QUESTION: I don't smoke but my friend does, and we're having a discussion about whether smokers cost employers more money than non-smokers do. Can you settle this?--H. L.
ANSWER: Researchers say there is no question that smokers do cost companies more. The only question is how much more.
Dr. Hap Stump, clinical director of the health center at St. Helena Hospital and Health Center in Deer Park, Calif., says recent studies estimate the extra cost per smoker to be $600 to $1,000 per year. Included in that sum are the costs of extra health insurance expenses, absenteeism and lost productivity.
Q: I have been hearing people at work talk about putting the money they took out of stocks last month into annuities or life insurance. I thought those things went out of fashion as investments decades ago. Am I wrong?--O. B.
A: You're right. Insurance investments lost their luster many years ago. But single-premium life insurance--so-called because you pay the entire premium all at once--regained some of its allure last year when tax reform smiled on it. And the recent stock market turmoil has helped, too.
Neither annuities nor single-premium insurance policies offer investors a chance to get rich quick, which is why they have been out of favor. But both are regarded as safe, an attribute that investors are more concerned about since the Oct. 19 market crash. As an added benefit, both allow investors to defer taxes until retirement--an advantage that few investments can boast with the advent of tax reform.
Before you invest in either, though, be sure to check them out thoroughly. Be especially aware of initial sales fees charged by companies issuing annuities and of the interest rates promised by single-premium insurance issuers. Sales fees can range from nothing to 9% of the face value. And some single-premium companies lure investors with high rates but then cut them below prevailing market rates after the first year or so.
Q: My wife is still dependent on me for support even though we are divorced. Do you know if it is possible to keep claiming someone as a dependent even when you no longer have a legal relationship binding you?--C. H. S.
A: You'll have to query a tax expert or lawyer about the specifics of your case, but couples who have married and divorced have been known to qualify nevertheless for dependency deductions.
In one recent case, a legally divorced couple continued to live together because they couldn't afford to support themselves and their children and live separately.
Their arrangement was that the husband supported the entire family and the wife took care of the house and the children.
When the husband took a dependency deduction, the IRS balked, arguing that the relationship was more employer-housekeeper or employer-babysitter than husband-wife. But the couple won their case in Tax Court.