Friday, November 28, 2008

Part II: Recapitulating About SPIRAs

Recapitulating, SPIRAs are special IRAs set up at FDIC insured institutions earning a guaranteed interest rate. Acting as a CD, a SPIRA acount would not be subjected to the fluctuations of the stock market.The interest earned would then be distributed tax free to pay for medical coverage. This medical coverage would be based ideally on viable health insurance programs set up by Congress treating all Americans as a group.

Let's be realistic! These accounts are not going to be funded out of thin air. This will be a patient process that will take time. One of the main ways of funding these SPIRAs would be the allowing of IRAs, 401Ks, etc. to be transferred to these accounts tax free.

Take for example a person, age 50, has $400,000.00 in a 401K. Then transfer this to a SPIRA that earns a regulated minimum of 6% per year. The interest earned would be $24,000.00 per year. The first priority would be to secure medical coverage. There would be gradations of coverage. A person could opt to get a high deductible medical savings account that would function like medical savings accounts now available. The premiums of course would be paid for from the interest earned on this SPIRA. This distribution would be tax free.

Let's say the premiums would range from $3000.00 to $12,000.00 per year. The account is generating $24,000.00 per year. What remains after paying for the medical coverage would be $21,000.00 to $12,000.00. What would then happen to this excess interest money? It would be ideal to be able to secure other benefits for the individual. However, the first priority would be for obtaining medical coverage. This would supercede all other benefits.

The excess interest per year then could be used to secure certain benefits such as life insurance and possibly disability insurance. After securing medical insurance, it would be important to reinvest some of this excess interest back into the SPIRA in order to increase the account principal. Let's say then that half of the excess interest would have to be reinvested back into the SPIRA and half of the excess interest could be available for securing certain specified benefits to be discussed later. SPIRAs would be growing for future generations as all SPIRAs have to be willed to beneficiaries.

The first advantage for the US and its' people is the providing for some way to pay for health insurance. Having health insurance is a must for a quality life. The ability to pay for this coverage is a priority. SPIRAs are a possible way that would begin to guarantee future generations a means of securing coverage. Obviously not everyone would have substantial SPIRAs. However, any SPIRA would generate interest income that could be used to help secure medical coverage. Any SPIRA would be a foundation of assets that provides benefits, provides a sense of security and of pride that would be passed onto future generations. SPIRAs should be enhanced by gov't incentives that would foster the growth of these accounts and the equitable share in the prosperity of the country by all people not just a few. After the last few disastrous months it's obvious the country needs to see the advantage of empowering more of its citizens.

The benefits of SPIRAs are widespread. As these accounts grow more and more benefits could be secured for individuals. As well, benefits secured by SPIRAs would begin to supplant benefits provided by employers and the gov't saving them huge amounts of money. Employers could enhance employees SPIRAs as this would benefit them as well. SPIRAs are an investment in the future solvency of Americans. Something radical and unique needs to be done at this trying time for Americans. With a broad stroke we could change our future idealogy about how we treat ourselves and future generations. Our gov't should invest in these futures.

Tomorrow, let's talk about the other possible benefits that could be afforded by SPIRAs and the possible ramafications.

Thanks, and all comments are welcome,

No comments: