[If you want to see the previous edition of this newletter CLICK HERE.]
Dear Everyone!
It's 102 today... but it's September so summer must be over right? Doesn't look or feel like it.
I was hoping to report in this issue that we have a brand new healthcare insurance system in CA... that the governor and the legislature got together and came up with a way to hold down the cost of healthcare which will hold down the cost of insurance. (No one seems to "get it" that insurance is expensive because healthcare is expensive.)
Anyway, no news on that front. But there is always something to be miffed about in this business... so here we go... this time it's underwriting.
-Al
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Let's Kill All The Underwriters!
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Didn't Shakespere say something like that about lawyers?
The last two weeks have made me wonder WHY I even bother to work in the health insurance industry because it is getting to the point where most of the major carriers have tightened up their underwriting (UW) such that if you have a pimple on your tush, you are getting either a decline or a big rate-up.
We're at the point where the carriers don't want to take any risk at all. They want young healthy people. To get them they do two things. They bring out new plans with lower rates and tight UW, and they raise rates on the old plans.
What happens to the old business? Well as the rate increases continue, those who can get out do, and those who are sick or on meds, are stuck (and they all call me!.)
So the carrier is then left with a plan with lots and lots of old sick people where there are a lot of claims... so the carrier's lawyers petition the Dept. of Insurance for even larger rate increases based on loses for that 'class.' After a few years they get the rates up high enough so that fewer and fewer people can afford the plan and they have to drop out and go on the MRMIP state risk pool, subsidized by the state.
True, some carriers will let some people on some plans transfer without UW... but most often if you try to go from a less-rich plan to a more-rich plan... fergetaboutit if you are on any kind of meds, especially those for high blood-pressure (HBP) or cholesterol. (It always reminds me of what we said about Sacramento's light-rail transit system in the early days before it was built out: "On light-rail you can drink and ride... 'cause you ain't goin' nowhere!")
So here I am with a file of new clients whom I used to be able to place at Blue Shield or Blue Cross or Aetna, and I'm seeing the gates being to close. There is nothing I can do about it, except suggest people try the MRMIP state risk pool. It's expensive, but for some it is the only way out.
This is why a lot of guys and gals are leaving the individual and family health plan business. If you can't get your people through UW, you don't make commission... and if you, like I, have a very expensive wife... well you are going to go in other directions.
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| Mr. Who?
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We call it "Mister Mip." MRMIP is the Major Risk Medical Insurance Program and it is the insurance you get if you can't get anything else... assuming you can afford it.
The California Major Risk Medical Insurance Program (MRMIP) is a program developed to provide health insurance for Californians who are unable to obtain coverage in the individual insurance market. MRMIP is administered by a five-member Board which established a comprehensive benefit package. Services are delivered through contracts with health insurance plans. MRMIP subscribers participate in the payment for the cost of their coverage by paying subscriber contributions on their own behalf. MRMIP supplements those subscriber contributions to cover the cost of care and is funded annually by $40 million from tobacco tax funds.
There are three plans contracted by MRMIP.. one by Cross, one by Shield and one by Kaiser. The plans are not bad... just expensive. There are a number of hoops you have to jump through before you are eligible. The hardest one is that you have to exhaust COBRA (which is at least 18 months.) The problem is that often COBRA costs are too high and the person can't afford it. What then? Nothing. MRMIP won't take them if they are eligible for COBRA or if they declined it.
Most agents don't 'work' to help someone with MRMIP (or with COBRA) because the state pays the grand sum of $50 commission. But I will do my best to help people with the application and advise them on which of the three plans they should consider. Why do all that work (and it can take a bit of time?) Simple. I do this business to help 'the people.' That's want it's all about. Besides, what goes around, comes around. So if you know someone who might need help "talking" to "Mr. Mip," just have them call me. |
| HS What? |
I got a ton of "cards and letters" from my last issue saying "Al, what
the %$#@ is an HSA plan." OK. Sorry about that. I should have
explained.
Everyone thinks these are complex when they are actually very simple... and very, very good for a lot of people.
While the whole 'mess' is called an HSA, there are really two moving parts. First is the actuall HSA account. The second is the health plan it is "attached" to.
HSA stands for Health Savings Account. It's a bank account. It looks
like an IRA, which I'll explain in a minute. An HSA only 'works' with a
health plan that is deemed by the insurance gods as "HSA compatible."
What does this mean? It means it complies with the mandates set by
Congress which set these things up in 2003. Basically they are
high-deductible plans. All carriers now have a bevy of HSA plans
(meaning they are compatible with Congress and "allow" you to set up a
health savings account.)
When you sign up for an HSA compatible plan (very popular and I sell a
lot of them!) you first have to be accepted by the carrier just like any insurance plan. Then you go to a bank and set up the savings account part (or
do it online with Patelco which pays the best interest these days.)
That's it. You have a health policy and a bank account. There is no law saying you HAVE to fund the account. The health plan works and looks like any other health plan you've had in the past.
You
can only put a limited amount into the HSA account: $2850 for a single person, $5650
for a family. From this fund you pay for health items while under the
deductible of your health plan. For example I have a $4,000 deductible
HSA (Blue Shield) plan on myself. Each year I can put in a max of
$2850. Next week I'm having my physical. The bill will be about $400
including lab work. I take $400 out of my HSA to pay for this. My
deductible is now $3600. You know the drill.
So why is a HSA plan a big deal? Simple. Every dollar I put in my HSA
bank account (I put in the max of $2850 a year) I get to write off
ABOVE THE LINE on my 1040 income tax. It's just like you do with an
IRA. Ask any tax advisor and they will say an above-the-line deduction
is HUGE compared to an itemized below-the-line deduction.
How about this? You can fund the account at anytime. You can go to the hospital today and be out tomorrow with a $2,000 bill. You can then put $2,000 in the account tomorow and take it out the next day to pay the bill. You STILL get the $2000 tax deduction!
Or you can pay the bill tomorrow and put the money in a day beore your taxes are due in April (for the previous year).
Of course you would want to fund the account as soon as possible because of the interest you will receive.
Like an IRA the interest I earn on the money in my HSA account is NOT taxable.
Unlike an IRA, when I take the money OUT of the HSA account to pay the bill, it is NOT taxed.
So I get to put money in and get a tax deduction and when I take it out
it is not taxed as income. While the money earns interest I pay zero tax on that interest... ever. While I can only use the account for health related
expenditures, the list is long. (And after age 65 you can use it for
long term care premiums.)
If I were allowed to, I'd put all the money I could in an HSA, but alas there are limits.
Basically the government is helping me pay my medical bills via a very nice (large) tax deduction.
One thing you can't use your HSA money for is to pay the premiums on
your health plan. I don't know why they have that limitation. But just
about any legitimate health care cost is allowed... dental, eyeglasses,
canes, travel, etc.
There are a ton of websites you can go to to learn about how HSAs work, but just call me and I'll go into detail with you on them. I've pretty much explained them here. This is about all there is to these plans.
These plans have been popular on the East coast for years, but not so much
here because this has been HMO-land up until recently. HMO rates have
gone through the ionosphere and people (smart money) are dumping HMOs
and moving to HSA plans. For every 'traditional' co-pay plan I sell, I
sell 3 or 4 HSA plans.
One interesting thing. Agents talk with each other and compare notes. The word on "agent street" is that you can't sell an HSA to a woman. Men like them, but women don't. They want the co-pay plan. It does not matter that they will pay a huge premium for it compared to the low(er) cost HSA plans.... that's what they want. This has not been my experience so much as it has been that of other agents.
HSA plans have the best bang for the buck. These are great plans... especially for people who don't use a lot of medical services.
True, you have to be able to take the hit of a high deductible, but
Nationwide (soon to be HealthNet) has a terrific plan at a great rate
(with somewhat easy UW) that has a $1750 deductible (the minimum set by
Congress.) I'm going to switch to that one myself next month. (Why is
Nationwide switching to HealthNet? I'll talk about that next time.)
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Well, that's a wrap for this issue. I hope you've found some of the info above useful and interesting. If you have questions about life or health coverage, safe-money annuities, or employer group benefits just give me a call or send email.
Sincerely,
Alan N Canton
Adams-Blake Insurance Solutions
InsuranceSolutions123.com
916-962-9296
CA License # 0F31110
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Al Canton, Owner
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I'm Al Canton, owner of Adams-Blake Insurance Solutions.
Everyone promises the best service, etc. So I won't bore you with that message.
Bottom line, I know health insurance, work-supplements, medicare, life, and annuities.
Most importantly, I'm honest. I will not put you in a product just for the money. I've been here 25 years and I've built my business reputation on integrity and honor.
It's that simple.
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