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Ask Colleen King | Blogs


Health savings accounts and tax time–how do they go together?

03-10-2010by Colleen King

When people understand them, many like the idea of health savings accounts. They aren’t for everyone, but no one type of health care coverage is. Otherwise, we’d all have the same plan, and health care reform would have hit by now.

What does a health savings account (HSA) have to do with tax time? Well, if you’ve maxed out all the places you can stash pre-tax money, this is one more place to consider, IF you opened the account before the end of 2009. You have up until April 15th, like you do with IRAs, to make contributions and designate them for 2009.

My tax guy is not a huge fan of HSAs. We have this discussion every year; he’d rather see me put more into retirement over an HSA. But the way I contribute to my HSA makes sense to me. You can look at the maximum amount for the year and drop that in. In 2009 it was $3000 if you had an individual HSA eligible health plan. Or, you could do a monthly automatic bank transfer so the account grows slowly over time. The way I do it, I anticipate what expenses are coming up and deposit accordingly. When I know my annual optometry visit is coming up, I put money in for that. HSA money can also be used for long term care insurance premiums, so I’ll be putting money in for that soon–they’re due AGAIN!

Since most people, especially entrepreneurs and self employed people have higher deductible health plans to save on the premium, to me is makes sense to have a plan that can be used with an HSA because the money you put into an HSA is deductible on your federal tax return. And, at the end of the year it’s not ‘use it or lose it.’ It rolls over, stays with you, until you do need it.

You can use the money for all sort of things, click here for a list of allowable expenses. There are many other details on the ins and outs of HSAs, but I’ll save those for another time. Main thing today, if you have one, and you need a place to stash some money to cut your tax obligation, consult your tax professional and see if this might be one thing to consider.

Lots of banks and credit unions in California offer HSAs. Check out this web site, as a ‘clearing house’ of sorts to see what’s available.

Be well! more

Taxes on annuity earnings? Are you kidding me?

02-27-2010by Colleen King

Why is an ‘insurance person’ writing about a tax issue? When it comes to annuities, it may end up connected if the President has his way. Unfortunately.

An article in Investment News by Dan Jamieson on February 22 indicates that President Obama wants to have the 2.9% Medicare tax apply now to unearned income. This will hit more than just annuities, this will also affect other forms of unearned income you may be more familiar with–dividends, rents, royalties and interest on individuals earning more than $200,000 and couples earning more than $250,000.

Is nothing sacred? Annuities, particularly fixed or indexed annuities, are a good way for people to go when looking for a conservative option to put money away. I’m assuming that if you are using an annuity for an IRA of some sort this wouldn’t apply. One reason many financial planners don’t use annuities for IRAs is the presumption that the fees and restrictions associated with annuities aren’t worth it. (There are many with no fees, by the way.) But there are fees generally with most options, aren’t there? Trading fees, etc?

Money in an annuity currently grows tax deferred, whether it’s set up as an IRA or not. This money needs to sit and grow particularly for folks planning on using this for retirement living. If they are a high wage earner now, this can eat into the growth of a non IRA annuity.

Share this with a friend, not just the annuity part, because people need to know what else is going to be affected by this proposal. Seems like someone needs to look at ways to cut spending, but maybe there’s just something I’m missing. more

Category: Annuities

If you think a 39% increase in California health premiums are bad, did you hear about Georgia?

02-24-2010by Colleen King

Anthem Blue Cross should thank Blue Cross/Blue Shield of Georgia for coming up with something causing even more outrage than they did. An article in today’s Atlanta Journal-Constitution tells the story of a gentleman who had a 72% increase in premium. On the surface it looks like maybe one of the reasons was because he turned 60. That’s usually a big ‘bumping point’ in premium. But it’s on a policy with a $10,000 deductible?  Like any other article on this type of subject, it went on to say that most increases weren’t nearly that high. But it only takes one to catch a headline.

The president of the National Association of Health Underwriters (NAHU) said he didn’t think the carrier was gouging with this rate increase. I sure hope not, and that they can back up the reasoning for it. As an agent, I view my/our relationship with insurance companies is a partnership. Hopefully neither of us throws the other under the bus. But if this and other significant increases aren’t justified, it gets hard to defend.

Yesterday, Leslie Margolin appeared before the Assembly Health Committee to explain Anthem’s position and has promised to work with lawmakers to try and bring down costs. But it’s not a matter of just insurance companies and the cost structure, it’s all parties–physicians, hospitals, drug makers, device makers, you name it.

I”m spending a lot of time these days helping my clients look for more affordable coverage. But you can only move people around so much. If one carrier has an increase the others will too at some point. Until the day comes when we truly have suitable reform, that’s the best we can do. I think. Hope so! more

I’ve got insurance, why does care for the indigent or uninsured matter to me?

02-20-2010by Colleen King

I know I’m not a political or social services writer, but our pals at the L.A Times Wednesday had an interesting article on how the County of Los Angeles reimburses physicians when they care for the uninsured.

How does this affect your health insurance premiujms? The Physicians Services for Indigents Program in L.A. County was paying doctors 29% of their estimated fees until last January when they cut it to 27%. Now, this week the rate will be reduced to 18% effective July 1. Can you imagine doing your job for less than 1/5 of what you normally earned?

If you think this doesn’t affect your health insurance premiums, think again. This is one of the biggest reasons for health care reform. You have people who need care and can’t afford it, and physicians (and others) who are willing to provide it, but something has to give. Cost shifting to insured patients happens when physicians and hospitals have to get costs handled somewhere.

And speaking of hospitals, the article by Molly Hennessey-Fiske and Ron Lin points out that physicians may go to hospitals for reimbursement. I know back in the day when I was an emergency nurse in downtown LA and Hollywood, the emergency physicians would try to negotiate something with the hospital when they saw the obligatory uninsured. Which downtown, was a vast majority of the patients. But that was back in the day when reimbursement was better and more people had jobs with health insurance provided.

All this to say, be kind to your local emergency physician and keep your policy current. Or get one if you can. The costs you incur can be disasterous if you aren’t insured. And until there’s a more palatable way to handle health care reform, well, enough said.

Have a great weekend, stay dry and stay out of the ER. more

So, what was Anthem’s response to all the ‘rate rage?’

02-18-2010by Colleen King

Last week Wellpoint, the parent company of Anthem Blue Cross, put out a response to the screaming about their recent rate increase. Click here and check it out.

It’s long, but I think potentially worth reading if you’re at all curious. If nothing else, the earnings statement Brian Sassi makes is impressive: “Anthem’s net income on a per-member-per-month basis was $12.62 in 2008, which compares to $18.45 and $13.22 for our two large not-for-profit competitors.” Guess we’ll find out later who those folks are, right?

So what was it in 2009? Well, they’ll get to that I’m sure. But in his response to Kathleen Sebelius, Sassi points out that membership has dropped off; mainly healthier clients that are looking to save money and feel they don’t need health insurance. That leaves people with health issues who will cost them more money.

Each carrier has rate increases; I’ll be interested to see what happens as the year progresses and other ‘rate actions’ come up.

So in the meantime, what do you do if you’re rates are dragging you down? You can do what I did and apply to another carrier, or even downgrade your plan with the carrier you have now. Do you need every office visit covered if you only go to a doctor once or twice a year? Maybe not, it ends up being a personal preference/comfort for each individual. And being willing to pay for the smaller things generally will end up saving you a significant amount on premium.

And consider working with an independent agent. We don’t cost you a dime and we can give you rates from all the companies. Otherwise you have to call each company, and have multiple reps call you back. For me, I have a specific set of companies I prefer to put people with because they tend to work best for most. That doesn’t mean the other companies aren’t okay, like anything, it’s a matter of personal experience.

Now at least you have a bit of a reprieve if you’re with Anthem, the increases won’t hit until May 1 now. But don’t wait to make changes, because everyone will be scrambling at the same time which slows the process. more

Category: Uncategorized