online car shopping — without a pushy salesperson hovering.
Key steps in the process:
•Step one. Check out the options on your state's exchange. Start at HealthCare.gov, the federal government's portal, which will route you to your state or allow you to create an account if the feds are running your state's insurance marketplace. Plug in details about where you live, what you earn and family size. If your income is low enough, you may be alerted that you're eligible for Medicaid and told how to apply for that.
•Step two. Determine if you are eligible for financial help, which can come in the form of subsidies to offset the cost of premiums, co-payments or deductibles.
Anyone under age 65 participating in the new state exchanges can get tax credits if their incomes are between the poverty level and 400% of the poverty level. In 2014, that means families of four that make $24,000 to $94,000 per year could get subsidies. Those who make 250% or less of the poverty level can get even more financial help. The federal poverty level is now $11,490 for an individual and $23,550 for a family of four.
•Step three. Calculate what you've been spending for your uninsured health care, including prescription drugs, doctor visits and any emergency room or other hospital visits. Are there health concerns you've avoided addressing that are likely to get worse, like that sore knee or breathing condition? Medicines you should be taking but aren't? Are there young athletes in the house?
•Step four. Spend time pondering what type of plan is right for you, based on how much you can afford to pay in premiums, co-payments and cost-sharing for procedures, as well as what your medical needs are likely to be next year.
Options are grouped into coverage levels that are coined bronze, silver, gold and platinum based on the percentage of out-of-pocket costs borne by the consumer. Bronze plans cover the lowest percentage of expenses — 60% — and have the lowest premiums. Silver plans cover 70%, gold pay 80% and platinum plans cover 90% of out-of-pocket costs. Even policies that appear affordable may not be if you have high deductibles, co-payments or cost-sharing for procedures.
Could you afford to pay 40% of last year's medical bills — and almost everything out of pocket until a high deductible is met?
You need to consider other factors when deciding among plans. Williams recommends consumers stick with insurers that are "well entrenched" in their area; not one you've never heard of before.
Farzan Bharucha, a health care strategist for consulting firm Kurt Salmon, recommends calling providers you would consider if you had insurance and ask whether they will be accepting patients in the policies you're considering.
"A fair number will say they are full," says Bharucha, who advises physician groups and hospitals.
•Step five. Decide whether it even makes sense financially for you to buy insurance. For some people, paying the annual penalty, which starts at $95 or 1% of income for the first year, may be the cheaper move. (Unless, of course, your health takes a turn for the worse.) By 2016, however, the annual penalty will be $695 or 2.5% of income.
The exchange plans are set up so you will never have to pay more than 9.5% of your salary for insurance. But the new law certainly doesn't mean coverage will be cheap.
"It's still going to be expensive, particularly for low-income people," says Andy Hyman, who directs the health care coverage team at the Robert Wood Johnson Foundation. "There is a financial burden, but it's far less today than what it was."
How the financial help works
Under the Affordable Care Act, there are two main types of subsidies to reduce insurance costs and out-of-pocket costs of medical care: tax credits and cost-sharing reductions. To lower your insurance costs, if eligible, you can get subsidies to help pay for plans obtained in the new state exchanges. You might also qualify to pay less out-of-pocket for co-payments, co-insurance (that share of procedure costs you have to pay) and deductibles.
Tax credits
The subsidy amount is based primarily on income and number of family members. The tax credit is calculated as the cost of a "benchmark" middle-range plan in your area minus your required payment, a set percentage of your family income. These benchmark plans are set as the second-lowest-cost "silver" plans for a person of your age living in your area. Depending on how much you make, you'll be expected to pay between 2% and 9.5% of your income on monthly premiums. The difference between what you're expected to pay and the cost of the premium is what the government will cover.
For example, Kaiser Family Foundation says a 40-year-old who makes $30,000 a year is expected to pay 8.37% of income in insurance, or $2,512 per year. In this person's area, the estimated "benchmark" premium is $3,857 per year. So this person gets a tax credit of $3,857 minus $2,512, or $1,345, the foundation says.
These tax credits are "advanceable," meaning that the savings are included in your monthly premiums. You pay lower costs up front, rather than having to get reimbursed later.
Cost-sharing subsidies
Health Savings Account-qualified health plans define a general maximum amount for out-of-pocket costs. Then, eligible people can get reductions in their own maximum out-of-pocket expenses, which range from one-third to two-thirds of this initial maximum, depending on income. Those with the lowest incomes — at or below 250% of the poverty level — can also get plans that cover a higher proportion of the cost of medical services.
Still murky? You'll see how much you can get in savings after you fill out an application for the state exchanges starting Tuesday. But until then, you can estimate your potential savings with the Kaiser Family Foundation's subsidy calculator. This calculator takes into account information about your income, family and tobacco use and gives you estimates of how much you might receive in subsidies and how much you might have to pay for premiums and out-of-pocket costs.
Don't wait. But don't hurry, either.
That's the best approach to the new health insurance exchanges that are scheduled to open for business Tuesday. Buying insurance is supposed to be easier than ever once several provisions of the Affordable Care Act take effect this fall. That doesn't mean the process is easy or should be done speedily, however, experts say. That's especially true if insurance shopping is new to you.
"Don't be hurried in buying a plan," says Bryce Williams, managing director of global benefits consulting firm Towers Watson Exchange Solutions. "There's no rush."
Williams likens it to buying the first car off an assembly line: It may be best to let the new exchanges — particularly the 31 run by the federal government — iron all the kinks out. Federal exchanges may not be ready, and there may be more and better information and "hand holding" available after a few weeks. Besides, your insurance won't start until Jan. 1, 2014, whether you sign up now or in December.
If you're one of the more than 45 million people who lack health insurance, you can begin the enrollment process Oct. 1, but you certainly don't have to. The deadline to purchase (or face a penalty at tax time in 2015) is March 31, 2014.
Every state has people called navigators who received grants to help guide consumers through the process in an unbiased way. Insurance companies are also increasingly pitching their individual policies online and in stores, where agents are available to help you figure out what plan is right for you — but they obviously have a vested interest in your decision. A key benefit to the new online exchanges is the ability to easily compare different plans — as you might during online car shopping — without a pushy salesperson hovering.
Key steps in the process:
•Step one. Check out the options on your state's exchange. Start at HealthCare.gov, the federal government's portal, which will route you to your state or allow you to create an account if the feds are running your state's insurance marketplace. Plug in details about where you live, what you earn and family size. If your income is low enough, you may be alerted that you're eligible for Medicaid and told how to apply for that.
•Step two. Determine if you are eligible for financial help, which can come in the form of subsidies to offset the cost of premiums, co-payments or deductibles.
Anyone under age 65 participating in the new state exchanges can get tax credits if their incomes are between the poverty level and 400% of the poverty level. In 2014, that means families of four that make $24,000 to $94,000 per year could get subsidies. Those who make 250% or less of the poverty level can get even more financial help. The federal poverty level is now $11,490 for an individual and $23,550 for a family of four.
•Step three. Calculate what you've been spending for your uninsured health care, including prescription drugs, doctor visits and any emergency room or other hospital visits. Are there health concerns you've avoided addressing that are likely to get worse, like that sore knee or breathing condition? Medicines you should be taking but aren't? Are there young athletes in the house?
•Step four. Spend time pondering what type of plan is right for you, based on how much you can afford to pay in premiums, co-payments and cost-sharing for procedures, as well as what your medical needs are likely to be next year.
Options are grouped into coverage levels that are coined bronze, silver, gold and platinum based on the percentage of out-of-pocket costs borne by the consumer. Bronze plans cover the lowest percentage of expenses — 60% — and have the lowest premiums. Silver plans cover 70%, gold pay 80% and platinum plans cover 90% of out-of-pocket costs. Even policies that appear affordable may not be if you have high deductibles, co-payments or cost-sharing for procedures.
Could you afford to pay 40% of last year's medical bills — and almost everything out of pocket until a high deductible is met?
You need to consider other factors when deciding among plans. Williams recommends consumers stick with insurers that are "well entrenched" in their area; not one you've never heard of before.
Farzan Bharucha, a health care strategist for consulting firm Kurt Salmon, recommends calling providers you would consider if you had insurance and ask whether they will be accepting patients in the policies you're considering.
"A fair number will say they are full," says Bharucha, who advises physician groups and hospitals.
•Step five. Decide whether it even makes sense financially for you to buy insurance. For some people, paying the annual penalty, which starts at $95 or 1% of income for the first year, may be the cheaper move. (Unless, of course, your health takes a turn for the worse.) By 2016, however, the annual penalty will be $695 or 2.5% of income.
The exchange plans are set up so you will never have to pay more than 9.5% of your salary for insurance. But the new law certainly doesn't mean coverage will be cheap.
"It's still going to be expensive, particularly for low-income people," says Andy Hyman, who directs the health care coverage team at the Robert Wood Johnson Foundation. "There is a financial burden, but it's far less today than what it was."
How the financial help works
Under the Affordable Care Act, there are two main types of subsidies to reduce insurance costs and out-of-pocket costs of medical care: tax credits and cost-sharing reductions. To lower your insurance costs, if eligible, you can get subsidies to help pay for plans obtained in the new state exchanges. You might also qualify to pay less out-of-pocket for co-payments, co-insurance (that share of procedure costs you have to pay) and deductibles.
Tax credits
The subsidy amount is based primarily on income and number of family members. The tax credit is calculated as the cost of a "benchmark" middle-range plan in your area minus your required payment, a set percentage of your family income. These benchmark plans are set as the second-lowest-cost "silver" plans for a person of your age living in your area. Depending on how much you make, you'll be expected to pay between 2% and 9.5% of your income on monthly premiums. The difference between what you're expected to pay and the cost of the premium is what the government will cover.
For example, Kaiser Family Foundation says a 40-year-old who makes $30,000 a year is expected to pay 8.37% of income in insurance, or $2,512 per year. In this person's area, the estimated "benchmark" premium is $3,857 per year. So this person gets a tax credit of $3,857 minus $2,512, or $1,345, the foundation says.
These tax credits are "advanceable," meaning that the savings are included in your monthly premiums. You pay lower costs up front, rather than having to get reimbursed later.
Cost-sharing subsidies
Health Savings Account-qualified health plans define a general maximum amount for out-of-pocket costs. Then, eligible people can get reductions in their own maximum out-of-pocket expenses, which range from one-third to two-thirds of this initial maximum, depending on income. Those with the lowest incomes — at or below 250% of the poverty level — can also get plans that cover a higher proportion of the cost of medical services.
Still murky? You'll see how much you can get in savings after you fill out an application for the state exchanges starting Tuesday. But until then, you can estimate your potential savings with the Kaiser Family Foundation's subsidy calculator. This calculator takes into account information about your income, family and tobacco use and gives you estimates of how much you might receive in subsidies and how much you might have to pay for premiums and out-of-pocket costs.
03 September 2013
Purchasing power declining in Michigan
Story originally appeared on the Lansing State Journal.
In many ways, Ramona Jackson reflects Michigan’s changing labor force.
Earning $7.70 an hour as a cook, the Lansing woman finds it difficult to provide for her household that includes two children and five grandchildren. Earning about $16,000 a year at a Pizza Hut restaurant, the 52 year old joined a handful of employees earlier this week outside the chain’s south Lansing location to picket for higher wages.
“We’re not asking for a whole lot,” Jackson said. “Just enough to sustain, run a household. Some of us are having trouble making rent.”
Despite employment gains statewide in recent years, more Michigan workers such as Jackson are being squeezed by low or falling wages since 1982, according to an annual report from the Michigan League for Public Policy.
Michigan’s median wage of $15.89 an hour in 2012 is down 7 percent since 1982, when adjusted for inflation — the second-highest drop among all states, according to the report. In 1982, the median wage was $7.44 an hour, but in 2012 dollars it was $17 an hour. Only Alaska experienced a larger drop.
That decline in purchasing power is a sharp contrast from the early 1980s, when the state’s automotive industry was going strong.
In 1982, Michigan had the fourth-highest median wage in the nation. But hundreds of thousands of higher-wage automotive jobs were eliminated during the recession that started in December 2007 and stretched into 2009, and state median wages nosedived.
As a result, more Michigan workers are being forced into lower-paying retail or restaurant jobs, and often have to work two jobs to make ends meet, said Gilda Jacobs, president and CEO of the Michigan League. To address falling wages, the report recommends the state expand higher education opportunities for Michigan youth and increase the state’s minimum wage of $7.40 to an unspecified level.
In recent years, the fiscally strapped state has slashed funding for higher education, leading to tuition increases at most universities.
“We were once a high-wage state,” Jacobs said. “Despite the fact that we are staring to build up our economy, we have a lot of people who can’t make ends meet. We need to change that.”
But Michael LaFaive, director of the Morey Fiscal Policy Initiative for the Mackinac Center for Public Policy,a free-market think tank, said raising the minimum wage would only force businesses to lay off employees.
The report also found the wage decline has been sharper for blacks than whites. In 2012, blacks had a median wage of $12.65 in Michigan — 25 percent lower than the $16.85 median wage for whites. That’s the biggest gap between the two groups in the 34 years in which the data has been tracked.
In many ways, Ramona Jackson reflects Michigan’s changing labor force.
Earning $7.70 an hour as a cook, the Lansing woman finds it difficult to provide for her household that includes two children and five grandchildren. Earning about $16,000 a year at a Pizza Hut restaurant, the 52 year old joined a handful of employees earlier this week outside the chain’s south Lansing location to picket for higher wages.
“We’re not asking for a whole lot,” Jackson said. “Just enough to sustain, run a household. Some of us are having trouble making rent.”
Despite employment gains statewide in recent years, more Michigan workers such as Jackson are being squeezed by low or falling wages since 1982, according to an annual report from the Michigan League for Public Policy.
Michigan’s median wage of $15.89 an hour in 2012 is down 7 percent since 1982, when adjusted for inflation — the second-highest drop among all states, according to the report. In 1982, the median wage was $7.44 an hour, but in 2012 dollars it was $17 an hour. Only Alaska experienced a larger drop.
That decline in purchasing power is a sharp contrast from the early 1980s, when the state’s automotive industry was going strong.
In 1982, Michigan had the fourth-highest median wage in the nation. But hundreds of thousands of higher-wage automotive jobs were eliminated during the recession that started in December 2007 and stretched into 2009, and state median wages nosedived.
As a result, more Michigan workers are being forced into lower-paying retail or restaurant jobs, and often have to work two jobs to make ends meet, said Gilda Jacobs, president and CEO of the Michigan League. To address falling wages, the report recommends the state expand higher education opportunities for Michigan youth and increase the state’s minimum wage of $7.40 to an unspecified level.
In recent years, the fiscally strapped state has slashed funding for higher education, leading to tuition increases at most universities.
“We were once a high-wage state,” Jacobs said. “Despite the fact that we are staring to build up our economy, we have a lot of people who can’t make ends meet. We need to change that.”
But Michael LaFaive, director of the Morey Fiscal Policy Initiative for the Mackinac Center for Public Policy,a free-market think tank, said raising the minimum wage would only force businesses to lay off employees.
The report also found the wage decline has been sharper for blacks than whites. In 2012, blacks had a median wage of $12.65 in Michigan — 25 percent lower than the $16.85 median wage for whites. That’s the biggest gap between the two groups in the 34 years in which the data has been tracked.
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