What triggers my Long Term Care Policy to begin paying benefits?

Long Term Care Insurance (LTCI) will begin paying a claim when the insured is certified as eligible for care. The general rule is that two activities of daily living (ADL) must require assistance in order for someone to become eligible to go on claim. Often people are certified as eligible for claims while they are still living in their own home with assistance from others, which is one reason the home care component of LTCI is so important to most buyers.

ADLs include the ability to dress oneself, toilet on your own, feeding oneself, transfer oneself, maintain continence, and bathing oneself. These are areas where a certified aid or someone with proper training can easily help make these things possible.  However without help the person in need of assistance will usually slip further away from independence and more towards dependence on others for more things.

A physician is typically involved in the process of certifying that someone needs help with their ADLs.  This is the first step in getting the claim process moving forward.  A formal request to the carrier to go on claim is needed. What that does is get their case/care manager team involved to review the needs both what the physician certified as well as other information about living conditions etc… The care manager has some leeway towards helping with things other than just paying for care to ensure appropriate care is in place.

Once the insurance carrier agrees all triggers are met to go on claim, it will depend if you are on at home or institutional care along with the provision of your insurance contract to determine your elimination period. The elimination period is akin to a deductible for other kinds of insurance but here measures not spent dollars but the number of days care is received or the number of days there was a need for care.  Depending on riders etc. the measures used can differ.

When you set up your policy you will choose an elimination period from zero to one hundred eighty days. The in home care and facility care elimination periods are on a standard basis the same, however virtually all policies are written to include a rider putting the home care elimination period to fewer days or in some cases none. 

Once you are then past the elimination period you will begin receiving benefits based on the actual amount spent on your care. Because you are accessing a pot of money for the care, the longer that you can stretch the care dollars the longer you have help or even total payments made for your care.  Typically each month the insurance company will reimburse for expenses paid, although depending on various circumstances there are more than one option for how the claim benefits can and will be paid out.

Reasons your life insurance may not pay out

Life insurance claims are generally paid once proof-of-death is supplied. There are a few times when the payment is going to be delayed or possibly not made to beneficiaries. Delays are more common than non-payment of benefits.

There are various reasons where the death requires further investigation and other reasons that will cause a decline of payment. Let’s first look at the reasons your life insurance will not pay a claim. They are fairly easy to define and most make total sense to everyone.  Generally you can look at the exclusions section of the life insurance contract and quickly see what would cause a non-payment of life insurance claim.  To get a bit more detail here, suicide within two years of the insurance policy issue, death while committing a felony, or death at the hands of the beneficiary are three big reasons that most insurance policies will be able to not make a claims payment.

The above reasons will definitely delay the payment of a claim while they decide to pay or not the claim. In addition, suspicious deaths, mysterious disappearance, and when there is questions about who may be responsible for the death of the insured will all hold up payment of the claim as it is investigated. Insurance companies what to make sure before they pay a claim it is a valid claim. The same holds true on the property and casualty side of the insurance world. Think about if your house burns down they want to make sure you did not burn it down intentionally. Likewise when a death occurs they need to check various factors.

In most every death claim you will have to supply a death certificate. Depending on if the certificate was signed by a treating physician or the medical examiner may well determine what if any questions are raised by the insurance carrier. The reason is that a treating physician will typically only sign a death certificate of someone they have been treating on a long term ongoing basis where they can really attest to the cause of death. Medical Examiners are more often involved in death involving criminal acts or suspicious deaths where the medical examiner had to investigate the death. They don’t necessarily dig really deep into the cause if they are pretty sure it was not a murder. In some cases they may rule something a suicide when in fact it was not more than an unfortunate accident. In these situations it can lead to significant investigations by the insurance carrier.

Insurance carriers only want to delay and withhold payment where they legally can do so. When the payment was going to the person who killed the insured is typically the biggest reason aside from suicide where they will push to investigate and not pay a claim. Of course any other situation where fraud may have occurred such as someone knew they were diagnosed with a  terminal disease applies for coverage and get it issued without disclosing that issue. Fraud like that will also cause the policy to be terminated with only premiums paid going back to the beneficiary.

All of this just helps folks understand that doing something in hopes of a low cost large payout using life insurance will just not work long term. Instead those seeking to bend the rules for a large payout will not get it.  That is not to say a legitimate death soon after a plan purchase will be inaccurately declined, it will be paid when legitimate.

Using a good life insurnace agent may help avoid some of the issues mentioned above.

Does my out of network expenditures count towards my in-network deductible?

Out of network expenses may or may not count towards in-network totals. This is something that we will see continue to change as plans look to further control healthcare expenses. Let’s look at the various possibilities.

Insurance carriers recommend how to design plans to those self insured groups with whom they work. For plans where they are fully insuring the members they make the decision on plan design. What this means is we can see within the same insurance carrier (who is listed on ID cards) different plan designs. The reason for this is how tightly the financially responsible party wants to control the healthcare expenses incurred.

Generally speaking fully insured plans are already or are moving towards a split between in and out of network expenses where one never helps cover any of the costs for the other. Thus, if you incur out of network expenses that are totally on top of in-network care you receive. What does this do to your out of pocket expenses?

Generally, out-of-network care limits are twice the in-network care cost limits. So if you use out of network providers extensively along with in network providers, it’s possible to end up spending three times or more your in network deductible before you are just on cost sharing. The total costs for out of network in some plans are quite high, so in the scenario where you are using both in and out of network providers you can really end up spending a lot more money than you planned to spend on healthcare for the year.

If you have a plan design not changed in a while it is possible your plan may still allow out of network care costs to count also towards in network deductibles. This is becoming more reare. When it does happen, if you hit the out of network deductible, you will also have met your, in-network deductible as well which helps keep the total costs in check for you.  These plans are rarer these days as healthcare costs continue to spiral out of control. Most plans do not work that way.

Most plans keep the in and out of network costs separate. It is all about making the cost difference between in and out of network care so significant there becomes a serious financial incentive to use in network provider. Part of it is the fact that out of network providers can collect any amount they want and insurance will only reimburse, or accept towards the deductible the amount they deem the “allowable.”  

Allowable levels are becoming better defined by the insurance carriers and communicated to the members. Often they are the same or only slightly more than is paid to an in-network provider. So the use of an out-of-network provider results in a portion of the cost going to the deductible while you may pay multiples of that amount for the actual care received. You also end up paying much more for that deductible as well. Overall going out of network these days will really cost you a pretty penny.

How do I know if the doctor in the insurance network is any good?

Choosing a doctor can be tough. Most folks want to pick a doctor who is qualified and considered a good physician. To that end, most folks want to first pick a doctor who is good and secondarily is in the insurance company provider network.  Often though folks want to do the searching for new providers within their network so that raises the question how to know what doctors in the network are quality.

In the business world and medicine in the USA does fall into a business world model, we often see discounts provided by vendors trying to build a client following. There is no real indication of good or bad quality just because some vendor offers a discount. We see discounts from top car makers and even top restaurants at various times. Most vendors often have some excess capacity they want to fill and discounting or offering specials helps fill that void.

Healthcare providers who are new often join every network they can so they are able to fill their appointment books with new patients. Also, many specialist physicians are involved with networks in order to ensure they can see referral patients. As they build referral relationships, they don’t want the new referring physicians to have to give too much thought to what patients they can refer or not refer. Also, physicians often are in networks for the benefit of the patients they serve allowing them to get in-network benefits when receiving care.

Now that we have discusses several reasons physicians may join provider networks, let’s look at how you can pick a good dock from the group of network physicians.  Most of the provider networks now have markers for physicians who meet various criteria that allow them to be held out as better than average physicians. There are a number of ways the insurance companies evaluate who gets their preferential ratings among the various insurance carriers. Typically various educational and board certification requirements are in place. Then for most of them, there are requirements that the provider have treated enough member of the insurance company with good cost effective outcomes.

Cost effective outcomes can be measured more than one way. There is the skeptical way to evaluate it, where keeping costs low is most important while the actual outcomes don’t come into play much. There is a mix where outcome is measured primarily by follow-up treatment needs. Thus care is evaluated around specific major medical conditions or surgical episodes and using various statistics, that give a fair indication of needed care around these incidents before, during and after the episode of care.

Regardless of the way the care is measured, if it is measured the same way for all providers within the carrier, ultimately within a carrier the data is going to remain valid. Using this data as a guide and checking with other physicians you know is ultimately the best way to check on the physicians you want to know about.

I see deals for surgery elsewhere in the world that seem like great deals, what is the catch?

Yes there are some incredible deals for quality care around the world. As we train more doctors in the West who want to return home to their birth country, we see medical centers pop up in India, Thailand, Singapore, China, and other places where locals and foreigners are able to go secure quality healthcare services.

One measure of quality recognized in many places is JCAHO accreditation. This accreditation is required by facilities in the USA if they want to get paid by Medicare and even most other insurance companies. The accreditation looks at a considerable variety of factors that help promote quality care and help control spread of disease within a hospital facility.  Thus at this time it is the Gold Standard.

If you are a cash paying patient, these deals are usually going to save you a large chunk of the cost for the care they offer. These facilities tend to offer care for high cost frequently performed services in the USA, and for that matter other developed countries. These are services where the treating physician was able to learn well that skill in the USA or other Western Country before returning home. Many of the physicians even obtain and maintain board certification and sometimes even spend some of their time in the USA every year.

The reason these deals are good for cash paying customers is that few insurance companies pay for any of these foreign programs. The insurance carriers are growing the list of what they will cover and where.  They may or may not cover the associated travel costs though.  Travel costs and time spent away before and after the procedure all have to be added in from both a cost standpoint as well as a time commitment. Often you have to spend a week or two, sometimes more recovering nearby where the services are reserved.

One thing you tend to find with many of these foreign programs is a very high comfort level at the facilities you use for the surgery. Some even have separate hotel style wings for pre-op and recovery time. The room is sometimes also available for the traveling companion when the person getting surgery is in the hospital wing.  Other programs have you stay at a resort pre/post-operatively. In these cases they may or may not have any provisions for the travel companion during the hospital stay.

Pricing may or may not include a travel companion ticket.  Food costs are often on top of the cost (at least pre/post operatively) for the surgery program.  When an insurer agrees to pay for the program they often do include the cost of a traveling companion and air to the international destination. They do not usually cover the cost of passports though so if you don’t have valid ones you may have to add that cost on to your expenses.

Ultimately there is not much of a catch to these deals on surgery other than most are not covered by insurance. If you have Medicare or Medicaid they definitely are not covered.  You can save quite a bit, and enjoy a nice foreign travel experience, and get quality care when you use these programs.

How do I know if my hospital based providers are in-network or out-of-network, and why may this be important to me?

For folks in Medicare Advantage Plans, PPOs, HMs, and most any other health plan other than original Medicare or Medicaid you need to know and understand the healthcare provider network(s).  These networks are the providers who offer discounts to the insurer and you for accessing care from them. Providers not in the network are paid at a different level and those costs fall into your out of network costs bucket.

To help you understand your health plan and the importance of using network providers let’s look at a couple of examples. First most Health Savings Account based plans have a 2:1 ratio out of network to network costs in order to meet maximum out of pocket costs. Of course there is also the cost above what the insurance carrier allows that can take the out of network costs out of sight.   So if you have a $5000 family in-network deductible the out of network may be $10,000 for the family. Then you add on any above allowable costs before you get to the total out of pocket cost.

Network providers’ costs count towards the in-network (much lower) deductibles. Also, they are not allowed to bill for costs above the contracted rates. That aspect is one key piece of the puzzle that helps keep the total costs in check. Also, the networks help to assure quality of the providers within them, because in theory the providers are processed thru a series of checks and balances to ensure they meet requirements to join the network.

The insurance companies create or rent networks created by network development companies. They use the networks to contract rates with providers both facility and non facility. These contracts establish set reimbursement rates that help control the cost of care. The insurance companies can then model the reimbursement rates against their claims history over a normalized time period. This allows them to evaluate expected claims costs for periods of time going forward. This allows the setting of premiums by the carriers. Thus, all of the plan elements are based on in-network use.

When people use out of network providers it can due to unchecked quality lead to higher overall costs and over utilization in some cases.  For this reason because this can cost the insurer more money than expected they create more cost sharing for the insured to help cover these extra costs.  Thus it is key to know and understand your provider network.

Usually, the best place to check to see if a physician or any other provider is in the network is to go to the insurance company website and look up the provider. Most carriers update the provider list at least once per week, some as often as every night. Of course the provider should be able to answer the question about being in network as well. It is key though to specifically ask if they are In-Network, not just if they accept the insurance.  Most out of network providers will say yes they accept the insurance and you get a rude surprise when the bill comes showing it paid on an out of network basis.

Use of out of network providers will cost you more out of your own pocket, and in these days of high cost for healthcare most folks don’t want to spend any more than needed for quality care. You will also find that you are not protected from above the allowable amount dictated by the insurance company. Thus, if you get care and the charge is $500 and the allowable by the insurance company is $150, in addition to your cost share the provider may demand the $350 over and above the allowable which they are legally able to demand.

Networks are there to help control costs for the insurance company and the insured, so use out of network providers at your own risk.

Does Healthcare Reform help me get coverage if I have medical issues?

Presently Healthcare Reform is in the implementation stages and to a large extent is not fully implemented. It is also facing a decision of constitutionality by the Supreme Court of the United States. These two factors mean we have a long way to go before we have a fully functional law if ever.

The timeline for the law does not call for major changes such as implementing guaranteed issue for all major medical health plans until 2013. Thus for those who currently have major medical issues they must still meet all underwriting criteria for a plan to be issued by the insurance carrier.  Thus, if you have serious medical conditions it is possible there will be no coverage offered.

Presently, in Texas you can always go to the Texas High Risk Pool for help with coverage when you are declined by other carriers.  Many other states have similar programs for those who are otherwise not insurable with traditional health insurance for individuals.

In 2014 if the law stands, you will be able to get coverage, however ratings can be applied so those with major health issued will still likely pay more.  Some of those details are still not fully worked out.  There is a 3:1 ratio that is to be implemented that one person does not pay more than 3 times what anyone else pays in the same geographical are. I expect but have not been told explicitly, that age as well as medical conditions will warrant the differentials in rates.

Ultimately yes, if the healthcare reform act stands, it will help you get coverage, but it will not necessarily make the coverage any less expensive for you.  There are still issues with how the law is structured that allows healthy people to opt out and pay a minimal fine thus making for a riskier pool of folks buying insurance thus higher premiums for those individuals.

What are the different variables in a Long Term Care Policy?

Long term care insurance policies are built around the promise to pay for care needed when you meet the eligibility requirements to go on claim. However, with long term care it’s not as simple as paying for a doctor office visit as care is rendered in many different ways and in many different settings.  To meet all of these different needs, the plans are designed with flexibility to make selected parts of the plan design best work for the insured’s needs.

Long Term Care Insurance Plans are designed with the following key components set based on insured input about needs. The daily or monthly benefit; percentage of benefit available for in home care; elimination period; inflation protection level; length of total coverage; and in some cases establishing if the payments are based on daily or monthly benefit levels.  These together create the policy and dictate how benefits are paid out during the time of a claim.

The daily or monthly benefit level is one of the most key elements in designing a policy. Also, the decision to take a daily or monthly benefit is also part of what will affect these amounts of payments as well.  Generally when in a facility it is easier to live on a daily benefit basis, but during the use of home care often different amounts of care happen on different days which lends itself more to using the monthly benefit for in home care.  Home care often ends up shared between paid care givers and family and/or friends who help out some. With this you may see spikes on some days where costs for care are greater than on other days.

The costs some days could be more than the daily benefit, but when averaged for the month may fit within a monthly benefit. In order to choose the level of coverage it’s best to look at facility costs in your area, or the area where you would want to live if needing institutional care.  Also assess how much does in home care cost. With these numbers you can more easily pick a number that gets the coverage level you want. You do not have to cover all of the expenses you may incur. Some people do opt for lower levels of coverage to help pay for care but don’t worry about covering the costs fully.

The elimination period, which serves as a deductible, but is expressed in terms of the number of days services are received or since the designation care is needed is another moving target, you set as the policy gets set up. You can have one elimination period for both the institutional and at home care. You can also have separate elimination periods, where typically the at home care payments kick in more quickly than do payments for institutional care.  You can get anything from zero day elimination for home care up to 180 days elimination. Typically there are no zero elimination periods for institutional care, but the 180 days is one way to help cut the cost of the care.  Know that whatever period you pick, is a time frame in which you are paying for the care, hence my comparing it to a deductible.

Inflation Protection is another key element. Setting up a plan for a set amount of benefit today is great if you end up needing care soon. However many of us will have many years before we need to get care. To that end, you will always want to have the level of coverage grow to keep pace with the rising costs associated with the care.  Most of the carriers even require you to consider as part of the application process how you would pay for care if the cost increases with or without inflation protection. In fact to have a partnership eligible plan it must contain inflation protection in most cases.  The inflation protection will on either a simple or compound interest method increase the daily/monthly benefit limits typically annually on the anniversary date. The most I see offered is usually a 5% compound interest.  At this time, that is helping keep pace with medical inflation, which is key for this kind of care.

Length of coverage is the last key component where you have multiple choices. You can get as little as two years of coverage to as much as lifetime coverage. Two years is fairly short, unless you only seek care when you are nearing the end of life. Statistics indicate there are three points where we see spikes in the length of stay with institutional care. They come around six months, two years, and five years. Of course nobody fits right on those spikes and you can’t know ahead of time which spike is yours.  Thus, you have to look at how much care you may want to have covered by the insurer. 

In addition to standard lengths of coverage couples can get shared coverage where one can use most of the shared coverage leaving some for the other member of the couple. This is how my own policy is set up with my wife. We are both guaranteed a minimum amount of care but if one were institutionalized for many years the shared coverage allows for that coverage to kick in and ensure we both get care. This is a very useful provision in many plans and beyond that is one that is especially useful if one partner is placed into institutional care to deal with organic brain disease.

Ultimately the use of a professional agent is key to building a policy that best fits the client’s needs. A good professional agent understands the market and how the policies fit together. This allows guidance towards designing a plan that provides the benefits most important to the client, not just pushing a cookie cutter plan on all who desire coverage.

We enjoy working with clients on finding and implementing the right Long Term Care Insurance Solutions.

Does my health insurance cover care outside the USA, such as the discount surgeries in India?

Health Insurance varies from policy to policy. Some will cover emergency care outside the USA while other plans will only cover care inside the USA. Almost none cover international medical evacuation though. Thus, there is no simple answer to will your policy cover international care.

International care is broken down into a couple of different care categories. First there is emergency care, which if any care is covered internationally, usually it is emergency care. Routine care is something almost no policies cover on an international basis. The reason emergency care is covered on many policies, is that it is an emergency endangering life and limb. Also, frequently the emergency care outside of the USA is far less expensive than that received in the USA.

Another break point in getting an idea of if your care is covered or not has to do with the kind of payor (insurance company) involved. Medicare, for those 65 and over who have paid into the system long enough or the disabled who were granted Social Security Disability and Medicare for the Disabled, and Medicaid are the two big government payors.  The government generally does not pay for any care outside of the USA. Other insurance comes thru employer sponsored group plans and yet one other source is individual health plans. These private insurance plan are where you really have to check will or won’t they cover emergency care outside the USA.

Virtually all Indivdual major medical health plans will cover emergency care outside the USA. Group plans more often than not will cover emergency care outside of the USA. The plans where coverage is fully insured by the insurance company generally do cover emergency care around the world however self insured groups (those plans where the employer puts aside money to cover care) have more liberty in how they define covered services. These plans are ones where there is a higher probability you may not get emergency care covered outside the USA, especially if the company does not require any international travel for business reasons. They way you know for sure is to ask the employer or review your certificate of coverage.

In the event your health insurance does not cover emergencies outside of the USA, you should definitely get travel insurance where they provide adequate emergency care coverage while on the trip. You can pick a plan here. Without insurance you can be out of pocket and often the providers will require payment before treatment, especially outside the USA. This could be financially devastating to most travelers.

Of course some people want to travel internationally for lower cost good quality care. There are several areas in the world where US quality care is available at facilities and providers all trained in the West. More often than not those seeking care of that nature are paying cash for the care. Insurance generally does not cover care of that nature. There are a few facilities that have achieved JCAHO certified facility status and that is a critical step towards being able to get US based insurance companies to agree to pay for care like this. Because there are travel costs and follow up care is a bit more difficult, the insurance carriers are a bit timid to rush into paying for this care. 

As we see more facilities and programs around the world get the JCAHO certification, we will likely see a growing list of programs where you can travel for your care. Of course the care involved is typically extensive surgical procedures which for most people take several days from initial diagnosis thru completion of treatment. Of course often these programs include hotel accommodations and sometimes airfare as part of the overall program. The price for many of these programs is a small fraction of what would be paid at a hospital near home, so that is why some carriers do agree to pay for these packages.

As you can see coverage for international care is limited and tends to be by private insurance companies and only for emergency care. Always keep in mind that the government does not pay for care outside the USA so you need to have travel insurance if you have coverage thru the government and plan international travel.

Is Travel Insurance a Good Idea?

Travel insurance is one of those add on costs when you are booking that exciting well deserved vacation (holiday).  To many it seems like it is just wasted money because nothing ever goes wrong or if it does they roll with the punches and take it in stride.  Others swear by it because they know the costs associated with things going wrong.  Also, they understand that when things go wrong it is not always someone else’s responsibility to cover their additional costs, which can mount rapidly depending on circumstances.

There are so many reasons in favor of having travel insurance and so few legitimate reasons not to have it. For most folks a vacation represents one of the most major purchases for a specific year.  When folks buy a new car or new house they definitely insure it.  Thus when sinking a few thousand dollars, which in many cases are non-refundable, into a vacation is a huge investment. If for some reason the trip had to be cancelled most people would want their money back or at least most of it back. Also, if they have problems along the way to or from the trip again they want help with the extra expenses.

In a worst case scenario on a foreign trip if you or a family member traveling with you were to become ill or injured you want help picking care and ensuring it is paid for. If you need medical evacuation you want to have that paid for as well. This is one of the key features many people cite as their key reason for adding coverage.

With travel increasing in cost and vacations growing as an expense for most, the invested dollars are becoming more important to most families.  Thus a missed vacation and lost dollars are also more important to families. The extra costs associated with things going wrong can easily kill the budget for their trip. A medical evacuation not paid by any insurance could easily put most families in serious financial trouble when often they cost $15,000 or more depending on when, where, and how far they have to fly. 

Travel insurance covers so many different situations that may come up that causes problems for your trip. It typically covers things such as cancellation of trip for medical reasons of travelers and their immediate family members. Death of family of the travelers also tends to be a covered situation. In some policies work related cancellations are possible, but you have to really watch the exclusions there as business owners typically can’t cancel for business reasons. You can buy a rider on some policies that allow cancellation for any reason.

Once the trip starts you usually have coverage for many things that come up such as missed connections and other delays. This helps you catch up with your ship, pay for a hotel room and extra meals on the trip due to issues that come up. (You do have to check exclusions to know when coverage will not occur.) Should your luggage not arrive with you on the flight, most travel insurance providers will keep watch on the location process and ensure the bags get to you timely. They will also offer different levels of coverage for replacement items and in the event the bag never found and returned they will pay you for the lost goods, at least up to the limits of the policy.

Should you have to break away from the trip in the middle of vacation there are typically trip interruption provisions that will help cover the cost of returning home early if that should be necessary.  Thus, if you get sick and need to go home for care not requiring a specific medical evacuation this is where that can come into play.  If a family member dies or becomes seriously injured or ill the trip interruption provision may come into play.

Another feature of the travel insurance is that they have folks well versed in helping arrange alternative travel when things go wrong. Thus, if your flight gets cancelled you can call them and they will work out new travel plans for you keeping in mind various aspects of the trip important to you. If you are on the way to a ship and need to be at the port by a specific time that can be the guideline in getting the trip reworked.  They can also go and find a hotel when the airport is backing up with tons of stranded travelers. These specific items really can make a big difference when you are already under the stress of missing part of your vacation.

Before the trip you can get concierge services from the insurance company. For instance on a recent trip I had them find me internet café’s near to each of the ports of call we stopped at so I would have a list before I even arrived at the ports. The can arrange special meals for you and even help get limited show tickets. They are there to help you make the trip an even better experience for your travels.

Those who say that travel insurance is an expense not worth it to them, offer up that they never have a need for any of the covered things and will suffer the loss of the non-refundable trip fees. This may work for some, but unless you live near the port and can dive there or to the resort you plan to use, you may well find that air travel offers many troubles at unexpected times. If you are on Medicare and travel out of the country you have NO medical coverage so assuming that just because you are healthy and nothing has ever happened is not a good idea. Some can afford to self insure but very few are in that club. 

Airlines and cruises are not required to cover costs associated with missing flights or ships and in many cases every issue that comes up falls into a category where the expense is yours to cover. Thus, things you may expect other vendors to cover for you, really are not going to be covered so the idea that the airline or cruise line will take care of me is outdated and one you should not fall back on.  Thus, there is more reason again that getting coverage is important.  This is even more true when traveling internationally where if you have health insurance other than Medicare you may have emergency coverage but almost never have medical evacuation coverage.

We work with several travel insurance carriers. For help picking the right travel insurance plan give us a call. For an immediate quote check out these policies and rates.

Which is better a Health Savings Account based health plan or a PPO?

As I discuss the two key designs of health insurance in Texas people often ask which is better. Ultimately is a personal choice of what plan is better for your specific needs. However lets discuss the differences so you have some idea about what each general design includes so you can make a more educated decision about what plan best first your needs.

First some common things that you find with each of these plan designs. For managed care both use networks and divide care between in-network and out-of-network care. Both are offered to those seeking individual health insurance plans. Both are covered by insurance carriers. Both have deductibles which must be met and both have maximum out of pocket levels at least for in-network care.  Both designs also provide an annual check-up to members regardless of age at no cost.

Let’s examine what makes a PPO plan a PPO plan. Most PPO plans allow you to go see the doctor for only a co-payment. The Co-payment may be the same for primary and specialty care or it may be different. That varies on carrier plan design. You will then have a deductible for care obtained outside of the doctor’s office which is not preventive care.  Once you meet the deductible you will depending on the exact plan structure, share costs with the insurance company on a percentage basis. Ultimately you will hit a maximum out of pocket cost limit. The total maximum limits are not set by law and in some cases they can get quite high. They can be as high as the insurance company wants to make them for the specific plan design.

Health Savings Account (H.S.A.) plans are designed with a deductible for all care other than the annual preventive visit. In some rare cases, some chronic condition medicine is covered first dollar by the insurance company as well.  Generally all doctor visits, care outside the physician office as well as medicine goes towards the deductible. In most plans once the deductible is met you have no additional costs for the year. Some designs do offer cost sharing after the deductible but they are rarer and regardless ultimately you do get to a point that your out of pocket maximum is met. The annual maximum limits are established by law and revised annually.

These are two totally different plan designs when it comes to when the bulk of your out of pocket care costs kick in. Generally for similar deductible levels the H.S.A. plans are a lower financial risk for the same or similar premium expense levels.  But ultimately, you have to decide what plan is best for your specific needs.

What can I do with my life insurance policy if I no longer need the protection?

In some families the purchase of life insurance is primarily to cover a period of time when the need is greatest. When the family moves on to a new phase in life where they don’t necessarily need as much or maybe any life insurance they may have to make a decision on what to do with their current policy. The answer varies based on what kind of insurance is in place now as well as how healthy the insured is at that time.

There are two basic kinds of life insurance temporary or permanent. If you only have a temporary policy you likely have no cash value and the premiums blossom past the initial term making these policies unattractive to a policy buyer.  Of course if you are near death and the term is many years down the road you may be able to sell the policy but there is no guarantee. Of course you can always just cancel the policy with no penalty, saving ongoing premium expense.

If you have a permanent policy however, you should have a cash value that can be cashed in should you decide to cancel the policy. You can also sell the policy to one of the companies that purchase such policies. In this transaction you typically will get more than the case value of the policy. You are no longer the owner of the policy and can’t reclaim ownership either. The beneficiary will be changed to become the company that bought the policy. They will pay ongoing premiums and benefit from the payment of the death benefit at such time it occurs.

There are some who disagree with this market where policies are bought by investors. I present it as something out there you can do with your policy. You will have to choose for yourself if the benefit of the extra cash from getting rid of the policy is worth it, knowing someone else has an economic gain from your death.  There are a number of companies that purchase policies and I don’t intend to endorse any one over another. You should always review offers from more than one purchaser before making a decision on which one to use though.

Some factors that are considered when a price is set to purchase your policy include your age, cash value of the policy, ongoing premium, and your health, or another way to think of it how much longer you expect to be alive, based on actuarial tables.  The buyer expects to make a reasonable return on their investment to they have to calculate how much money will go into the purchase and ongoing maintenance costs of the policy, subtract that from the death benefit and then calculate a return and make sure it matches their expectations.  Thus, the folks who tend to make the most off a policy sale are those who are terminally ill and not expected to live very long.  Those who are in prime health usually get less for the same policy due to a longer life expectancy.

Before you cancel, cash-in, or sell your policy you need to ask yourself, is there any chance I will need a policy again?  If you answer yes, then examine the cost of a new policy and see, will getting a new policy be cost prohibitive, and if so, seriously consider keeping the current one. Also, consider is your health worse now than when you get the prior policy. If you say yes, then you need to really consider if you would even be able to get a new policy if needed. If you are in a position where you can’t get a new life insurance policy again carefully consider is getting rid of my current policy a good idea of not.

There are many considerations you should make before pulling the trigger and making a change. For help with life insurance in Houston be sure to give us a call. We are here to help with new policies or even help you replace coverage or sell your policy to a buyer. We can also help you with Long Term Care Insurance, Health Insurance, and Disability Insurance.

What can I do to help cut my Life insurance premium?

Life insurance premiums are set by the carrier based on expected return on investments and mortality based on established mortality tables. Of course company profit and premium taxes all figure in as well. Premiums are generally speaking not negotiable because they have to fall on one of the filed and approved (with the state insurance department) rate tables. I say they are not negotiable, however it is possible in some circumstances to get a better rating with appropriate sharing of information with the underwriter.

The entire process starts when you get quoted and begin the process of applying for the coverage. It is always best to fully explain medical conditions to your agent so they can assess if one carrier is better than another due to medical conditions. For instance occasional cigar smoking rates as smoker rates for many carriers but some will give preferred non-smoking if all else checks out for preferred.  Giving the agent a full picture of your health allows also the gathering of necessary data for underwriters to fully understand conditions you may have.

A lot of the price is based on the expected mortality based on a variety of factors. To that end, it’s best to really understand where you fall within that data realm. As mentioned earlier it helps to fully disclose to the agent your medical history so they can pre-screen what carrier likely will give a great rate. Of course the best rate may or may not be with an appropriate carrier. I stress appropriate carrier because going with carriers who don’t have good financial strength possibly puts your policy at risk of not being fully paid when a claim comes up due to inability of the carrier to pay. It is very easy to pick one of the carriers with good financial ratings.

So you sit down with the agent, disclose health conditions, decide on the kind of life insurance you want, and most importantly the death benefit you want/need.  (It should be based on actual needs since underwriting does look at your requested death benefit as part of the overall underwriting equation, and excessive life insurance can be a trigger for higher rates or a decline.)  From there your agent should recommend at least two carriers based on prices and expected underwriting outcome.

If they only offer up a single carrier and say that carrier is best at all underwriting outcomes you need to check with a second agent.  Each carrier has a sweet spot for clients they want, or you could call it a target audience and their underwriting and pricing is set to get that client base. Thus, it is almost impossible to find a single carrier who is tops at all underwriting outcomes.  Also, if an agent always recommends just one carriers be careful that you are not being sold a policy with a carrier where the agent’s goal is to hit bonuses or win a contest.

With an application in, you need to be sure that the underwriter sees all medical information that validates how healthy you really are. You don’t want to hide anything because that is fraud and would give the carrier an out from the policy. Be sure to have the agent make notes of medical records, lab work, etc…that shows things are going well.  Also, make sure that when you meet with the paramed you have not had alcohol or caffeine for at least eight preferably twelve hours ahead of time. Make sure you have not smoked in a few days since the nicotine can show up in blood tests for a few days.

Following thru on all of the above things will help you fall on the best possible rating level. When you get an outcome where the rating is higher than expected, you should ask the agent to talk to the underwriter to discuss the reasons you believe you should actually be at a better rating than what was issued. There are circumstances where clarification of information can help move you to a better rating, especially when the approved rating was right on the edge between two classes.  The better class can save at times as much as 20% on rates for the same coverage.

If you would like to speak with a professional advisor about life insurance in Houston give us a call.

Is a Limited benefits Policy a good option to save on health insurance premiums?

Limited Benefit Health Plans have a place in the market. They however are not a good replacement for Major Medical Insurance.  It is thus important to know and understand the product you are purchasing when you first make the purchase so as not to be surprised when you use the coverage, to find out there are limits on how much is paid for specific issues.  The worst thing I see happen to people is that they end up buying a limited benefits policy

What most folks think of as a health insurance/medical insurance policy is known within the industry as a major medical policy. These policies pay for covered services with few limitations. By contrast the limited benefits policies are just that limited in what they cover and the amount covered for each service. Most of these policies have a schedule of payments attached.

Reviewing the schedule of payments is one critical step to take so you will understand what coverage you will get.  Note, one limited benefit plan does not necessarily look like another, each is different and most have different opinions of what and how much coverage is provided. For instance office visits may be paid up to different amounts on different plans and may be limited to a set number of visits per year on some plans and unlimited on others.  These differences are just a couple examples of where the limited benefits policies differ within their category.

Some areas of concern I have with limited benefits policies are that in many cases you do not necessarily get a discount from providers, it is just a cash reimbursement to you for what you pay for the healthcare services you receive. To that end, if you are paying full charges, often the reimbursement does not come close to paying what you had to pay for the services you received.  Why do I point out that the payments may not cover your costs?  First, it is important to know with a limited benefit plan your liability is not limited and could add up very quickly this is one reason that a Major Medical plan is usually better.  Secondly, because when you go get care and only have a limited benefit plan it’s likely you will have to pay deposits to the providers in amounts expected to cover the care costs. Thus, it takes cash to get your care in the first place.

Major Medical coverage has few limits in terms of what level of payment will be made to treat a specific condition. With the new unlimited lifetime maximum coverage, the big overriding limit is now gone as well. To that end when you go for care, the hospital may ask for a deposit but only based on what you are expected to owe based on your deductible and co-insurance limits.  If you use in-network providers you don’t run into the issue of having to pay above what insurance pays for specific procedures. Instead you pay a portion of the bills based on your deductible and co-insurance levels. This allows you to better control your overall healthcare costs each year.

Ultimately, there are some who can only afford to have limited benefits plans, or due to underwriting are able to qualify only for limited benefits plans. In these cases, yes these are the plans you should obtain. Major Medical plans are far better because they provide you far more protection from costs of medical care when something bad happens.

Is Life Insurance A Good Estate Planning Tool? Can I use it to help with planning to protect a sizable estate?

Life insurance is protection for those left behind after the death of someone important to a family or business.  So many times families are devastated financially at the loss of a key breadwinner who supports a family, businesses close or are sold to unrelated parties due to the death of a key employee or owner, and estates are broken up and paid away in taxes after the death of someone with substantial assets who failed to properly plan for their death.

What life insurance does is provide a lump sum of money (or a stream of money in some special cases, and also in some cases additional benefits) to those left behind after the death of the insured person.  The cash payment is used as needed/desired by those who are the beneficiaries. The policy is purchased by the policy owner and often that is also the person who is insured.  The benefits paid to the beneficiaries are most typically family members left behind and generally the money is used to pay final expenses and ensure the family members left behind are able to financially survive the next several years of their lives.

Families buy life insurance on the main breadwinners and also when planning well on the main caretaker of the children. The loss of the breadwinner (person who earns the money to pay for housing, transportation, insurance, food, and other needs) can create for many families’ situations where the existing lifestyle will change dramatically.  Thus, for families the cash helps replace income lost with the death of the breadwinner. In the case of a stay at home spouse who cares for kids, the insurance offers cash necessary to hire domestic help who can help with the chores and child care once provided by the stay at home spouse.

In special need circumstances such as estate planning or business owners the cash benefits are there to help pay estate taxes or buy out the deceased partner out of the business. There are other special cases for life insurance but generally the payout goes towards specific needs of the special situation. For brevity we will not try to cover all special circumstances here.

The purchase of a life insurance policy has several components. (1) Identify and quantify the need, which is part of the sales process; (2) Identify the appropriate carrier based on insured health and insurance need; (3) Write an application for insurance; (4)Submit the application for Underwriting; (5) Complete Underwriting, which may include medical exams (paramed), review of medical records, review of the MIB (Medical Information Bureau) reports, or review of special circumstances; (6) Receive a policy, counter offer, rejection, or postponement from the insurance company, and finally (7) Implementation of the policy.

The underwriting process and timeline are important especially when purchased for special needs. There may be circumstances when temporary coverage is available but often it is not for special needs or for amounts requested.  The process of underwriting is generally described above.  In addition to the above it is important to know and understand that the underwriter is dependent on many others to get the process completed. The insured also can impact the process by responding timely to additional information requests and completing any paramedical reviews requested timely.

Generally a life insurance policy, except for instant or rapid issue low death benefit higher cost policies, take a month to two or three months to get from application to policy issued in force.   The time line is affected primarily by securing medical records, getting the para-medical review completed, and providing answers asked by the underwriter.  Medical record acquisition is typically the biggest hold-up for most life insurance cases. 

When a life insurance company wants to review medical records it is typically for a more in depth review of a medical situation listed on an application. For instance if someone lists high blood pressure with a single medicine to treat it and associated tests when the diagnosis was rendered, it is likely the underwriter will want to review the medical records from the cardiologist to validate the information on the application, especially if the diagnosis is within the past year.  This helps determine if there are other likely to develop medical conditions which would affect the rating issued by the insurance company.   Because this information is needed to fully understand the health status of the applicant the insurance company requests the medical records. 

Companies that specialize in securing medical records are used to secure the medical records from the attending physician. These companies have different ways of securing the records. They do pay physicians to produce the records, and also provide to the physician the signed HIPAA authorization which is part of the application.  Why then is this a slow down spot in the processing of an application? Often doctor’s offices are very slow to respond to requests for medical records even though they are being paid.  The proposed insured can help speed this along by letting the doctor’s office know the importance of getting medical records to the insurance company if requested.

Once the underwriter has all data about the proposed insured, they will review the health status and based on internal guidelines set by each carrier, which are unique to the carrier, the individual is scored and based on the score assigned a rate for the policy requested. Thus health status, amount of insurance requested, amount of insurance to be held in total, and the length of a rate guarantee all will factor into a final rate.  Insurance type is a key factor in determining the price of a policy. Term insurance is less expensive than permanent insurance. Shorter terms 10 years are less expensive than 20 or 30 years, but of course if you need the policy longer than the initial term the rates go way up.

Estate Planning is one purpose for life insurance. The reason for the life insurance is not to leave cash behind for survivors to use for their own needs but instead it is left to help pay or totally pay any estate taxes that may be due on the estate of the insured individual.   Life insurance, typically permanent policies because it is expected they will be kept until a death occurs, are purchased in amounts expected to be adequate to pay some, most, or even all of the estate taxes which would be due at the time of the death of the insured.

Life insurance proceeds are counted as part of the estate of the person who receives the payment, so often a trust is set up to both own the insurance and receive the benefits. The trust has to be set up in a manner that it defines who has access to the cash deposited and for what use the money can be used. It often also needs to specifically indicate primary and secondary beneficiaries for the trust.

The reason many use the life insurance for the payment of the estate taxes is to ensure the full value of their estate is passed along to beneficiaries (people, companies, or charities).  These folks often see the cost of the insurance as a small price to pay to ensure their beneficiaries don’t lose estate value. This also allows a long term payment stream to be made to cover the estate taxes.  Further with a good Whole Life or Universal Life policy, it’s possible that the cost of the coverage will be far less than the actual estate taxes which if viewed from an actual total cost vantage point, it is the most economical way to cover the estate taxes costs.

In addition to paying estate taxes there are other special uses for life insurance. Among these include funding buy-sell agreements, covering the costs associated with the loss of a key person at a company, funding legacy donations to charities or foundations, and funding legacy trusts that are there to support economic needs of future generations.

Here are some statistics about life insurance and estate tax: 

·         In addition to Federal Estate Taxes some states have Estate taxes (with some using very low limits that trigger up to 20% estate taxes in the state on top of Federal). Exclusions exist for transfer to spouses and specific other situations.

·         30% of US Households have no life insurance *

·         44% of Households have individual life insurance  *

·         1/3 or more of homes with $100,000 annual income are underinsured *

·         Currently there is a $5,000,000 exemption on Estates under the Federal Death Tax although passing the estate to a spouse is allowed with unlimited wealth transfer.

(* = LIMRA Life Facts 2010)

Definitions to know:

Proposed Insured / Insured – the person on who the insurance is provided

Insurer – The company licensed in the state in which a policy is issued, who provides a guarantee thru the form or an insurance contract, to pay a specific death benefit at the time of the death of the Insured, less any policy loans or other contractual deductions.

Policy Owner - Individual or entity who owns the policy, it may or may not be the same as the Insured

Policy Beneficiary / Beneficiary – The person(s) or entity that receives the payout of the death benefit at the time the Insured dies.

For Life Insurance in Houston we are here to help.

Should I buy a Final Expense Life Insurance Policy?

Life insurance is important for everyone to have. It helps leave a legacy behind as well as cover bills related to the passing. Life insurance is useful for ensuring the home is paid off, kids can attend college, etc. thus, the ideal is a full life insurance policy, but for some they can only qualify or afford a lower cost policy. Final Expense policies are one of these easier to qualify for lower cost policy.

I should clarify that lower cost does not mean that you are getting a better rate for coverage than you would for a regular term or permanent coverage plan.  With Final Expense coverage you are buying a policy of somewhat limited benefit which means the death benefit will generally be anywhere from $5,000 to $25,000.  Most term and permanent coverage policies have minimum death benefits of $100,000 (a few may go as low as $50,000).

Because there is a difference in the death benefit between a final expense policy and the more traditional life policies, one may be a better fit than the other. If someone wants to ensure they get the home paid off, leave money behind for the spouse to raise the kids, get the kids thru college, etc…then a final expense policy would never make any sense.  But, if the person who needs coverage only needs to pay funeral expenses and other similar final expenses, one of these final expense policy is possibly a good fit.

If you only need to cover an amount between $5,000 and $25,000 (average funerals are running between $5,000 - $10,000 per burial, and that is not with many extras to make the funeral really nice, with those you can easily add several thousand more to the cost).  A lot of the recommendation to get final expense vs. term or permanent boils down to your specific needs. Someone young and healthy looking to pay costs of an eventual funeral would need a permanent product, which a final expense is, however if they are super healthy they can probably pay a bit more towards a traditional policy and get several times the death benefit.  Those in more near term need, less healthy, and with very limited financial resources probably need to look at a final expense policy as their option.  If you are looking to leave behind money for more than just getting your remains buried you need to look at traditional policies, again based largely in part on your needs. For help with life insurance in Houston have a quick look at some live quotes and give us a call to discuss the best overall life insurance strategy.

Disability Insurance – General Overview

Have you ever wondered what would happen if you got sick or injured and could no longer work? If you are married would your spouse be able to help take care of you and care for your home, children, and make enough money to make ends meet for the family?  Do you assume your parents, brother, sister or a friend will help you get thru the disability?

Disability insurance is intended to replace lost income when the insured becomes unable to work due to medical reasons caused by either illness or accident.  The reason it replaces income is the employee at some point will run out of sick and vacation time yet be unable to return to work at which time they need income from someplace. To that end the Disability Policy is what kicks in at that point.

Everyone who works, unless they are otherwise independently wealthy, needs to consider having a policy. There are few resources available to the yet to retired when they become disabled, to cover the cost of living. Many may assume the Government will just take care of them, and yes under certain circumstances you may be able to get money from the government, however there are various hurdles to get over first many difficult to tackle. 

Generally if you have not worked and contributed to Social Security/Medicare for at least 10 years you will not be able to claim many benefits at the Federal Government level and states offer various levels of help.  Those who have made enough of a contribution to SSI and Medicare may be eligible for SSI Disability payments and likewise Medicare benefits for those under age 65. The SSI Disability benefits are somewhat limited and will not allow you to live the lifestyle you were accustomed to living prior to the disability.  You may find yourself with less than 35% of your prior to disability income coming in as a SSI-Disability payment which for most is not enough money to live, without giving up their prior to disability lifestyle.

With a disability plan, or stacked plans from your employer and an individual plan you may be able to ultimately replace most of your income. You generally pay for the disability income with after tax money so your benefits are generally paid on a pre-tax basis which does allow you to gross less disability income than prior working income and still live the same lifestyle to which you were accustomed. 

Contact us to discuss how a Disability plan fits your individual or group needs.

Why did my anesthesiologist get paid in full for their bill while my doctor has to give a 50% discount?

I will start off with a statement that I am not picking on anesthesiologists because the same question could be asked about radiologists, pathologists, emergency medicine doctors, and other specialists who work only within the hospital setting.  There are reasons that doctors are paid differently even for the same services.  The hospital based physicians in particular though do sometimes get paid more on a percentage of charges than do other providers and several factors weigh into that as well.

I will preface the rest of the blog post by sharing that I am writing based on how it works in many states, there are exceptions around the USA where hospital based physicians work directly for the hospital and the compensation structure paid by the insurance companies is different as well. In Texas all physicians providing clinical services are in their own practices which are separate from the hospital. Thus they or their practice bills and collects revenue for the services provided separately from the hospital’s charges and collections.

Generally we seek to get care at the lowest cost, so we typically all seek “in-network” care. This means we go to providers who are contracted with the insurance company. In exchange for the provider being in the network for any given insurance carrier, they give a discount off their charges. From a practical standpoint they really agree to the fee schedule offered by the carrier or negotiate rates they will accept. Generally most providers must accept the rates offered by the carrier.

Some providers do get exceptions to the carrier’s standard fee schedule. One set of providers who may get an exception is those who have a proven track record of providing cost effective care with good outcomes. Large groups who are critical to the carrier’s networks may get negotiated rates. Hospital based physicians, such as the anesthesiologists and radiologists, often because they have exclusive arrangements at specific hospitals are also able to negotiate rates.  Of course not all physicians agree to contract with the insurance carriers and this leads to out of network care issues.

Often, but not always, in a hospital based setting, physicians who only work in the hospital will be paid at the “in-network” rate even when they are not contracted. Again, I stress this is definitely not a guaranteed situation, but it does happen.   This is exactly the situation where you will sometimes see payments to anesthesiologists, radiologists, pathologists, and emergency medicine physicians getting paid more than you would expect for a contracted provider.  It is because they in fact are not contracted but are being paid at the in-network level.  In some cases, primarily emergency care, the provider may in fact get their full charges paid.

The hospital based physician charges and out of network issue is one that many of the carriers fight on a regular basis because some of these hospital-based physicians to charge rates well above what other providers are paid for similar services. This issue is something that is a big deal to the carriers because paying 2-3-4 times what others are paid for the same services does end up costing everyone more in terms of higher premiums.  One technique used by carriers now, where permissible is to limit payment to the same amount paid by Medicare for non-network providers.  (Those providers who refuse to accept Medicare Assignment.)

These limits on payment may result in the patient being balance billed, however the insurance company may make whole patients/members who had no choice but to use the out-of-network physician.  These are the cases where you can expect to see the higher level compensation paid to physicians.  So collectively higher negotiated rates with the carrier and payments to non-network-providers in order to hold the member harmless make up most of the higher payments to hospital based physicians.  The other reason you may see full charges paid is that the provider adjusts their charges based on contracts with carriers and only charges what is due by the carrier, automatically writing the difference off as a contractual allowance.

Generally it is a rare circumstance where you will see a provider paid their full charges by an insurance company, but it does happen. The above information should have shined some light on why that happens with hospital based physicians.  If you need help with Health Insurance In Texas so you can get hold of network discounts contact us.