The Land of Ozz

My wife wrote a comment on Facebook that I want to follow up on. Mrs Ozz said:

“The idea of universal health care for our family is SCARY! At least we would still have Medicaid for Caden but who knows how that would change!”

While the Medicaid program that Caden is on works well for us college educated middle class folk…I seriously don’t know how uneducated (illiterate) people get it for their children.  The red tape and paperwork processes to get approved are horrendous.  You not only have to be able to read and comprehend the applications, but you have to have good records.  I was told to expect it to take 4-6 months to get Caden approved.  I had good records and followed the instructions and got the approval back in a few weeks.  The paperwork was heavy on the front end but has been almost non-existent on the back end.  These government run programs like Medicaid don’t provide specific benefit information like private health care.  You never get an explanation of benefits (EOB) from medicaid and from what I have seen there are no processes for reimbursement if you do pay for something out of pocket.

Caden has been covered by Medicaid (Katie Beckett – TEFRA program) since birth which was almost five years ago.  Children who qualify for TEFRA Medicaid are defined as follows:

These are children age 18 or younger that live at home and meet the SSI definition of disability for a child and meet the level of care required for Medicaid sponsorship in either a nursing home, ICF/MR or an acute care hospital. The parent’s income and resources are not considered in determining eligibility… Source

That definition gives me a reality check on how serious Caden’s conditions have been since birth.  What they are basically saying is that if the family is not willing or able to care for the child then they would likely be institutionalized if a suitable home could not be found.

This medicaid plan has worked for us but it has had some bumps in the road.  Beginning in 2008 the state of South Carolina began outsourcing Medicaid to private industry (HMOs) so this particular “GOVERNMENT” health care is no longer run by the Government in most cases.  We opted out of the HMO choices which were offered through SC Healthy Connections Kids and went back to fee-for-service Medicaid after being forced into an HMO that did not even provide coverage for most of Caden’s care.  The HMO we were auto enrolled into has only one participating hospital within 100 miles and it is not the Medical University of South Carolina (MUSC) Children’s Hospital where ALL of Caden’s inpatient, outpatient, and surgical work has been provided since birth.  As a matter of fact MUSC is the only hospital in the state that performs pediatric cardio-thoracic surgery. So why they choose an HMO for Caden, a child with congenital heart defects, where the only hospital in the state that can provide care is a non-participant in the HMO is completely illogical?

The scariest part of government run health care for me is the lack of equal value on life.  Many health care professionals believe that kids like Caden are a burden on families and society.  For instance, the women’s clinic where Mrs Ozz got most of her prenatal care went out of their way to make sure that we knew that we “had choices” during the pregnancy.  They made sure that we understood how difficult it would be to care for a special needs child and that we did not have to put our family through that.  Never mind that a life is a stake here.  They were basically saying that our family could have lived an easier life if we had chose to end our baby’s life at approximately 26 weeks in the pregnancy.

The mentality behind government health care is similar in that there seems to be no regard for the life of the patient if cost high and end of life are possible anyway.  You may remember that President Obama has made it pretty clear that some life saving procedures may not be worth performing on some patients.  I see this attitude held by some politicians along with their lack of value for all life to be the precursor to a slippery slope into situations like the one Dr. Bernhard Moeller faced in Australia.  The doctor was denied a visa because his son had DOWN syndrome and that would have caused a drain on taxpayers through the Australian government health care system.  And where does it all go from there?  When does the government decide to stop prenatal care or even force abortions on women who are carrying babies with known life threatening conditions that will almost surely put a drain on the taxpayers if the child is allowed to become a citizen?

The assessment of Dr. Moeller’s family medical needs were likely accurate if his son’s care cost anywhere near as much as my son Caden’s care.  Our family takes out at least twice as much benefit from the health insurance system as we put in during an average month even when there are no major procedures or extended hospitalizations.  Major surgeries along with associated hospital stays are particularly draining on the insurance system when they do occur.  Let me provide some personal details to clarify by using the first two months of Caden’s life.  I stopped adding the bills when the total passed $330,000 so we will use that number as a reference since we know that the first two months was at least $330K for Caden’s care.  My current insurance plan premiums are about $13,445 per year for our family coverage for Blue Cross Blue Shied Standard (non-postal rates).  While I was not a government employee at the time of Caden’s birth my plan was similar in benefit and premium costs so the example here is fairly representative.  Like most plans I pay a portion and my employer pays the remainder of the premiums to the insurance company.  At $330K in bills for those two months of care that means that it took more than 24 employees worth of yearly insurance premium contributions to cover the first two months of Caden’s hospital care after birth.  Caden has also had several other major surgeries since birth so these first two months is only a small example of what health care costs for a child with complex medical conditions.  For example Caden’s regular ongoing care today totals in excess of $2,000 per month due to tube feeding supplies, therapies, medications, specialist visits, and associated tests.  That is nearly double the monthly premiums ($1120) being paid in total for my family between me and my employer.

So the scariest part of the government run health care model is brought to light in Australia’s denial of Dr. Moeller’s visa.  If that example runs it’s course in the United States then Caden’s care might be categorized as too costly and the system might have to drop him from coverage if the politicians and burracrates get too involved in the process.

I suggest that we send a $13 check or money order to our Senators and Congressmen to make a point on how serious we are as average Americans in opposition to this bill.  A commenter on one of my other posts has inspired this idea.  Bill says:

I assume that you Christians will return any money that will be sent to you per the stimulus bill. it only right that you do not accept this money but rather send it to a a person in need. Your gift will help those in need may the good lord bless you kind republicans.

In response to Bill I would argue that “you Christians” are already personally giving more to those in need than President Obama.

Although liberal families’ incomes average 6 percent higher than those of conservative families, conservative-headed households give, on average, 30 percent more to charity than the average liberal-headed household ($1,600 per year vs. $1,227). RealClearPolitics

Most of us are already giving to the needy and will not be hurt by giving back just one weeks’ worth of what the average American is going to see from this stimulus in tax credits.  Join me by mailing a $13 check or money order to your Senator or Congressman within the next week.  We need to make sure the checks are made out to someone who can actually see that the money is used for those in need of help.

Stand by for more information.  Follow me on Twitter or subscribe to this blog by email or RSS feed for further instructions.

UPDATE: Obviously Senator Jim DeMint and his aids are too busy to respond to constituants.  I did try to contact him to see if such an effort as mention above would do any good? While Senator DeMint has been on the right side (no pun intended) of all the spending bills, he has done a poor job on constituant serviecs.  He must be thinking more naitonally in terms of the 2012 presidential race.  It should not be too hard to give Obama a run for his our money in 2012 since he barely beat McCain and is not fairing so well out of the shoot.

The perfect storm is brewing and few people can read the signs. Many in Washington wrongly believe the root of the economic problems are in the housing market. I believe that the root of the entire economic meltdown is rooted in greed and no amount of government programs, tax cuts, or funny money from Washington with fix that root cause. A lot of people and businesses are going to have to feel some real pain before this problem goes away.

As the news slowly trickles out of Washington on how the stimulus/bailout/rescue will actually be spent, we are learning more every day that very few politicians expect this bill to create or save a mass of jobs within the next two years. As a government civil service member I can assure you that major infrastructure projects will not translate into jobs very fast. The programs have to be staffed and then the contracts have to written and then the contractors have to develop plans, etc, etc. Most of the benefit of this stimulus will likely begin to be realized in U.S. economy in about three years as admitted by most of Washington. Yes that is very convenient timing for a presidential reelection bid but I think the economic problems could correct themselves in about that amount of time even if congress does absolutely nothing. But by doing nothing they will not be able to claim credit for casting a vote for “something” which they think “is better than nothing”.

The disturbing reality of the state of the U.S. economy came to me in a headline titled Visa Reports Profit Rose 35% with Increased Use of Cards. The NY Times did not explain this news in the same way I perceived that headline at first glance. The first thing I thought was that record job losses plus lower retail spending equals a high likelihood that folks are using their Visa credit cards and “convenience” checks to pay their mortgages, utilities, and car payments. So the “Increased Use” of Visa is probably not good news for our economy if you get down in the weeds of how that credit might be being used. Since the magic carpet (stimulus) from Washington is not expected to land in a neighborhood near you any time soon to create or save jobs this makes for the perfect storm. The more jobs that are lost the more likely we are to see non-traditional expenses put on credit credit cards. Then when the credit limit is reached before the new jobs reach the unemployed credit card owners, well you get the picture I am sure. The exact timing of when this storm will hit hardest is dependent on the amount of credit the average jobless head of household has available after the loss of their job. Once the income stops and the bottom is reached (top of credit card limit) then there will be no ability to get refinanced and you might start seeing homeless rates rise like only a small sample of the U.S. population is old enough to remember from the 1930’s. The notion that fixing the housing market will solve all the problems is a fantasy. A borrower without a job is not going to be able to pay mortgage payments even at 0% interest. No amount of mortgage system overhaul, tax cuts, or infrastructure projects are going to solve the rapidly rising unemployment numbers.

The stimulus programs implemented by President Bush did not prevent this economic meltdown and the stimulus being sold by President Obama and his friends in congress will not fix the economy. What exactly this country will look like once the perfect storm comes ashore is impossible to forecast but you should prepare to witness some extreme damage.

Higher unemployment + increased use of credit = more foreclosures to come

Many Americans, especially those without health care coverage are concerned about how they might be able to get health insurance coverage.  There are a lot of promises being made about health care insurance and I want to take a close look at the one that looks the most appealing to many Americans.  I want to break down the cost of health care insurance for small business and their employees based on some conversations I have been having with small business owners who do not currently offer their employees health care insurance.  Barack Obama is quoted as saying, “since 1990 companies with fewer than 20 employees have created 80% of new jobs in America”.

Small Business Health Care Cost Example

To set the stage, let’s say a services related business grosses $500K and makes $50K profit after the expenses, taxes, benefits, and salaries (including owner/operator) are paid.  This business employs 16 people who average making a gross wage of $12 per hour.  Before we go too far let’s take a realistic look at what an employee’s household budget might be in this small business.

Employee’s Household Budget:

* Misc includes clothing, toys, cable, phone, entertainment, gifts, charity, savings, etc.

I created the above household budget example based on a single income family of four including two preschool age children where the mom cannot obtain a full-time job to make enough to pay for childcare for two young children.  I added $250 per month that might come in the form of overtime or an evening part-time job by mom or day that supplements the budget.

Barack Obama’s Promise for Health Care Coverage

Barack Obama’s says that his health care plan would provide small businesses “tax credits to cover up to 50% of employee insurance” premium costs.  How will that work for this company and the employee’s family listed above?  Let’s pull data from a very popular health care plan offered to federal government employees that is available throughout the United States.  Since that is what Barack Obama offers as example in his speachs it is only fitting.  One of the standard plans offered to feds is by Blue Cross Blue Shield and costs a total of $1027 per month in premiums.  That plan costs approximately $12,000 per employee in premiums per year.  Please note that the federal government picks up 70% of the premium and there are thousands of employees in this group plan.  To get this level of coverage for a company of 16 employees, you are almost guaranteed that employee coverage in this company will cost well above $1027 per month per employee.

Health Care Cost:

Now remember that the business only has $50k profit to apply to the Net Premium Left to Pay.  If the employer decides to purchase as much premium as possible, each employee will still be required to come up with at $256 for in premiums.

With Company Help (No profit left to grow company)

$98k prem – 50k profit = $48k remaining

$48k remaining / 16 employees = $3k per employee per year

$3,000 per employee / 12 months = $250 per employee per month

No Company Help ($50k profit used to grow company)

$98,592k prem / 16 employees = $6,162 per employee per year

$6,162 per employee / 12 months = $513.50 per employee per month

The employee’s household budget will not support this premium and will likely not choose to purchase health care insurance in a similar scenario.  This is not just a speculation for small business employees that I know, but this is a fact.  These are the Plumber Joe type of folks who are already running on tight budgets and will likely pocket the $250-500 per month and pray that they don’t have health care issues that cost more than they have stuffed in the mason jar.   Every employee who has been offered health insurance where they would have to sacrifice premiums out of their check has passed on this option. The result shows that the average small business employee cannot afford health insurance even with Barack Obama’s health insurance plan for small busniess.  The average family making wages in the range listed above simply cannot afford to fork out $250-$500 per month in heath care premiums if, IF the employer can get decent health care coverage at this price per employee.

Barack Obama says that for small businesses he will “help them not just create new jobs but good jobs with health care”.  What we can clearly see it that Barack Obama is out of touch with reality when it comes to how many small businesses and households operate in this country.

References:

http://www.barackobama.com/issues/healthcare/
http://www.opm.gov/ [PDF] – U.S. Office of Personnel Manaement

Achieve American Dream and then Give It Back

A short note to the rich and famous.  You may soon be required to start refunding movie tickets, CD sales, MP3 royalties, book sales, and concert tickets.  The method of refund will be delivered to your faithful fans by way of the Obama success tax.

One thing that has struck me about the robin hood philosophy of Barack Obama is that it is the enemy of the core reason many people flock to this great country of opportunity.  Obama’s promise of taxing the rich means that if you actually achieve the ultimate American dream and become rich and famous then you will not get to keep all that you worked so hard to obtain for very long.  Your success will be limited to $250K or less per year to remain free from what I call the Obama success tax.

Should you be tithing if you are in a financial storm?  By financial storm I mean that you may be facing the loss of your job and/or foreclosure on your home or maybe bankruptcy.  You know, the BIG financial problems that are plaguing many families in the USA these days.  Most of our politicians who are currently trying to “relate” to us have no clue what it feels like to face such desperate circumstances.  I have been through a severe financial storm and can tell you that you must be prepared or you will be devastated by the destructive nature of these storms.  You can loose more than your job, home, and credit rating.  You could loose your life as you know it.

Our Story

My wife Sherry and I both were working when we got married. We bought two cars (on credit)¹, our first house that we could only afford on two incomes², and all the fixings that go along with being a first time home owner. The fixings were fairly big ticket items mostly purchased on credit³.  These were things like window coverings, lawn equipment, refrigerator, freezer, lawn furniture, etc, etc.

Then we had our first child and decided that Sherry should stay home with Riley. We did not fully understand back then why God had put it on our hearts to have Sherry switch from being a full-time public school teacher to being a full-time mom, but that is a story for another day.  From a financial perspective this was a very bad decision because we could not afford to live on a single income ⁴.  We initially made up for the nearly $30K per year of lost income by cashing in some 401k accounts and paying for even more stuff on credit that we could not afford^5,6. Then I took a job that paid more via the over-time that came with some required travel.  The over-time pretty much made up for the remainder of the lost income and we got into a comfort⁷ zone with our household budget that as I said “required the over-time” to stay out of the red.

To this point I have noted and marked more than a half dozen major mistakes in our financial planning that would not be fully exploited until we hit our first real financial emergency.  Never mind the fact that we had a zero balance in our savings account at that time.  This emergency would not cost us a significant amount of money out of pocket, but the emergency would shed light into the dark corner of our finances that we did not even realize existed up until that point.  The emergency caused us to fall back on my base salary for a period of nearly seven months.

So how big of a deal could it be to miss some over-time for a few months?  We were in need of approximately $500 of over-time pay per month to maintain our bills.  Our bills included more than $500 per month in minimum payments on credit card payments plus two cars that totaled another $770 per month.  To boot, we were upside down on both cars and could not sell either because we did not have the cash to pay off the balance of the loan even if we could find a buyer at a fair market price.

The emergency we faced was the care requirements of our second child Caden.  He was born with some severe medical conditions that we still battle to this day nearly four years later.  As recently as last week he had another open-heart surgery.  His medical conditions did not really cost us anything directly.  The indirect related expenses were that we ate out more during his extended hospital stays and spent more on gas going to and from the hospital (100 miles round trip per day between MrsOzz and I), but that was about it.  Caden’s genetic birth defect qualified him for Medicaid so that as a secondary insurance paid for all the deductibles and co-pays that my employer provided insurances did not cover.  This particular Medicaid program (TEFRA – Katie Beckett) was designed to help families with children who are disabled under SSI (Social Security Income) standards, but do not qualify for SSI or regular Medicaid due to assets and income.  This program helps families like ours avoid bankruptcy when the deductibles and co-pays reach well into the tens or hundreds of thousands of dollars.

So far I have described the climate before the financial storm and pretty well defined the make-up of the storm.  While Caden’s birth did not cause our problems, his birth certainly exposed some VERY bad decisions we had been making in the previous four years working up to his birth.  Our total financial damage can be described by saying that it would have taken $10,000 cash just to get us current on our bills at one point.  We were 30-60 days behind on everything including our home.  Not only that, I would have needed to have the opportunity to begin making the same amount of overtime again just to continue to make minimum monthly payments on our home, cars, and $60K worth of credit card debt if by some miracle we could round up $10k to get us current on everything.

What about tithing?

Tithing is a very touchy subject that I will not try to justify with a ton of scriptures.  While there are plenty of biblical references on finances, they are best digested first hand.  If you have never read the Bible and are in a financial storm, then you picked a perfect time to start.  God does some of his best work on those in need.  Sherry and I not only began reading the bible regularly within the year after Caden was born, but also went seeking advice on our finances.  We enrolled in a Crown Financial class.  We then peppered what we learned from that class with principles taught by Dave Ramsey who credits Crown founder Larry Burkett as a source of some of his principles.

So there we were in a pretty big storm.  Each month, some lenders were not getting paid because we were about $500 short on breaking even on our bills without overtime.  At that point in our life we were not tithing because we could not afford it.  Most would say that is exactly how they would have been viewing tithing.  It was not required to maintain life as we knew it so it should not have been in our “expenses”. Tithe was not included in our expenses then and it would never be in our expenses in the future. More on that in a minute.

It was in the middle of this storm that we finally come to the realization that what we had possession of was not really ours.  We learned from reading the bible that God made every single thing that we could detect with our senses so why were we holding so tightly to it all like it was ours?  Could we take it with us when we died?  Were we ever going to reach the “richest man alive” status and be remembered in the history books for our wealth and possessions? Even if we did, would it matter in eternity? We could not come up with answers to any of these types of questions that justified our continuing to act like we actually owned anything on this earth.  God owns it all and we are just here to take care of it, to be stewards.

In late 2005, about one year after Caden’s birth, we decided to begin tithing.  We had heard our pastor say along with many others who said similar things, “If you want God to help you with your finances then you are going to have to get him involved in your finances.” So what does that really mean?  To us that meant tithing.  I don’t want to stir an argument, but we do make a distinction between tithing, gifts, donated time, and charity.  I realize that many people don’t see it that way, but they have a right to be wrong. That is another borrowed phrase from our pastor.  I mentioned before that our tithe is not part of our “expenses” and it never would be.  Below is an illustration of how we include tithe in our budget spreadsheet.

Income

Salary NET (Net amount of salary)
Carry-over (Add Balance from last pay period)
Deposits (Add Misc income from Internet)
Tithe (deduct tithe based on gross pay before taxes, insurance)
NOT CLEAR (deduct Checks/debits not yet cleared)
TOTAL Income

Expenses

Mortgage
Utilities
Groceries
Car payment
Car Insurance
Car Gas/Maint
Credit
Student Loan
Phone/Internet
Cell Phone
Childcare
Entertainment
Savings
Gifts
Charity

Total Out (total expenses)

Balance (Total Income – Total Out)

You will notice that tithe is a factor in our income and not our expenses.  We now treat tithing as a necessity to the income of our budget.  We have come to a point of enjoying the tithe check as much as the pay check. We have always had tithe at the top our budget list, but up until the fall of 2005 we just treated tithe like and expense and most often like it was at the bottom of our priorities with charity and gifts.  This is a common theme I see with many Christian families that I talk to about finances.

We got to a point in late 2005 where one or more bills was not going to get paid each month to the tune of $500 per month.  If we started tithing right off the top then that would just mean one or two more bills would end up falling off the bottom of our budget.  Since we saw no way out with an almost certain foreclosure, repossession, charge offs, and/or possible bankruptcy if we could not get out from under the house and at least one car payment, what would it hurt to give God a shot at our finances?  The first few months were just like I said above.  A few more bills fell off the bottom and the mortgage got even farther behind.  It was not until we finally staked the sign in front of our house that we saw things begin to turn.  Sherry and I believe to this day that we were still holding on to the house as “ours” even after the above change in attitude on tithing.

It was at this time that God showed up in a BIG way.  It was to the tune of tens of thousands of dollars in one year.  I won’t go too deep into the details, but there is no other explanation to this day as to why things happened how and when they did to allow us to be where we are today financially.  We are in the same house driving the same two cars (one already paid off) and we will have all our credit cards, student loan, and car loan debt paid off by next fall.  That has all been done without “settling with the lender” on a single debt and by paying every dime we owe to our lenders.

Attitude on Tithing

It is best if you get the right attitude on tithing from the start.  My suggestions are as follows:

• Tithe as an act of worship (enjoy it)
• Tithe to your local church
• Tithe based on gross of all increase

I will add a few notes just to clarify these points. First you must not see tithing as simple a must do act but rather an enjoyable act of worship.  God does not need your money and you can not buy His love. Second you should tithe to your local church.  Don’t have a church? Then that is another problem we can address in another post so just pick one to tithe to for now. Last but not least, you should not have to ask whether to tithe on gross or net income.  If you have to ask the gross/net question then you did not get the first point about enjoying tithing.

In conclusion I will just say that the answer to the title quesiton is not for me to give you, but I can at least share with you how it has works for us.  I don’t think that tithing in itself will fix your problems financially or otherwise, but if it grows your trust in letting God handle your problems then you will come out a winner in the end.

This post was inspired partially by JD over at Get Rich Slowly.  His post titled Could Tithing Lead Some Americans to Lose Their Homes? has some great comments that validate my claims on the attitudes of many Chrisitians on this subject.  Sherry and I enjoy sharing our testimony on finances and have been planning on writing this post for some time now.  I will share some specifics on our financial blessings in the future.

Should you tithe on your tax refund? The short answer is yes. The long answer goes back to another question. Do you tithe on gross income or net income? This is a question that I have heard discussed a few times, and I was even asked point blank by a co-worker once. My response was something like, “If you have to ask then you probably already know the answer.”

I believe that you should tithe on gross income before Uncle Sam, your 401k, or your health insurance provider gets their cut from your pay check. This is not the most popular answer, but I believe it to be the correct one. It is not your first fruits if someone else has already been nibbling.

The long answer to the original question is that it depends on whether you are a:

• Gross Income Tither – Then no, you have already tithed on this “refund” money when you earned it.
• Net Income Tither – Yes, you now have new spendable income that is flowing into your wallet that has not been tithed on already.