Ask Colleen King

The news came out last week that Leslie Margolin was leaving Anthem Blue Cross and I had to wonder why. Of course, there’s the obvious, the blow out earlier this year when the rate increase craziness hit. But that was months ago, and things had toned down considerably. Click here for a short story on this.

I heard her speak at a forum earlier this year in Woodland Hills, and she seemed like a very nice, nose to the grindstone kind of person. In asking my account rep at Anthem about here, he commented that people would be surprised at how geared toward a desire to provide a more universal type of health care she was.

Let’s face it, NO ONE was going to win in the position she was in. She did diversify the product portfolio considerably in her time there, which makes me wish some of the other carriers would do a bit of that too. While overall I like what they’ve done, I like to have more than one carrier to chose from and when their pricing beats everyone out overall, there’s not a lot to suggest outside of Anthem. People these days have to watch their budgets. I regularly have account execs tell me I should be selling on the benefits of a plan, not just the price. I do that to an extent, but if you have two similar plans, one $100/month less than the other, that’s usually the only benefit most folks want to look at. And I can’t blame them.

I hope Ms. Margolin does well at her new job, and would love to pick her brain one of these days on this whole mess!

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I came across an article last month that was published by USA Today on April 30th that to me, outlines just a part of the big wake up call we have coming in 2014 when the bulk of the health care reform measures go into effect. If you can find it, check out the article by Sandra Block, “IRS lack clout to enforce mandatory health insurance.” Sorry, I waited to long to post this and lost the link. But my article will give you the basis for my concern.

This article lists estimates of needing 16,000+ IRS agents to enforce this eventually. The Congressional Budget Office is estimating the cost at $5-10 billion to administer this. And that’s just the start.

My concern along with other agents in California is the price tag on all the changes. Even though people aren’t happy with rates in LA and Ventura counties, you are definitely paying less than places like Massachussettes, New York and New Jersey. And now that you are looking at eventually subsidizing people, not excluding for pre-existing conditions, rates will soar. But the IRS can’t apparently enforce these new provisions in the law.

For example–30 year old male in New York City, hospital only plan would run $176/month. No deductible, but no coverage for office visits, most outpatient care or prescriptions. Which is more of what a 30 year old would need. You could get something comparable in the SFV area for $78-99/month, but there would be a deductible.

The same 30 year old, wanting a more comprehensive plan, opts for a $2000 deductible, $30 office visits, 80/20 coverage, sounds great right? Are you willing to pay $529.06/month for that? That’s a real figure for the 10009 zip code. I can find $2500 deductible, 70/30 plans with three office visits per year with generic and brand coverage for $111/month.

So you might want to look for coverage now, while it’s affordable in California. No one really knows what will happen once all this starts to kick in. Pretty scary!

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We agents really aren’t all bad, money grubbing fiends but unfortunately the insurance industry has had their share over the years. You want your agent to watch out for you best interest, not theirs–i.e. commissions. I kid my clients at times when suggesting a less expensive health insurance policy than one they are looking at. I’ll tell them ‘you can buy that, and my mortgage company and I would appreciate it, but do you really need to spend that much?’ So what two things do you need to watch out for?

Twisting– This is a term you hear more in life insurance but it can apply to health insurance as well. This is where an agent gets you to drop a policy, or replace a policy, that doesn’t really need to be changed but it will generate a sale for them. The times to change a policy would be:

* rates have gone up
* your needs have changed–maybe you need less coverage, maybe you need more
* a health condition you once had has changed or gone away and you had previously received an above standard rate. Sometimes you don’t need to change carriers, but sometimes it ends up being easier.

The other thing you want to avoid at all costs is the Rescission of a policy. Insurance companies are within their rights to rescind coverage if you have lied or misrepresented facts on an application. What will happen usually is they will refund any premium paid minus any expenses they paid out. So if you bought health insurance, ‘fibbed,’ had an expensive bout of care thinking you’d just drop the coverage later, think again. Not only will you be on the hook for the costs but you also risk criminal prosecution for insurance fraud.

These days insurance carriers are running a bit scared due to all the health care reform changes coming up. And I had a rescission happen to me. Dealt with the party entirely over the phone (which is not unusual with health insurance) and thought all was well and good. A few months later the carrier called me about this person, asked me some questions, saying there was something ‘pre-existing’ with this person that wasn’t on the application.The policy ended up being rescinded, and I have no idea about the associated costs, but turns out my client had gone through inpatient rehab, which certainly isn’t cheap!

The irony was I was told I couldn’t have any information on what the situation was that flagged this due to privacy protection. But I was copied on the rescission letter, and it cited the reason for rescission was this person’s ‘recent care’ at a drug rehab facility that was named in this letter–so much for confidentiality!

So in short, if you don’t think you need any changes, don’t be pressured into it. And if you do fill out an application, play it straight; it’s not worth the angst of losing coverage you need. And a second opinion from another agent should be considered if you are concerned about what you are being told.

Have a great weekend!

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A few days ago I wrote about how convoluted the small business tax credit for group health plans was going to be. Here’s a reminder.

Now here’s a commentary on why the bill was bad for small business, and a very eloquent one at that. The National Federation of Independent Business’s (NFIB) president, Dan Danner, points out some very strong points as to why small business is going to get very little help through this, but the government will gain a fair amount in taxes.

Here is one of the worst points:

“This law is death by a thousand cuts for small business owners. According to the Congressional Budget Office (CBO), the overhaul will cost about $115 billion more than first projected, bringing the total to more than $1 trillion. Small businesses will also now have to deal with an onslaught of new taxes and burdensome paperwork.”

So basically, in California, we’re already taxed into oblivion seemingly, so this isn’t going to help. Rather than repeat his points, PLEASE click on this link and read. Almost better than the article itself, click on the tabs for ‘Comments.’

Not many people want to see folks go without health care, certainly including me, but I’d like to see them have jobs too. Having a job means an income, which means food and other basic necessities. This will only hasten the demise of local and small businesses that are the lifeblood of the economy rebounding. This may not seem like an ‘insurance’ related article, but kill off small business, you kill off the economy. Kill off the economy, and there’s no tax money to fuel your benevolent attempt at reform. So no improvement in the ‘health care’ situation. No, I don’t have the answer, but I know this isn’t it. Because with all of this, people aren’t going to be buying health insurance, that’s for sure!

You can’t pay for health care or insurance if there’s no money in California. Remember the phrase after NAFTA passed, ‘that sucking sound you hear is jobs moving south of the border?’ Now that sucking sound is jobs moving to Oregon, Arizona and Nevada. Along with their tax revenue!

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With all the discussion around health care coverage, the cost, who’s good and who’s not, I like to see my clients get the most they can from their health insurance.

The big tip–the excitement–drum roll please…..You want to use contracted providers whenever possible. With HMO (health maintenance organization) plans you don’t really have a choice. You have to see doctors contracted with the carrier or your care isn’t covered except in case of an emergency.

PPOs, preferred provider organizations, you have the option of using providers that are or aren’t contracted. If you use a doctor, hospital, outpatient surgery center, whatever, that IS contracted with your insurance carrier you get the benefit of a contracted rate. So even if you are paying for the care, like when you haven’t met your deductible yet, you get the benefit of the contracted rate, also known as a discounted rate or negotiated rate. This can really help–I had blood work that I was billed over $400 for last year, and once the negotiated rate was applied, it cost about $100. I still had to pay the bill, but would the lab have knocked it down 75%? I think not.

So either go to the web site of your insurance company (they all have them) or call them. You can also ask the office or hospital you are going to be going to if they are contracted but be sure to specify if you have an HMO or PPO plan. Just asking ‘do you take Aetna’ won’t help if you have an HMO and they only accept PPOs.

It may seem like a little thing, but believe me, it will make a difference.

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As with most things that came out in the health care reform bill, the devil is in the details. The small business tax credit most assuredly included. I am not a tax expert by any means, but my wonderful tax guy, David Marton in Westlake Village, passed this on to me from the Kiplinger Tax Letter. And here is an article with various pieces of information you may find helpful.

So, you will get a 35% tax credit if you have 10 or fewer employees and the average yearly wages are less than $25,000. If you are a tax exempt organization, the credit is capped at 25%. And the higher the average wages, the more full time employees you have, the credit decreases. For example, the Kiplinger letter give the example that if you have 15 employees, averaging $35,000 per year, the credit goes down to 9%. And it’s gone completely if you have more than 25 full time employees or wages average more than $50,000.

And god forbid our government should stop there as far as complexity. Guess who is NOT eligible to be included in this? Partners, sole proprietors, 2% owners of S corporations and 5% owners of C corporations. On top of that, Family Members–including kids, their spouses, spouses and their parents, grand kids, parents, siblings and their spouses, nieces, nephews, aunts and uncles. I didn’t see anything about partridges in pear trees, but I bet they’re excluded too. Then there’s rules around seasonal workers, part timers, it just goes on and on.

Oh Yeah–employers must be contributing a minimum of 50% of the employee premium. Most do, but several of my clients have a fixed amount they contribute per employee, and sometimes that doesn’t calculate out to be 50%.

Then the amount of the credit you take decreases the amount of the deduction you can take for paying premiums. That makes sense, otherwise you’d be ‘collecting’ twice.

And there’s more, so I urge you to contact your tax professional to see how this works for you–or doesn’t–before you make any decisions about your benefit offerings and how they will work with the new credits. And of course, they phase out over the next few years. Probably out the time we figure it out.

Like I said, there’s a lot to this, so stay tuned.

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In my last article I talked about the impending herd of new graduates, high school and college, and that people are now needing to address what to do about their health insurance.

Again, If your high school grad is going to college, then of course they can stay on your group health plan if you want them to. The health care reform bill has passed, one of the FEW things that comes into effect this year is allowing overage dependents up to age 26 to stay on their parents’ plan. That is supposed to to go into effect September 23 this year, but most major carriers have said they will implement this early. But should you do it?

Check the cost of doing this–if you only have one child it might be more expensive to go that way. if you have more than one child on the group plan, usually it is the same cost regardless of the number of kids. So ask.

Other options to consider–There are short term health plans available that I refer to as ‘accident and illness’ plans. Generally they don’t cover maternity, routine care or anything pre-existing. But if someone gets sick or injured, which tends to happen in your 20s, then you are covered subject to the deductible. Because they don’t cover pre-existing conditions, the underwriting review period is very quick and these can be set up in a couple of days usually. They can either be purchased on a month to month basis for a maximum of 6 months, or if you know specifically how long you will need it you can purchase a certain number of days. It’s affordable–one carrier I use for these, in Los Angeles County a 22 year old can get a policy with a $1000 deductible for $87/month. Or if you knew you only needed one month, or 30 days, that same coverage would cost $51.30.

Or, if you’re not sure what the future holds for your new grad, no job prospects on the horizon, you would probably want to consider a regular individual health plan. Rates on these really run the gamut, so I won’t go into a lot of detail here, but for a 22 year old male, in a Northridge zip code, standard rates range from $44 – $440/month.

So there are ways to get your new grad covered; consider talking to an independent agent to sort through the best options for you.

Subscribe above, and keep apprised of insurance happenings. It’s not necessarily as dry as it sounds.

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May into June is such a great time for families as their kids are getting ready to graduate from high school or college. A time of pride, sense of accomplishment, it’s great. As I drive around the LA area I see the signs of upcoming graduation ceremonies and it takes me back. We won’t go into how far back.

But it’s also the time to figure out what to do about health insurance. If your high school grad is going to college, then of course they can stay on your group health plan if you want them to. But in general the landscape has changed. Many people are unemployed, or their companies have dropped their health plans. Or it is way too expensive to keep dependents on the plan. Or new grads are coming into an environment where jobs are scarce, and jobs with benefits, even more scarce.

Now that the health care reform bill has passed, one of the FEW things that comes into effect this year is allowing overage dependents up to age 26 to stay on their parents’ plan. That is supposed to to go into effect September 23 this year, but most major carriers have said they will implement this early. But should you do it?

Check the cost of doing this–if you only have one child it might be more expensive to go that way. if you have more than one child on the group plan, usually it is the same cost regardless of the number of kids. So ask. Many times it is more cost effective to go to an individual plan, but if you child has a health condition that will keep them from getting coverage, then leaving them on the plan is the way to go.

Next, some options if you decide to buy insurance on your own
A 3 minute Video on what’s happening this year because of health care reform.

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I saw this article title and had to look at it a couple of times. Deductible on a life insurance policy? That brought up all sorts of morbid concepts for me so I decided to read it.

Thomas Jurek, an agent in the Midwest, had an interesting article published in the Agent Sales Journal on this last December, and what he was pointing out was a different way to assess your life insurance needs and planning. His definition was that it was the difference between what a family needs and the amount they will receive at the time of the breadwinner’s death.

Most agents recommend an annual or biannual review of insurance in place. That way you can make sure there’s enough, or equally as important, do you still need all that you have? When kids have left the nest and are financially independent, a couple nearing retirement might not need as much life insurance.

Basically, the way I read this, is rather than the deductible being what you pay before insurance kicks in, this is more like what are you going to be stuck paying for, or going without, based on how much life insurance there is when the primary earner dies. For younger families with kids you have to allow for college and weddings. What assets do you have that you need to protect? Rental property? what if you lose the tenant? What do you have in savings and are you willing to deplete that if someone dies and the life insurance isn’t enough to meet your mutual obligations?

Lots of questions, and multiple answers for most scenarios. Bottom line, call an agent you trust and see where you stand. It could keep your family from having to make some really tough decisions at a difficult time.

Subscribe and regularly receive little gems like this–have a great week!

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This news at least when it comes to health insurance was better than Nutella pancakes on a weekend. I’m surprised I had to read this in the L.A. Times Sunday morning and didn’t get email notification from Anthem, since they are really good about keeping agents in the loop on things. Especially one this important. Click here to read the full article–it’s short!

As you recall, things went crazy as the media blared stories of rate on individual plans with Anthem going up 39% as of March 1. Of course, the way it was phrased it made it sound like ALL plans were going up, and that was not true. Anthem then agreed to delay the implementation of the increase until May 1 while an independent firm came in and audited the increases. That’s not done yet and I’m still dying to see the outcome.

So now, it’s not clear when the increase will come, but you know it will at some point. Carriers have to give at least 30 days notice when raising rates, so it would be June 1 at the earliest. I’ve spent the past few weeks working with my clients to get them enrolled at the ‘old’ rates if they were changing to Anthem plans. I kept pushing them to apply so we could get effective dates before April 30 so they wouldn’t be hit with the increases and would have a 12 month rate guarantee. At the old rates.

I’m glad I have more time to help people save on their insurance costs wherever possible. Nothing makes me happier than to save people money on their insurance and keep decent coverage. Have a great week!

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