MAY 2013
Khaas Baat : A Publication for Indian Americans in Florida

Individual Health Insurance – PART II


The benefits of individual coverage

In the event of illness or injury, individual coverage is infinitely better than being uninsured. Although you may think that you can do without health insurance, you are taking a major risk if you choose not to get it. An unexpected illness or serious injury can put you and your family in financial peril. Remember that once you develop symptoms, it's too late to apply for coverage.

With individual health insurance, you're directly in control of your own policy. You may be able to negotiate to have certain provisions included or excluded, and you can choose your deductible amount and co-payment percentage. Keep in mind, however, that your choices will affect your premiums.

The disadvantages of individual coverage

When you purchase individual health insurance, you're responsible for 100 percent of the cost. Individual insurance often doesn't provide as much coverage as group insurance in the same price range. Moreover, to make up for the insurer's increased risk exposure, individual insurance is more expensive than group insurance.

Individual health insurance coverage is much easier to come by when you're healthy. If you're already sick or have a history of health problems, you may find it difficult to obtain coverage. Group insurance, by contrast, is usually available without taking a medical examination or answering health questions. And, beginning in 2014, the PPACA requires that all health insurers must sell coverage to everyone who applies, regardless of their medical history or health status, and plans cannot exclude coverage for those medical conditions.

What you should look for in an individual policy

Try to find a policy with a guaranteed renewability provision. The guaranteed renewability provision means that the insurer can't cancel your coverage if you become ill. As long as you continue paying your premiums, your insurance coverage continues. Your premiums may go up over the years, but they will rise for all policies in your class, not just for your policy alone.

Be sure to check what's covered and when. Major medical coverage, which covers all hospital costs including rooms, emergency-room care, anesthesia, tests, X rays, and drugs, is preferable to hospital-surgical coverage, which covers only hospital and surgical services. Most insurance companies impose a waiting period before they'll cover pre-existing conditions. The shorter this period, the better. Three months to one year is standard; anything over a year is extremely undesirable. Most policies do cover outpatient treatment, although cosmetic and other truly elective surgeries are rarely covered. The easiest way to check what's covered is to look at what's not covered, by reading the Exclusions and Limitations section. You'll also want to check with your state insurance agency, since some states require non-group insurance coverage to comply with a standard set of benefits.

You'll want to find a policy with the highest lifetime payout possible. Policies with unlimited payouts are less common these days, but anything less than $1 million may be insufficient to cover you in the event of a catastrophic illness.

You'll also need to choose a limit for your out-of-pocket costs. Lower deductibles and co-payments mean that your costs will be lower if you actually do get sick, but you'll pay dearly for this protection. By agreeing to higher deductibles and co-payments, you can cut your insurance premiums dramatically. As long as you retain a reasonable out-of-pocket maximum, you shouldn't have to worry about your medical costs getting out of hand.

Finally, look for an insurer that's financially stable – one with an "A" or "A+" rating from A. M. Best, Moody's, or Standard & Poor's. It does you no good to have guaranteed renewable insurance if your insurance company goes belly-up.

Note: According to the PPACA, passed in 2010, effective June 1, 2014 all policies must cover "essential health benefits." These benefits include the following: (1) ambulatory patient services. (2) emergency services. (3) hospitalization. (4) maternity and newborn care. (5) mental health and substance use disorder services, including behavioral health treatment, (6) rehabilitative and habilitative services and devices, (7) prescription drugs, (8) laboratory services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care.

DISCLAIMER: Securities and Investment Advisory services offered through SagePoint Financial, Inc., member FINRA/SIPC and a registered investment advisor.Fixed and/or Traditional Insurance Services may be offered through Capital Insurance & Asset Protection LLC, which is not affiliated with SagePoint Financial or registered as a broker-dealer or investment advisor.

Haren Mehta, manager partner of Capital Insurance & Asset Protection LLC, can be reached at (813) 679-5204, e-mail or visit


TAX Talk - Extensions AND Amendments


Well, officially the tax filing deadline is over – but it is estimated that about five million business tax payers and 10 million personal tax payers file for extensions!


Tax planning is a yearround activity and starts from day one of the current tax year. Individual (1040) tax filers have till Oct. 15 to file the tax returns with extension (provided Form 4868 has been filed before April 15). LLCs (1065), S (1120S) and C (1120) Corporations have time till Sept. 15, to file the tax returns with extensions.

In some circumstances, you also can get an extension of time to file and pay any tax due. However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. The following are the different extension process:

Automatic 2-month extension. You are allowed an automatic 2-month extension to file your return and pay federal income tax if you are a U.S. citizen or resident alien, and on the regular due date of your return:

If you use a calendar year, the regular due date of your return is April 15. Even if you are allowed an extension, you will have to pay interest on any tax not paid by the regular due date of your return.

Married taxpayers. If you file a joint return, either you or your spouse can qualify for the automatic extension. If you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies for it.

How to get the extension. To use this automatic 2-month extension, you must attach a statement to your return explaining which of the two situations listed earlier qualified you for the extension.

Automatic 6-month extension. If you are not able to file your return by the due date, you generally can get an automatic 6-month extension of time to file (but not of time to pay).

You may not be eligible for extensions:

You want the IRS to figure your tax, or

You are under a court order to file by the regular due date.

Nonresident Alien Spouse Treated as a Resident

If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U.S. resident. This includes situations in which one of you is a nonresident alien at the beginning of the tax year and a resident alien at the end of the year and the other is a nonresident alien at the end of the year.

If you make this choice, the following two rules apply.

This means that neither of you can claim under any tax treaty not to be a U.S. resident for a tax year for which the choice is in effect. You can file joint or separate returns in years after the year in which you make the choice.

Social Security Number (SSN)

If you choose to treat your nonresident alien spouse as a U.S. resident, your spouse must have either an SSN or an individual taxpayer identification number (ITIN).

To get an SSN for a nonresident alien spouse, apply at an office of the U.S. Social Security Administration (SSA) or U.S. consulate. You must also provide original or certified copies of documents to verify that spouse's age, identity, and citizenship. If the nonresident alien spouse is not eligible to get an SSN, he or she can file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS to apply for an ITIN.


If you discover an error after your return has been filed, you may need to amend your return. The IRS may correct errors in math on a return and may accept returns with certain forms or schedules left out. In these instances, you need not amend your return! However, do file an amended return if there is a change or error in your filing status, income, deductions, or credits.

File a separate Form 1040X for each year you are amending. Mail each form in a separate envelope. Be sure to enter the year of the return you are amending at the top of Form 1040X. Generally, to claim a refund, Form 1040X must be filed within three years from the due date of your original return or within two years from the date you paid the tax, whichever is later. Returns filed before the due date (without regard to extensions) are considered filed on the due date.

Do not forget to attach copies of any forms or schedules that are being changed as a result of the amendment, including any Form(s) W-2 received after the original return was filed. Normal processing time for Forms 1040X is 8 to 12 weeks from the IRS receipt date.

Non-Profit Tax Returns:

Most non-profit tax returns (Form 990s) are due by May 15 – and there is an automatic extension (by filing form 8868) for 3 months till Aug. 15.

IMPORTANT: Most small tax-exempt organizations whose annual gross receipts are normally $50,000 or less are required to electronically submit Form 990-N, also known as the e-Postcard, unless they choose to file a complete Form 990 or Form 990-EZ instead. If you do not file your e-Postcard on time, the IRS will send you a reminder notice. There is no penalty assessment for late filing the e-Postcard, but an organization that fails to file required e-Postcards (or information returns – Forms 990 or 990-EZ) for three consecutive years will automatically lose its tax-exempt status.

There are various limitations and thresholds for many of the tax deductions. Please consult your CPA/Tax attorney/or tax consultant for proper guidance with the above subject matter.

DISCLAIMER: In accordance with IRS Circular 230, the above information is not intended or written to be used, and cannot be used as or considered a "covered opinion" or other written tax advice and should not be relied upon for the purpose of avoiding tax-related penalties under the Internal Revenue Code; promoting, marketing, or recommending to another party any transaction or tax-related matter(s) addressed herein; for IRS audit, tax dispute or other purposes.

Suresh Kumar, CPA, MBA is the Principal of Kumar Consulting, PA, a CPA & Consulting firm licensed in the states of FL, KS, & MO and can be reached at (813) 421-5068, e-mail or visit

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