Experts Share 3 Crucial Planning Steps

More and more small business owners are selling their companies, with sales hitting a four-year high earlier this year in the United States, and Canada predicting its largest small business turnover ever in the next five years.

"Many of our CEOs are baby boomers approaching retirement age," says Kathleen Richardson-Mauro, co-author with Jane M. Johnson of a practical new guide, "Cashing Out of Your Business," http://www.richardsonmauroandjohnson.com/.

"We're about to see a tsunami of ownership transitions and Kathleen and I worry that too many of  these small business owners are not taking steps early enough to plan for it," adds Johnson.

Richardson-Mauro, a Certified Financial Planner, and Johnson, a Certified Public Accountant, specialize in helping business owners successfully transition out of companies and achieve their goals. They recently launched an educational website, Business Transition Academy, to help owners plan their exits on their own.

"Most CEOs don't realize they need to start planning years before they might, potentially, be ready to sell or hand off their business," Johnson says. "And while a lot of that planning is to ensure they'll have the money to meet their lifestyle goals, there are other equally important considerations."

Small business owners tend to pour their lives into their companies and it doesn't take long before their identity is entirely defined by their job, the women say. In order to achieve a successful after-life, they need to start laying the groundwork early for their emotional separation.

Johnson and Richardson-Mauro suggest these steps for small business owners of any age to begin preparing mentally for their non-CEO future:

• Start now. You never know when you might receive an unsolicited purchase offer or what life events might rock your world. Most owners do not start thinking about transitioning out until some event gives them a jolt: a significant birthday; children graduating from college or starting their own families; illness or injury.

"Planning improves your chances for a successful outcome and gives you more control over the process," Richardson-Mauro says. "We sometimes don't realize just how much our lives revolve around our business - or we do realize it and don't want to think about it because the future looks scary."

With planning, you can ensure you still have a social life, a sense of accomplishment, challenges, and the other intangibles that make us satisfied and gratified.

• Identify what you want to get from your ownership transition. You'll have both financial and non-financial goals and objectives. Financial may include receiving enough money to live on for the rest of your life and creating a foundation to further a cause important to you. Non-financial may include regaining balance in your life and following a passion you gave up when you started your business.

Consider goals in every area of life, the authors say, from health, to family, to social connections.

"This is about remembering your true passions, determining what's most important to you, and deciding what you want to do when you can spend less or no time with your business," Johnson says.

"This will re-energize you and provide you with direction as you figure out the best way to transition the ownership of your business. It will also enable you to minimize any chance for regrets."

• Identify your fears, concerns and other barriers that prevent you from planning. Many owners fear what will come next and worry about losing their life's purpose. Most wonder if they will have enough money to live the lifestyles they desire, and they're concerned about their employees' futures, Johnson says.

"Take proactive action to address these concerns by having a family meeting; discussing the future with your spouse; and identifying your actual financial needs. That will allow you to find solutions and work through them," says Richardson-Mauro.

The two women say they've met many business owners who one day just decided they were tired of the headaches and ready to relax. They sold their business or otherwise transitioned out, only to discover they were bored, lonely and unhappy.

"After all of your years of work and sacrifice, you deserve a happy life after business," says Johnson.

"It's completely doable," adds Richardson-Mauro, "with planning.

About Kathleen Richardson-Mauro

Kathleen Richardson-Mauro, CFP, CBEC, CM&AA, CBI, has owned and operated five small companies and has successfully assisted more than 150 business owners in achieving their transition goals.

About Jane Johnson

Jane Johnson, CPA, CBEC, CM&AA, started her career in public accounting and finance at General Electric, then established her own practice. Fourteen years later, she negotiated the sale of her firm, retaining all of her clients and team members. In 2010, Jane received the Excellence in Exit Planning Achievement Award from Pinnacle Equity Solutions.

95 Percent of Illinois Residents will have Access to at Least 34 Plans
Rates Will Be as Low as $120 Per Month for a 25-year-old in Chicago

CHICAGO - Governor Pat Quinn today announced that rates for the benchmark plans that will be offered on the Illinois Health Insurance Marketplace are more than 25 percent below U.S. Health and Human Services (HHS) estimates. The Governor made the announcement as Illinois is awaiting final federal approval for 165 health plans that are expected to be offered by eight insurers as options on the Illinois Health Insurance Marketplace. Today's announcement is part of Governor Quinn's commitment to improve the health and wellbeing of the people of Illinois, and ensure that all people have access to quality health care.

"All health insurance plans offered through the Illinois Health Insurance Marketplace are designed to meet the needs of individuals, families and small business owners across the state," Governor Quinn said. "I am happy to say that starting in October, Illinois residents will be able to select a plan that is affordable and meets the healthcare needs of their families. The number and quality of affordable health plans that will be offered through the Illinois Marketplace is impressive."

Health insurance plans offered through the Marketplace will be categorized as bronze (lowest cost), silver, gold or platinum (highest cost) based on how costs are shared. For example, bronze plans are likely to have lower premiums but higher out-of-pocket costs such as deductibles, co-pays and co-insurance.

Illinois' rates are lower than was predicted by HHS and lower than many other states. For example, the lowest proposed monthly rate for a bronze plan for a 25-year-old is $120 in Chicago or $128 in Peoria; for a 40-year-old it would be $152 in Chicago or $163 in Peoria; and for 60-year old consumer it would be $323 in Chicago or $346 in Peoria.

"With the launch of the Marketplace hundreds of thousands of consumers in Illinois will also have access to financial support to help pay for health insurance," Governor Quinn said. "This means they have access to health coverage that meets their budget, keeps them healthy and gives them peace of mind."

Individuals and families with income between 138 percent and 400 percent of the federal poverty level may receive subsidies on a sliding scale if they obtain coverage through the Marketplace.  For example:

·         A single 30-year old, with a household income of $23,000 could be eligible for a subsidy that could bring their monthly cost to $44 in Peoria or $69 in Chicago

·         A family of 4, parents aged 40 with 2 children, with a household income of $60,000 could be eligible for a subsidy that could bring their monthly cost to $150 in Peoria or $234 in Chicago

Illinois Health Insurance Marketplace Overview

The Illinois Health Insurance Marketplace is the official online shop where consumers can compare all health insurance plans side-by-side; get help from a local expert trained to educate them about their options; and apply for financial assistance to bring down costs.

"We're pleased with the numerous options that will be available through the Illinois Marketplace. Through the Marketplace, the vast majority of Illinoisans will be able to compare up to 34 plans and premiums side-by-side and, for many, have access to financial help to lower the cost of the plans," Illinois Department of Insurance (DOI) Director Andrew Boron said. "The Marketplace website will make the process of shopping for health coverage more transparent and will allow residents to make side-by-side comparisons when considering health care options."

A six-month enrollment period for the Illinois Health Insurance Marketplace will begin in October and close April 1. For coverage to begin Jan. 1, customers must enroll by Dec. 15.

 

Plans offered in the Illinois Health Insurance Marketplace

In addition to the four "metal levels," high deductible "catastrophic plans" will be available for young adults under age 30 and certain other qualifying individuals.

Illinois consumers will pay similar or lower premiums for similar coverage compared to nearly all other states that have released premium rates. For example, the lowest proposed monthly rates for a bronze plan for a 25-year-old consumer in Denver is $146 and Seattle is $167, while a consumer in Chicago would only pay $120 and a consumer in Peoria would pay $128.

All plans provide coverage for the same set of essential health benefits.  These health benefits include : (1) ambulatory patient services, (2) emergency services, (3) hospitalization, (4) maternity and newborn care, (5) mental health/substance use disorder services, including behavioral health treatment, (6) prescription drugs, (7) rehabilitative/habilitative services & devices, (8) laboratory services, (9) preventive & wellness services & chronic disease management, and (10) pediatric services, including oral and vision care.

Once a consumer decides what coverage he or she wants to purchase, four factors can affect the premium rate: age, area of the state in which the person resides, whether the person uses tobacco, and how many people are covered by the plan. Subsidies and tax credits may lower costs further for many individuals and families. In addition, if a company does not spend at least 80 cents of every premium dollar on medical care, policyholders will receive rebates

The lineup of plans would give residents in all 102 Illinois counties access to a broad array of affordable coverage options.  Ninety five percent of Illinois residents would have access to at least 34 individual plans, in addition to another 28 plans offered through employers.  Additionally:

·         Every county will have choices that include PPO and HMO Individual and Small Group plans

·         10 of the thirteen rating areas will have plans offered by 4 companies, 2 of the thirteen rating areas will have plans offered by 5 companies, one area will have plans offered by 3 companies

·         The total number of plans offered per county ranges from 57 to 109

"The recommended quality health plans will provide a broad range of comprehensive coverage options for customers of the Illinois Marketplace," Illinois Health Insurance Marketplace Director Jennifer Koehler said. "When consumers calculate the subsidies that will be available through the Marketplace, they will see that we are entering a new era in which health care will be more affordable than ever."

The state recommended plans from eight insurers, including Land of Lincoln, a new Illinois company:

·         Aetna Life Insurance Company

·         Coventry Health and Life Insurance Company

·         Coventry Health Care of Illinois, Inc.

·         Health Alliance Medical Plans, Inc.

·         Health Care Service Corporation, a Mutual Legal Reserve Company (Blue Cross)

·         Humana Health Plan, Inc.

·         Humana Insurance Company

·         Land of Lincoln Mutual Health Insurance Company

As part of the QHP recommendation process, DOI reviewed the plans to determine they meet acceptable actuarial/network sufficiency/underwriting standards, do not discriminate against people with existing health conditions, and provide the ten Essential Health Benefits.

Beginning Oct. 1, Illinois residents will be able to access the Marketplace in three ways: online, the state's help desk or by visiting a partner organization to obtain in-person assistance. That information will be announced later this week.

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by U.S. Senator Chuck Grassley

Monday, September 23, 2013

Q:           Why is the federal government expected to reach the debt ceiling yet again?

A:            The simple answer:  Washington spends too much.  Think of it this way.  How long could your household operate by spending more money each day every day that outstrips your earnings, savings and investments?  That's basically what Uncle Sam does 365 days a year.  Month after month, year after year, Washington spends beyond its means.  American households must make tough choices to cover shortfalls in their budgets.  That includes:  stop spending money you don't have, earn more take-home pay or take on debt.  Borrowing money to bridge the gap also means paying more at the end of the day to cover the interest on the loan.  That's exactly the hole into which Washington has dug itself.  The U.S. government pays $600 million a day to service its debt.  Under current law, the Treasury Department may not exceed its current $16.7 trillion borrowing authority without approval from Congress. Washington reached the debt limit in May and will exhaust all options for avoid hitting the debt ceiling by mid-October.  At that time, the Treasury Department may not spend more money than it collects.  Now that sounds like music to the ears for those of us who work so hard to rein in runaway federal spending.  But it's a little more complicated than that as Washington needs to maintain its creditworthiness to uphold the "full faith and credit" of the United States.

Q:           Can Washington pay its bills if the debt ceiling isn't raised?

A: Big spenders like to rinse-and-repeat the idea that the sky is falling when it comes time to get serious about cutting spending.  Take the sequestration that kicked in March 1.  Despite doomsday predictions, the sun continued to rise in the east and set in the west.  It turns out belt-tightening in the Beltway didn't cause the world to end as we know it.  And yet, Washington must still face the consequences of spending beyond its means.  If an agreement to lift the debt ceiling fails to reach a consensus, it's reasonable to have a back-up plan to ensure Washington doesn't default on the national debt.  That's why I'm co-sponsoring the "Full Faith and Credit Act."  This would serve as a temporary tool to allow the federal government to borrow money - if incoming revenue falls short - to cover Social Security payments, active-duty military pay and interest payments on the national debt.  Prioritizing these essential financial obligations is a responsible way to pay the bills and blunt the efforts of those who choose to govern by scare tactics instead of solving the nation's spending problems.

Q:           Why is there a debt ceiling?

A:            By setting a debt ceiling, Congress exercises its Constitutional power of the purse strings to, in effect, trigger a debate on taxes and spending.  Thank goodness for that.  Riding the borrow-and-spend gravy train, Washington is careening towards an unprecedented $17 trillion national debt.  The U.S. Treasury is expected to collect $2.8 trillion in tax revenue for the fiscal year ending Sept. 30.  And federal spending is expected to exceed $3.4 trillion in those 12 months.  You don't need to be a math genius to understand this doesn't add up.  This imbalance creates the federal deficit.  Uncle Sam fills the spending gap by taking on debt and paying interest on the Treasury bonds and notes.  America can't afford to let interest payments swallow up a growing percentage of the federal budget and Gross Domestic Product.  A bigger risk lies ahead when interest rates start to climb.

Q:           Why is the debate framed as a "budget showdown?"

A:            Washington is operating under a divided government.  The electorate voted to split the majorities in the U.S. Senate and House of Representatives.  So it shouldn't come as a big surprise that lawmakers are working hard to represent the views of the people who sent them to Washington.  Those inside the Beltway like to talk in terms of budget brinksmanship and fiscal cliffhangers, but failing to chart a path of fiscal discipline pretty much secures a legacy of burdensome taxes and debt for our children and grandchildren.  Congress and the President need to come to a meeting of the minds for the greater good of the country.  It will require presidential leadership to build consensus among Congress and the American public to secure entitlement reform.  If Washington doesn't come together sooner rather than later to curb spending, tame the debt and reform public entitlements, $600 million swallowed up per day on interest payments will seem like a bargain.