September is Life Insurance Month

Life Insurance…It really is “The Gift that keeps on giving”.

Think about it. Life insurance equals cash to pay for:
Food on the table
A roof over your family’s heads
Money to pay the monthly bills
A little red wagon under the Christmas tree
Clothes for the kids
A whole lot of other things, and most importantly…Peace of mind

Buying life insurance is a nobel unselfish act. Assuming you love your spouse and kids does that love end if an accident or illness takes your life too soon? Because, unless you have a jaw dropping balance in your investment account, your income stops when your heart does. When you own life insurance the event that creates the need creates the cash…income tax free.

Be loving, nobel and unselfish…Do the right thing. Call your life insurance broker today.

Carpe Diem

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Another Affordable Care Act Gotcha

If you bought a personal/family health insurance policy this year, do you understand it will expire on December 31st? No? Well, it does.

Some history…prior to January 1, 2014, personal/family health insurance policies, unlike employer-sponsored group health insurance plans, were by contract “guaranteed renewable” on their policy anniversary dates from year to year.* Each year the issuing insurance company would recalculate a policy’s premium taking into account the beneficiaries’ increased ages, overall current and expected claims from that block of policies and other data, then provide the policy owner the opportunity to renew his/her insurance, without change, in exchange for paying the resulting renewal premium. Typically, that would occur on each policy anniversary date until the policy owner entered Medicare. That was the case regardless of any changes to beneficiaries’health. Individuals could not be singled out for premium increases because of claims paid on their behalf. Policy owners were free to accept the insurance company’s renewal premium offer, or reject it and seek coverage elsewhere.

Prior to passage of the Affordable Care Act (ACA), qualifying to purchase personal/family health insurance was an issue for those with significant health conditions or for those working in very hazardous occupations. Most states supported safety-net programs to provide healthcare assistance or to provide the needed insurance to those who qualified for help.

Fast forward to 2014. Personal/family health insurance is now “Guaranteed Issue”…no more concern about health histories or hazardous occupations. But no longer is such insurance “Guaranteed Renewable”. Instead, your insurance company can change the benefits structure of your insurance each January 1st, as long as those changes fulfill the strictures of ACA…and expect continued premium increases. If you bought an ACA qualified health insurance policy in 2014, look for a letter from your insurance company before year-end offering to keep you insured, but with changes to your present policy and changes to your premiums effective January 1, 2015…just the tip of the ACA iceburg.

Open Enrollment Period for 2015 ACA insurance plans begins November 15, 2014, ending on February 15, 2015. Work with a qualified agenty or broker, or take your chances with healthcare.gov. If you anticipate collecting a premium tax credit you must go through healthcare.gov, but working with a qualified agent or broker at your side will be to your benefit. Your premiums will be same whether or not you work with and agent or broker.

*In the distant past so-call Industrial Insurance Companies offered accident and health insurance policies which could be cancelled by the insurance company on short notice for any reason, but as the health insurance industry developed in the last century competition from more attractive health insurance products pushed industrial insurance out of the marketplace.

Carpe Diem

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Affordable Care Act…Are You Grandfathered?

If you own a personal health insurance policy, not employer-sponsored group health insurance, AND if your personal health insurance policy went into effect prior to March 10, 2010, AND if you made no changes to your policy after 3/10/2010, such as changing its annual deductible amount or co-insurance percentages, your policy may be “Grandfathered”. Owners of grandfathered personal health insurance policies will not be forced to replace them with “Obamacare” policies in the future.

“If you like your insurance, you can keep your insurance.”…well not so much. Rules imposed by the Affordable Care Act (ACA) demand that personal health insurance policies which became effective after March 10, 2010, non-grandfathered plans, be replaced by health insurance plans meeting requirements imposed by ACA starting in January 2014. However, the effective date of the replacement rule has been postponed twice since ACA became law. Currently that replacement date has been pushed out to 2017. Most health insurance companies have opted to renew such policies through the end of 2015. Call the member service number on your insurance ID card to see what your health insurer intends to do regarding renewal of non-grandfathered policies.

ACA health insurance policies must provide benefits which may or may not be included in pre-2014 health insurance policies…items such as maternity benefits, juvenile vision/dental benefits. Your health history or occupation will not preclude your obtaining ACA health insurance plans. Premium rates are the same for men and women in ACA plans. Only age, number of family members to be covered, your zip code, and tobacco use are considered when determining the amount of premiums to be charged for ACA plans. Insureds’ Annual Out of Pocket claims costs for healthcare services received from in-network providers are capped at $6,350 for singles/$12,700 for a family in 2014. Insurers must pay out at least 80% of each year’s personal plan premium collections to cover claims, retaining only 20% to operate the company. If the claims pay-out is less than 80%, insurers must refund the difference to its policyowners.

Leaving insurers only 20% of premium income to operate the business while mandating they offer health insurance to anyone who applies forces them to seek ways to increase efficiencies and reduce operating costs. Thus ACA health insurance plans offer much less flexibility to their owners. No longer can one buy a health insurance policy containing a selection of annual deductibles and reduce his/her monthly premium by opting for a higher annual deductible. ACA plans contain one annual deductible…take it or leave it. ACA health insurance plans are open-ended…no annual benefit payout maximums. In the past most health insurance policies
expired after paying out a pre-determined dollar amount in benefits, most recently three to five million dollars.

“If you like your doctor, you can keep your doctor, period.”…well, not so much. Most ACA personal health insurance plans contain networks of doctors, hospitals and other healthcare service providers. Obtaining healthcare services from providers outside those networks greatly increases out-of-pocket costs. ACA plan healthcare service provider networks offer fewer choices of providers…and your family doc for the past twenty years may not be in your new ACA plan’s network.

So, if you own a grandfathered health insurance policy think long and hard before replacing it with an ACA compliant policy. Keeping much broader provider networks, avoiding forced-on premium costs for maternity, juvenile dental/vision services, and other add ons, makes owning grandfathered insurance quite attractive for the next several years.

Carpe diam.

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Which is Worse, Living Too Long or Dying Too Soon?

Either way you cut it, living too long or dying too soon is a bummer for all of us. Either option has the potential for financial devastation. Dying too soon is the easy part for you. You’re gone…no more worries for you. However, your family is left holding the bag, and without your help to pay the bills your family’s future will be perilous. If you own a business your too soon death causes even more issues. Think about it.

Living too long is another issue. Better healthcare and lifestyle allows us to live longer, much longer on average, than our parents and grandparents. A new retiree can look forward to thirty or more remaining years, good news for many of us. Potentially running out of cash to pay the bills in our later years is the bad news. (If you don’t own one already set up an IRA now.) Compounding the issue is the possibility of declining health leading to the need for at home care or care in an assisted living facility.

The good news for you is that you may employ insurance to guarantee cash flow when it’s needed the most…life insurance to hedge dying too soon…long term care insurance to pay the bills for at home care or care in an assisted living facility later. Premiums for both are less when you buy it now, currently and over your lifetime, rather than putting it off until later.

On the living too long side of the question, whole life insurance provides instant cash as its death benefit plus it can provide needed cash to you after it has been in force for a number of years via its cash value, thus augmenting your retirement income stream.

Carpe Diem

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Don’t Buy Insurance over the Phone!

Several days ago I received an irate call from a gentleman calling my office in Florida from Pennsylvania. It appears he bought health insurance over the phone back in February 2014, from a scammer using my name indicating scammer was calling from Florida. My irate caller, who sounded as if he were in his 40′s, said he had been paying $250.00 per month premiums via automatic checking account drafts since February. When he recently tried to use his over-the-phone health insurance …guess what? You are correct…his insurance is bogus.

Here’s a little tutorial: The several states regulate insurance, issue licenses to insurance companies and their agents to sell insurance products which must have been approved by the state in question prior to the sale. Should an insurance agent wish to sell insurance in every state he/she must apply to every state and meet their education/training and other requirements. Qualifying to sell insurance in every state means owning and qualifying for fifty (50) insurance agent licenses. A health insurance agent licensed in Florida must obtain a Pennsylvania non-resident agent’s license before attempting to sell health insurance in PA…and that agent may sell only insurance plans approved for sale in PA. If an insurance agent fails to act within a state’s insurance laws and their regulations, that agent will receive a visit from a guy carrying a badge and a gun…may be fined, lose his/her license, and may face jail time. Robbing banks is much more efficient than scamming people with phoney insurance schemes…but the low-lifes are always out there somewhere.

I fear my Pennsylvania caller will never recover his cash wasted on bogus insurance premiums…and will be forced to pay his medical bills out of pocket…PLUS, the Affordable Care Act (ACA) is lurking in the shadows. Should my called not be able to prove to the IRS that he owned credible health insurance this year he may be hit with the ACA penalty “Tax”. ( Tax is in quotes because it was originally an Un-Constutional fee before Chief Justice John Roberts turned into a tax in order to make it fit the Constution, thus ensuring he would continue to be invited to Washington, DC’s insider cocktail parties.)

But I digress…Long story short, don’t buy insurance, and most anything else, over the phone from someone you have never met and whom you cannot vet…and do not hesitate to ask to see an insurance agent’s license. He/she will carry it with them just as a driver’s license.

Carpe Diem

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How Affordable is the Affordable Care Act?

Ah yes, the Affordable Care Act of 2010, still kicking into gear in early summer 2014. Did you miss the ACA application cut off date on March 31, 2014? If so you are SOL until January 1, 2015. 2015 ACA open enrollment starts in November of this year, so get ready.

How about those ACA plan calendar year deductibles? If you have trouble scratching together several hundred dollars to pay ACA policy monthly premiums, then paying out-of-pocket several thousand dollars before your insurance kicks in must really be fun for you. Did you buy one of ACA’s “Catastrophic” policies?….you pay out $6,350.00 in cash, plus your monthly premiums, before your policy pays anything at all…and that means no outpatient prescription drug coverage until you have forked over $6,350.00 from your pocket, which is hanging inside out by then. (One insurance company took pity on you, and only makes you pay $6,250.00 out of pocket first…big whoop!)

Some Catastrophic plans “allow” you to visit a doc in exchange for a $20.00 co-payment for two or three office visits per year, without making you pony up the full annual deductible first…BUT, you must see one of their In-Network physicians…so go see the lowest bid-winner doc of your choice just as long as that doc is “in-network”. Do you have a family doctor whom you have relied on for several years…one you have confidence in, one you trust? Well, get ready…He or she will not be in your insurance company’s network! Murphy’s Law rules.

I keep reading that a vast majority of voters are unhappy with the Affordable Care Act and its impact on them and their families. Why then did those same voters send the same administration which brough you ACA back to Washington in 2012? You must really like the idea of having your neighbors pay your bills for you…but what happens when your neighbors get tapped out? Yep, “Change you can believe in”, don’t leave home without it.

Carpe Diem

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Is Long Term Care Insurance for You?

When an accident or illness lays you low for months at a time, owning Long Term Care Insurance (LTCI) provides the cash to allow you to remain at home during your recovery. If recovering at home is not an option, LTCI pays the rent required by an assisted care facility. LTCI is not just for older folk. Owning it would be good for you too. As is true for most life/health insurance, younger people pay lower LTCI premiums both at the beginning and in the long run.

As a nation we are living longer than our parents and grand parents. That is good news/bad news for most of us. Now we are concerned about outliving our retirement dollars. Long run, Social Secuity and Medicare are paying out more than they take in. How much will be left for you in the future? Washington could tax everybody at 100% of income, and that still would not be enough, long term, to keep up Social Security and Medicare, as they exist today. When and if ever Washington begins to address those issues you can expect program cuts and “means testing” to reduce your Medicare and Social Security benefits.

Medicare does not pay a dime toward your long term care expenses. Owning LTCI today makes good business sense. Rely on yourself and your insurance company to provide long term care dollars when needed. That beats depending upon some government agency by a long shot.

Talk to your insurance broker about LTCI today. It will be time well spent.

Carpe Diem

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Who Pays the Bills When You Can’t?

Your assignment today is to pull out your check book, or go to your debit account’s auto-pay screen. Then list your regular monthly bills…the ones recurring every month: rent or mortgage payment, utility bills, cable/phone bills, car insurance, homowners/renters insurance, groceries, car/automobile lease payments, health insurance, gasoline, oil, maintenance…these support your life style. Okay, add ‘em up. The total is what you need, every month, to float your boat…and those are net-after tax numbers.

Now, imagine your income, investnments and savings drying up over the next several weeks. How do you pay the bills then? You could start robbing banks…but after the law grabs you, your life will become a worn cot behind steel bars and bologna sandwiches every day, plus a three hundred pound room-mate with a digestive problem and bad breath…all courtesy of the tax payors.

A sudden accident or lingering illness could rob you of your ability to generate income for yourself and your family…and take away your ability to pay those critical bills every month. If you think it won’t happen to you, don’t be so sure. The odds of your becoming disabled and staying that way for many months or years is much greater than that of your dying before age 70.

For many years businesses have hedged their bets by obtaining Income Replacement Insurance on the lives of key employees as a way to shift the disability risk to insurance companies. Thus, when a key employee is disabled and no longer able to perform, the insurance company provides income in the form of disability payments to the employee, freeing up salary dollars to allow the business to bring on a replacement…just makes good business sense.

It follows that you too should apply that good business sense to your life. In your household, you are the “Key Employee”…if you are married, and you both work, your household contains two “Key Employees”. Who brings in the money when you can’t? Who pays the bills when you can’t? Unless you hit the Lotto in the past few weeks, you do not control enough cash to carry you through an extended time of no income.

Look into Disability Income Insurance today. Talk to your insurance agent or broker about it. As a rule of thumb, figure on paying an Annualized premium equal to about month’s benefit pay-out…hedging eleven months with one month’s benefit amount. As the premium payor, your Disability Income Insurance benefits are income tax free, and that also helps with the bills.

Carpe Deim

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Last Minute Alternatives to Keep You in ACA Compliance

Affordable Care Act (ACA) “Obamacare” Open Enrollment Period ends March 31, 2014. If you are not enrolled in a health insurance plan by March 31,2014, you will be forced to wait until November of this year before you may enroll in new health insurance.

The tax penalty for failing to enroll in a health insurance plan in tax year 2014 is the greater of $95.00, or 1% of your adjusted gross income in 2014. (i.e., If your income from all sources should be $35,000.00, your tax penalty would be $350.00.) That tax penalty will increase substantially in 2015 and in the following years.

If you are one of the many earning too many dollars to qualify for a tax credit but not enough to cover Obamacare’s bloated insurance premiums without straining your budget there is a possible shelter for you…not a long term answer but enough to see you through 2014, in the hope that ACA may be changed or replaced with a more workable law within the next couple years.

Designed for those between jobs needing health insurance to cover the gap between employer provided group health insurance plans is a product referred to as Temporary Health Insurance, or Short Term Health Insurance. Such plans provide traditional major medical insurance benefits during the gap between group insurance coverage…can last anywhere from thirty (30) days up to ,usually, eleven months.

For now Short Term Health Insurance plans have escaped the clutches of Obamacare, and work just like traditional health insurance: You must satisfy a deductible which you select…any amount from less than a thousand dollars up to five thousand dollars or more. After your deductible has been satisfied, you and your insurance company share in claims above the deductible…typically 80% is paid by the insurance company and you pay the remaining 20%, ( could also be 70%/30% or 50%/50%)…until you reach a cut-off point. At that point, the insurance company starts paying 100% of the bill.

Because such health insurance is designed to cover you for a relatively short period of time, does not cover “pre-existing”conditions, and ends when paid claims total, usually, $1,000,000.00, or sometimes $1,500,000.00, its premiums are lower than those demanded by Obamacare plans. If one has owned Short Term health insurance for a full eleven months, and still needs health insurance, that person may apply for a second such plan to last up to another eleven months.

Caveat: If our insured person, above, collected on a claim during the period he/she was covered by the first Short Term policy, the second short term policy may not cover the condition causing the claim, as such would now become a “Pre-Existing” condition. However, if you need affordable health insurance now, and Obamacare plans cost more than your budget allows, look into owning a Short Term Health Insurance plan. Just Google Temporary Health Insurance, or see the link on my web-site.

Carpe Diem

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The ACA Mandate Clock is Ticking

You have until Match 31, 2014 to enroll and pay for health insurance meeting requirements of the Affordable Care Act (ACA), nee Obamacare.

If your household income is low you may qualify for healthcare provided by your state…Medicaid. However, if you are not a head of household, or single with very low income you may fall through the cracks…no Medicaid and no tax credit help to pay health insurance premiums. But because our Federal government is benevolent you will not be forced to pay a penalty tax for not owning health insurance in that circumstance.

In 2014, the penalty tax for an individual is the greater of $95.00 or 1% of income above the income tax filing threshold. Starting in 2015 the penalty tax shoots up like a rocket.

Take heart. You may be exempt from paying the penalty tax if:

You earn too little to even file an income tax return…
You qualify for a hardship exemption…
You belong to a qualifing religious group…
You are a member of a health care sharing ministry,,,
You are presently in prison…
You work/live full time in a qualifying foreign country…
Plus several additional catagories

What does ACA mean when it refers to “household income”? My reading of that is all wages, salaries, tips and other income from ALL sources, less qualified expenses, generated by everybody living in a household…..On an income tax return form 1040, see line 37, “Adjusted Gross Income”…that’s your household income.

If you miss the 3/31/2014 enrollment cut-off, you must wait for the next enrollment period, starting in November 15, 2014, until you can apply for ACA health insurance. There are circumstances allowing you to enroll after the 3/31/2014 cut-off, so talk to your health insurance broker/agent if you need more information.

Carpe Diem

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