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Individual health insurance–explain guaranteed issue plans?

08-29-2008by Colleen King

When dealing with Individual Health Insurance, depending on your personal health history, it can be dicey to apply because you don’t know whether you’ll be accepted or not and if you are, and are offered coverage at an above standard rate, will it be affordable? Depending on your situation there are some options in California, so we’ll look at a few of them. You can see this poor guy is trying to figure it all out in a song….


Light picture to get you through this subject...


If you are coming off a group health plan and have health issues, you are eligible for Federal COBRA for usually up to 18 months as a result of the Health Insurance Portability and Accountability Act (HIPAA). Problem is, if you’ve ever looked at the cost, if you didn’t have a heart condition before, you will now. You get to keep your exact same coverage, not subject to underwriting review, but you are now paying the full cost plus a 2-4% administration fee. NOW you understand the true cost of health insurance. Federal COBRA applies to businesses with more than 20 employees, but California, being the way we are, instituted CalCOBRA for companies with less than 19 employees. Similar rules around this, you can keep it for 18 months but you pay the full cost plus about a 10% administrative cost. And if you work for a 20+ company, you can take advantage of Federal and CalCOBRA for a total of 36 months coverage, if you can afford it.


What do you do when COBRA ends, or if you can’t afford COBRA and are uninsurable? Once you complete the full run of COBRA, the insurance carriers have guaranteed issue health plans you can apply for. But, the cost is often comparable to your COBRA coverage.


Option of last resort are a type of plan called a ‘mini med’ plan. These are not the first line of plans that I as an agent offer but when there is nothing else, it can help keep the wolf from the door. I work with one company that offers 3 different level plans and I usually try to encourage people to look at the highest level, contrary to what I usually advise. The carrier pays a fixed amount per day for hospitalization, a specific amount for office visits, they will help with some physicians and surgical charges and offer several discounts on other types of services such as vision, prescriptions, hearing aids, and so on. The monthly cost on these can often be better than your COBRA offering but not as comprehensive a type of coverage. But, it will help.


Again, not the first type of plan in my arsenal but when properly explained, there is a place for the mini med plan. They tend to be more popular outside of California and can also be found in the group health insurance arena as well when an employer wants to offer something but doesn’t want to break the bank.


Reform of the health care and health care reimbursement has been talked about intensely for well over a year in California. Don’t plan on it happening too soon, we can’t even get a budget passed. You need to be responsible for your own wellbeing so seriously consider looking into at least a high deductible health plan in case something major happens. Because comprehensive reform ain’t happening soon. Be well!

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Health Insurance–what good is it when you have such a high deductible? You’re paying for everything!

08-15-2008by Colleen King

In order to save money on insurance premiums, many people whether in an individual health plan or group health plan will select a health insurance plan with a higher deductible. They figure they are normally healthy, aren’t going to a doctor very often, so why spend a fortune on health insurance premiums? This is how I generally direct people to go.  But then they go to a doctor, pay for the visit and associated costs, and wonder, ‘why the heck am I paying premiums if I’m paying for care too?’


A couple of months ago I had something come up with a client reinforced what I tell people all the time. When you have a higher deductible plan, it’s true, you are paying for a lot of your expenses. But, when you see a doctor or other type of provider that is contracted with the insurance carrier you have your health insurance with, you pay the contracted or ‘negotiated’ rate. Big deal? It sure can be.




My client had a lap band procedure done for weight loss. A couple of weeks after it was done, she received a call from the facility saying her insurance claim had been denied because her coverage had lapsed, and she owed approximately $22,000 for the procedure. Wow! Well, there had been a problem with payment and her group plan was terminated. She and I both called the carrier and got it straightened out, as the coverage was not supposed to be canceled. The facility needed to resubmit the claim, and it would be paid.


The next day I received a very nice call from a claim rep at this carrier saying that the claim had been recalculated and a check in the amount of $3804 would be sent that day. That was the ‘negotiated’ rate, down from $22,000. My client may have been able to negotiate a few thousand off herself, but one reason the insurance companies get strong rates overall is volume. Individuals can try but rarely do they have the ‘volume’ to get the better rates.


Just recently I had something similar happen. I went in for a physical and had the usual plethora of blood tests done. The lab bill alone was $484.50! But the ‘insurance discount’ was $385.25, so I ended up paying $99.25. You can’t tell me the lab isn’t making some kind of profit on this. So when you hear about all the debates in health care reform need to find a way to contain costs, keep these two examples in mind. Remember, it’s not only the insurance companies that are in this for the money–Be well!

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Long Term Care Insurance–how much does it cost? I can pay for it without insurance. Oh yeah?

08-13-2008by Colleen King

The problem with Long Term Care insurance when speaking to prospective clients about it is the cost. That may come before or after the denial of the need for it, because none of us want to admit that we need it. At least I don’t, but I bought it anyway. To avoid ever needing it, because if you can’t eat it or wear it, I don’t want to spend money on it.


In the conversations with people about this frequently and the reasons I hear for not needing it are as follows:


It’s too expensive

My kids will take care of me

I’ll never go to a nursing home!

Okay well, here’s the deal. The expense, just like we don’t want to admit the McDonalds Cheeseburger isn’t 35 cents anymore, you can’t find safe care for $1000/month. Check out the following numbers:


In California, over the past five years, costs increased 19 percent in Los Angeles, 12 percent

in San Francisco, 21 percent in Oakland, 9 percent in San Diego, 9 percent in San Jose, and 28

percent throughout the rest of the state. This compares to a 17 percent increase nationwide.


The study, which found that nationwide the cost of long term care in nursing homes, assisted

living facilities and in the home increased for the fifth consecutive year, also found that one

year in a private nursing home in San Francisco costs $100,101. The comparable cost in

Los Angeles is $76,459, while in Oakland the cost is $92,740, in Sacramento the cost is $92,094

and in Santa Ana the cost is $86,934. The annual cost for a room in a private nursing home runs

$82,560 per year in San Diego and $89,973 in San Jose, while the cost throughout the rest of the

state averages $72,919.


By contrast, the national average for a year in a private nursing home is $76,460 - more than one

and a half times the average annual household income in the U.S. of $48,201. Most long term care

services in this country are rising at a rate faster than inflation, as the cost of providing

this type of care continues to rise.


SO, basically just because you've saved in your retirement fund, you can deplete that very quickly

with long term care needs. Looking into a plan that will cover care at any level, home, assisted

living or nursing home, and has some sort of inflation protection so the daily benefit level will

rise annually is crucial. Your kids will probably have families of their own and may have health

problems of their own by the time you need assistance. With a long term care policy, they can take

care of you if they are able, but supplement that with outside caregivers so they don't run

themselves into the ground. You need to at least look at it.  Be well!

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Health Savings Accounts–now you get a more realistic idea of the cost of care

08-08-2008by Colleen King

Did you know that it doesn’t really cost $10 to see a doctor? The HMO plans have gotten people into the mind set that it’s only $10 to see a doctor. When you have a Health Savings Account (HSA) you have a much more tuned in idea of cost.


In HMO plans mainly, you have a fixed office visit co-pay that covers pretty much everything. On a PPO plan, the office visit co-pay generally covers the doctor visit alone, then you pay for any additional lab or xrays. That gives you a better idea of what things cost. When you have a health plan that is qualified to be used with an HSA, you pay for everything until you hit the deductible, then you have either full or partial coverage, depending on what your out of pocket maximum is. So what’s so good about that? At least, that’s what this lady is asking herself……




Well, HSA eligible health insurance plans have decidedly lower premiums and overall, the out of pocket maximum is less. So the money you aren’t spending on insurance, you deposit into your HSA. If you have a ‘good’ year medically speaking, then the money in the HSA stays with you. I’ve carried my health insurance this way since 2004 and it’s worked out nicely.


But what you really start to get a grasp of is the cost of care. Some insurance carriers a couple of years ago started posting pricing information on their web site, what they will pay for certain procedures in certain areas. Aetna was the first as I recall. Now that it’s YOUR money, not the insurance company’s most people are more interested in what services are going to cost.


How much time did you spend researching the cost of your last TV or computer purchase before buying? How much time did you spend checking out the cost of an office visit with a couple of doctors in your area? How about the quality of the TV, computer or doctor? I probably have the answer to the doctor question, and that’s okay; this is a new mind set for us, daring to question the almighty medical world. I recently received a nice comment from a lady, Mona Lori, whose web site you need to check out–www.OutofPocket.com. She started this web site in 2007 out of the frustration of having what’s called a Consumer Driven Health Plan, but not knowing how to best use it. Here’s what she said to me in an email:


“ OutOfPocket.com was definitely worth launching.  I have received so many great comments from consumers all over the U.S. about our dysfunctional health care system.  We do not have a critical  mass of consumers using the site yet, but if enough consumers eventually shared/posted actual prices they paid for routine health care services, collectively, consumers will have created a very powerful directory of true prices for health care services.”


So if you have an HSA, or even just a higher deductible PPO plan and you want to know how to get more bang for your buck, check out www.OutOfPocket.com. She is certainly gathering info still, but this will be a dynamic process, so bookmark her site!   Be well!


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Annuities and the beauty of tax deferred growth

08-05-2008by Colleen King

Annuities are a tool that allow money to grow on a tax deferred basis. Not tax free, tax deferred. Tax deferred growth is the benefit of retirement plans, whether you are looking at an employer plan such as a 401k or 403b, or an IRA you start yourself. The idea is that you let this money grow, and when you are ready for retirement, either you won’t be working or you won’t be working as much, so your income drops, ergo your tax liability drops. Here is a link to a really nice simple chart (just the kind I like) that will show you the type of growth you stand to gain.


Annuities and tax deferral


Fixed annuities, whether a regular fixed or a fixed indexed annuity, allow your money to grow on a tax deferred basis, but does NOT have to be set up as an IRA. A lot of advisers used to tell people not to used an annuity as a personal retirement vehicle for IRAs because of fees that were often associated with them, and frankly because there was more money to be made for them if you went into a stock based account.




Well, since the stock market has become so volatile, a lot of people are looking to some kind of a fixed annuity because with these, unlike the stock market or the majority of variable annuities, your principle is guaranteed. Once you hit a certain age in life, you don’t want to risk losing what you have saved and try to rebuild it again.


When planning for retirement most experts will tell you to take advantage of all the ‘pre-tax’ options available. Once you max those out, but you still have excess money you would like to put away, you can either look at a Roth IRA or an annuity. The advantage of a Roth is that you are putting away after tax money so when you pull money out of it, your gains are tax free. The potential disadvantages are the annual limits on what you can deposit and if your income is above a certain amount you aren’t eligible to have a Roth. That still leaves you with annuities as an option. No limits on how much you can put in, your financial status doesn’t come into play so it’s one of those things to consider. Especially if you have some windfall bonus, inheritance or some other good fortune come you way.


So there is a combination of ways to do this, you just need to assess the best prospects! Be Well!

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Category: Annuities