Frank West — Page 17

6 “Benefits” to Having Group Employee Benefits.

June 8, 2015 by Frank West

As a small business owner, you may be thinking about providing group employee benefits for your employees. There are many “benefits” (no pun intended) to providing this kind of service for your employees. There are many different insurance companies with many different programs. Generally speaking, there are six types of benefits you should at least consider when selecting which to include in your package.

1) Health Insurance: Health insurance protects against the risk of medical expenses. There are many health insurance companies with many different types of programs and options. It is best to do some research to see which insurance company is best for your company and employee’s needs. Two very popular insurance programs are HMOs and PPOs.

HMOs, or health maintenance organizations, provide managed care for insurance companies. HMOs cover services of doctors who agree to treat patients under HMO guidelines. Under HMOs, individuals usually select a primary care physician and need to obtain referrals in order to see other doctors or specialists. These referrals are only given when the HMO plan deems the services necessary.
PPOs, or preferred provider organizations, are subscription based and the employee can visit a network doctor without going to a primary care physician for a referral. Doctors and hospitals work with insurance plans in order to provide care at reduced rates. Most PPO plans also allow you to visit a non-network doctor, but you pay a higher deductible and/or Co Pay.
High deductible HSA plans are also gaining popularity. The premiums can be significantly lower than a PPO and this option allows the employee to set up a qualifying bank account and make contributions from which they pay the expenses that fall within the deductible. The contributions to the HSA that are not used in the calendar year roll over to the next year.

2) Vision Plans: Usually offered as an addition to a general health insurance plan, but can be purchased stand alone, vision plans provide reimbursement for vision services. This insurance would be used when visiting an optometrist or ophthalmologist for services such as eye exams, eye glasses or contact lenses.

3) Dental Coverage: Generally offered in addition to a general health insurance plan, dental insurance provides individuals with insurance for dental care. Dental plans vary, but generally speaking they cover (partially or in total): basic cleanings, fillings, x-rays, periodontics, endodontics. Some plans may even cover parts of oral surgery, crowns, implants or dentures. Some carriers offer HMO and PPO dental options.

4) Group Life: Life Insurance can be purchased on the group with a set limit for the group or set limits by job/class. The coverage is term, is reasonably priced and is available while the individual is employed by the company. While a Group Life program can be purchased stand alone, most employers will combine as part of the overall benefits package.

5) 401K : 401K plans are a great way for employers and the owners to provide a vehicle to create a retirement income pool. Individuals contribute a percentage of pre-tax income into a qualified plan while they are working and later receive funds from the plan upon their retirement. The investment income accumulates tax free and the recipient pays income taxes as the funds are distributed, usually at a lower rate. Individuals can start withdrawals without penalty upon turning 59 ½. Many employers will provide a matching contribution based on a formula that may include company profitability.

6) Disability (Short and Long Term): this type of insurance protects those who become disabled and are unable to work. Short-term disability insurance generally pays a percentage of a disabled employee’s salary for a certain amount of time after a short waiting period of 7-14 days. Each state has different guidelines and rules regarding short-term disability; some states require benefits be provided for up to 26 weeks. Long-term disability insurance is more popular among employers. If an employee is unable to work for a long period of time due to disability, this coverage will pay a part of the employee’s salary. The amount of money that an individual will receive often depends on their position and how much coverage their company provides. Many employers will provide both STD and LTD as complimentary products.

Filed Under: Affordable Care Act, Group Health Benefits, Group Health Insurance Tagged With: Group Health, Group Medical Insurance

Tips for selecting the right comprehensive health insurance plan.

June 8, 2015 by Frank West

Today, with medical costs at all-time high, emergencies such as sickness, disease and accidents which may result in prolonged hospitalisation, can leave you in severe financial crisis unless you have a comprehensive medical insurance policy which takes care of all your required expenses. So how do you choose a plan that’s perfectly suitable for you and your family?

There are a lot of factors to consider when choosing an insurance plan, most importantly: what your health care needs are, and what you can afford to spend? Once you are aware of your financial strength, the next step is to identify the “ought-to-have” with anticipating certain medical needs. With the right insurance, you could save thousands, perhaps even tens of thousands, if you or a family member gets sick.

Here are some critical clauses that needs your attention to detail while buying a health insurance policy:

• Sum insured limits

The main limit in health insurance is the sum insured. Any medical expenses incurred over and above the sum insured are not payable. It is advisable to take adequate cover from an early age, particularly because it may not be easy to increase the sum insured after a claim occurs or when the age increases.

• Individual/floater policies

Most buyers often struggle to make a decision on whether to buy an “individual” policy for each family member or a “family floater policies”. While an individual policy works best in all situations, it can be an expensive option. The family floater plan on the other hand offers flexibility in terms of utilising the overall insurance coverage among the family as a group. While an individual opts for a family floater cover, the sum insured opted should be sufficiently high considering a situation where more than one person in a family needs hospitalization in the same year.

• Extent of coverage

When you are paying for a comprehensive cover, it is important to make sure that the risk covered is comprehensive as well. One should not buy a plan just because it’s cheaper than the rest but should be measured in terms of premium versus benefit comparison. Benefits such as pre and post hospitalization, day care procedures, OPD cover, maternity extensions or ambulance service, should be taken into consideration.

• Waiting period for pre-existing disease exclusions

Many individuals have health related problems that exist before you apply for a health insurance policy or enroll in a new health plan. Pre-existing condition imposes a waiting period which is also called the cooling period. Therefore, apart from the insurance premium being charged by various insurers, you also need to compare the waiting periods stipulated in the policies for covering pre-existing ailments. Some policies specify a waiting period of two years, while in case of some, it could extend to four years. Similarly, there are waiting periods for certain listed conditions like hysterectomies, cataract, kidney stones and knee replacement surgeries which may vary from one year to four years and these also need to be compared.

• Any internal sub-limits like room rent curbs, sub-limits on specific procedures

In order to avoid inflated charges that hospitals levy on patients with an insurance cover, some policies have sub-limits on room rents or certain procedures and this becomes the most critical feature when evaluating a health insurance policy. Typically the insurer places two kinds of limits, on the hospital room rent and the liability for specific diseases. Classically the room rent expenses are capped at 1% of the sum assured for a day, while ICU charges have a ceiling of 2% of the sum assured. Plans free of sub-limits are preferred as it prevents surprises at the time of claims. These sub-limits are generally seen in plans with lower overall sums insured.

• Deductibles/co-payments

Sub-limits can also take the form of co-payments, where the insurer will be asked to pay a predetermined percentage of the claim amount or deductibles, where the insurer will have a cut-off cost which you will have to bear and the insurer will come into the picture only when the bill goes beyond this limit. It is advisable to go for plans that come devoid of restrictive options, such as co-payments, limits on room rents and treatment-specific limits. They may cost a little more but evade financial risk during emergencies.

• List of exclusions

While your health insurance policy can provide relief in times of emergencies, there may also be times of trouble in case you are not aware about the ailments that are covered and those that aren’t. It is important to know the list of exclusions in your health insurance policy to avoid instances when you end up paying additionally for a service already covered in your policy or in worst case scenario, post treatment you realise that your policy did not cover the treatment of that particular illness.

• In-house claims servicing or use of TPA and service levels/market feedback

It is important to know whether the insurance company has its own in-house servicing unit or uses a TPA for servicing the policies.

Insurance companies having their in-house servicing units have a better turnaround time for claims servicing and cashless processing.

A hospital or medical institution which has an agreement with the insurance company or TPA (Third Party Administrator) to provide cashless treatment is a network hospital. While buying a health plan, make sure of the proximity of the network hospital from your place of residence or work. Opt for an insurer who has more network hospitals in geographical locations where you are likely to need medical care.

Ensure that the facilities and repute of the hospitals in the network are worthy.

• Reputation of the insurer

Traditionally, we all are inclined to go for plans that our friends and family suggest as we trust their experience and judgment.

But the market is flooded with products and marketing gimmicks to lure customers. While deciding on a health plan, it’s important to conduct a due diligence on the insurance company — keeping track of how smooth their claim settlement is, how many claims have been settled, time efficiency and network.

Filed Under: Health Insurance, Health Insurance Self Employed Tagged With: Health Insurance Self Employed, independent insurance agent

California Immigration 2016: Senate Approves Health Insurance For Undocumented Immigrants.

June 8, 2015 by Frank West

A proposal to expand health care to Californians in the country illegally cleared the Senate on June 2nd, passing on a 28-11 vote and heading to the Assembly.

Senate Bill 4 would allow undocumented immigrants to purchase health insurance on the state exchange, pending a federal waiver, and enroll eligible people under the age of 19 in Medi-Cal, the state’s insurance program for the poor. A capped number of undocumented adults would also be allowed participate, if additional funding is appropriated in the state budget.

“We are talking about our friends, we are talking about our neighbors and our families who are denied basic health care in the richest state of this union,” said Sen. Ricardo Lara, D-Bell Gardens, the measure’s author. “Ensuring that every child in California grows up healthy and with an opportunity to thrive and succeed is simply the right thing to do.”

The debate frequently turned to other intersecting issues, including Medi-Cal reimbursement rates. An effort to reverse a 10 percent cut to the payments from 2011 has been front and center at the Capitol during final budget negotiations, with many lawmakers arguing that doctors simply cannot afford to accept new Medi-Cal patients.

“If this bill were to be signed into law, it would only serve to exacerbate the problem and not fix it,” said Sen. Jeff Stone, R-Temecula. “This bill would only add hundreds of thousands of more patients to the roll with no one to care for them.”

As the discussion shifted to stalled federal efforts to overhaul the country’s immigration laws, it got increasingly contentious. Sen. Isadore Hall, D-Compton, baited his Republican colleagues – who supported a resolution in April calling for comprehensive immigration reform – to vote for SB 4, calling their “excuses” to oppose the measure “tools of the weak and incompetent.”

“If excuses are the tools of the weak and incompetent, then we have a weak and incompetent president,” retorted Sen. Bob Huff, R-Diamond Bar.

Republican Sens. Andy Vidak of Hanford and Anthony Cannella of Modesto, who both represent swing agricultural districts, joined Democrats in voting yes on the bill.

“Taxpayers are already paying high health care costs for the undocumented Californians when they show up in our emergency rooms,” Vidak said.

While support for SB 4 is strong in the Assembly, a signature from Gov. Jerry Brown is not guaranteed. Brown has expressed skepticism over the bill because of its cost, which was estimated to be as much as $740 million annually in an earlier incarnation.

Lara scaled back the bill last week to help it get past the Senate Appropriations Committee, where a similar proposal was held last year. In addition to limiting the Medi-Cal enrollment guarantee to children only, the amendments eliminated a proposal to establish a secondary insurance market for undocumented immigrants if the federal waiver is not approved.

Because SB 4 aims to expand the scope of the federal Affordable Care Act, which prohibited undocumented immigrants from participating in any of the health insurance exchanges it established, California would be required to apply for a waiver allowing individuals to buy plans on the state exchange regardless of immigration status, though they would not be eligible for subsidies to help pay for the coverage.

Filed Under: Affordable Care Act, Health Insurance Tagged With: Medi-Cal

5 Major Employee Perks That Help You Save Money.

June 1, 2015 by Frank West

Five company benefits you should take advantage of:

They say that a penny saved is a penny earned. Unfortunately, a penny earned isn’t always saved. With the high cost of living expenses, school tuition, family care, car maintenance, general inflation, a still-struggling economy, and — worst of all — debt, it’s a wonder some Americans manage to save any money at all. Even so, they might be leaving a huge source of savings opportunities untapped in the form of company benefits.

A scarcity of savings
The financial demands of everyday life often mean that people must live hand to mouth, paycheck to paycheck, with barely enough income to survive. Setting aside some savings, whether it’s for that rainy day next week or that retirement fund four decades from now, can become an impossibility — an intangible goal that’s set aside for months or years.

In a July 2011 poll of 2,700 people by the National Foundation for Credit Counseling (NFCC), 64% of respondents said they would borrow from family or friends, sell their belongings, or disregard other monthly expenses in the event of an unplanned $1,000 expense — anything but dip into their savings.

The remaining 36% replied that they would turn to their financial reserves, but there’s no indication of how soon, if ever, they’d be able to replenish that money.

Five company benefits you should take advantage of
There are plenty of ways to rescue your budget and save some money in the process — and you need look no further than your own workplace. Many companies offer benefits and compensation plans for employees that sadly go unused by many working professionals.

1. Retirement benefit plans
Once perceived as an alternative to Social Security pensions, retirement benefit plans are quickly becoming the norm. A 401(k) provided directly by employers can help their employees set aside cash directly into their retirement funds.

As with all important financial decisions, there are some pros and cons to consider before building your savings portfolio:

Pros:

401(k) contributions are pre-tax dollars, which means an employee’s deposits to the account aren’t taxed until distribution.
A high contribution ceiling that’s increasing: Starting in 2015, employees are free to funnel $18,000 per year into their 401(k)s, or up to $24,000 if they’re aged 50 or older.
Employers will generally match an employee’s contribution up to a percentage of the employee’s salary — up to 6% on average.
Don’t be pressured to choose between Social Security, personal savings, or a 401(k) for your golden years; you can build up and manage all three to your personal preferences.

Cons:

Although 401(k)s are a great way to build a nice post-career nest egg, if you pull those funds out prematurely, you could be faced with hefty early-withdrawal penalties.
Starting at age 70-1/2, you must begin withdrawing a minimum amount from the account each year. Otherwise, you’ll be penalized 50% of the amount you were supposed to withdraw.

Employer-sponsored retirement benefit plans are a great way to plan ahead for your post-work years, yet only one-third of Americans take advantage of them through their jobs, according to the Department of Labor.

2. Employer tuition assistance
Continued education can be invaluable for anyone looking to gain knowledge and enhance their professional skill set. It’s never too late to get into student mode and hit the books. However, tuition fees and student loans also come at a high cost that can be prohibitive.

So what better arrangement than getting paid to go to school?

Most employers offer tuition reimbursement for employees who enroll in matriculating classes or job-training seminars. If it’s directly related to your current position, you might be fully compensated. It’s also one of the best win-win situations for employee retention; continued training sends the message to superiors that you’re on the job and eager to grow and expand your career skill set.

However, as with any company-backed program, check with your human resources department to see how much schooling they’ll cover. Some employers may also have restrictions regarding the types of courses you can pursue and might even mandate a minimum GPA in order to qualify for reimbursement.

3. Automatic savings transfer
It’s one of the simplest, most straightforward ways to direct income from point A to point B. If you’ve already made arrangements with your bank to automatically transfer money from your checking to savings account, getting your employer on board to do the same can only help both your bank account and personal savings discipline.

Sign up for direct deposit and specify to your employer that a portion of your paycheck be allocated to a savings account or other destination of choice.

This option is one of the simplest and most direct ways to save money because it divides funds and then diverts them directly from one bank account to another, without any prerequisites or fine print to consider. No matter whether it’s $50, $100, or $700 a month, you can change the amount of money transferred to a savings account automatically. Further, the savings reserve is fixed and won’t devalue itself depending on market conditions.

4. On-site child care benefits
The U.S. Department of Agriculture reported last year that a middle-income, two-parent household will spend $39,420 on child care and education alone up through a child’s 18th birthday, grossly diminishing a family’s ability to save money for other necessities. But the advantages of an on-site, workplace day care are many, not the least of which is the shared belief that happy kids make for happy workers.

Bloomberg cited a study of hundreds of workplace-sponsored day care programs, and over 1,000 employees claimed that bringing their children to work was more affordable.

5. Discounts, fringe benefits, and other perks
Just as books of coupons often go unredeemed, you could be missing out on some valuable discounts offered through your employer. Many companies strike membership deals with airlines, insurance providers, and local health clubs, for example.

With a little planning, research, and follow-through, conserving money though your employer is simply a matter of partnering with your workplace and carefully managing your paycheck and the resources provided to you. Expenses might add up, but in time, so can your savings account. Check with your human resources department and inquire what programs and incentives are available to you.

Filed Under: employee benefits, employee perks Tagged With: employee benefits

5 Reasons Your Health Insurance Premium Will Likely Rise in 2016.

June 1, 2015 by Frank West

If you don’t want to pay more for health insurance, look away now! Here are five reasons why you should be prepared to pay more per month for your health insurance plan in 2016. The Motely Fool Sean Williams May 25, 2015

Cdc Fb
Source: Centers for Disease Control and Prevention via Facebook

It’s been a little over a year since the Patient Protection and Affordable Care Act was officially implemented and U.S. citizens were required to purchase health insurance or face a penalty come tax time.

Obamacare’s two main goals
The goals of this healthcare reform law, which you probably know better as Obamacare, are twofold. First, it’s designed to encourage people to enroll for health insurance and lower the number of uninsured people in the United States. Uninsured people are a strain on the healthcare system, from hospitals to insurers, so getting more people involved helps spread the cost of medical care across a greater percentage of the population. That leads to the second point: controlling medical cost inflation. Obamacare is designed to help increase competition among insurers by making the process of shopping for health insurance more transparent.

Through two full enrollment periods Obamacare appears to be decisively taking care of the first point. Nearly 12 million people enrolled through a state-run exchange or Healthcare.gov for the 2015 calendar year, well ahead of tempered Department of Health and Human Services estimates of 9.1 million by year’s end. Even with some expected attrition throughout the year from non-payees, Obamacare will have notably lowered the uninsured rate in the U.S.

The second point, though, leaves much to be desired still. Although healthcare premiums have been rising at a slower rate over the past five years than at any time over the previous five decades, this has more to do with pricing pressure caused by the Great Recession than Obamacare making the health insurance process more transparent.

Five reasons your health insurance premium may be on the rise
In actuality, it looks as if health insurance premiums could potentially be in for a healthy price hike in 2016. Here are five reasons why.

1. Targeted therapies are pressuring insurers
To begin with, a new trend in targeted therapies, known also as personalized medicine, is hurting insurers. Instead of focusing on one-size-fits-all therapies for chronic diseases, biopharmaceutical companies are aiming their research and development dollars at rare diseases and/or lesser-common diseases that have specific genetic markers.

Source: Bristol-Myers Squibb

There are two reasons drug developers have recently seized the opportunity to focus on targeted therapies. First, there’s little competition among rare diseases and gene-targeted therapies. Secondly, it allows these drug developers to set astronomical price tags on these drugs in order to ensure they recoup their development costs — and not just for the approved drug, but for other clinical and preclinical therapies that didn’t make the grade.

For example, recently approved PD-1 checkpoint inhibitors Opdivo from Bristol-Myers Squibb and Keytruda from Merck both work to enhance the immune systems’ ability to recognize and attack cancer cells, which often go undetected. However, both drugs come with an annual wholesale cost of $143,000 and $150,000, respectively. Admittedly, insurers are possibly getting some discount from these levels, but it’s still difficult for insurers to support paying these targeted therapy costs profitably, so they may choose to boost premium pricing across the board.

2. The individual mandate penalty isn’t encouraging enough people to enroll
The primary purpose of the individual mandate, the actionable component of the PPACA, is to encourage healthy young adults (whose premium payments are direly needed for Obamacare to work) to enroll. Having these individuals sitting on the sidelines, especially when they’re less likely to go to the doctor anyway, isn’t helping insurers spread their medical costs around.

Source: Flickr user Reynemedia.

The individual mandate institutes a penalty on U.S. citizens come tax time if they were without health insurance for more than three months during a calendar year. In 2014, this penalty was the greater of $95 or 1% of a taxpayer’s modified-adjusted gross income. In 2015, the penalty soared to the greater of $325 or 2% of modified-AGI.

However, based on data from H&R Block, the median penalty during 2014 for those without insurance was just $178. This works out to less than one month’s payment if an individual had purchased the lowest level of insurance on an Obamacare exchange, known as a bronze plan. In other words, unless the penalty for not having insurance approaches the cost of purchasing insurance for the full year, it’s cheaper for non-purchasers to continue to simply pay the penalty.

Not to mention, the IRS’ hands are tied when it comes to penalty collection. The IRS can’t garnish wages or seize property, thus its only means to get you to pay is to take money out of your refund if you’re owed one, or to ask nicely.

3. Risk corridor funding gaps are hurting insurers
According to a recent report from Standard & Poor’s, and as reported by FierceHealthPayer, the risk corridor payments designed to protect insurers who simply aren’t doing as well as others may wind up hurting rather than helping insurers.

Source: Centers for Disease Control and Prevention via Facebook

The risk corridor is a program put in place to collect funds from some of Obamacare’s best-performing insurers and funnel it to insurers who are losing significant amounts of money on enrollments. If you’re wondering how an insurer can lose money after more than 11 million people enrolled over the past two enrollment periods, it pretty much comes down to the makeup of their new members. Too many sick enrollees and the scales tips toward higher medical costs and losses for the insurer. With a new state-level adjustment risk added last year by the Department of Health and Human Services, the risk corridors budget is now neutral, and many insurers who are due payments from the program aren’t collecting or getting paid.

More than half of insurers included in S&P’s report neither made a payment to the risk corridor program nor received one. Some insurers didn’t even post receivable payments on their financial statements because they frankly don’t expect to be able to collect money from the program.

It’s believed that struggling insurers that aren’t receiving these payments, especially smaller insurers, could be forced to propose hefty premium increases just to make up the difference.

4. Insurers still maintain some degree of pricing power
Fourth, it’s important to realize that despite becoming part of a transparent marketplace exchange, insurers still maintain some degree of power when it comes to setting the pricing of their plans.

Source: Centers for Disease Control and Prevention via Facebook

Prior to Obamacare, the checks and balances on premium increases simply weren’t there. It wasn’t uncommon for insurers to hit consumers with a double-digit percentage increase in their health insurance premium rates within a state or region if its costs were higher than expected.

Under Obamacare, insurers are required to submit their premium rate proposals to their states’ Office of the Insurance Commissioner for review. From there some “bargaining” between both sides ensues and a rate is often set that’s between what the Office of the Insurance Commissioner would like, and what the insurer would prefer.

But, insurers still control what states they operate in, thus they maintain the upper hand on overall insurance plan “supply.” In states where there is little competition among insurers, it’s not out of the question that insurers could propose hefty increases, even with the new Obamacare checks and balances in place. While insurers may have given up some of their power when transitioning to Obamacare, they are far from helpless. Expect them to use their clout to help health insurance rates move higher in 2016.

5. Inflation is taking its toll
Finally, don’t forget that inflation plays a role too. Regardless of targeted therapies increasing insurers’ medical costs, the average cost of most healthcare goods is on the rise — be it expensive diagnostic services or the needles used in IVs.

Generally speaking, as long as the Consumer Price Index, one of the more common gauges of inflation, is rising, there’s a good chance that health insurance premiums will need to rise as well, at least to match inflation. If there’s one piece of solace that readers can take here, it’s that overall inflation levels have been pacing well below their historic average since the Great Recession.

Keep your eyes peeled
Consumers will also want to keep their eyes peeled for the upcoming King vs. Burwell ruling from the Supreme Court next month, which could have a definitive effect on premium pricing in 2016. Obviously we’ll have to watch and wait to see whether prices do indeed rise in 2016 — insurers just submitted their 2016 pricing this past week — but my personal belief is we can expect a noticeable uptick in health insurance premiums in 2016, so prepare accordingly.

The Motley Fool Sean Williams May 25, 2015

Filed Under: Health Care Reform, Health Insurance Tagged With: Affordable Care Act, Health Care Reform

7 Rules For Deducting Medical And Dental.

May 28, 2015 by Frank West

In past years, if you itemized your deductions, you could deduct qualified medical and dental expenses to the extent they exceeded 7.5% of your adjusted gross income (AGI). However, beginning January 1, 2013, this threshold was raised to 10%. In this article, we’ll discuss what you need to know to claim a federal income tax deduction for medical and dental expenses.

1) AGI Threshold Increase

The total of your qualified medical and dental expenses must exceed 10% of your AGI to claim a deduction. There’s one exception which we’ll discuss in the next section.

2) Temporary Exception to the 10% AGI Threshold

If married, and one spouse is at least age 65, the threshold remains at 7.5% of AGI until December 31, 2016. Beginning January 1, 2017 the threshold will be 10% for all taxpayers.

3) You Must Itemize

You must itemize your deductions (i.e.; Schedule A) in order to qualify. You cannot use the standard deduction and claim medical and dental expenses.

4) When Are Medical Expenses Considered Paid?

You must have paid medical expenses during the calendar year. If you paid by check, the date you mailed or delivered the check is usually the qualifying date of payment.

5) Qualified Costs And Expenses

You may use any medical or dental costs you paid for yourself, your spouse, and your dependents. However, if you were reimbursed by insurance or another source, your deduction will be reduced by the amount of the reimbursement. In general, any legitimate medical expenses will qualify, including the costs of diagnosing, treating, easing, or preventing disease. This also includes the cost of health and dental insurance premiums and possibly long-term care insurance premiums. Also on the list are eye exams, eye glasses, contact lenses, and eye surgery. The list of qualified expenses is quite extensive. To find everything you’ll need to know about deducting medical and dental expenses, click the following link which will take you to the IRS website and to the specific publication on this subject. To learn more, click: IRS Publication 502.

6) Travel Costs

You may be able to claim the cost of travel for medical care. This includes public transportation, ambulance, tolls, parking fees, etc. If you used your personal automobile, you may be able to deduct 24 cents per mile for 2013.

7) No Double Benefits

If you participate in a Health Savings Account or Flexible Spending Arrangement and you used either to pay for medical expenses, you cannot claim a tax deduction as these funds are usually withdrawn on a tax-free basis.

Filed Under: Health Care Reform, Health Insurance Tagged With: Health Care Reform, Health Insurance Self Employed

You May Need Disability Insurance.

May 27, 2015 by Frank West

Needing disability insurance at some point in your lifetime is not as far-fetched a possibility as you may think. Disability doesn’t have to involve a career-ending catastrophe — it could simply involve a bad accident from which you need several months to recover. If you do find yourself out of work for a relatively short or long period of time, you may find yourself wishing you’d lined up sufficient disability insurance.

Take a gander at the table below. It shows how likely you are to become disabled for various periods of time before you reach age 65, depending on your current age:

Age Today	For Six Months	For One Year	For Two Years	For Five Years
25	35%	22%	17%	13%
30	33%	21%	16%	13%
35	31%	20%	16%	13%
40	28%	18%	15%	12%
45	25%	17%	14%	11%
50	14%	12%	17%	10%

Source: 1985 Commissioner’s Disability Income Table

As you can see, even if you’re 40, the odds are nearly 1 in 5 that you’ll be disabled for an entire year. The higher odds for younger people might surprise you, too. (Remember that childbirth and recovery can be considered medical disabilities for women that can last six months or more.) Disability insurance is a dangerous thing to ignore.

Filed Under: Disability Income Insurance, Disability Income Insurance Tagged With: Paycheck Protection., Professional Disability Income Protection

5 Dangerous Myths About Insurance.

May 21, 2015 by Frank West

When it comes to insurance, I generally find that people are either over-insured or woefully under-insured. This is tragic as insurance is one of the most important aspects of most people’s financial plan. Being adequately insured is also arguably more urgent than other financial goals because you never know when the need will arise, and not having it can completely devastate a family.

There’s plenty of blame to go around. Financial advisors tend to focus more on investing because that’s where they tend to be compensated the most. The financial media also tends to give short shrift to insurance because it’s not as “interesting” as investing. This leaves most people either learning about insurance from over-zealous insurance agents or avoiding the topic altogether due to denial, procrastination, the desire to avoid said over-zealous agents, or some combination of these. As a result, here are some of the most common and dangerous myths I’ve seen about insurance:

1) Health insurance is too expensive.

According to a recent study, 15% of Americans still lack health insurance. Forty-six percent of them didn’t know they now face fines for being uninsured and 43% didn’t know they could qualify for subsidies that can make insurance more affordable, especially for the uninsured who tend to have lower incomes. Many don’t realize how affordable health insurance can be with the subsidy and how expensive it can be not to have insurance between the tax penalty and higher out-of-pocket medical costs. According to this calculator, a 26-year old non-smoking couple in my home city of San Diego earning the median uninsured household income of $37,300 would pay about $238 a month total for a mid-level plan in the exchange, just more than half the $503 cost of a plan without the subsidy.

This doesn’t just apply to the young. Many employees we speak to are afraid of retiring before they qualify for Medicare at age 65. Yet, many of them are eligible for even greater subsidies and lower health insurance costs than a lower-income American. That’s because the amount of the subsidies are based on taxable income and retirees can often reduce their taxable income by using tax-free Roth accounts and post-tax savings and investment accounts for income before age 65. If their income is low enough, their Social Security income may not be taxable either.

2) You don’t need disability insurance.

Most of us understand the need for life insurance, but did you know that you have a greater likelihood of becoming disabled than you do of dying before you retire? Think you’re covered? According to Life Happens, most long-term disabilities are not work-related and so they’re ineligible for workers compensation, and 70% of private employers don’t offer long-term disability insurance. In addition, research shows that less than half of employees have an emergency fund to pay their bills for a few months if they couldn’t work.

Even if you are covered at work, you may need a supplemental policy. That’s because any benefits paid for by your employer are fully taxable to you and you generally can’t take them with you after you leave the job. If anything happens to your health, you may no longer be insurable after you leave your job.

3) Your employer-provided life insurance is enough coverage.

These policies typically pay your beneficiaries your annual salary, which of course is enough to replace your income for about one year. Unless that’s really all your family needs, you probably need more life insurance. (On the other hand, you may not even need life insurance at all if you have no dependents.) You can use this calculator to estimate how much insurance you should have, and you can shop for low-cost term policies here.

4) Medicare covers long-term care.

No, it doesn’t. Nor do private health insurance policies. Medicaid does cover long-term care but the catch is that you have to spend down all of your assets (and anything you gave away in the previous 5 years) before Medicaid will kick in. Considering how expensive long-term care is, one incident can wipe out a lifetime of saving and investing.

Unfortunately, long-term care insurance is expensive as well. One way to reduce the cost is to see if your state offers a long-term care partnership program. If you purchase a policy through one of these programs and use up all the benefits, you get to keep an additional amount of assets equal to the insurance coverage you purchased and Medicaid will pick up the rest of the bill. This way you can purchase just enough insurance to cya – cover your assets. Find an experienced agent to learn more and get a quote.

5) Umbrella liability insurance is only for the super wealthy.

The fact is that if your assets (including retirement accounts and, in many states, your home equity) and your future income exceeds the liability limits on your auto and renter’s or homeowner’s policy, you could be in big trouble should you ever find yourself hit by a big lawsuit. It’s not unheard of for middle-class families to lose almost everything and even have their wages garnished to satisfy a lawsuit arising from a car accident, injury at their home, or accusation of libel or defamation of character. Even if you win the suit, an umbrella policy can help cover your legal costs. Talk to your home and auto insurance agent to get a quote.

Filed Under: insurance Tagged With: insurance

7 Myths About Life Insurance.

May 20, 2015 by Frank West

Life insurance is kind of like the Rodney Dangerfield of financial planning. As one of most people’s least favorite financial topics, it gets no respect. Yet, it’s something that almost everyone needs and not having it when you need it can be devastating to your family’s well being. Here are some of the most common and dangerous myths about this often misunderstood product:

1) Your employer-provided life insurance is all you need.

Your employer may provide you with life insurance equal to 1-2 times your annual salary and you may even be able to purchase up to 4-6 times your salary. But there are several problems with that. First, your “salary” doesn’t typically include commissions, bonuses, and second incomes. Second, to replace your income for dependents, you generally need at least 5-8 times your income and some experts even recommend 10-12 times. (You may want to use a calculator like this to determine your specific needs.)

Even if you do have enough insurance through your job, you may lose it when you leave. You may be able to convert your optional insurance to an individual policy or purchase one on your own but either way, it may be much more expensive than purchasing a policy today, especially if your health deteriorates.

Finally, you may actually be able to get a better deal on your own, especially if you’re young and/or in above average health. Even if your employer’s policy is initially cheaper, the cost may go up each year and you may not be able to take it with you when you leave, You can purchase an individual policy that locks in your rate for a period of time or allows you to build cash value if you want to keep the policy your whole life. Only include your employer’s coverage in covering your needs if you can take it with you at affordable rates. Otherwise, consider it a bonus.

2) Only the breadwinner needs life insurance.

“Imagine if something were to happen to the stay-at-home spouse in your family. The breadwinner may need to hire someone to clean and take care of the kids and that can cost a lot of money. Unless your family would have that extra income to spare, you may need life insurance on both spouses,” advises Marvin Feldman, President and CEO of life insurance non-profit organization, Life Happens. Insurance on the stay-at-home spouse also gives the working parent the opportunity to take time off work and help the family adjust to their loss.

3) Life insurance is really expensive.

A recent study conducted by Life Happens and LIMRA, found that 25% of Americans said they need more life insurance but only 10% planned to purchase it within the next year. The main reason given was cost, with 63% saying that it’s too expensive. However, 80% of them overestimated the cost. 25% thought that a $250k 20-year level term policy for a healthy 30-yr old would cost $1k a year or more when it actually would cost about $150.

4) My health disqualifies me from life insurance.

There are a lot of companies that cover a range of health conditions and some even specialize in high-risk cases. You can also purchase a policy that is not medically underwritten at all. Just be aware that they tend to be more expensive and have lower coverage limits.

5) Everyone should buy term and invest the difference.

While this generally makes sense for most people, a permanent policy can be a better deal if you need life insurance for your entire life. Some examples would be to provide for a special needs child or to cover estate taxes. For a small percentage of the population, the cash value can also be a good investment if you need life insurance, are in a high tax bracket and have maxed out all your other tax-advantaged options.

6) You get a better deal purchasing life insurance online.

“The Internet can be a great place to research life insurance and find an agent but you actually pay the same price whether you purchase a policy online or through a human being,” says Feldman. “What you don’t get online is the personal service that can help you figure out how much you need, which company is likely to give you the best price based on your health situation, and what the terms on the application mean. A web site may not realize that you need coverage for your whole life due to a child with special needs or that your health won’t qualify you for the rates offered by the lowest price company. Most importantly, a commission-motivated agent can help motivate you to actually get the policy as it’s something very easy to procrastinate.”

7) You’re too young to worry about life insurance.

Life insurance actually makes the most sense when you’re young since the premiums are less expensive and you have fewer assets to pass on to heirs. The longer you wait, the more expensive it will tend to be and the more likely you are to develop a medical condition that makes it much more expensive. Of course, the biggest problem with procrastinating life insurance is that by the time you need it, it’s too late to get it.

Every person’s situation is unique. Some people don’t even need insurance at all. Whatever decision you make when it comes to life insurance, just be sure it’s an informed one. After all, if something does happen to you, you don’t get to come back and relive the day like Bill Murray did in Groundhog Day.

Filed Under: Life Insurance Tagged With: Term Life Insurance, Universal Life

Of Obamacare’s Many Taxes, What Hurts Most.

May 20, 2015 by Frank West

At tax time, more of us are looking anew at the Affordable Care Act. Some of us are doing so as we hunch over our tax returns. Yet many of the panoply of taxes added by Obamacare are not open and obvious. They are more like those Lois Lerner emails, or Hillary Clinton’s for that matter. In fact, there could be a new competition for what is Obamacare’s most unfair tax. As one editorial noted, some say it is the 2.3% excise tax on medical devices, increasing their cost, hurting the industry, and designed purely to collect revenue.

Another pure revenue raiser is the 3.8% net investment income tax. Depending on your income, it adds a 3.8% tax on top of your interest, dividends and capital gains. While this one may be politically safe since it purports to target only upper income people, it is hard to explain this to someone with a modest income who sells their lifelong property and ends up with an extra 3.8% tax on top of their capital gain tax. Such a person might be in that upper income category just once year.

There are many Obamacare taxes, so many, in fact, that can even be debated how many there are. In terms of tax filings this year, Obamacare is creating a tax filing backlash. Yet most of the approximately 85% of Americans who have health insurance and who make less than $250,000 a year can relax. Most of the new taxes are unlikely to hurt you or impact your pocketbook. Even so, it’s easy to be overwhelmed, which is one reason the IRS has a 21-page Publication 5187 on the Health Care Law: What’s New for Individuals and Families.

If reading about the now-not-so-new-law triggers a need for an entertainment break, there’s always President Obama’s Buzzfeed video. Or you can review three new tax forms: the 1095-A Health Insurance Marketplace Statement, the Form 8962 Premium Tax Credit, and Form 8965 Health Coverage Exemptions. Forms 1095-A and 8962 are for people who bought health coverage through the Marketplace. Form 8965 is for those who got a Marketplace coverage exemption or plan to claim an exemption.

For ranking Obamacare’s taxes, you must first list them. That is no mean feat, since some of it depends how you count and what you regard as a tax:

2.3% Tax on medical device manufacturers (this doesn’t hit you directly, but indirectly it sure can).
3.8% Net investment income tax. This one is a big one. Depending on your income, it adds a 3.8% tax on top of your interest, dividends and capital gains.
Employer mandate on business with over 50 full-time equivalent employees to provide health insurance to full-time employees. $2,000 per employee $3,000 if employee uses tax credits to buy insurance on the exchange.
40% Excise tax on high-end (Cadillac) health insurance plans (40% excise tax on the portion of employer-sponsored health coverage that exceeds $10,200 a year and $27,500 for families).
Medical deduction threshold tax increase (threshold to deduct medical expenses as an itemized deduction increases to 10% from 7.5%).
Individual mandate (a tax for not purchasing insurance, though the tax penalty is called a Shared Responsibility Payment, the greater of 1% of your income above the filing threshold of $10,150 for singles and $20,300 for married couples filing jointly or $95 per adult ($47.50 per child), with a maximum of $285 for a family, whichever is higher. It goes up in 2015.
Excise tax on charitable hospitals which fail to comply with the requirements of Obamacare.
Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D.
Medicare Part A tax increase of .9% over $200k/$250k.
An annual $63 fee levied by Obamacare on all plans (decreased each year until 2017 when pre-existing conditions are eliminated) to help pay for insurance companies covering the costs of high-risk pools.
Medicine cabinet tax (over the counter medicines no longer qualify as medical expenses for flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), health savings accounts (HSAs), and Archer medical saving accounts (MSAs).
Additional tax on HSA/MSA distributions.
HSAs or Archer MSAs, penalties for non-qualified medical expenses of 10% to 20% in the case of an HSA and from 15% to 20% for an MSA.

Filed Under: Health Insurance, Obamacare Tagged With: Affordable Care Act, Health Care Reform, Health Insurance Self Employed, Obamacare

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