What to look for in health insurance...

I know, I know... It's been a week since I have updated this. There really hasn't been much happening with the Health Care bill lately. Most of what I have been reporting on is about all that we still know. We just need to see what happens with the states filing Federal lawsuits about the constitutionality of it all.

What I want to do this week is change gears a little and talk to you about your current health plan. A lot of people trust that agents will have their customers' best interest at heart. But, what I see a lot of times is that some agents are looking out for their own best interest. This week, I want to explain how Health plans work, what to look out for and what to run from.

First, if someone is offering you a health care plan that you're not familiar with please check them out via the Texas Department of Insurance company look-up link. This will give you information on how many complaints have been filed, what their financial stability looks like and, most of all, how long they have been selling in the state of Texas. You can also click here to look up your agent to see how long they have been licensed as well as who they are appointed through.

Texas is one of the few states that allows many different companies to offer their products. If you recall during the debates about health care reform, some states only allow 1 or 2 companies to offer products. This is why Congress really wanted to have more competition; because some of the Representatives come from those states that only allow 1 or 2 companies in. Now, this is a whole different issue that I can get into later... for now, lets talk about what to look for in your health plan.

Each family or group has their own needs and you really need to make sure the plan your agent offers meets those needs. There are a lot of different plans you can choose from so it's very important that you let your agent know what you're looking for.

You need to decide what is more important: keeping the monthly cost low or receiving more benefits. One of the things you need to ask yourself is "how many times do I go to the doctor per year?" If this is a simple once or twice a year for check-ups, there are plans that only allow 1 or 2 doctor visits a year. This will help keep your monthly costs down.

The next question is "how much money do I have saved in case of an emergency?" This will tie in to your plan 2 ways. The first and foremost is your deductible. The higher the deductible, the less risk the insurance company is going to have to pay out on a large claim, thus lowering your monthly premium. The 2nd way this ties in is on your co-insurance. (I will explain this in a few minutes.) Can you pay 30% after your deductible or is 20% going to work for you in your situation?

Now, companies do have a stop loss on their plan, this is the most you would be out on any given claim after your deductible. Let me explain...

John gets into a serious car accident. He is in the hospital for 3 months and his total bill is $40,000. His insurance plan has a $5,000 deductible and an 80/20 plan (meaning the insurance carrier pays 80% and John pays 20% after the deductible). Of the $40k that is owed, John has to pay the first $5,000, leaving a balance of $35,000. The insurance carrier will pay 80% of the $35,000 and John is responsible for the 20%. This leaves John with a payout of $7,000. So, in total, John has to pay out $12,000 of the $40,000 owed. Right?

Not really. Because as I said before, the insurance carrier has a stop loss (it depends on the carrier and the plan) of $3,000 of the 20%. So, all he has to pay out is $8,000 instead of $12,000.

Simple example of John's costs:

Bill $40,000
Deductible $5,000
Balance $35,000
20% of $35,000 = $7000
John's Stop-Loss = $3,000 maximum instead of the full $7,000
Total out-of-pocket for John is $8,000

Now, there are little things you can adjust on your plan to keep costs low as well. You can get a higher doctor co-pay, have a deductible for your prescriptions, and get a higher co-pay for those prescriptions.

I will always recommend that people get an agent to show these plans just because if you don't know what you're doing - and I have seen it happen too many times - you will wind up with a plan that will not pay out what you think it will and then you will be upset with the carrier. As agents, we get you the same rates that you can get directly through the carriers. It doesn't cost you any more to have an agent work for you. So, why would you try to navigate these plans yourself?

In closing, I would also recommend that your agent show you 2-3 plans from a couple of carriers and you choose which one is best for you. If the agent only shows you one company, it should raise several flags. He or she should have 2-3 carriers, even though one may be higher than the other, just to show you that they shopped the market and this is what they came up with.

As always, I do offer personal and group consultations to review your plans at no charge. If you want to make sure you're in the best possible plan, please click here and schedule your free consultation.

Health Care Bill: What's in it for us?

I explained last week what the time-frame for the bill is. This week I want to try to explain what's in it for us.

As you read on my timeline last week, starting this year (probably around November) insurance companies can no longer deny coverage for pre-existing conditions. This could be a really good thing or a bad thing depending on how you look at it. I will explain in a moment. The insurance companies will no longer be allowed to put lifetime caps on plans. You will be allowed to keep your children on your plan until the age of 26 instead of the age of 21. Insurance carriers will be required to offer preventative care to help catch diseases earlier.

I want to talk about the pre-existing clause for a moment; so, bear with me as I rant about this. If you are someone that has a pre-existing condition there are a couple of things you need to know. First, your rates will still be high due to the fact that the "exchange" you get it from will have mostly "sick" people in it. This is nothing more (in my opinion) than a glorified high risk pool (which most states have, by the way). Second, there are minimums that the health care providers have to offer. These will be very basic plans that have very high deductibles, probably no co-pays, and prescription cards that have separate deductibles on them as well. Now you will be able to "buy" up to a better plan that has lower deductibles. But, you will have to pay huge prices for those things.

Now let me throw out a scenario:

There is a guy that is 25 years old, self-employed, never goes to the doctor, works out, eats right and really does a great job of maintaining his health. One day, he gets really bad cramps in his abdomen and decides he needs to have it checked out. He goes to the doctor, pays out-of-pocket because it's cheaper for him to pay a $300.00 doctor bill twice a year than to pay $300 a month for insurance. The doctor tells him his appendix is about to burst and they need to operate. This will cost him $10,000. The patient says he doesn't have that kind of money available. The doctor tells him not to worry, to go to the exchange and get health insurance. Once the operation is done he can drop it, the doctor says. He agrees, signs up for the best plan available, and has the operation then cancels his policy.

Now, using this scenario you're probably asking yourself, "What about the mandate of having health insurance"? Well, I just read that the IRS has no authority to place liens or seizures for failing to have health insurance. All they can do is take the fines out of your refund check. So, if you're self employed and you have no refund check, you don't have to pay the fine.

If you can't see where I am going with this stay with me. OK, so we have established that the patient can get health insurance through the exchange, have the surgery, then cancel his policy the next month.

This is going to have a domino effect. The insurer just paid out $10,000 for a surgery that someone only paid 2 months worth of premiums for. Now the insurance company won't be able to recoup that cost because they are only going to be able to charge so much on these exchanges. This will then cost the insurance carrier more money, so they have to cut their costs and start laying people off. Once the layoff is done and they have more people taking advantage of the system it will push the carrier out of business. Then, Washington will come in and say "You know what? We can't have all these people without insurance so we need to offer it to them." So now comes into play the whole scenario for universal, government-run health care.

All of this being said, my goal today is to make folks aware of situations that most people don't think about and I really hope I have done that for you today. I will be adding more stuff about this next week so be sure to check back with me. If you have any questions please contact me.

Also, I deal with a variety of insurance companies and it is likely that I can save you money on your current health insurance. If you have been with the same company for more than a year, you really are paying too much. Please contact me to let me see if I can save you money. If I only save you $50.00 a month or more, wouldn't it be worth it? Click here for a free assessment and more information.

Health Care Bill : What's in it?

I told you last week I would let you know what this new health care bill would do for you and your family and here it is. If you have questions please don't hesitate to let me know by clicking here.

Before I get started, I want to give you this link that will direct you to the bill itself. I will try to summarize as much of it as possible; the problem we will have is that no one really knows everything in this bill and it could be years before it is all out to see where we stand. Our leaders even openly admit they did not know what was in this before they even voted on it. (Click here to see a video of Nancy Pelosi admitting she did know what was in it.) That being said, here is what we know so far:

The total cost over ten years is 940 billion dollars, according to CBO estimates it would reduce the deficit by $143 billion over the first ten years. My opinion on this is that this is a little over-exaggerated due to the fact that we will be paying taxes into this in the next 4-5 years and not seeing any real benefit for that time frame. So, yes, it will be reducing the deficit because they have the money (our higher taxes) coming in but nothing going out.

Here is the time frame for the bill:

2010

Coverage

• Subsidies begin for small businesses to provide coverage to employees.
• Insurance companies barred from denying coverage to children with pre-existing illness.
• Children permitted to stay on their parents' insurance policies until their 26th birthday.
  

2011

Coverage

• Set up long-term care program under which people pay premiums into system for at least five years and become eligible for support payments if they need assistance in daily living.

Taxes and fees

• Drug makers face annual fee of $2.5 billion (rises in subsequent years).
  

2012

Taxes and fees

• New Medicare taxes on individuals earning more than $200,000 a year and couples filing jointly earning more than $250,000 a year.
• Tax on wages rises to 2.35% from 1.45%.
• New 3.8% tax on unearned income such as dividends and interest.
• Excise tax of 2.3% imposed on sale of medical devices.

Cost control

• Medicare pilot program begins to test bundled payments for care, in a bid to pay for quality rather than quantity of services.

2014

Coverage

• Create exchanges where people without employer coverage, as well as small businesses, can shop for health coverage. Insurance companies barred from denying coverage to anyone with pre-existing illness.
• Requirement begins for most people to have health insurance. Subsidies begin for lower and middle-income people. People at 133% of federal poverty level pay maximum of 3% of income for coverage. People at 400% of poverty level pay up to 9.5% of income. (Poverty level currently is about $22,000 for a family of four.)
• Medicaid, the federal-state program for the poor, expands to all Americans with income up to 133% of federal poverty level.
• Subsidies for small businesses to provide coverage increase. Businesses with 10 or fewer employees and average annual wages of less than $25,000 receive tax credit of up to 50% of employer's contribution. Tax credits phase out for larger businesses.

Taxes and fees

• Employers with more than 50 employees that don't provide affordable coverage must pay a fine if employees receive tax credits to buy insurance. Fine is up to $3,000 per employee, excluding first 30 employees.
• Insurance industry must pay annual fee of $8 billion (rises in subsequent years).

Cost control

• Independent Medicare board must begin to submit recommendations to curb Medicare spending, if costs are rising faster than inflation.

2016

Taxes and fees

• Penalty for those who don't carry coverage rises to 2.5% of taxable income or $695, whichever is greater.

(It is speculative that since this is a federal law you could face up to 2 years in federal prison and have a felony conviction for not having health insurance. Let me be very clear here, it is only speculative at this point. This is possible due to the fact that this is a federal law and if you do something that is against federal law it is a felony.)

2017

Coverage

• Businesses with more than 100 employees can buy coverage on insurance exchanges, if state permits it.
  

2018

Taxes and fees

• Excise tax of 40% imposed on health plans valued at more than $10,200 for individual coverage and $27,500 for family coverage.

—Sources: House bill; Kaiser Family Foundation

Now next week, as I research this more, I will try to explain more about what's in it, possibly some of the hype that's true and not true. Keep following my blog to keep informed.

Again, if you want to see if I can save you some money on your current health plan please click here.

Also, rates for life insurance have never been lower click here for a free quote.