[Note: You may have to click "load images" in your email program if you don't see my pix at the right. Also, if you want to see the previous editions of this newsletter CLICK HERE. ]
Dear Everyone!
Thanks for all the kind words many of you sent about my last edition.
I want to welcome new readers from the speech I gave to the Masonry Association of Sacramento at the Silverado Masonry Desgin Center. You REALLY want to check this place out if you are looking for a patio or any kind of stone work. It is worth the drive down there just to see the show room.
Lots of stuff here, so enjoy.
-Al
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| Hey Kids What Time Is It? |
It's Medicare time again. Can you stand the excitement?
The most screwed-up government agency on the planet... the CMS (Centers for Medicare and Medicaid Services) is the group of knuckle-heads who make the rules for these government programs.
We now have two enrollment periods. The first is called the Annual Enrollment Period, which is from Nov. 15 to Dec. 31. During this time beneficiaries may change prescription drug plans, change Medicare Advantage plans, return to original Medicare, or enroll in a Medicare Advantage plan for the first time. Enrollment changes take effect on January 1.
The second is called the Open Enrollment Period, and goes from Jan 1 to March. It allows some limited changes and is pretty complex. It is all on http://www.medicareadvocacy.org/Medicare_EnrollmentPeriods.htm When you figure it out, let me know!
Medicare loves to use letters and 'parts.' There is Part-A which everyone gets for free and covers hospital expenses. There is Part-B which you pay for ($96.40 for most people in 2008.) And there is Part-D (D for drugs, obviously) which is available from lots of companies for from zero to $70 a month.
Do you know about Part-C? This is called the Medicare Advantage plan. What is it? It's a better Medicare in my opinion. It has better benefits and it cost the government more money so obviously they are thinking of doing away with it. (Many MA plans also incorporate a Part-D drug plan so that is one less choice for you to make.) For most people, if there is an MA available in your county by a good carrier you should get it... unless you can afford supplements.
Supplements? What are these? They've been around forever... often called Medi-gap plans. These are plans that you pay for and which fill in the gaps of Medicare. They are not cheap.
There are three strategies that a senior can take.
1. They can have regular medicare... and that's all.
2. Than can have regular Medicare with additional medicare supplements (that they buy) as well as a stand-alone Part-D (that they buy.)
3. They can enroll in Medicare Advantage (with or without Pard-D), but not have supplements. (By Federal law you can't have supps if you enroll in an MA. Go figure.).
Again, it's all about the money.
I could go into a long dog and pony show about what is 'best' and why... and put you to sleep with the details. Instead I'll just tell you this.
The choice depends on physical condition and income, but all things being equal or close to equal, the 'best' coverage you can have is regular Medicare with a supplement and a Part-D plan... I suggest Plan-F (supplements are regulated by CMS and have 'letters,' each letter having the same coverage no matter who the carrier is.) Depending on age and location and carrier, an F is going to cost a 70 year old person about $160 a month. A Part-D will cost about $25 a month. Given the choice, that's what I would have.
However, we're talking serious money for lots of seniors and if the money isn't there, than I'd go with a Medicare Advantage plan. Many of these are zero-premium. How can that be? It's all about what the government gives the carriers per month to pay the claims, what networks the carriers have, etc. (If you want to know the details, call me!)
There is a new AARP endorsed plan from United Healthcare/Secure Horizons that is $90 a month. There is the Blue Cross Freedom One that is zero dollars per month? What is the difference? Lots. That's what your agent brings to the table.... his or her expertise and experience to give you their take on which MA plan is best for you.
If you are currently on regular Medicare and are considering an MA plan, you have 45 days to get one, so don't delay. Otherwise you have to wait another year.
Call me if you have questions or know someone who needs help with this confusing maze of programs.
One more thing. Lots of people criticize the government for "making" it hard by offering choice. I disagree. Choice is a good thing... everyone has different needs and issues... and you won't get any choice with Hillary-Care, or Obama-Med, or Rudy-Health... that's for sure.
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| Not Enough Agents?
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I (and most agents) got an email from our friendly DOI (CA Dept. of Insurance) this past week with news that CA is changing the license 'structure' that we have.
First of all, as most of you know there are two main licenses... Property and Casualty (P&C) and Life/Health. Most agents have one or other, but some do both (not well, in my opinion.)
The DOI (in response to legislation) is breaking apart the Life/Health license into two separate parts... Life Only and Health Only. They have made it MUCH EASIER to enter the (life/health) insurance business in that you only have to know half as much.
Those who only want to sell life have to take a test with that subject matter. Same for those who just want to sell health. (However those of us who have a current Life/Health license are grandfathered in and can continue to sell both.) They also cut in half the number of continuing education credits we need to get every two years.
I read the bill and it is simple to see why this was done. It seems that CA does not have enough life agents. Say what? You mean you don't get enough calls and letters asking you to meet with an agent?
Well, if you live in Gold River or the Fab 40s you do. But there are stats upon stats that show that CA is way, way, way down the list on the number of life policies in force.
Why is this important? Simple. Husband dies without insurance and wife and kids could be in a bad way economically assuming his income was IMPORTANT to their living standard (Gee, you think?) Getting a check for 250,000 clams goes a long way to keeping a family off of welfare when the old man assumes room temperature!
All but three states (Texas, CA, and North Carolina) have the 2-part license. It (supposedly) makes it easier for people to enter the insurance business. So who is behind this? Probably the carriers.
Lots of people think this is a good thing. I'm not one of them. I take the position that it dumbs-down the industry. You have to have a certain level of intelligence and ability to get a license now. You have to take 80 hours of class, know life AND health and take a 150 question (which is not that easy) exam. With the new rules you only have to know half as much... and I assume only have to be half as smart?
But I understand the issue. We need more agents to sell to the lower economic strata and most agents want to sell the HNW (high net worth) individuals. The concept (without stating it in legislation, of course) is to equate the intelligence level of various minority groups with the 'need' to sell them products that will help them avoid public assistance should a spouse die. If we lower the entry requirements perhaps the carriers can attract less educated people to market to 'their own.'
That's how I see this. If you read the bill "between the lines" this is pretty much what it attempts to accomplish.
I'll tell you this. When I read the industry web sites and the chat boards I hear about a lot of fraud as well as a lot of just plain "bad" sales ethics in every state but CA. From what I see, CA has a higher level of agents, in that I don't see lots of incidents of people being 'sold' a crap policy or an unsuitable annuity or the wrong health plan too often. I go to a lot of seminars and 'road shows' put on by the carriers and wholesalers (yes, we have lots of middlemen in this industry and you don't know about it... and next time I'll explain.) I find agents in this state to be educated and 'smart.' I don't know what will happen after we dumb-down the license procedure, but I don't think it will be a 'good thing.'
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And Then There Is Greed (Part 2)
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I got a lot of interest in the story I published last time about my expensive ultrasound test. I have a long-time friend who is a business financial consultant (mostly in the publishing industry.) She is is also married to a doctor and knows the finances of a medical practice. She wrote a letter that I include below and gave me permission to print it, but she wanted to stay anonymous.
However, before you get to that, do you remember I said I would call the doctor's office and see if I could work a deal on the ultrasound bill? Well I did.
I spoke to the office manager and told her very politely and with no anger or antipathy that I thought the price was too high for a procedure that took 7 minutes and for which the doctor took 2 minutes reading the result (which were negative). I told her that I was a senior citizen without a salaried income or job stability (which is true about the insurance biz), had a high-deduct policy and that unless she made some kind of consideration I would have to pay the bill in (many) multiple installments.
Without missing a beat she immediately took off $125. Holy cow! My jaw dropped. I was so flummoxed that I agreed immediately. It was not until I got off the phone that I realized I probably left money on the table and that I could have played Let's Make A Deal and gotten a better discount.
So, if you get a bill that you disagree with, this proves that the profit margins are high enough that the docs can take off 25% and still afford a new BMW each year.
OK, here is the letter I received. It has a different viewpoint from mine so see if you agree.
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Dear Al:
I liked this (as I like most of your writing!) but I have a couple of points you might want to consider:
First, the reason that the MRI costs so much ALSO has to do with the cost of the machine. It's EXPENSIVE. And since they can't sell many, and the development costs are astronomical, it HAS to be expensive. It costs $3 to $5 million for a mid-level machine. Let's say that you can treat 10 patients per day, 5 days per week, 50 weeks per year (maintenance, etc.) for 5 years before you need to replace it. And let's also say that the maintenance contract on it runs $150k per year. You're treating 12,500 people and must amortize at least $3,750,000 over that patient load. That's $300 per patient. And we haven't started talking about rent, electricity (!!), staff to handle the patients in and out, techs to run the scanner, . . . .
Are you sure you were gouged? 'Cause $500 looks pretty low to me.
Another reason that treatments are expensive: because the liability for reading them is astonishing. Our cultural theory that every bad outcome must be SOMEONE's fault, plus the natural desire not to kick the sufferer when he or she is down, leads to socking the nearest deep pockets with the bill. All well and good when they really did wrong, not so good when it's a case of statistics catching up with you. And statistically, there WILL be some bad results, even when everyone does everything right. Tort law doesn't allow for that.
I know, for example, that brain surgeons in NYC pay north of $150,000 per year, per surgeon for liability coverage. More, of course, if they take tougher cases, or if they've had more claims than the bare minimum. (Hey, in brain surgery, even a "good outcome" tends to be appalling to the rest of us -- getting sued is normal no matter how good the surgeons are.)
As for why we spend so heavily on medicine: it also has to do with our national resistance to the idea that death is an inevitable part of life. I can't tell you how often my husband comes home deeply upset because some guilt-ridden family is putting their relative through all kinds of hell for no possible gain. (Often against the expressed wishes of the patient before the incident happened, even.)
We spend a surprisingly large fraction of our health care budget in the last few months before death, and usually to very little effect. If we were more sensible about the way we did this, we'd have much lower costs. I'm not sure how we can bring a more rational attitude to bear, but we need to find a way.
Looking at a doctor's compensation: have you compared it to that of any other profession where the individual invests equally heavily in training and works similar hours at work of similar difficulty level? It's actually LOW, when you consider 4 years of med school (plus the cost and the interest on the loans to pay for it), and a minimum of 4 years of post-grad work for almost minimum wage (often that's as much as 8 years -- for my husband it was 6, after med school. That is, 10 years of grad school and postgrad before you can START earning a living).
Compare doctors to those who run large companies, or to Wall Street, or top engineers, or . . . . The money isn't out of line. It IS much higher than the average family. An internist averages about $100 to $150k. A **top ranked** specialist might make $300k to $500k, after many, many years in practice. And top ranked CEOs make what? 20 times as much? This country pays its stars well.
And compare what the doctor actually gets paid as a salary (as vs. the part that goes to the practice to support secretaries and billing clerks and rent . . .) to the rest of the medical bills. It's not that big a fraction.
We need more efficient infrastructure, but that makes patients very unhappy, and may hurt their ability to recover.
And as for HMOs -- you may have stories, but we should share. I have some that would make you nuts. They do me.
Just a random collection of thoughts from your local number cruncher.
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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
InsuranceSolutions123 Agency
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 the Insurance Solutions Agency.
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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