Ask Colleen King

Health Savings Accounts (HSAs) are a great way to handle health care coverage for many people. In order to have one you need to have a specific type of health plan, referred to as a Qualified High Deductible Health Plan (HDHP). In order to qualify as an HSA eligible HDHP in 2008, plans for a single individual must have a the deductible of at least $1100 and the only benefits available prior to meeting the deductible are preventive services. For a family plan the minimum deductible in 2008 is $2200.

But the question I want to address in this article is one aspect of setting up the actual HSA. When a family has an HSA eligible plan, should they set up one HSA or two? Well, when you set up an HSA for your family there can only be one account holder listed, but the money in the account can be used for all members covered by their family health plan. In 2008 the maximum contribution for an individual is $2900 and for a family is $5800. So, no big difference at this point whether you need one account or two? Maybe if you file your taxes separately, you could each use the deduction of what you’ve contributed during the year.

Here’s where the potential benefit comes in; after age 55, people with HSAs are eligible for ‘catch up’ contributions! In 2008, that would be an additional $900. If you have one account, there can only be one catch up contribution. But if you and your spouse have separate accounts, you could both take advantage of the catch up contribution. So,with a family HSA allowable contribution of $5800 (if you choose to make the maximum contribution) plus $900, that would give you $6300 in the account. With separate accounts you could each make the maximum contribution of $2900, plus $900, times 2, giving you a total of $7200 that you could put away. Something to think about!

Every year these numbers are adjusted for the coming year; see below for the HSA numbers for 2009:

• Maximum HSA contribution–individuals $3000, families $5950
• Catch up contributions for account holders over age 55–$1000
• Minimum health plan deductible–individuals $1150, families $2300
• Maximum out of pocket max on a plan–individual plans $5800, family plans $11,600

Whatever you do, you need to have health insurance these days. HSA eligible plans can be less expensive than conventional PPO plans and you are basically are ’self insuring’ for the smaller issues. Look at it further to see if it’s a fit for you.

Be well!

Tags:   Group Health Insurance · Health insurance · HSAs · Individual Health Insurance1 Comment

Medicare–the golden years–woo hoo! You finally have your red, white and blue card, health care until you ‘no longer need it’ is now taken care of. But are you okay with your current situation? Medicare alone does not cover 100% of everything so most people pick up additional coverage, which I will go through below.

Medicare Supplements and Medicare HMOs, also known as Medicare Advantage plans, are something to choose wisely. This is because as time goes on, like with regular insurance plans, benefits change and what you chose originally might not be working for you now.

November 15 through December 31 is Medicare open enrollment every year, and if  you have a Medicare Advantage/Medicare HMO plan and you aren’t happy, or your doctor is no longer accepting the plan, NOW is the time to make a change and you don’t have to go through medical underwriting to be accepted.

Medicare Supplements don’t have quite as liberal rules around changing, but there are ways of doing it. BUT, generally you will have to be able to go through underwriting screening and be accepted. And that’s usually the problem. When you initially become eligible for Medicare, you have a six month window (three months before and three months after your birthday) to enter any supplement plan that you want. No underwriting. You can be a medical train wreck and they will still take you. However, if you have a supplement and it’s become too expensive, you can make the change to an HMO plan during the annual open enrollment period.

In Los Angeles County, and several other counties in California, the Medicare HMOs (aka Medicare Advantage plans) are free, so if money’s getting tight a Medicare HMO might be a good solution to your situation. If you are having trouble navigating the coverage waters of Medicare associated plans, call your agent. Or me; I’d be glad to help you figure out your options.

Be well!

Tags:   California · Los Angeles · Medicare Advantage plans · Medicare HMOs · Medicare open enrollment · Medicare supplementsNo Comments.

Long Term Care insurance is going to be an essential part of your financial/retirement planning portfolio, because despite what you may think, the government is not going to take care of it. They’re struggling now to do what they are supposed to, and it doesn’t look like it’s going to get better anytime soon.

Many people think this is something you get in your late 60s or early 70s. You can, but the problem is that rates are significantly higher at that point, and there’s always the risk that you may have developed something rendering you uninsurable.

The time to really start looking is in your late 40s or in your 50s.  Reasons why:

1. Rates will be lower; for with each birthday, the rates will go up.
2. When you have no health conditions, you may qualify for a 10% ‘preferred health’ discount with most carriers. That can add up to worthwhile savings.
3. If you are married and you both apply there is usually about a 25% spousal discount. So you buy two policies for about 25% less each! Unfortunately, as we know, once you hit the ‘older years’ you risk one spouse possibly passing away and you lose that possible discount. Or, one of you may not qualify for coverage, so you lose the spousal discount possibility.

Case in point–I recently had two requests for quotes. My initial presentation was for a $170/day benefit, 5% compound interest inflation protection, a 3 year benefit period, and a 90 day elimination period. One lady was 52, the other was 72.  Standard rate, without any discounts, not taking into consideration the possibility of a preferred health discount. The 52 year old woman’s rates per year were $2329/year. The 72 year old woman’s rates were $7800/year! And those were the least expensive rates from the three companies I queried.

So even though $2300+ a year is not cheap, long term care costs in California at this time can be as much as $80,000 per year, or more. Compare $2300 vs. $80,000. All of a sudden, it seems manageable doesn’t it?

Also, while carriers won’t guarantee it, the majority of the time carriers will not raise rates on existing policies. So locking in that $2300/year could be helpful in a few years as you are looking to retire and your income is going down.

So at least do some checking; you can’t make a good decision without good information. If you have an agent you trust, get a quote or if they don’t sell long term care insurance, ask for a referral to an agent that does. And if you’re in California, I’d be glad to help you.

Be well

Tags:   Long Term Care InsuranceNo Comments.

I recently heard this statement at a sales training session, and it’s become my new mantra. Health insurance and most other types of insurance for that matter, can be really expensive and now’s not the time to be absorbing rate increases.

Even though I sell insurance for a living I don’t like to see people pay more than they need to. That doesn’t mean the least expensive coverage is the best way to go either. But there is a happy medium often times.

Life insurance rates overall have come down over the past few years so if you purchased life insurance more than 4-5 years ago, it might be time to see if there is something less expensive for you. Why not? You also have to see if what you have is sufficient. If you’ve had another child or two since you last bought a policy, it’s time to make sure that is still okay.

Long Term Care insurance–well, none of us are getting any younger, so if you are in your late 40s and up, you might consider at least learning about it. Maybe get a quote too. The old thinking was that this is something you buy in your late 60s, early 70s. By then, rates can be at least double what they would be in your 50s. Plus there’s the risk of developing a health condition that could either keep you from getting a 10% preferred health discount or rendering you uninsurable in general.

Annuities–see my September 30th post on annuities. They can be a great move in this economy if you don’t need the money right away and there aren’t enough antacids in your house to withstand the stock market volatility.

So don’t participate in the recession. If you are a business owner, you still need to market. Those that stop, their businesses don’t grow. You might not grow as much, but growth of any kind is good right now.

Be Well!

Tags:   Annuities · Health insurance · Life Insurance · Long Term Care Insurance1 Comment

Can it get much crazier? If you’ve never considered an annuity for anything before, you should consider it now.

An annuity is actually an insurance product that gives people a guarantee on their investment. At least the fixed annuities and fixed indexed annuities do. The stock market is a scary place to have your money these days, especially if you saw the Dow drop nearly 800 points Monday! It didn’t plummet that much after 9/11, which doesn’t make me feel very good.

Annuities are life insurance products that guarantee your principal. Fixed annuities will make the commitment.  The variable annuities won’t, as they are directly invested in the stock market. If you are in your 20s and 30s, you may not mind the loss because you have time to make the money again or wait for the market to rebound. Not that it did after the mess of 2000, but it could.

But if you are in your 40s and up, we baby boomers aren’t going to have the time to re-save. I’ve moved a good part of my money into annuities over the past 3-4 years. There are different kinds, with different time frames, it is not a one size fits all product. Talk to your insurance or financial advisor to see if this if an annuity might be a suitable direction for you to go.  I use them for people that have left jobs and don’t want to leave their 401k or 403b behind. But they don’t have the stomach for the stock market. The other plus on this is that when you leave an employer sponsored retirement plan is that you will be starting an IRA. The main reason to move your old retirement plan is that if something happens to you, ODDS ARE THAT YOUR BENEFICIARIES WILL GET THE ENTIRE AMOUNT AT ONCE! Talk about ugly tax consequences.

By moving it into an IRA, whatever the vehicle, an annuity or whatever, you and your beneficiaries retain control and the money can be taken out over time. This is referred to as a ’stretch’ IRA and you need to know about this.

If you are concerned about the stability of insurance companies, especially after AIG being ‘bailed’ out, or rescued, or ‘whatevered’, what you need to realize is that the insurance segments of AIG are sound. There are reserve requirements of 103% of the face value of policies that must be held, not flying around. What got them in trouble was poor investing by their other business units.  Remember, in 1929, the banks went under. The insurance companies held strong.

So take a deep breath and hang on. It’s going to be a bumpy ride!

Tags:   Annuities · annuity · fixed annuities · fixed indexed annuitiesNo Comments.

Health Insurance is treated differently by people as opposed to homeowners or auto insurance, because unfortunately we tend to need to use it more often. Individual health insurance plans generally over 70% (or less) after you meet the deductible. So until you hit the out of pocket maximum, which is like a stop loss, your 30% adds up. Thank goodness for the out of pocket max, because that’s the part that keeps you from going broke, or paying that 30% forever.

I was asking my business partner about these in light of the current economy. His only response was on the economy, and to quote him, ‘Ruff” (see picture at the bottom of this post). Supplemental insurance can be sold in a few ways, and whether or not it makes sense depends on your personal philosophy on insurance. And yes, some people outside of this industry have insurance philosophies. These are plans you will hear about that provide extra coverage for cancer, accidents, hospitalization, critical illnesses such as strokes and heart attacks.

These may be helpful to you, but you really need to evaluate the cost versus what you get, IF you have an occurrence. The main thing that bothers me about the way I hear a lot of agents sell them, and only sell supplements, is that they describe them as ‘paying you money for what your main health insurance doesn’t cover.’ It often sounds like they make up the entire difference, and they don’t generally.

They don’t coordinate with your main insurance most of the time. They send you the specified amount after you file a claim if it meets the criteria. Then it’s up to you, if you spend it on non-medical expenses, which could be helpful, or you use it to pay medical costs.

Some employer groups will offer these to employees at the employees’ expense to enhance the benefit package. Depending on what you buy, it could be paid on a pre-tax basis, which is good for the employer and the employee. Before you go forward with it, ask the following questions:

• Is there a limit to the number of times I can file a claim?
• Will the rates ever go up?
• What does this cost each month, and what is the potential payout?

These are just a few of the questions you need to ask. These types of plans are mostly offered in conjunction with group health insurance, but some can be offered on an individual basis. Wherever you are buying it, make sure you understand what you are getting and keep asking questions until you are satisfied.

Of course, there is always the alternative–Be well!

Tags:   Group Health Insurance · Health insurance · indivdiual health insurance1 Comment

Health insurance tends to be confusing to most people, so going to a big, national web site to decipher what all is available might be okay for some. If you really understand it, then go for it. I can understand wanting to do it on your own and not risk being pressured into buying more than you want.

However, whether you are looking for an individual plan for you and/or your family or a group health plan, if this isn’t your forte, seriously consider using an independent agent. I’ve dealt with several people during my time in business that had gone to a major site to pick their own, then they were unhappy with it. There are several things that can be phrased in different ways, and if you don’t know all the nuances you might end up with something other than you thought. Many of these huge national sites also have agents available by phone you can call for help, but from what some of my clients have told me, trying to get the same person a second time especially if it’s a couple of months or more after you bought the policy can be tough.

By going to an independent agent, whether they are down the street or just established with a private agency in your state, if you have selected a good agent, they will be there if down the line you have a problem. I tell my clients that I don’t disappear after a sale, that I remain available to them in case there is an issue. I also tell them that I return phone calls usually the same day. That may sound like pompous horn blowing over a dumb little thing, but it you’ve ever had an agent evaporate on you, you’ll agree that it’s not.

I also tell my clients that I ‘do the shopping’ for them. On my web site I post the pricing and benefits of all the available carriers that I represent. So you could certainly go to my web site, find information, select a plan and apply online without ever talking to me. But I like to talk to people, so if you do go to my web site, let’s talk about what you have found and see if it will really fit what you are looking for. I look at the nonsense of individual health insurance and group health insurance plans day in and day out, so sometimes I can point out small things you might have missed. My goal is to help people find what fits their needs, not mine, and frequently I talk people down in price, spending less than they would have on their own.

Sometimes people think that by going to a carrier (insurance company) directly, then can save money. My services and those of any other independent agent, are free, whether you end up buying from us or not. We are paid by the carrier we place the business with. So our consultative services work for you–you don’t have to call a bunch of carriers to see what’s available, because I promise you–they all think they have the best thing going and it’s not always true. They won’t tell you about the ‘comparative pitfalls.’ So deal with an independent agent, and get objective information on your plans.

We also know about the subtle differences between carriers when it comes to underwriting health issues. They don’t tell us everything, because honestly, with some agents that would be like giving away the answers to the quiz. But there are some carriers that are certainly easier to work with than others.

So use our expertise and willingness to help you if something goes awry–Be well!

Tags:   Group Health Insurance · Health insurance · Individual Health Insurance1 Comment

Life insurance is life insurance, right? Many times yes, but with the right type of life insurance your mortgage will be protected in a way that affords your survivors more options.

Have you gotten a mortgage or refinanced a loan lately? About 20 minutes after the close, you started getting things in the mail offering crucial, vital protection that was absolutely essential to your existence and the existence of your family as well the continuation of liberty and freedom in America. Geez, when you put it that way……..

Often is it offered by an affiliate of the company you did your loan through, but also insurance agencies that do this type of coverage buy information and seek out public records when a new loan or re-fi closes. The idea is that you fill out the card, mail it then get a call to set an appointment. You can do that and meet with the agent, but there are some definite questions you need to know to ask.

Generally what is being offered is called ‘decreasing term’ life insurance. What you are buying is a term policy that is meant expressly to pay off your mortgage, it’s not a fixed, static amount.  So, as your mortgage balance decreases, so does the amount the policy will pay if you pass away. If you are buying with a spouse or partner and you both apply, you are really paying two premiums and getting one policy, with a death benefit that decreases over time. AND, if you sell your house, usually the policy is attached to the house so you end up starting over if you are buying another home.

What about this scenario–one of you is working, the other isn’t. The working spouse dies.  You have other bills, and now a loss of income. What do you do? Well, the decreasing term life policy will pay off your mortgage, but what about other expenses?

By using a regular term life insurance policy, either 20 or 30 years, you control what happens to the money. You can now address other bills and have a financial cushion. Maybe you do want to pay off the house, and you can, but what if you are now going back to work and would like the mortgage interest expense as a deduction? This is one of the things I mean by having control over your situation. If  two people are insured, you have two level premium death benefits (meaning the value doesn’t drop over time). And if you move, the policy goes with you.

Optimally, you look at an amount that will pay off the mortgage, put all kids through a four year college program and take care of a majority of the remaining partner’s living expenses. That can end up being expensive, and you don’t want to buy insurance that breaks you. Once we look at rates, then we go ‘backwards’ and see what death benefit amount is affordable. After all, having something is better than nothing, because it will give your survivors time to grieve and deal with things. And not have to make difficult financial decisions at a terrible time.

Some people if they are younger will opt to add on a ‘return of premium’ rider. If you are alive at the end of the term of the policy, they will return 100% of the premium to you. No interest of course, but at least you get it back. Agents are divided on whether this is a good thing to recommend or not. I suggest it, but don’t push it, because ultimately my clients are calling the shots.

So basically, when you have people depending on you financially, whether you want to call this mortgage protection, life insurance or just good old peace of mind, seriously consider looking at it. Be well!

Tags:   Life Insurance · mortgage protection3 Comments

I was on vacation last week, and even though I was out of cell phone and computer/wireless range, there’s always someone talking about health insurance.

I was in a cab on the island of Aruba, which is beautiful. My boyfriend and I with another couple had gone to a great beach and in the cab on the way back, we were asking the gentleman driving us to tell us a bit about Aruba (other than what we knew about Natalie Holloway!)

He was of Dutch origin and had lived there most of his life. Said it was beautiful and safe, but like anywhere, things were changing. Health care coverage was free (remember, that always means higher taxation!) but they were having a huge influx of Colombians which was a burden on their system. He groused that when one comes, the whole family comes and often times they aren’t working, ergo they aren’t paying taxes or contributing to the system. Just draining it. Sound like familiar complaints?

In California, it’s the Central Americans who are often blamed as a problem. Several years ago when I spent a lot of time in Italy, it was the Tamils, the people from Sri Lanka that were ‘draining’ the economy. Every country has it’s problems, and part of it seems to evolve from people in poorer nations striving to make a better life for themselves and their families in a better place.

Health care is only one piece of a ‘better life’ and it costs money. What do we do about it? There are so many ideas, but whatever you think is a great way to change our current system, it won’t happen quickly. The more people that buy health insurance, healthy people rather than just those who are ill, the more money that goes into ameliorating the risk–right now, who buys it? People anticipating needs whether it’s planning a family and all the care costs that come with having babies, people getting older fearing illness, and so on. Younger healthy people also need to get on the band wagon, even though they ‘don’t need it.’ You may not develop asthma or high blood pressure in your 20s, but what about that snowboarding accident or amateur sports injury? Running down the stairs in a hurry and either badly spraining or breaking an ankle. That costs too, and those are the kinds of things that can saddle a young person with a ton of bills that would have been avoided with a decent health plan.

So until the ‘big reform’ (lord help us all!) takes place, covering yourself and your family, if it can be done without costing a fortune, seriously look at doing it. That’s not just a sales ploy on my part, it’s reality. Significant reform will take a few years at best. Meantime, help avoid the potential pitfall of financial ruin by seeking some sort of coverage. A good agent will help you find what fits you best.   Be well!

Tags:   Health insurance · Individual Health InsuranceNo Comments.

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….

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!

Tags:   Group Health Insurance · guaranteed issue health plans · Individual Health Insurance · mini med plansNo Comments.