Saturday, July 22, 2006
When Would You Like to Retire
By Len Harris of LTC Global
lharris@ltcglobal.com
Many people think they have the wherewithal to retire and enjoy their golden years. Travel, volunteer your time, visit family and friends-Surprise! Health care costs, never expected, are the biggest threat to retirement savings.
Yes, the government will provide some coverage and some employers will pay some retirement health costs, but the lion’s share will still come from the retiree. Deductibles and co-payments are not considered when putting money aside. These expenses can be huge, especially to people susceptible to illness just as they near retirement. It’s estimated that the onset of an illness could siphon approximately 20% of a household’s wealth. “You could easily burn close to $1 million of your nest egg with out-of-pocket expenses for a major illness,” according to George Ciccotello, director of Graduate Personal Finance at Georgia State University.
People think Medicare will cover it all. It doesn’t. Without a Medicare supplement, the average couple aged 65 will spend $200,000 to cover medical costs in the average retirement. That’s just for deductibles, the cost of Medicare, co-payments, non covered items and prescription drugs. That’s based on the husband living to 82 and the wife to 85 with no employer provided health insurance.
Unfortunately, one of the most overlooked forms of protection is Long Term Care Insurance (LTCi).
So many people say they’ll wait until they retire to look at or even think of purchasing a policy. A policy at age 50 might cost 40%-50% less than at age 65. In addition 40% of those needing long term care are between the ages of 18-64. Debilitating illnesses and serious injuries can strike anyone. People don’t plan for this, because “It can never happen to us”.
There are those agents who understand this and are making inroads at the worksite. Showing an employer how this coverage can reduce absenteeism allows the agent to either have the employer offer a “core” plan and let the employee enhance the program, or allow the agent to talk directly to the employees. Either way, LTCi helps both the employer and employee.
It is a fact, long term care insurance is the last thing people think of to protect their later years, but once purchased, there is a 97% retention rate. After they’ve seen the light, it’s kept for life.
7/06
Wednesday, January 25, 2006
The New Generation of Insurance Scams
Yesterday my Dad called me about an offer he received. Dad is 85, soon to be 86 in March. He is in great health for his age. He goes to the GYM 2 times a week. This man who he sees there a lot, is an insurance agent. He told him about a great deal. He’s going to get him (my Dad) a $1 million Life Insurance policy, and then pay him something like $100k or more. What a deal!
In fact last year, we had an 85th birthday party when Dad turned 85, and one of his friends brought up a similar sounding idea to me that I should investigate. If you have read my bio, you should notice that I too am an insurance agent. Well, this sounded awfully too good to be true to me, so I blocked out even thinking about this until hearing about this again yesterday. So tonight I went on the internet to investigate, and the alarm bells have now begun to go off.
I mean, can you imagine someone purchasing life insurance on an elderly person and then paying the premiums, and also paying the insured? We all know that expression about something being too good to be true. So here is how it works. Let me know what you think. Remember, I have nothing against people making money through legitimate means, or even making lots of it. I want to be one of those making lots of money, but my moral code says to do it honestly and morally.
This is called Stranger Owned Life Insurance or SOLI. Someone buys Life Insurance on someone else’s life, and then pays the premium and pays them for signing up. If approved, the insured must keep the policy for at least two years. After that they can sell it or sign it over to the people who got them involved in this in the first place. Now I am simplifying this, and here is where the potential illegalities lie. First of all, when Life Insurance is bought, the beneficiaries are supposed to have an insurable interest. Like your wife or kids, or now in the modern era, your significant other, if you know what I mean. Or even a business partner. So a total stranger has an insurable interest? Then how about the upfront money? The agent may not tell you, but the proceeds more than likely come from his commission. In most states, this is rebating, and illegal in the insurance business. Two no-no’s. The insurable interest problem is something that can be explained away, because often life insurance is owned for many years, and the people you bought it for to protect may be gone from your life, and after two years, judicial review (previous lawsuit history) has said policies are no longer contestable by the insurance co’s in most situations, and this is one of them.
Now tomorrow I’ll be at a Life Association meeting to discuss this with my peers. I write mostly health insurance, but have a history in the life end of the business too. Sooo, what d’ya think? Let me know. Please also take a look at my insurance blog. Insurancemaven.blogspot.com. I have this article posted there, but have some other items there too.
In fact last year, we had an 85th birthday party when Dad turned 85, and one of his friends brought up a similar sounding idea to me that I should investigate. If you have read my bio, you should notice that I too am an insurance agent. Well, this sounded awfully too good to be true to me, so I blocked out even thinking about this until hearing about this again yesterday. So tonight I went on the internet to investigate, and the alarm bells have now begun to go off.
I mean, can you imagine someone purchasing life insurance on an elderly person and then paying the premiums, and also paying the insured? We all know that expression about something being too good to be true. So here is how it works. Let me know what you think. Remember, I have nothing against people making money through legitimate means, or even making lots of it. I want to be one of those making lots of money, but my moral code says to do it honestly and morally.
This is called Stranger Owned Life Insurance or SOLI. Someone buys Life Insurance on someone else’s life, and then pays the premium and pays them for signing up. If approved, the insured must keep the policy for at least two years. After that they can sell it or sign it over to the people who got them involved in this in the first place. Now I am simplifying this, and here is where the potential illegalities lie. First of all, when Life Insurance is bought, the beneficiaries are supposed to have an insurable interest. Like your wife or kids, or now in the modern era, your significant other, if you know what I mean. Or even a business partner. So a total stranger has an insurable interest? Then how about the upfront money? The agent may not tell you, but the proceeds more than likely come from his commission. In most states, this is rebating, and illegal in the insurance business. Two no-no’s. The insurable interest problem is something that can be explained away, because often life insurance is owned for many years, and the people you bought it for to protect may be gone from your life, and after two years, judicial review (previous lawsuit history) has said policies are no longer contestable by the insurance co’s in most situations, and this is one of them.
Now tomorrow I’ll be at a Life Association meeting to discuss this with my peers. I write mostly health insurance, but have a history in the life end of the business too. Sooo, what d’ya think? Let me know. Please also take a look at my insurance blog. Insurancemaven.blogspot.com. I have this article posted there, but have some other items there too.
Saturday, January 21, 2006
Long Term Care Insurance 2006
Q)Is there a Long Term Care crisis in America?
A)If it’s not here now it will be soon. The Baby Boom generation begins to turn age 65 in 2011. As it is, Long Term Care is very expensive, and the number one payor, the government, wants ‘out’ as much as possible. As of now 40% of Medicaid payments go towards Nursing Home stays. Prominent Republicans, and now Democrats recognize the importance of having the private sector to pay for the cost of Long Term Care via insurance. Organizations such as the National Association of Health Underwriters, www.nahu.org, have been pursuing the overturning of an amendment by Henry Waxman (D, Ca) that began the prohibition of the Long Term Care Partnership Insurance plans. With the partnership program, if an individual purchases Long Term Care Insurance, and exhausts the benefits of the policy, then they do not have to spend down their assets as they do today. Individuals can maintain on a dollar for dollar basis the amount of assets in their name that the policy was worth. For example, if the policy paid $100k in claims as a maximum benefit, the policy owner could then obtain Medicaid and still have up to 100k in assets to qualify. Democrats did not want this type of program fearing that it would benefit the rich, but now with a looming Long Term Care crisis, they are beginning to recognize the value of this program. Many states now have a partnership program in place in anticipation of federal approval. Even Hilary recognizes this program and has placed her name as a sponsor. After this is passed, the next goal will be approval of an above the line deduction for individual Long Term Care Insurance policies.
A)If it’s not here now it will be soon. The Baby Boom generation begins to turn age 65 in 2011. As it is, Long Term Care is very expensive, and the number one payor, the government, wants ‘out’ as much as possible. As of now 40% of Medicaid payments go towards Nursing Home stays. Prominent Republicans, and now Democrats recognize the importance of having the private sector to pay for the cost of Long Term Care via insurance. Organizations such as the National Association of Health Underwriters, www.nahu.org, have been pursuing the overturning of an amendment by Henry Waxman (D, Ca) that began the prohibition of the Long Term Care Partnership Insurance plans. With the partnership program, if an individual purchases Long Term Care Insurance, and exhausts the benefits of the policy, then they do not have to spend down their assets as they do today. Individuals can maintain on a dollar for dollar basis the amount of assets in their name that the policy was worth. For example, if the policy paid $100k in claims as a maximum benefit, the policy owner could then obtain Medicaid and still have up to 100k in assets to qualify. Democrats did not want this type of program fearing that it would benefit the rich, but now with a looming Long Term Care crisis, they are beginning to recognize the value of this program. Many states now have a partnership program in place in anticipation of federal approval. Even Hilary recognizes this program and has placed her name as a sponsor. After this is passed, the next goal will be approval of an above the line deduction for individual Long Term Care Insurance policies.
Tuesday, November 29, 2005
HSA's
Q) Rick, what's all this I'm hearing about HSA's? What is it?
A) HSA is the acronym for Health Savings Account. This concept is a part of the Medicare Modernization Act, known mostly as the new Part D of Medicare adding a prescription benefit.
A Health Savings Account works similar to an Individual Retirement Account (IRA) where $$ deposited into the account receive an above the line tax deduction. The money in the account earns interest tax free and is usable for Health Insurance expenses, or even health related expenses that might not be covered by the plan. Examples such as dental and vision. The money in this account is to be utilized to pay the deductible expenses of the plan. In order to qualify as an HSA plan, the minimum deductible allowed is $1000. No office visit copayments, or copayments for Rx is allowed. All medical expenses are out of pocket until the deductible is met, and at that time, the plan either pays 100% or 80% of expenses thereafter.
A) HSA is the acronym for Health Savings Account. This concept is a part of the Medicare Modernization Act, known mostly as the new Part D of Medicare adding a prescription benefit.
A Health Savings Account works similar to an Individual Retirement Account (IRA) where $$ deposited into the account receive an above the line tax deduction. The money in the account earns interest tax free and is usable for Health Insurance expenses, or even health related expenses that might not be covered by the plan. Examples such as dental and vision. The money in this account is to be utilized to pay the deductible expenses of the plan. In order to qualify as an HSA plan, the minimum deductible allowed is $1000. No office visit copayments, or copayments for Rx is allowed. All medical expenses are out of pocket until the deductible is met, and at that time, the plan either pays 100% or 80% of expenses thereafter.
Sunday, November 27, 2005
More on the new Medicare Program
Q) How does Medicare Part D work?
A) Medicare Part D is the newest edition to Medicare. Part A covers hospitalization and Part B covers medical treatment. In order to be eligible, an individual must be age 65 or permanently disabled. Eligibility begins on the first day of the individual’s birth month when he or she becomes age 65. Whereas individuals can begin receiving Social Security benefits at age 62, such is not the case with Medicare.
There is no premium for Part A, however Part B does have a premium, as does the new Part D. For the first time under Part D, beneficiaries can pay directly to a private insurer instead of the government, and the benefits are administered in the private sector too.
The basic Medicare Part D works this way. All Rx costs up to a $250 deductible are paid by the insured. Then Part D pays 75% until $2250 has been paid out by the insurer (US Gov’t). After this, any Rx expenses between $2250 and $3600 are paid by beneficiaries. Once the $3600 ceiling is reached, Medicare then pays 95% of pharmacy expenses. Medicare recipients at the poverty level are excluded from the above, and receive far richer benefits.
Insurers participating in the Medicare Part D program must offer benefits equal to or better than the above, and so far most are. By the end of December 2005 I will be certified to write plans issued by Mutual of Omaha in several states. Notice I said certified. Normally we just become licensed by filling out paperwork and waiting for licensing approval by the insurer. In the case of the new Medicare program, we must be certified, code word for test. So far premiums with Mutual of Omaha run between $18.24 and $50.48 depending upon geographic location and the choice of which of their three plans is chosen. For more information, please click on the link below.
http://www.cms.hhs.gov/FamilyFirst051118c-N.pdf
A) Medicare Part D is the newest edition to Medicare. Part A covers hospitalization and Part B covers medical treatment. In order to be eligible, an individual must be age 65 or permanently disabled. Eligibility begins on the first day of the individual’s birth month when he or she becomes age 65. Whereas individuals can begin receiving Social Security benefits at age 62, such is not the case with Medicare.
There is no premium for Part A, however Part B does have a premium, as does the new Part D. For the first time under Part D, beneficiaries can pay directly to a private insurer instead of the government, and the benefits are administered in the private sector too.
The basic Medicare Part D works this way. All Rx costs up to a $250 deductible are paid by the insured. Then Part D pays 75% until $2250 has been paid out by the insurer (US Gov’t). After this, any Rx expenses between $2250 and $3600 are paid by beneficiaries. Once the $3600 ceiling is reached, Medicare then pays 95% of pharmacy expenses. Medicare recipients at the poverty level are excluded from the above, and receive far richer benefits.
Insurers participating in the Medicare Part D program must offer benefits equal to or better than the above, and so far most are. By the end of December 2005 I will be certified to write plans issued by Mutual of Omaha in several states. Notice I said certified. Normally we just become licensed by filling out paperwork and waiting for licensing approval by the insurer. In the case of the new Medicare program, we must be certified, code word for test. So far premiums with Mutual of Omaha run between $18.24 and $50.48 depending upon geographic location and the choice of which of their three plans is chosen. For more information, please click on the link below.
http://www.cms.hhs.gov/FamilyFirst051118c-N.pdf
Monday, November 14, 2005
Medicare Part D Enrollment Begins
Q)What's the latest on Medicare Part D?
A)Today is the day enrollment in this program begins. Nov 15, 2005. In order to enroll without any penalty, eligible enrollees have until May 2006. There is much in the newspapers and internet on the subject now. Should you require more information please send your question with an e-mail address, and we will make sure you get a quick response.
A)Today is the day enrollment in this program begins. Nov 15, 2005. In order to enroll without any penalty, eligible enrollees have until May 2006. There is much in the newspapers and internet on the subject now. Should you require more information please send your question with an e-mail address, and we will make sure you get a quick response.
Tuesday, October 04, 2005
Medicare Part D
Q)Where else can people find information on the new Medicare Rx program?
A)Another excellent site is www.cms.hhs.gov, which is The Centers for Medicare and Medicaid Services. Under the heading, 'Spotlight,' is a listing of the companies that have so far had their new Medicare Rx plans approved in each state. Enrollment for the program begins on Nov 15, so now is the time to begin researching the program.
A)Another excellent site is www.cms.hhs.gov, which is The Centers for Medicare and Medicaid Services. Under the heading, 'Spotlight,' is a listing of the companies that have so far had their new Medicare Rx plans approved in each state. Enrollment for the program begins on Nov 15, so now is the time to begin researching the program.
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