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Health insurance–What’s a Deductible?

2008-07-31 by 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?

2008-07-29 by 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?

2008-07-24 by 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

2008-07-22 by 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?

2008-07-18 by 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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Annuities–what are they, and why should I consider having one?

2008-07-13 by Colleen King

Annuities can be a good things for a lot of people depending on their retirement status, financial situation and age. There are essentially two categories–fixed and variable. In the fixed category, you have the regular old fixed annuity and fixed indexed annuities.


Variable annuities I’ll touch on briefly–only briefly because I don’t sell them, but want to share with you what they are. Variable annuities are directly invested in the stock market. The advantage of these that are touted is that when the market goes up there is big money to be made. But if things go down, your principle isn’t guaranteed. There are riders that can be purchased to help safeguard against this but obviously, if you are purchasing them, it eats into your profit potentially. Not going to spend a lot more time on this, again because I don’t sell them. If you’re interested though I’d be glad to refer you to reputable agents that will give you good advice. They may be good for your situation, most certainly.


On the fixed side, the plain ole vanilla fixed annuity is what your parents and grandparent would be well versed in. Your principle is guaranteed! You accumulated a large amount of money, $100,000+, bought an annuity from an insurance company, and you were guaranteed an income for life. You would get monthly payments for life, and the amount per month would be based on the amount you deposited and your life expectancy. Annuities are sold as a source of income you can’t outlive. What makes this different from one other particular product, there’s a bad old insurance saying that explains it–life insurance is in case you die too soon, and annuities are in case you live too long.


You can now find fixed annuities for lower opening amounts, most of them have no associated expenses. Deposit it, let it grow, and as you approach ‘the golden years,’ your nest egg will help provide for you. The ways payouts can be calculated has changed a lot too, defeating a lot of the complaints and concerns from days gone by–especially from beneficiaries when their benefactor died not long after opening an annuity.


Fixed indexed annuities are a little more adventurous. But like all fixed annuities, your principle is guaranteed. In this case, you have multiple ways to allocate your money. Your gains and losses are tied to different stock market indices, but not directly invested in the stock market. Sounds like a contradiction in terms, but trust me, it works. If the market goes up, depending on the crediting strategy you select, you value goes up. But if the market plummets, you don’t lose, your balance stays the same. Another bad old insurance-ism, ‘Zero is the Hero.’ Good market things go up, bad market, you stay the same, your balance doesn’t drop.


Recently, due to a popular NBC television show, Fixed Indexed Annuities and the agents selling them were branded as being deceptive and a bad thing to put money into. While Chris Hanson was able to point all the bad, he apparently passed on the option to present any of the positives. Love you Chris, but I was disappointed in how lopsided your show was. They are a safe product to put your money into, but there will always be the loser agent that will be more interested in their commissions rather than finding a suitable vehicle for their clients. The way you lose money in a fixed indexed annuity is by pulling too much money out of the policy too soon, thus incurring the wrath of the surrender charges. But more on that in a future post.


So, if you are looking for a safe vehicle to plan for retirement, or you have left a job and want to figure out what to do with your old 401k or 403b, consider an annuity. If you’re in your late 40s or up, this can be a safe place to plop that nest egg. You can also consider a stock account, mutual funds or things like that, but be sure to ask what kind of guarantees on your principle they will make. I’ve got two indexed annuities, and I’ve sold some to family members. Believe me, as most will know when you do business with family, you better have the strength of your convictions behind what you offer them!

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Category: Annuities



Life Insurance–talk about a morbid discussion!

2008-07-12 by Colleen King

Life Insurance is always an odd discussion to embark on, and I try to get that out right off when I speak with clients for the first time. Basically, when couples are shopping for life insurance for the first time, what you are trying to figure out how much money one would need if their spouse/partner were to die in order to maintain the current standard of living.


There’s a happy discussion! But realistically, when you have a family, what would happen if one of you were to die? These days, most couples are both working because if you live in California, you’ve had to either take out a mortgage the size of a small nation’s GDP. Or if you are renting, you know, rents here are pretty ridiculous too.


Optimally, when figuring out how much coverage you need, we look at your expenses on a monthly or annual basis to see what it would take if the income from one of the partners were to go away. This can be done in multiples of annual salary, or look at what it would take to pay off the mortgage, cover utilities, food, schooling for the kids and eventually college. As well as any other incurred debts. Either method usually gets you pretty close to the same number.


Then the type of insurance you need–term or permanent, either whole or universal. That will be covered in another post. Let’s say we’re looking at term rates, because that’s usually the less expensive. Doesn’t always mean cheap though–again, your health history, smoker status and a few other things get in to play. Please try to be of a normal weight, nonsmoker, not have a hazardous occupation and be pretty healthy. That way we can get the best rates. But if you’re not in ‘super hero’ status, don’t let that keep you from checking into rates.


If you need a $1,000,000, 20 year term policy let’s say, and the monthly premium is NOT going to fit into your budget, don’t do it. We start ratcheting back the amount until the cost isn’t a strain. Even if the final amount won’t cover everything that you want it to, you need to have some coverage rather than none. That will buy your surviving spouse time to grieve and deal with life without facing losing the home. It gives them time to figure out what they are going to do, and not having to make huge financial decisions at a time when they can’t think straight.


So, even though you aren’t going to die, talk to a good agent about your needs and look into the cost of something that will provide financial peace of mind. Life insurance–a morbid, but crucial discussion. Don’t make a bad situation worse. Be well!

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Category: Life Insurance



Long Term Care Insurance–no thanks, don’t need it

2008-07-12 by Colleen King

Long Term Care insurance is being talked about a lot as baby boomers are starting to approach retirement. They/we are starting to need to go to the doctor a bit more, need a few more medications and find they don’t necessarily put it all together to figure out the obvious–we ain’t getting any younger!


What does Long Term Care insurance pay for anyway? If you think Medicare is going to pay for anything other than medical needs, those days are long gone. MediCal, California’s version of Medicaid will eventually, but you will have to spend the vast majority of your liquid assets before it will kick in. And then after you pass away, the State will usually try to reclaim they money they spent on your care from your estate. Wow, bet none of THIS was in your estate plan, was it?


If you have needs for skilled care, like recovering from a surgery calling for intravenous medications, dressing changes or other therapies, Medicare will cover a certain number of days, but then you end up sharing the cost.


But if you are becoming debilitated, need help dressing, bathing, eating, walking or getting to the bathroom, these aren’t considered ‘skilled’ needs, but rather, custodial care. Depending on the type of policy, care can be provided in the home, an assisted living center or a nursing home. Most people have the vision of growing old gracefully in their paid off home. But that’s not always possible without help. And don’t automatically assume your kids will be able to care for you.


First, they need to want and be able to. This usually falls to daughters in most families. On top of that, they either have their own families or depending on their age, they may be having health issues of their own. I can remember when I was an emergency nurse, we’d see people in their late 80s or 90s seriously ill and dependent, and the ‘kids’ that were supposed to take care of them were in their late 60s or 70s. So it’s just not always possible.


So at least look at a Long Term Care insurance quote with a good agent. There are lots of options, many ways to do this, so don’t assume it’s too expensive before you look at it. If you think $1,500 -$3,000 or more per year is expensive, how is $60,000- $80,000 going to fit in your budget? Revisit my blog in the future, because this and more will be discussed here. Be well!

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Group Health Insurance in California

2008-07-12 by Colleen King

Group health insurance is a HUGE discussion in California. It has been over the past 2-3 years as concerns rise over the uninsured. As well as the cost of health care–wow, it’s all exploding.


The beauty of small group health insurance (2-50 employees) in California is that when a company is set up within certain parameters, group health insurance is guaranteed issue regardless of the health status of the enrolling members. One of the things that has been fun about setting up group health plans for me is that I’ve been able to help people get insurance they need, legitimately, and frequently they didn’t know this was an option. Love doing that! Does that mean it will cost a fortune? Well, it isn’t cheap but the plans tend to have richer benefits than individual health insurance plans so that make it cost more. BUT, even with disastrous health problems, a two person group will never pay more than 10% about standard rates.


So when you think every group health case sold in California is profitable, it’s not. The carriers know they won’t make money on every plan sold, but that’s the way the game is set up in California. At the risk of sounding too ‘salesy,’ if you are having trouble recruiting and retaining employees, having a group health plan can help you get and keep the people you want.


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