How can I lower the cost of my health insurance?

Leading health insurance carriers have responded to the market conditions that we have been suffering from for the past several years by offering produces know generally as “Consumer Driven Health Plans”.  Some of these plans are worth a close look.  Once we have a discussion about your situation and particular needs, we can show you several options, being sure you know about any potential pitfalls before you buy.

What is less expensive, group or individual health Insurance?

For the past several years, individual insurance tends to be less expensive than group.  This may be counterintuitive, but consider that group coverage must accept all applicants, regardless of prior or current health conditions.  Individual coverage in subject to medical underwriting, which means that you may or may not qualify, based on your medical records.

My COBRA is expiring soon.  What are my options?

Depending on your health status, you may be eligible for an individual policy.  If not, you will be eligible for a policy under the federal law HIPAA.  If you are self-employed and have at least one business partner or employee, you can form your own group and have a broad selection of plans. Finally, there is the major risk pool, which provides coverage to those who have been declined for individual coverage.

I am self-employed.  Can I have my own group plan?

If you have at least one business partner, or employee, yes you can.  The main advantages is that there is no medical underwriting, so if you are having trouble qualifying for individual coverage, a group policy could be a good solution.

I have read about lawsuit against major carriers that allege that they are canceling policies after someone gets sick or has a major claim.  What it that about?

The major carriers are stating that less than 1% of their policyholders have been affected because they did not accurately disclose serious medical history that would have prevented them from getting a policy in the first place.  They then went on to file claims for that condition shortly after the policy was issued.  Obviously a carrier will protect itself from such abuse.  I have personally seen only 2 cases of this in over 20 years, and they were both cases of intentional misrepresentation of serious conditions.  If you are honest and take reasonable care in completing an application for individual coverage, you will not have this problem.

What carriers do you represent?

The carriers we shop include Aetna, Blue Cross, Blue Shield, Cigna, Kaiser, Health Net, PacifiCare, and United Health Care.  These carriers do about 85% of the business in California.  Blue Cross and Kaiser do about 50%.

Do you handle Medicare Supplements?

Yes, we offer a variety of plans through Blue Cross, Blue Shield and Mutual of Omaha.  We offer Part D, Rx plans, through these carriers as well.

How do I pick the best Part D, Rx plan for me (or my parent)?

We base or recommendations on the convenience and cost of the plan.  We offer to search your specific list of drugs among all the plans offered and share those results with you.  We feel that we can only be competent offering the few plans mentioned above, so in some cases, we refer clients to other carriers for their Part D coverage.  There is usually little difference in cost among the leaders and, of course, we offer service after the sale on the products that we represent.

Will poor health prevent me from getting a Medicare supplement?

Not if you are applying within certain guarantee issue times.  The biggest of which is, the first 6 months after you become eligible for Medicare Part B.  In addition to accepting your application, our preferred carriers will not impose a waiting period for pre-existing conditions.  We encourage clients to take a good look at the Medicare supplement market as soon as they turn age 65.  It is almost always better coverage at a much lower cost compared to their individual or group coverage.  One notable exception would be where your employer is paying for your coverage.

How much life insurance should I have?

As a “rule of thumb”, 6 to 8 times your annual earnings is usually recommended. It may help to consider your specific financial situation in terms of your dependents need for either income, paying off debt, or both. Also, consider any special financial obligations that may be coming up, such as private school or college costs. If you have other income sources/assets, or a spouse that is capable of working, that should be considered as well.

What are the different types of life insurance and which is best for me?

There are three basic types, with some variations. They are term, universal life and whole life.

Term life is the least expensive coverage, assuming that you will only want to carry insurance for 10-20 years or so. After the term is up, so is your coverage, so care should be used in deciding how long you will want the coverage. With term, there is no cash value, but some policies offer a return of premium feature.

Universal life may be 5 times more expensive than term, but it maintains a level cost for your entire lifetime. It develops cash value, or equity, which you can use during your lifetime. For periods of 15 plus years, it may be less expensive to own than term.

Whole life may be another 30-50% more expensive than universal life. Like universal life, it has a level premium for life. It tends to build cash value faster than universal life and the death benefit usually increases each year.

Two popular variations are variable universal life, which allows you to invest your cash values in mutual fund type accounts and survivorship life, which is useful for married couples with estates worth over about 4 million who want to have separate, tax advantaged funds to pay estate taxes for their children.

What is the best age to buy life insurance?

Your age now is best! Unlike most things, which can be purchased with money, life insurance also requires reasonably good health. It is important to start a program as soon as practical to avoid either paying more than you should, or being unable to qualify, due to a health event.

Will I need a physical?

A paramedical exam is required for almost any amount of coverage. It consists of an examiner asking you several health questions and having you provide a blood and urine sample for the lab. The results are sent to the underwriter in the home office, who may also request your medical records. Once an underwriting decision is reached, we advise you of the offer and shortly afterward you will be given a policy and several weeks to decide if you want to put the coverage in force. There is no cost or obligation to you to go through these steps.

What if I do not like the offer that the carrier makes to me?

Since we use several leading carriers, we will be able to shop the underwriting results and advise you of any better offers that we know of. If we find one, you will not have to have another physical, just complete a new application for the new carrier.

What resources are available to learn more?

Insurance Information Institute
A non-profit group sponsored by the insurance industry to provide general information about insurance. This is an excellent resource for unbiased information. Order publications at the web site. http://www.iii.org

The Life and Health Insurance Foundation for Education
The Life and Health Insurance Foundation for Education (LIFE) is a non-profit organization designed to address the public's growing need for information and education on life, health, and disability insurance. LIFE also seeks to remind people of the important role agents perform in helping families, businesses, and individuals find the insurance products that best fit their needs. http://www.life-line.org

Is a policy necessary?

The best answer to this question would have to come from your own personal experience.  If someone you know well has experienced long term health care in their family, they can tell you first hand about the emotional and financial strain that it puts on a family.

In general, if you are independently wealthy (someone define that for me please!) or, on the other extreme, have little income or financial assets, you do not need a LTC policy.  Otherwise, be aware that LTC is only minimally covered by Medicare, Medicare Supplements, HMO's or Health Plans - usually not over 90 to 100 days worth.  There are no plans for the government to begin covering it and it is very expensive.  Finally, the likelihood is that 1 out of 2 of us will live long enough to need care.

Doesn’t Medicare cover this?

Only about 16% of the nation's LTC expense is covered by Medicare.  Once you have had 100 days of care, or no longer qualify for "Skilled" or "Intermediate" levels of care, Medicare stops covering you, and so do most Supplements and HMOs.

What is the best way to buy a policy?

You do not have to buy an unlimited policy to be protected.  A larger daily benefit for a shorter benefit period is more likely to help you than vice versa.  Looking at many variations of plan design will help you see the value points in the pricing of a policy and make a good decision.

What policy options or riders are worth considering?

Automatic benefit increase options that help keep your benefits in line with actual costs are very important.  For couples, a survivorship option that waives the premium for the surviving spouse after the death of the first is recommended.  Also for couples, a shared care option that lets you use the healthy spouses benefit account if needed can add peace of mind.

Which are the best carriers?  How can I compare, besides price?

Three carriers do about 75% of the business in this market.  Genworth, John Hancock and Met Life.  We have found that these, and other leading carriers have policies that are more alike than different.  We also give an honorable mention to Allianz and Mutual Of Omaha.  A good broker will compare and contrast several leading carriers for you with the aim of helping you find the right fit.

What discounts are available?

Preferred health, spouse coverage, multi-life (business or worksite).

What if I already have a pre-existing health condition?

Some health conditions, like those requiring heart surgery that has been successfully completed, may have little or no impact on your ability to qualify for a policy.  Others, like diabetes or MS, for example do.  LTC underwriters are more concerned about mobility issues than acute conditions. One reason to act early is to "lock in" the best rates while your health is good.

What is the best age to buy a LTC policy?

Age 40 is not too soon to start looking at this market.  From age 45 on is time to take action as soon as you can gather enough information to make a good decision.  There is a very powerful financial incentive to buy earlier rather than wait until just before you think you might need it.

What is an elimination period?

It is a "time deductible", the amount of days that you actually receive care before you start earning benefits under your policy.  For example, if you need care at a rate of $200 per day, and if your policy has a 30-day elimination period, you would spent $6,000 for that 30 days of care.  With a 90-Day elimination period, you would spend $18,000 before your insurance started paying.

What is the average amount of time a person needs LTC?

Once a person needs care, the national average is said to be about 2-years at home, plus about 3 years in a facility (5-years total).

Can my family provide my care?

For a policy to pay a benefit, a near family member cannot usually provide all care.  They can provide some, such as meal preparation, housekeeping, driving.  You may also hire almost anyone to do these things and receive benefits under your policy. Services such as bathing, dressing and transferring require a non-relative from a licensed agency.  Some have said that having a professional do the heavy work allows them to have a more normal relationship with their loved one.

Can the carrier raise my premium?

Premiums are designed to remain level.  Insurance laws, such as "rate stabilization" and "guaranteed renewable" prevent carriers from singling you out for increases or cancellation because you have used your policy or your health has changed, for example.

That being said, carriers can, with approval of the regulators, increase rates on a class basis.  As of this time, Genworth, John Hancock and Met Life have never increased rates on their existing policyholders, but we advise clients to expect increases of 10% to 20% per decade on average.

Why don’t I wait until I am much older, and closer to maybe needing care, before I buy?

It costs about 10% more per year for each year that you wait.  Even if your assets earned 10% annually (after taxes and fees), your health might change making a policy more expensive than it should be, or unavailable.

Are there any tax benefits to buying a LTC policy through my business?

Business owners can provide this benefit on a selective basis.  The business can deduct much or all of the cost for the owner and spouse without having to report it as income.  If the benefits are needed, they are tax-free! These are very significant tax benefits.  We recommend checking with your tax advisor for a more specific answer.

How much LTCI will $3,000 per year buy a couple?

Couple - Age 50	$5000 Monthly LTC Benefit 3 Years Each with Shared Care Rider For A Total Of 6 Years 5% Compound Inflation Initial Benefit Amount $360,000
Couple - Age 55	$4500 Monthly LTC Benefit 3 Years Each with Shared Care Rider For A Total Of 6 Years 5% Compound Inflation Initial Benefit Amount $324,000
Couple - Age 60	$4500 Monthly LTC Benefit 3 Years Each with Shared Care Rider For A Total Of 6 Years 5% Simple Inflation Initial Benefit Amount $324,000
Couple - Age 65	$3500 Monthly LTC Benefit 3 Years Each with Shared Care Rider For A Total Of 6 Years 5% Simple Inflation Initial Benefit Amount $252,000
Couple - Age 70	$3500 Monthly LTC Benefit 3 Years Each with Shared Care Rider For A Total Of 6 Years No Inflation Protection Initial Benefit Amount $252,000
Couple - Age 75	$1800 Monthly LTC Benefit 3 Years Each with Shared Care Rider For A Total Of 6 Years No Inflation Protection Initial Benefit Amount $129,000