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.