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Health insurance–What’s a Deductible?

07-31-2008by Colleen King

I always feel bad for people who find health insurance confusing–the things that really make it hard to understand, most people don’t even encounter. Most initial questions revolve around ‘what’s a deductible?’ Right after ‘what’s the difference between an HMO and a PPO (see my other post about that).


When evaluating a health insurance plan, either individual health insurance or a group health insurance plans, the one thing most people look at is ‘what’s my co-pay?’ It’s a good thing to know that, but more importantly (to me) are the following three items:


The Deductible

Co-insurance

Out of Pocket maximum

The deductible generally is what you pay before your coverage kicks in. Some benefits will be available prior to meeting the deductible, like the office visit co-pay. Deductibles are generally involved with PPO plans but in order to drive costs down HMO plans, particularly individual HMO health plans, are starting to have deductibles. I try to get my clients to look at the higher deductible health plans in order to save money on their monthly premium, but it all boils down to what people are comfortable with.


Co-insurance refers to what the insurance company pays versus what you pay once the deductible is met. you hear about 80/20, 70/30, 60/40 even 50/50 plans. The insurance companies pay the larger number.


The out of pocket maximum is really important because if something big happens to you, this is the number that keeps you from going broke. When a major health issue hits once you’ve met your deductible, and the 70/30 co-insurance kicks in, once your ’30% s’ hit the out of pocket maximum that is generally it for the rest of the calendar year. You may still have office visit co-pays and prescription co-pays, but other costs are pretty much taken care of until January 1 the next year. On a lot of PPO plans these can be $7500 or more, which isn’t chump change, but when you put that up against a surgery costing $100,000 or more, then it becomes a bargain.




Of course there are many other things to look at. Many individual health insurance plans in California, in an effort to come up with affordable plans, don’t cover maternity. Some plans offer generic drug coverage only, there’s all sorts of combinations coming up so you really need to look at what you are considering purchasing. That’s where an independent agent can come in handy.


Independent agents can help you sort through all of what’s available and help you decide which options will fit your situation best. AND, best of all, it doesn’t cost you anything to use an agent. The rates are the rates, and independent agents are paid by the carrier you place your business with. And a good agent will be there after the sale to hep you with any issues that come up. Be well!

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Medicare–is it enough?

07-29-2008by Colleen King

Medicare Supplements, Medicare HMOs, do you need anything more than original Medicare? Well, if you’ve looked at how it works, you’ll know that there can be some hefty costs especially if you are hospitalized.




Medicare Part A you automatically get at age 65 if you’ve worked a specific length of time in the US. This mainly covers hospitalization. The big expense here is that you have a deductible, and unlike most insurance plans, these are ‘per hospitalization’, not calendar year deductibles. in 2008, the Part A deductible is $1024, and this goes up pretty much every year. So if you are hospitalized in February, and then again a few months later for an unrelated problem, you’re hit with another deductible.








Part B you have to buy and this takes care of things more along the line of doctor visits and outpatient procedures. With Part B, this year the cost is $93/month and you have a $135 deductible, but that’s once a year. Where the expense comes in is that Part B is that it covers 80%, leaving you with 20% which of course can add up.


So, having some type of additional coverage is pretty important, especially for that Part A deductible! in order to have any of these additional types of coverage one does have to have both Parts A and B


First, there are two basic categories of ‘additional’ Medicare coverage, Medicare Supplements and Medicare Advantage plans. Medicare Advantage plans further divide into Medicare HMOs, regional PPOs, Private Fee For Service (PFFS) plans and medical savings account plans. I’ll be skipping the last two because the PFFS plans are fraught with problems and being phased out, and the savings account plans aren’t catching on.


Medicare HMOs function like regular HMOs, from the aspect that you pick a primary care doctor and you then have a network of doctors and hospitals that you get your care from. One advantage of these over the supplements is that during the annual open enrollment period, November 15 to December 31, you can change to another plan if you aren’t happy without going through underwriting–BIG plus especially as yu get older and have health issues. BEST part of these is that they are free in most counties, particularly in Southern California.


Medicare Supplements function more like a PPO, except that the ‘network’ for this are providers that take Medicare–leaves it pretty wide open. The plan designs are identical because they are designed by the federal government. Some carriers offer some limited extras, but mainly you want to look at the price of these. Comparable to these are the Regional PPOs. These are offered on a limited basis, they aren’t everywhere. And there is a network, the specific network for this product for the carrier you are insured by. Again, these may end up going by the wayside since the HMOs and Supplements by far blow away the competition.


So talk to your agent to see what is going to work best for you–Be well!

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Life Insurance–do I need it and if so, how much?

07-24-2008by Colleen King

Life insurance is one of those things that you don’t want to spend money on, right? If you’re like me, if you can’t eat it or wear it, I don’t really want to spend money on it. But do you really need it?


Keep in mind what life insurance is for. Growing up, I thought it was something your parents and grandparents bought in order to have something to leave to the remaining family. WRONG! View life insurance as ‘income replacement’–when you have people financially dependent on you, what happens to them if something dire happens to you? Whether it’s a spouse and children, elderly parents, a disabled sibling, what happens to their existence if they are fully or partially relying on your income?




Who doesn’t need it? Well, that’s debatable because even if you don’t have someone relying on you for some kind of financial support, should you pass away and leave large debts the proceeds from life insurance would be helpful. If you have family or friends that you would be leaving something large to, and the value exceeded the estate tax maximum, people often use term life insurance to pay for the tax liability.


A lot of times young people in their 20s with no assets, no house, no dependents will be sold a term policy. Do they need it? The industry is divided; most see life insurance as something you buy after you have something to protect. Others argue you should do it, because being younger, rates are lower and you are insurable. And you’ll probably get married, have kids and accumulate assets at some point, so you’ll need it anyway. Personally, I’ll do it when asked but I don’t actively pursue that market.


How much life insurance do you need? In your younger years, you tend to have more liabilities (like kids) so you need more. Basically, regardless of your situation there are a couple of ways to figure out the ‘how much’ question and you come close to the same amount. Depending on your income level, you can take your annual income and multiply it 5-15 times. OR, you can figure out your expenses on an annual basis, plus how much it would take to pay off the mortgage, $100,000+ per child for college, etc.


Here’s where your trusted agent comes in. A good agent will help you figure out the amount to shoot for then get quotes to see what the ‘ultimate’ amount is going to cost. If it comes back too high, then you adjust until you end up with a cost that is tolerable for your budget.


A little pre-planning can save your heirs a lot of heartache and keep them from having to make certain decisions when they are grieving. Be well!

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Category: Life Insurance


Long Term Care Insurance–let me share some stories why you need it

07-22-2008by Colleen King

The topic of Long Term Care insurance can be a real tough discussion. We’re talking about something that deals with us aging, being unable to care for ourselves and it can be expensive! That’s uplifting.


I would have been able to put my head in the sand too if it had not been for a few things in my life, both professional and personal. I was an emergency nurse for many years, and even though an emergency department brings visions of car accidents, stabbings, shootings and drug overdoses (at least where I worked) the other thing you would see was families bringing in an elderly relative that they could no longer take care of at home.                    




These poor debilitated people didn’t need acute medical attention, but without getting too graphic, they were bedridden, no bowel or bladder control, couldn’t feed themselves, I’ll stop there. When people get to that point they need what’s called custodial care. Medicare doesn’t cover it, MediCal (California’s version of Medicaid) will, but only after you deplete the person’s assets. It can get ugly and destroy what they worked hard to save for all those years.


You don’t need to be elderly to need custodial or nursing home level of care, and that’s another reason that long term care insurance can be important at any age. Instead of just getting old, younger people have motor vehicle accidents that leave them a mess, the unusual illness at a younger age could leave you needing help, anything can happen at any age. Does that mean you need to get it at age 25 or 30? There’s a lot of debate about that in the industry. Get it at a younger age, your rates are lower, you are still insurable, those could be good reasons. It used to be that you would start looking into it in your late 60s/early 70s, but it gets more expensive and there’s a greater chance that someone can be uninsurable. 50s are good, even late 40s–that’s when I did mine.


Personally, I had tried to talk my mom into doing this for years–she lives in another state and I’m not licensed there, so it’s not like I was looking for a sale. I just knew the cost of care versus the cost of long term care insurance, her overall financial situation and it made sense. She said she’d get to it, blah, blah, but never did. My mom was and still is very active, so I can understand. We lost my dad when he was only 62, it could have been useful during his cancer care, but in 1991 things were different in insurance.


But she called me one morning, in tears, because her husband (she remarried a good guy) had a TIA, or mini stroke. Well that knocked him out of the running and that’s what I told her. THAT got her attention, and within a few months she bought long term care insurance from an agent she had a long standing relationship.


Back to the professional side, when I speak to clients and prospective clients, they tell me they don’t need it, their children will take care of them. Well, back to the old ER scenario. We’d see debilitated people in their 80s and 90s, and their poor kids were in their 60s or 70s. Even before then, the children could have their own health issues that would preclude them from doing the heavy physical care that is often needed.


SO, when you look at $2000-$3000 per year for this coverage, where you are buying a large ‘pool’ of money that can potentially grow over time, compare that to the $60,000-$80,000 per year that in home, assisted living or nursing home care can cost. All things to look at, so if you have an agent you trust, talk to them. If you don’t, and you’re in California, I’d appreciate the opportunity to talk to you. Be well!

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Health Insurance–what’s the difference between an HMO and a PPO?

07-18-2008by Colleen King

Health insurance is never a simple thing, but the things that really make in complicated (in my mind) most people never encounter. The difference between an HMO and a PPO is pretty simple, but NOT if you don’t deal with it regularly.


  


Health Maintenance Organizations (HMOs) are where you select a primary care physician (PCP) and they coordinate your care, whether it’s hospitalization, referrals to specialists, you name it. They hospitalize you in the medical group’s hospital, refer you to specialists within in their medical group, and only go outside the ‘network’ if there isn’t a specialist that can handle something very complex.


Preferred Provider Organizations (PPOs) also have a network of doctors and hospitals, but you aren’t tied to a selected or assigned PCP. You choose who you see, and when. You can see non-network doctors and go to non-contracted hospitals but you pay a larger share of the cost.


Which kind of plan is better? Depends on your perspective. Many think HMOs don’t cover ‘anything,’ when in reality, from a financial perspective they cover more than a PPO. You just have a smaller network to choose from because that’s part of the cost containment mechanism.


People burn through the $$ often time with PPOs, but they have more latitude in who they see. In individual health insurance, at least in California, HMOs are more expensive than PPOs. But in group health insurance HMOs are less expensive.


So again, which is better? Ask 10 people, you’ll probably get 7 different answers. There’s a lot to consider specific to your situation. A good agent can help you evaluate your needs and make recommendations. If you’re in California and you don’t have an agent, feel free to drop me a note.


Be well!

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