Tag Archives: Premiums

2013 HSA Contribution Limits

2013 HSA Contribution Limits

The IRS has recently announced the new contribution limits for HSA’s (Health Savings Accounts).

HSA contribution limits: 

  • Individuals (self-only coverage) – $3,250 (up $150 from 2012)
  • Family coverage – $6,450 (up $200 from 2012)

HDHP minimum required deductibles:

  • $1,250 for self-only coverage
  • $2,500 for family coverage

Out-of-pocket maximum:

(Out-of-pocket expenses include deductibles, co-payments, and other amounts, but not premiums)

  • $6,250 for self-only coverage
  • $12,500 for family coverage

Under guidelines implemented in the Patient Protection and Affordable Care Act, over-the-counter drugs may only be reimbursed if they have a prescription. If a policyholder uses an HSA to pay for items or services that aren’t qualified medical expenses, the tax penalty is 20 percent of the HSA distribution.

Exploring the Lesser Known Features of Long-Term Care Insurance

Exploring the Lesser Known Features of Long-Term Care Insurance

Buyers of long-term care insurance often focus on just the coverage basics, such as the level of daily benefits, length of coverage, and under what conditions the policy will pay a claim. While these basics form the chassis of the policy, long-term care policies offer a host of other options that may prove beneficial to the policyholder.

Let’s take a look at some of these available options:

Survivorship Premium Waiver– If both spouses obtain long-term care policies from one insurer, some policies will provide a waiver of all remaining premiums if one spouse dies within a certain number of years after the policy is issued. For example, the policy may provide a premium waiver if the policies have been in effect for 10 years before one spouse passes away. The policy might also stipulate that no claims could have been paid during the period.

This feature may be included with the policy automatically or it may be offered as a rider to the base policy for an extra premium.

Shared Pool of Benefits- Instead of each spouse having an individual policy with separate benefits, they can elect to share each other’s benefits if needed. For example, each spouse might have a policy with a 3-year benefit period. Once one spouse has expired 3 years of benefits they have no further coverage, but the other spouse may still have 3 years of coverage remaining. With the shared pool of benefits rider, the spouse receiving care could also access the other spouse’s benefits.

This feature is most commonly offered as rider to the base policy for an extra premium.

Alternate Plan of Care– With our population continuing to age, new ways of delivering long-term care will continue to be developed. Not too long ago, no one had ever heard of adult day care or assisted living facilities.

With the alternate plan of care feature, you can ensure that your policy will never grow obsolete. You, your physician, and the insurance company will develop a plan of care which best serves your needs based on currently available options.

Look for this feature to be included in the policy with no additional cost.

Accelerated Premium Payment Options– Many insureds worry about their ability to afford premium payments during retirement when their income is reduced. Some insurers offer policyholders an option to pay accelerated premiums for a shorter period of time with the benefit of a contractually paid up policy after a certain period. For example, a 10- or 20-year accelerated payment period with no further premiums due afterwards.

This option has several benefits. Business owners may be able to deduct premiums from their taxes during their working years with no further premiums due in retirement. Additionally, with the cost of long-term care increasing rapidly, a contractually paid up policy means no exposure to premium adjustments made by insurers in future years to account for higher than expected claims experience.

Enhanced Elimination Periods– While all policies provide several elimination period options ranging from a 0 day to a 180 day elimination, it’s important to understand how the elimination period can be satisfied.

For example, some policies may credit a week towards your elimination period with just one day of home care received per week. Still another policy may have no elimination period for home care benefits while nursing home or assisted living facility care may require an elimination period.

These are just a few of the lesser-known features of long-term care insurance. There are many other options to consider when selecting a policy, but be sure to compare not only the basics of each policy but the included features and available riders.

Short-Term Health Insurance Can Cover Workers During Job Transitions

Short-Term Health Insurance Can Cover Workers During Job Transitions

Most employees that leave a job also leave their employer-sponsored medical coverage behind. This can be a chancy move, especially if you don’t have other insurance options readily available to you.

If you’ve already left your job, then you’ve most likely already found out that obtaining affordable health insurance isn’t the easiest task when you’re between jobs. COBRA is an option that gives you the right to keep your insurance from your previous employment, but the monthly premiums are usually extremely expensive and something that many simply can’t afford while unemployed.

Temporary insurance, which is a short-term form of health insurance, can be an affordable alternative to the high premiums associated with COBRA. It’s designed to provide a bridge between the gap of finding your next job and leaving your former employer-sponsored plan. Having such a policy can remove the chance of not being protected against unforeseen injury or sickness while you’re between jobs, but pre-existing conditions are usually excluded.

The premiums for short-term coverage policies are relatively much cheaper than those for COBRA, but the cost can still seem expensive for someone without a job. While finances may tempt you to put off insurance until you find another job, you should remember that financial security is the primary reason that individuals purchase short-term health insurance in the first place.

It only takes one unexpected hospital trip or admission to put someone without medical coverage hundreds to thousands of dollars in debt. For example, consider the financial repercussions if you suddenly develop appendicitis and need an emergency appendectomy when you don’t have medical insurance and the average cost of an appendectomy is between $11,000 and $18,000 dollars. Countless financial studies have cited medical bills as one of the leading causes of bankruptcy in America. Having short-term health coverage to carry you until your next job can help avoid the catastrophe of being responsible for the total cost of medical bills from being uninsured.

Aside from the value of financial protection, short-term insurance also helps to avoid having future health insurance claims rejected under Health Insurance Portability and Accountability Act (HIPPAA) laws. In other words, individuals that don’t have a break from credible insurance coverage exceeding 63 days are considered to have maintained a continuous coverage, which means that they won’t be subject to exclusions for pre-existing conditions. And, many approved short-term policies are included in the realm of credible coverage, even if they have exclusions for pre-existing conditions.

Depending on specific state requirements, short-term policies may run for a term of anywhere from 30-days to one year. As far as payment goes, most short-term health insurance plans offer two different options – paying through a monthly installment plan or in a single up-front payment that will cover a specific number of days. Generally, single payment plans are slightly cheaper than monthly payment plans.

Of course, temporary insurance is designed to be just that…a temporary solution to ease your health and financial concerns. It’s not designed to last longer than a year and should never be considered a long-term insurance solution. Once you’ve found another job, you should look into your new employer’s insurance offerings and determine when your new coverage would start if it’s elected.

Short-Term Health Insurance

Individual Health Insurance: Knowing What You’re Getting And Figuring Out What You Need

Individual Health Insurance: Knowing What You’re Getting And Figuring Out What You Need

While most Americans with health insurance are covered under an employer’s plan, there are still many employers that don’t have health insurance offerings. Workers of companies not offering insurance are left to find and purchase their own private individual health insurance directly from an insurer.

There are actually several advantages to purchasing private individual health insurance:

* Unlike those covered under an employer’s plan, you won’t just have a limited number of plans that were pre-selected by someone else to choose from. You, instead of your employer, get to determine what plan features are desirable and pick the plan that you see fit. By having a variety of plans available to you, such as those that don’t cover services you don’t want and that have higher deductibles, you can take advantage of lower premiums.

* Since private health plans are under your control, not your employer’s control, you also won’t have to worry about losing your coverage if you ever want to change jobs. As long as you pay your premiums when they’re due, the coverage is yours to keep and the insurer can’t drop you.

However, there are also several disadvantages to private health plan coverage, for example:

* Even if paying the same premium rates, individual plans usually provide less coverage than employer plans because individual policies have a larger percentage of the premium dollars going toward paying operational costs.

* The premiums for private health insurance plans increase as you age in most states. Since renewal rates tend to be higher than new policy rates, you can avoid the rate hikes for awhile by changing plans as rates become higher. However, this isn’t a long-term solution. Eventually, your age will make it more difficult to find an insurer and your individual policy will become more expensive.

* Group plans are typically required to insure all employees and their family members. On the other hand, if an applicant of an individual plan doesn’t have an ideal health status, then the insurer can reject the applicant.

If you do decide to go with private health insurance, then you’ll need to make sure that you work with the right insurance agent. Figuring out what type and what amount of insurance best meets your specific needs can be an overwhelming and confusing process. Having the right agent to help you assess your situation and apprise you of your options can be invaluable during the process. Being able to trust in your agent’s expertise and professional judgment and trusting that he/she will be working in your best interest are the keys to having a successful working relationship. Do remember that the agent also needs to be able to trust in you. So always make sure that any information you provide to your agent is honest and not withholding.

You will also want to keep a few questions in mind to ask your agent as you compare plans:

* What are the plan’s monthly premiums, coinsurance, and deductibles?

* What benefits does the plan offer?

* What pre-existing conditions affect my coverage?

* Is the doctor or hospital I want to use covered under the plan?

* If I use out-of-network providers, will there be additional fees or charges?

* How does the referral system operate?

* How is care handled should I need medical services when I’m away from home?

* Does the plan have a maximum amount it will pay over my lifetime or per year?

In closing, purchasing private market insurance isn’t as complicated as it might seem, but getting the right policy will take a little effort on your part. Remember to approach it just as you would any other major purchase – research all your options, do price and benefit comparisons, and seek expert advice and assistance.  — Brian Gruss 509-927-9200

Obtain Long-Term Care Insurance While Young for the Best Rates

Obtain Long-Term Care Insurance While Young for the Best Rates

An American Association for Long-Term Care Insurance study of all 2005 long-term care insurance applicants revealed that 42 to 58 percent of all applicants between the ages of 50 to 59 qualified for good health discounts. Additionally, the percentage who qualify for good health discounts decreases somewhat for applicants in their 60s, but drops dramatically for applicants in their 70s.

Consumers who are in good health typically qualify for discounts that can decrease the cost of long-term care insurance by 10 to 20 percent each year. This means that a couple can save hundreds of dollars annually for the protection they need.

The researchers exemplified their findings by breaking down the total number of applicants into percentages who qualified for good health discounts by age range:

·   Under Age 30 – 66.5%

·   Between 30 to 39 – 61.0%

·   Between 40 to 49 – 53.7%

·   Between 50 to 59 – 44.2%

·   Between 60 to 69 – 31.9%

·   Between 70 to 79 – 18.8%

·   80 and Over – 11.2%

Eight leading long-term care insurers that represent approximately 80 percent of all individual policies sold in the U.S provided the study data. The researchers concluded from examining the statistics that consumers understand they will need long-term care at some point in their life. However, they often wait too long to plan for that eventuality. This failure to plan causes them to purchase long-term care insurance late in life and they end up paying a much higher premium as a result. The researchers went on to note that consumers don’t realize changes in their health can result in higher premiums for long-term care insurance, or make them ineligible for coverage at all.

There were two other important conclusions drawn from the study. First, consumers should begin investigating long-term care insurance options while they are still in good health, which for most people is in their 50s. The second is that consumers with less than perfect health should seek advice from a long-term care specialist who knows which health conditions various insurers will accept. Once a consumer has been declined by one insurer, they may find it impossible to obtain coverage from any insurer.

Study Shows Shorter Duration Long-Term Care Policies Are Adequate to Meet Most People’s Needs

When asked why they haven’t purchased long-term care insurance, most people answer that the coverage is simply too expensive. However, that excuse may be eliminated thanks to a national study conducted by Milliman, a leading independent national long-term care insurance actuarial firm.

The researchers examined claims data from approximately 1.6 million policies currently in-force. Their goal was to determine what percentage of long-term care insurance claimants with shorter duration policies actually exhausted all of their policy benefits. What they discovered is that only 14.4 percent of closed long-term care insurance claims lasted longer than 24 months. The study further revealed that approximately 33.2 percent of open claims last longer than 24 months, only 5.6 percent of closed claims lasted longer than 36 months, and only 16.2 percent of open claims last longer than 36 months. The study concluded that for a three-year benefit period, only 8 out of every 100 claimants exhausted their benefits.

Of course, there are catastrophic situations where individuals may need long-term care for many years. However, according to the study’s findings, the majority of consumers can receive adequate long-term care insurance protection with a shorter-duration policy. This is an important discovery, especially for those who believe unlimited protection is too expensive. The researchers added that some protection is better than none at all, and a shorter-duration policy is clearly more affordable. A consumer can reduce the cost of long-term insurance protection by 35 to 40 percent by purchasing a three-year benefit versus an unlimited benefit.

In an April 2006 article entitled Six Steps To Buying A Long-Term Care Policy, which was published on www.kiplinger.com, the author Kimberly Lankford offers the following advice about choosing a long-term care insurance benefit period:

“Increasing your benefit period from three years to lifetime could double your annual premium, so you should weigh the odds that you’ll need long-lasting care versus the extra price you’ll pay for coverage. The average nursing home stay is less than three years, but those averages include people who are in a nursing home for just a few weeks after a hospital stay and others who are in the nursing home for a decade or more, says Driscoll. (Marilee Driscoll is the author of The Complete Idiot’s Guide to Long-Term Care Planning and is quoted throughout Lankford’s article.)

“And these statistics do not include the home health care, assisted-living facility care and informal (unpaid) care received elsewhere,” she says.

Most people opt for a three-year or five-year benefit period, but it may be worthwhile to pay extra for a longer benefit period if you have a family history of Alzheimer’s or some other chronic disease.

If you’re trying to save money, Driscoll recommends shortening the benefit period rather than extending the waiting period.”

Top Five Long-Term Care Insurance Myths

Top Five Long-Term Care Insurance Myths

If you’ve decided to purchase long-term care insurance (LTCI), good for you. There’s no question that LTCI can help protect your family’s finances by covering the exorbitant costs of long-term care if and when necessary.

However, because LTCI is such an important and sometimes costly purchase, it’s vital that you do your research and buy a policy for the right reasons. Too many insurance companies persuade consumers to buy LTCI with exaggerated claims and unproven “facts.”

Don’t fall prey to these fallacies. When purchasing an LTCI policy, keep your eye out for these top five sales pitches:

  1. An LTCI policy is a valuable tax write-off.

This may be true in some cases, particularly for business owners, but this statement is a myth for many LTCI policy owners. Although premiums paid for a tax-qualified LTCI policy can ultimately reduce your tax bill, you have to itemize deductions to qualify.

Additionally, for tax write-off purposes, LTCI premiums fall into the medical and dental expenses categories. This category is limited to expenses that surpass 7.5% of your income. So, if you’re income is $75,000, you’ll need more than $5,625 in unreimbursed health and dental care expenses before you can even add in your LTCI premiums.

Plus, even if your LTCI premiums go above 7.5% of your income, you can’t include all of the payments in your medical and dental expenses deduction. Your premiums are deductible according to a sliding scale based on your age. Therefore, LTCI may not be such a great tax write-off after all—depending on your situation, it may not save you a single dime in taxes.

  1. Assisted-living facilities are all created equal.

This is definitely not true. Under current law, there is not a national standard definition for “long-term care facility.” Therefore, if your LTCI policy says it covers a stay in an “assisted-living facility” or “adult day-care facility,” this could mean something different depending on the particular policy and the state where the policy was created.

Therefore, if you purchase an LTCI policy and then move to another state, there’s a possibility that there are no facilities in your new state that match the definitions of your policy. Obviously, this could put you and your family in a serious bind if you ever require long-term care. Before you sign on the dotted line, ask plenty of questions and make sure you fully understand what type of facilities the policy covers.

  1. Buy now to lock in the price.

When purchasing an LTCI policy, many consumers are under the false impression that their premiums will be the same forever. Although your premiums typically depend on your age at the time you purchase the policy, this does not mean the premiums will stay the same for the life of the policy. Your premiums can go up any time your insurance company enacts a rate increase, as long as the increase is approved by the state insurance commissioner.

Additionally, LTCI is particularly vulnerable to rate increases because it’s relatively new to the insurance world. Insurance companies don’t have a sufficient amount of data to predict the number of long-term care claims they will face in coming years.

  1. You should replace your current LTCI policy with a newer one.

If an insurance agent pushes you to get rid of your current policy for a new one and he doesn’t explain the benefits of the switch, this should sound off alarm bells. More than likely, the agent is just looking to boost his commissions.

Although some LTCI policies may have an added benefit that your current policy doesn’t include, it’s typically not a wise move to switch policies in mid-game. First of all, your premiums are based on your age at the time you purchase the LTCI policy. Therefore, if you switch you to a new policy, your premiums will increase. On top of that, you may have developed a pre-existing condition since you purchased the first policy, and this may not be covered by the new policy.

If you want to add benefits to your policy, you’re probably better off to upgrade your current policy instead of buying a new one.

  1. An insurance company’s financial rating isn’t important.

If an insurance agent tells you a carrier’s rating isn’t important, run as fast as you can and don’t look back. You wouldn’t eat at a restaurant with an “F” health inspection grade, would you? For the same reasons, you shouldn’t do business with an insurance company that has low marks.

Before you buy an LTCI policy, check the company’s financial rating with Standard & Poor’s, Moody’s, A.M. Best, Fitch or Weiss—these are all reputable financial rating services. You may also want to contact your state’s insurance department for additional details on specific companies.