What GOP Health Care Means for Your Wallet

Here are some elements of the current Republican health plan that might directly affect your wallet.

Will you be better or worse off if Republicans pass their version of health care reform? That’s the burning question for most Americans as they watch the arm wrestling going on in Washington, D.C. As with the health care debate itself, there are no easy answers.

The bill being debated right now, the American Health Care Act working its way through the House of Representatives, offers strong hints about what health insurance will look like when designed by Republicans. In general, young, successful, healthy people will pay less, but many other groups will pay more — or not have health insurance at all.

The Congressional Budget Office chimed in on Monday with a much-anticipated report saying the Republican plan would lead to 14 million fewer Americans having insurance than under Obamacare in 2018. Other estimates have pegged the number at 10 million (S&P Global Ratings) to 15 million (Brookings). The CBO also noted premiums may be 10% lower by 2026 than under Obamacare.

Obamacare 101

Before we get into the details, some perspective is necessary. While Obamacare did have provisions that dealt with the overall health insurance market, it was mainly aimed at the uninsured, and most of its provisions dealt with the mechanisms needed to get those Americans coverage. Much of the Republican plan deals with changing that market.

In total, about 22 million consumers are insured by what most folks call Obamacare – some 8 million via state exchanges, and another 14 million through expansion of traditional Medicaid, according to The Heritage Foundation. Nearly all of them enjoy some kind of government subsidy.

The Obamacare exchanges, which tend to dominate headlines, are in reality a small portion of the health care insurance market. Many Americans get insurance through their employers. There are another 10 million or so who directly buy their own insurance in the private market, outside the Obamacare exchanges. And 15 million get coverage through small-employer plans, according to Heritage.

Because the health insurance market has these very distinct elements, discussion about health care coverage can be confusing. Take the individual mandate and its associated tax penalty for those who don’t get insurance, which is incredibly unpopular with conservatives. It obviously doesn’t directly impact those who already get insurance at work. Also, the large premium increases that Obamacare exchange consumers experienced last year, which were indeed painful, only directly impacted the consumers getting Obamacare subsidies.

On the other hand, anything that happens to one end of the health insurance market is bound to have impacts on the rest of the market. Those who purchased individual plans directly — not on the exchanges — saw increases that were in line with Obamacare increases, leading to a lot of sticker shock.

Other popular Obamacare provisions, like a list of minimum coverage requirements or the elimination of pre-existing condition rejections, naturally led to increased health insurance premiums for all. Bottomline: Even if you aren’t using Obamacare exchange insurance, any changes to health care coverage will impact you. (If you’re looking for an Obamacare refresher, we’ve got one here.)

What’s in the Current Republican Health Care Plan?

Here are some elements that might directly affect your wallet.

1. Mandates Gone, But Not Really

Mandates, which conservatives impulsively dislike, are gone. Individuals will not face a tax penalty if they fail to get insurance, as they do under Obamacare. The House GOP plan does have a similar provision, however. Consumers who let their insurance lapse but then decide to get it later will pay a 30% surcharge. So while Americans are free to forgo insurance, that becomes a lifetime commitment — at least in order to avoid something that’s an awful lot like the old Obamacare penalty.

Employer mandates are gone, too. Under Obamacare, firms with more than 50 full-time employees must offer insurance. That requirement would be removed by the Republican plan. Depending on your perspective, that will either lower costs for business owners or hurt small business workers who might lose coverage they receive at work.

2. Subsidies Gone, But Not Really

Some say Obamacare helped middle-class and poor insurance shoppers afford high premiums with monthly subsidies. The subsidies, which could cover most of the monthly payment, were determined by a complex calculation involving income and regional costs. (Health care is more expensive in states like Alaska.)

The income cap for getting aid is about $48,000. With the Republican plan, subsidies are being “replaced” by tax credits and would be far more widely available. Families with incomes up to $150,000 would be eligible for as much as $4,000 toward health care costs. The tax credit amount, which will not be adjusted for geography, will likely be less than the Obamacare subsidy in most cases. The new tax credit would be $1,700 less on average than under Obamacare, according to the Kaiser Family Foundation.

A word about the Republican tax credit. It will be “advanceable,” meaning consumers can use the money as they pay their premiums, rather than wait until the end of the year when the money might be returned as a tax refund. If that sounds a lot like the way Obamacare’s subsidies work, that’s because they are essentially the same thing.

Health Savings Accounts

Republicans have long liked the idea of Health Savings Accounts, so the GOP proposals dramatically increases their limits. Consumers with high-deductible plans can twin these with health savings accounts, which are a little bit like 401(k) plans. HSAs let consumers put aside their own pre-tax income, invest it and use it for any health care cost. Supporters think HSAs support consumer choice; opponents are worried about health care funds being placed at risk in the stock market.

Right now, HSAs are capped at around $3,400 for individuals. The GOP plan would increase that limit. It would also lower penalties for the health care equivalent of early withdrawal – spending the money on non-health care costs. HSAs act a bit like a second IRA, because the money can ultimately be used for retirement, so this is a very good thing for workers who already max out other retirement plan options. It doesn’t help other groups who aren’t that lucky, however.

We explained how HSAs work earlier this year.

How Older Americans Lose

Older Obamacare consumers will almost certainly see their premiums rise under the GOP plan. Obamacare allows insurers to charge older consumers up to three times more than younger consumers. With the GOP health care bill, that jumps to a factor of five. This would likely lower costs for young buyers and raise it for older buyers.

Taxes May Be Lower, But Who Will Pay? 

The other politically attractive element of Obamacare is that it allows Republicans to say they’ve repealed most of the new taxes associated with it, not just the individual mandate penalty but other taxes that are unpopular with businesses, like a medical device tax. The tanning salon tax would disappear, too.

That raises an obvious question, however: Who pays? Either a whole bunch of people have to lose coverage, or money to pay for it has to be found somewhere. There simply is no way to repeal taxes but keep giving consumers coverage without exploding the deficit.

The Big Picture

It’s important to note that, Paul Ryan’s protestations aside, the American Health Care Act really is just a first offer in a negotiation that is sure to take many twists and turns. That means none of the specifics in this story are carved in stone. Still, when Republicans in the Senate have their say, you can expect these same concepts to come up over and over again — mandate elimination, tax credits, swelling the ranks of the uninsured.

Will your wallet win or lose when the final version is signed? Time will tell.

Are you concerned how your budget or even your credit score will be affected GOP health care reform? Share your thoughts with us in the comments section below. 

Image: FatCamera

The post What GOP Health Care Means for Your Wallet appeared first on Credit.com.

Will Trump’s Big Health Care Plan Give You Money Trouble?

Here's how to prepare your funds for a Trump presidency.

On Monday, President Donald Trump addressed a joint session of Congress (and the nation). In his speech, he shared his blueprint for the country’s future.

Many of his remarks centered on national security, jobs and taxes, but the item on many minds was health care.

Following a spate of town hall meetings in which angry constituents confronted their Republican representatives, Trump laid out his vision for replacing the Affordable Care Act (ACA, also called Obamacare).

Trump’s health care plan, if enacted by the Republican-controlled Congress, is likely to have an impact on your bottom line. Here’s how.

5 Health Care Principles in Donald Trump’s Speech

Trump’s speech to Congress included five principles he wants to see in the ACA’s replacement plan.

1. Keep Coverage for Pre-Existing Conditions

Trump insists that any replacement of the ACA should keep the coverage requirement for pre-existing conditions. If you’re staring down a medical condition, you should still be covered, assuming Trump gets his way.

2. Continue Tax Credits & Expand HSAs

Trump wants to continue offering tax credits to those who need help paying for health insurance (something that’s currently offered under the ACA). He also wants to expand the use of Health Savings Accounts (HSAs).

3. Offer States ‘Resources and Flexibility’ for Medicaid

One of the key points of the ACA was its Medicaid expansion. However, when the Supreme Court upheld the ACA in 2012, it ruled that states didn’t have to participate in Medicaid expansion. As a result, some states have “gap” populations, where tens of thousands aren’t covered by the ACA but still can’t get Medicaid.

Trump has promised “insurance for everybody,” and Medicaid expansion is probably a part of that. House Speaker Paul Ryan is a proponent of the use of block grants for Medicaid, and that could change the way Medicaid is administered in some states.

4. Pass Legal Reforms & Reduce the Price of Drugs

Trump’s health care plan champions legal reforms to protect patients and doctors from “unnecessary costs.” He hasn’t offered a lot of information about how to go about that, though.

A more interesting part of that principle is the idea of reducing drug prices. President Trump has been focused on the cost of prescription drugs since his campaign and insists that negotiation can bring down the cost of drugs. If this tactic is adopted, it could help many people on life-saving medications save money.

5. Create a National Insurance Marketplace

One of the sticking points many people have is that, for the most part, you can’t buy insurance across state lines. The ACA allows for multi-state exchanges, but they haven’t been used very much and success has been dubious.

Trump hopes a national marketplace will force insurers to compete more and offer additional choices for consumers, driving down the price.

What Trump’s Health Care Vision Means for Your Wallet

President Trump’s proposed health care policies would likely have an effect on your insurance costs. Here’s what to watch for.

Tax Credits for Coverage

The ACA currently offers tax credits for purchasing insurance through an exchange. Donald Trump’s speech to Congress last night indicates that tax credits for coverage will still be part of the plan.

But for millennials, that could actually mean paying more for coverage, thanks to a re-jiggering of how these tax credits would work.

A draft ACA replacement bill has been circulating, and presumably, the Trump Administration approves (Trump health secretary Tom Price is in favor). In this bill, tax credits are based on age instead of income.

If that policy is passed, older Americans would see more help under a new health care plan and younger Americans would see less. For some millennials getting subsidies under the ACA today, premium costs could go up due to a smaller tax benefit.

Expansion of HSAs

Details about the expansion of Health Savings Accounts haven’t been released, but their use is supported by both Trump and GOP members of Congress. This provision could be a good thing for younger Americans with few health care needs.

With an HSA, you receive a tax deduction for your contribution, and the money grows tax-free as long as you use it for qualified medical expenses. Under the ACA, you need a high-deductible plan to qualify. A high-deductible plan comes with a lower monthly premium, so users can save money each month that way.

If you don’t spend a lot on health care, the expansion of HSAs could be an advantage, depending on how the expansion is accomplished. If contribution limits are raised or the requirement for a high-deductible plan is eliminated, the HSA piece of “repeal and replace” could have a net benefit on your pocketbook.

National Health Insurance Exchange

The theory behind a national health insurance exchange is simple: Buying across state lines would give consumers more choices and cheaper coverage.

However, this might not actually work as intended. A study from Georgetown University looked at a six-state exchange under the ACA and found that it didn’t bring in new options, or even reduce costs.

On a national scale, though, the results might be different. If insurers are forced to compete by offering different plans, it’s possible that costs could decrease. However, state regulation will still be an issue, and no one has addressed how state-level regulation fits into a national health exchange.

Continuous Coverage

In his speech to Congress last night, Trump insisted that the government shouldn’t mandate coverage. But what’s the alternative?

According to the draft ACA replacement plan, Americans would need to have “continuous coverage” for a set period of time in order to take advantage of coverage for pre-existing conditions. In addition, those who don’t maintain continuous coverage would be subject to higher rates if they decide to re-enroll with an insurance plan.

If you don’t maintain coverage, you could see a significant uptick in your premiums as a result.

What Happens If You Receive Insurance Through Work?

One thing Trump didn’t address was the issue of what happens to those who receive insurance through work.

It isn’t clear how tax credits, Medicaid block grants and other items would be paid for, since the latest proposals are mum about the taxes the ACA imposes on those with higher incomes.

Ideas circulating among GOP members of Congress include a provision that caps the tax exclusion on coverage from employers. That means if your employer-sponsored health coverage exceeds the cap, you could pay higher tax costs.

The Bottom Line on Trump’s Health Care Plan

For now, it’s mostly speculation. Trump’s speech set forth principles for an ACA replacement, some of which protect the more popular aspects of Obama’s health plan.

Of course, it’s actually up to Congress to decide how to proceed. President Trump can outline his preferences, but that doesn’t mean Congress will follow his lead.

As with any policy, there will be winners and losers. Whether you end up paying more or less for insurance depends on what happens next in Congress.

Image: BasSlabbers 

The post Will Trump’s Big Health Care Plan Give You Money Trouble? appeared first on Credit.com.

5 Ways Your Obamacare Coverage Could Change This Year

 

Humana’s announcement last week that it is dropping out of the Affordable Care Act (also known as Obamacare) exchange and President Donald Trump’s tweet Friday that the Obamacare repeal is “moving fast” capped a frenzied week for the embattled law.

The proposed rule the Trump administration issued last week could mean major changes and increased costs for those who have Obamacare as well as other coverage. Congress would have to act to change Obamacare.

Amid the uncertainty about what will happen to Obamacare, here are five potential ways you and your health care spending could be impacted if the changes succeed.

The main changes would include:

  • Giving insurers the ability to offer more products that also cost more.
  • Removing the federal government’s oversight of insurers’ hospital and doctor networks.
  • Cutting in half the open enrollment period.
  • Requiring paperwork in advance that proves eligibility for enrolling outside of the open period.

    1. You might need to find a new health plan

Humana last week announced it will drop out of the exchange, saying it would no longer provide individual plans in 2018.

“That’s been a pretty consistent phenomenon for the last two years, where you might have a particular insurance provider and then they pull out of the exchange, and so now you’ve got to go find another one,” says Chris Rylands, a partner in the Atlanta, Ga., office of Bryan Cave LLP, an international law firm. His practice focuses on employee benefits.

Humana analyzed the customers who had signed up through the exchange and found too much risk

2. Your costs for women’s health benefits could rise

With the Trump administration’s vow to overhaul Obamacare, some American women are feeling insecure about their birth control options.

In one example, Cecile Richards, president of Planned Parenthood, told CNN’s Christiane Amanpour in January that Planned Parenthood’s patient requests for IUDs has jumped by 900%.

Sneha Bhakta, 22, is among the women who plan to look into requesting an IUD.

She and her parents pay about $500 each month for the three of them to have insurance through Obamacare.

“I follow the news extremely closely. Yes, my parents are concerned about the changing policies. Mostly because it’s all up in the air,” Bhakta says.

Bhakta, who lives in Atlanta, Ga., attended the Atlanta March for Social Justice and Woman in January, which was among hundreds of events the same weekend as the Women’s March on Washington. She says she’s scared about the possibility of losing coverage, especially the reproductive health care benefits, such as free birth control and pap exams.

3. Your deductible could go up

Proposed changes to the Affordable Care Act will create more leniency in how plans are classified. The greater leniency will allow for more diverse choices in the health care market, but could increase co-payments and deductibles for consumers.

All participating insurance plans have to cover 60% of out-of-pocket costs to qualify as a bronze-level plan, 70% for a silver plan, and 80% for gold. While the insurance plan pays for 70% of out-of-pocket costs for a silver plan, consumers would pay the remaining 30% through a combination of deductibles, co-pays, and co-insurance. Under the Obama administration, a two-point disparity was permitted, meaning that a plan could cover 68% of the costs and still qualify as a silver plan.

With Trump’s proposed changes to the Affordable Care Act, the disparity has been increased from 2% to 4%. Plans with only 66% coverage would still qualify as a silver plan.

It gives insurers a little more room to vary their plan terms,” Rylands says.

He adds that although there’s the potential for higher deductibles or out-of-pocket costs, the fact that the proposal extends it by only 2 percentage points means those increases will not be significant.

Already, Americans are showing they’re willing to pay for a plan with high deductibles in order to save money on premiums.

Over the last two years, enrollment in high-deductible health plans with a savings option by workers with employee-sponsored health insurance has increased 8 percentage points, to 29%, according to the 2016 Employee Health Benefits Survey by Kaiser Family Foundation and the Health Research and Educational Trust.

The survey found average premiums for those plans were “considerably lower” than the average for all plan types, at $5,762 for single coverage and $16,737 for family coverage.

4. You may have to be a bit more on the ball to enroll

The Trump administration’s proposal would cut the open enrollment period, typically three months, in half.

Under the new guidelines, those who need to enroll in health care for 2018 would have from between Nov. 1 and Dec. 15, 2017. Insurance coverage will end on Dec. 31, 2017, for all participants, no matter their enrollment date.

Not only would the open enrollment period be shorter, but the president has already slashed the advertising budget for Obamacare. Upon taking office, Trump cut $5 million in advertising days before the Jan. 31, 2017, enrollment deadline.

Enroll America, a nonprofit, nonpartisan organization that serves as the nation’s leading health care enrollment coalition, criticized the decision and its timing during the critical final days of the enrollment period for 2017. In a January statement, Anne Filipic, president of Enroll America, said, “their decision to halt outreach will have real impact on real people’s lives.”

Also last week, the Trump administration announced plans to place more stringent guidelines for the special enrollment period, in an effort to reduce the number of consumers registering outside the open enrollment period. For 2017, the enrollment period ran from Nov. 1, 2016, to Jan. 31, 2017.

The special enrollment period was originally meant for people who experience unexpected changes, such as unemployment, a new baby, or moving states. The Affordable Care Act allows consumers to enroll and submit proof later that they qualify for the special enrollment.

Insurance agencies have found that people signing up under the special enrollment period have higher health care costs, leading agencies to believe that Americans are signing up when already sick.

Under the proposed revisions, consumers will be required to provide proof before signing up for special enrollment.

Your providers could change

Proposed changes to the Affordable Care Act will also remove federal review of insurance networks. The networks were created by the Obama administration in response to complaints that there were too few providers accepting insurance policies purchased in the exchange.

The requirement for a minimum number of providers within a set distance from enrollees could be removed.

While this could reduce consumers’ access to health care within a reasonable distance, Rylands is hopeful it could allow more health insurance companies to continue providing services on the exchange.

“We’ll just have to wait and see if that happens though,” Rylands says.

The post 5 Ways Your Obamacare Coverage Could Change This Year appeared first on MagnifyMoney.

Here’s Everything You Should Know About Term Life Insurance

Shot of a group of people warming up outdoors

The majority of healthy Americans can use term life insurance policies to get sufficient coverage in place for anywhere from $15 to $100 a month. Most (85%) American consumers believe that most people need life insurance, but just over 60% carry a policy. Even among those who carry a life insurance policy, the amount covered is frequently not enough.

Term life insurance is a low-cost way for individuals with financial dependents to meet those people’s needs even after death. But it can be confusing to understand what it is and what it covers.

When to Consider Life Insurance

Anyone who has a financial dependent should consider buying life insurance if they don’t have the assets available to cover their dependent’s financial needs in the event of their death.

There are five major events that create financial dependence and may justify the purchase of life insurance. These events include:

  1. Taking on unsecured debt with a co-signer
  2. Taking on secured debt with a co-signer
  3. Marriage
  4. Having a child
  5. Moving to a single income

How Much Life Insurance Do I Need?

Term life insurance is the cheapest form of life insurance, but carrying too much life insurance is a waste of money. The exact amount you decide to carry will depend on your risk tolerance and the size of your financial obligations. In this article we offer rules of thumb that can help you calculate the financial loss associated with your death.

Most life insurance companies and brokers also offer life insurance calculators, but these calculators rely on averages. Since each person’s situation is different, it can be valuable to create an estimate on your own.

Unsecured debt with a co-signer

If you’ve taken on unsecured debt (like student loans) with a co-signer and you don’t have sufficient cash or investments to cover the debt, then consider purchasing life insurance in the amount that is co-signed. The beneficiary of this policy should be the person who co-signed the loan with you.

For example, if your parents have taken out $50,000 in loans via a Parent PLUS Loan or private loans, then you should take out a $50,000 policy with your parents as the beneficiaries. In most cases involving unsecured debt with a co-signer, a short term (such as 10-15 years) will be the most cost-effective option for covering this debt.

Secured debt with a co-signer

Secured debts (like a mortgage or a car loan) have some form of capital that could be sold to pay off most or all of the loans, but you still might want to consider taking out life insurance for these types of debts.

While your co-signer can sell the asset, pay off the debt, and become financially whole, that may not be the right choice for your situation (especially if the co-signer is your spouse).

For example, a couple that takes out $200,000 for a 30-year mortgage may decide to each take out a $200,000, 30-year term life insurance policy. This policy will allow either spouse to continue to live in the house in the event of the other’s death.

Marriage

Marriage isn’t a financial transaction, but it brings about financial interdependence. In the event of your death, the last thing you want your spouse to be concerned about is their finances.

Couples without children who both work aren’t financially dependent on each other, but many people would still like to provide their spouse 1-3 years’ worth of income in life insurance to cover time off from work, final expenses, and expenses associated with transitioning houses or apartments.

A couple who each earn $40,000 per year, and who have $20,000 outside of their retirement accounts, can consider purchasing life insurance policies between $20,000-$100,000 in life insurance to provide for the other’s financial needs in the event of their death.

Having a child

Because children are financially dependent on their parents, parents should carry life insurance to cover the costs of raising their children in the event of a parent’s death.

The estimated cost of raising a child from birth to 18 is $245,000, so it is reasonable for each parent to carry a policy of $100,000-$250,000 per child. It is especially important to note that stay-at-home parents should not neglect life insurance since their death may represent a big financial loss to their family (manifested in increased child care costs).

The beneficiary of this life insurance policy should be the person who would care for your child in the event of your death. Sometimes this will be your spouse, but sometimes it will be your child’s other parent, or a trust set up in your child’s name.

If a couple has two children under age 5, and $50,000 in accounts outside of retirement, then each parent should have between $150,000 and $450,000 in life insurance. Parents of older children may choose to take out smaller policies or forego the policy altogether.

Income dependence

If your spouse is dependent upon your income to meet their financial needs, then it is important to purchase enough life insurance to care for their immediate and ongoing financial needs in the event of your death. If you are the exclusive income earner in your house or if you co-own a business with your spouse that requires each of you to play a role that the other cannot play, then your death would yield a tremendous financial loss for several years or more.

In order to estimate the size of policy needed in this situation, there are a few guidelines to consider. According to the well-respected Trinity Study, if you invest 25 times your family’s annual expenditures in a well-diversified portfolio, then your portfolio has a high likelihood of providing for their needs (accounting for inflation) for at least 30 years. A policy worth 25 times your annual income, less the assets you have invested outside of retirement accounts, is the maximum policy size you should consider.

Many people choose to take out even less than this because their spouse will eventually choose to return to work. A second rule of thumb is that the total amount of life insurance for which your spouse is the beneficiary should be worth 10-12 times your annual income. A policy of this size would reasonably provide money to pay for living and education expenses (if your spouse needs to re-train to enter the workforce) for many years without damaging your spouse’s prospects of retirement.

Based on these rules of thumb, if you earn $100,000 and your family’s expenses are $70,000 per year, and your spouse is a stay-at-home parent, then you should have enough life insurance to pay out between $1 million and $1.75 million (remember to subtract the values of any other policies or non-retirement assets above when calculating this amount).

How to Shop for Life Insurance

After deciding on the amount of insurance you need, and the terms you need, you can start shopping for the best policy for you. Although it’s possible to shop around for the best insurance, MagnifyMoney recommends that most people connect with a life insurance broker. For this report, every quote received from a broker was within a few cents of the quote received directly from the insurance company.

If you tell a broker exactly what you want, they can pull up quotes from a dozen or more reputable companies to get you the most cost-effective insurance given your health history. This is especially important if you have some health restrictions.

People with standard health (usually driven by high blood pressure or obesity, or many family health problems) may find some difficulty finding low rates, but brokers can help connect them with the right companies.

People with “substandard health” because of obesity, high blood pressure, or elevated cholesterol, those suffering from current health issues, or people recently in remission from major illnesses will not qualify for term life insurance.

Top Three Life Insurance Brokers

  1. PolicyGenius – PolicyGenius is an online-only broker with an easy-to-use process and helpful policy information. Users give no contact information until they are ready to purchase a policy. PolicyGenius’s system saves data, so users don’t have to re-enter time and again. It is very easy to compare prices and policies before applying.
  2. Quotacy – Quotacy is an online-only life insurance broker with connections to more term life insurance companies than most other life insurance companies. Quotacy offers quick and easy forms to fill out, and they do not require that you give contact information until you are ready to purchase a policy. Unfortunately, they do not fully vet out the policies, so you may need to ask an agent questions before completing a purchase.
  3. AccuQuote – AccuQuote is an online-based brokerage company that specializes in life insurance products. Unlike the online-only brokerage systems, their quotes are completed through a brokerage agent via a phone call. People who prefer some human interaction will find that AccuQuote emphasizes customer service and offers the same price points as online-only competitors.

Top Life Insurance Companies

For those who prefer to shop for life insurance without the aid of a broker, these are the top five companies to consider before purchasing a policy. Each of these companies allow you to begin an application online though you may need to connect with an agent for more details (including a rate quote).

To be a top life insurance issuer, companies had to offer the lowest rates on 30-year term insurance for preferred plus or preferred health levels, and be A+ rated through the Better Business Bureau.

  1. Allianz – Allianz offers the lowest rates for both Preferred and Preferred Plus customers, but they do require you to contact an agent or a broker for a quote.
  2. Thrivent Financial – Thrivent Financial offers the lowest rates for Preferred Plus customers, but they require you to contact an agent before they will confirm your rate.
  3. American National – American National offers among the lowest rates with Preferred and Preferred Plus customers, and they work closely with all major online brokers. You must contact an agent to get a quote directly from them.
  4. Banner Life Insurance (a subsidiary of Legal & General America) – Banner Life Insurance offers an online quote portal and very low rates for Preferred Plus customers. They also seem to be a bit more lenient on the line than other customers for considering Preferred Plus (not considering family history).
  5. Prudential – Prudential offers an online quote portal and the lowest rates for Preferred customers.

What to Expect Next

After you’ve decided to purchase an insurance policy, the policy will need to undergo an underwriting process. This will include a quick medical examination (height, weight, blood pressure, urine sample, and drawing blood) that usually takes place in your home. After that, the insurance companies will need to collect and review your medical records before issuing a policy for you.

Underwriting typically takes 3-8 weeks depending on how complete your medical records are. The company will then issue you a policy, and as long as you continue to pay, your policy will remain in effect (until the expiration of the term). Once your policy is in effect, you can rest easy knowing that your financial dependents will be taken care of in the event of your death.

 

The post Here’s Everything You Should Know About Term Life Insurance appeared first on MagnifyMoney.

6 Health Benefits You Should Never Have to Pay For

 

child and doctor talking in clinic

Since the passage of the Affordable Care Act, most insurers must now provide preventive benefits without any form of cost sharing. And yet, millions of Americans are still missing out on free (and potentially life-saving) preventative health care services, like flu shots and cancer screenings.

If pocketbook concerns are keeping you from taking care of your health, take a second look. You may find that the preventive services you want are covered without cost to you.

Free benefits — Really?

Of course, it’s misleading to call preventive benefits completely free. You pay for them in the cost of your health insurance premiums. But you may as well use these benefits because, after all, you’re already paying for them. Recent studies show that preventive benefits may save 2 million lives and $4 billion dollars annually.

Furthermore, the ACA doesn’t guarantee free preventative treatments for 100% of insured people. Some insurance plans were given a pass on providing preventative services if they were implemented before March 2010. In 2016, 23% of workers who receive benefits through their employer are enrolled in a grandfathered plan and may not receive full free preventive benefits.

There is also the risk that medical providers may bill patients for services that should be free. Those types of errors are caused when medical billing offices unwittingly bundle covered and uncovered services, when your bill contains an error, or when your insurer errantly denies a claim.

Office visits and preventive services are often billed separately. This means you may receive a legitimate bill even when you thought you were going to receive free care. The only way to avoid this conundrum is to ask for costs in advance. You may also be billed if you use an out-of-network provider.

Below, we cover the preventive benefits you can expect to receive for free, and the times that they may lead to unexpected medical bills.

Benefits for adults

Preventive benefits for all adults fall into six categories. Some benefits are limited to at-risk groups or women only. Before you use a preventive benefit, ask your doctor if you qualify for free screenings. If you don’t, you will have to pay a bill.

Some preventive services will be built into an annual physical, but you can request the services as you need them.

Remember, the preventive service is free, but you may need to pay for ongoing treatment if you uncover a health problem.

Cancer Screenings:

  • Breast cancer screening (mammogram)
  • Cervical cancer screening (pap smear)
  • HPV screening (pap smear)
  • Skin cancer counseling
  • Colorectal screenings (fecal occult blood testing, flexible sigmoidoscopy, colonoscopy)
  • Lung cancer screening (tomography)

Insurers (except grandfathered insurers) cannot impose an extra charge for polyps removed during a colonoscopy. They also cannot charge for medically necessary anesthesia.

Treatment for Chronic Conditions:

  • Screening for the following diseases: abdominal aortic aneurysm, diabetes (blood glucose), hypertension (blood pressure), hepatitis B, hepatitis C, latent TB infection, liquid disorders, osteoporosis
  • Depression screening
  • Low-dose aspirin (adults with cardiovascular or colorectal disease risk factors)

Except obesity management and prescribed aspirin, you must pay for chronic condition treatments through your insurer. This means treating chronic conditions will include cost sharing.

Many chronic condition tests require a blood or urine sample. If your doctor is worried about your health, they may test for multiple uncovered diseases. In that case, you can expect to pay a fee for lab work.

You may also see a charge if a medical biller uses the wrong medical billing codes. If you end up with an unexpected bill, request an itemized bill and an explanation of benefits. You will see on the bill if any you have fees associated with the covered screening. When you see fees for covered screenings, call your doctor to have them adjust the bill. You can also ask your insurer to adjust the claim for you.

Free Health Promotion Treatment

  • Alcohol misuse
  • Obesity screening and management
  • Diet and activity counseling for cardiovascular disease prevention
  • Falls prevention (adults 65+)
  • Tobacco cessation
  • Well-woman visits
  • Intimate partner violence screening and counseling

Initial counseling and tobacco cessation pharmaceuticals are covered at 100%, but your doctor may recommend therapies and counseling not covered by insurance. Be sure to ask if counseling will be billed as a preventive benefit.

Free Immunizations

All immunizations recommend by the Advisory Committee for Immunization Practices (ACIP) must be covered as preventative benefits. This includes over 20 types of immunizations including the annual flu shot.

If you aren’t sure whether an immunization will be covered by your insurance, ask your doctor before you agree to the immunization.

Sexual Health Treatment

  • Screening tests for chlamydia, gonorrhea, syphilis, HIV infection
  • STI counseling
  • HIV counseling
  • Contraceptive services

Insurers must cover the lowest cost version of 18 unique forms of birth control. Treatment for sexually transmitted diseases or infections is not covered as a preventive benefit.

Lab work for sexually transmitted diseases that are not listed will cost extra. Request cost estimates for all tests and screenings even if they are part of your standard wellness visit.

Pregnancy Treatments

  • Anemia, bacteriuria, gestational diabetes, HIV, hepatitis B, syphilis screening
  • Depression screening
  • Folic acid supplements
  • Preeclampsia preventive medicine
  • Tobacco cessation behavioral cessation support
  • Breastfeeding counseling, supplies, and support

Obstetricians commonly ask for tests outside of those listed above. You should expect to pay lab fees for those tests. Most obstetricians can provide clients with a list of routine pregnancy tests and associated costs. In addition to lab fees, you should expect to pay for ultrasounds, labor and delivery fees, and facility fees during your pregnancy and birth experience.

Benefits for Children

Preventive benefits for children are more robust than preventive services for adults. Nearly all procedures provided during scheduled well-child visits will be covered as preventive services. This includes regular checkups, screenings for childhood diseases and disorders, and immunizations.

If your child provides a blood or urine sample you may want to ask about lab fees, but all other services will be free.

Children at risk and sexually active adolescents can receive all the preventive benefits that adults receive in addition to those specific to children.

Regular well-child visits will make it easy for you and your child to take advantage of any preventive benefits available to you.

Final word: Don’t neglect preventive benefits

Preventive coverage can help you catch and cure otherwise deadly diseases. Curing early-stage diseases often costs less than later-stage treatments, and early treatments may save your life. Recent studies show that preventive benefits may save 2 million lives and $4 billion dollars annually.

These services come with no additional cost sharing to you. Take advantage of preventive coverage; you can’t afford to neglect your health.

The post 6 Health Benefits You Should Never Have to Pay For appeared first on MagnifyMoney.

Can Retiring to Another Country Help Me Save Money on My Taxes?

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Q. I’ve heard that tax-wise, moving out of the country when you retire is a good idea. I have no kids so I’m open to the idea. What places — warm weather — could make sense? I would still stay a few months in America.

— Thinking [in New Jersey]

A. Whoa! Moving out of the country to avoid taxes is an extreme move. Let’s take a step back and look at the big picture.

“The nice thing about living in New Jersey is that virtually every state in the nation will be less taxing and less expensive to live — maybe with the exception of California, New York and Connecticut, said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton, New Jersey.

He said you should never move anywhere for tax purposes. Instead, you should move because you really want to and it fits your lifestyle.

Lynch said even if you move out of the country and become a resident of another country, it will not eliminate taxes that you pay in the U.S.

For example, he said, your IRA distributions, pensions and Social Security are still subject to federal income tax.

“Taking your IRAs and pension as a lump sum before you leave means that you will lose half in state and federal income taxes,” he said.

The benefit of many of these warm weather islands is that the cost of living is substantially less then the cost of living in New Jersey, but there are other things to consider, Lynch said.

The number one issue is health care.

“I would not want to have emergency surgery in many of these areas,” he said.

There are other potential drawbacks.

“These islands may have great seafood, but I like a steak and a pizza every once in a while as well,” he said. “Also, getting off these islands when they have big storms is not as easy as it is here. Things are different and you need to see if long-term it fits what you want.”

Lynch suggests you take a few steps before you go any further.

Start with doing a financial plan to see if the numbers work if you stay in New Jersey.

“If yes, and you have no kids to leave your money to, then option No. 1 is stay here,” Lynch said. “Option No. 2 would be if it doesn’t work by staying in New Jersey, can it work in other areas of the U.S. that are less expensive.?”

Next, he said, make a list of what you are looking for in retirement.

“Cost of living is definitely an issue, but medical care, physical activities — golf, tennis, etc. — people your age, etc.,” he said. “You need to take the emotion out of this decision as everyone on vacation never wants to go home.”

He said the reality is living there is much different then visiting for a few weeks.

“If you really do want to move, sit with a certified public accountant who is familiar with these types of moves and develop a long-term tax plan that will discuss the issues and work on some alternatives,” he said.

And if you decide you really want to move outside the U.S., he recommends you rent for a year and make sure it is what you are looking for.

“Stick your toe in before you jump into the deep end,” he said.

Image: AleksandarNakic

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The Average 65-Year-Old Retired Couple Needs $260,000 to Cover Health Care

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Paying for health care is hard on many Americans, but costs are especially high in retirement.

That’s according to recent analysis by Fidelity Investments, released this week, which found a 65-year-old couple retiring this year will need about $260,000 to cover their health care.

“The estimate applies to retirees with traditional Medicare insurance coverage,” Fidelity said in a press release, “and provides a general idea of monthly expenses associated with Medicare premiums, Medicare co-payments and deductibles, and prescription drug out-of-pocket expenses.”

It assumes the average life expectancies of 85 for a man and 87 for a woman.

The cost of covering healthcare in retirement is up 6% over last year’s estimate of $245,000, Fidelity said. It’s also their highest estimate since they began running the numbers in 2012.

“In recent years, the health care industry has experienced a period of historically low spending levels, due to a range of factors including a period of slow economic growth,” said Adam Stavisky, senior vice president of Fidelity Benefits Consulting.

However, long-term care expenses, which are based on a number of factors, could also throw a monkey wrench in retirees’ finances. As Fidelity noted, these costs are only covered by Medicare in certain circumstances, and a 65-year-old couple would need $130,000, plus savings for medical expenses, to insure against long-term care costs. (Keep in mind, this is assuming the couple is in good health and purchased a policy with an $8,000 monthly maximum benefit, with three years of benefits, and an inflation adjuster of 3% per year.)

Saving on Medicare 

According to one report by the Kaiser Foundation, Medicare beneficiaries spent $4,734 out-of-pocket on average in 2010; when hospitalized two or more times, those costs soared to $6,216. So how is a retiree to save on Medicare? Fortunately, there are ways to get around the problem. Credit.com asked Nate Purpura, vice president of Consumer Affairs with eHealth, a health insurance provider in San Francisco, how it’s done.

  1. Do your research. “The important thing to know is that Medicare you get from the government only covers about 80% of medical costs on average, and that doesn’t include prescription drugs,” Purpura said. “The other thing is that the government doesn’t cap your out-of-pocket expenses.” So if you get sick and visit the hospital twice in a year, you’ll incur out-of-pocket costs despite holding insurance. “If you just kind of glide into retirement and stick with the original government Medicare, you miss a lot of opportunities to save money,” Purpura added. Spend some time doing research to figure out your Medicare coverage options.
  2. Comparison shop for plans. “There’s a bunch of different insurance you can buy to supplement Medicare,” Purpura said. “Our research shows that, on average, a person can save 20% when they compare monthly premiums for Medicare Supplement Plan F — the most popular supplement plan.”
  3. Review your prescription drug coverage annually. Yes, the plans are “massively complicated,” Purpura said. However, different types of drugs (think generic versus brand name) are covered at different levels, so it pays to comparison shop for drug coverage. “And the good news is the rules change ever year,” Purpura added. “You have a time once a year to compare and update and make sure you’re getting the best price.” Using online portals offered by private insurers or the government, type in your prescription and dosage amount to see which plan works best for you.
  4. Consider Medicare Advantage for dental and vision. “On average, seniors spend 6% of that $4,700 on out-of-pocket dental care,” Purpura said. Medicare Advantage plans typically roll dental, vision and prescription drug coverage all into one, plus, they’ll cap your out-of-pocket spending on deductibles, co-pays, co-insurance and more.

Remember, combining the tips above with a rock-solid financial plan will keep you ahead of the game when it’s time to retire. To see how any debt is affecting your finances, you can view two of your free credit scores, updated monthly, on Credit.com. Carrying debt? See how long it will take to pay it off with our lifetime cost of debt calculator.

Image: Susan Chiang

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What Is the 1095-B & Why Did I Get It?

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This year, you may have received a tax form you haven’t seen before: the 1095-B. It’s a form sent by your health insurer or employer that shows you had the minimum health insurance needed to avoid a tax penalty during the tax year. (In short, it’s an Obamacare thing.) You could also receive a similar form, the 1095-C, if you work for a company with more than 50 employees. You might actually receive both or multiple forms, depending on your insurance setup and employment situation throughout the tax year.

If that seems confusing, relax. You don’t even need these forms to file your taxes.

“You just need to check a box that says you had health coverage,” said Debra Hammer, a senior communications manager with TurboTax. “You most likely will receive a form, but it’s not required.”

If you didn’t have health coverage for the full year and don’t qualify for an exemption, like financial hardship or gaps in coverage for less than 3 months, you may need to pay a penalty. Tax software should help you calculate that penalty, and if you’re going the pen-and-paper route for tax preparation, you can find information about the penalties on HealthCare.gov.

“The only real problem with the 1095-B is that people are afraid that if they don’t have one that they cannot file their tax returns until that get the form when in reality, most of the time the information about health insurance is on their W-2 coded DD in box 12,” wrote Bill Farmer, an Enrolled Agent with HTI Tax Service, in an email. “Another dead giveaway that a person has had health insurance is that they have a code W in box 12 which indicates that they have a Health Savings Account.”

Even if you get a 1095-B or 1095-C, it’s quite likely you won’t need to do anything with them other than file them away with the rest of your tax paperwork. The extent of your Obamacare-related tax activities may be limited to checking that single box indicating you had health insurance for the year.

But not everyone has it so easy. There’s the 1095-A, which has been around for two years and goes to people who had coverage through the health insurance marketplace. It’s required to reconcile the insurance premium credits you may have received and what you really qualify for, based on the difference in your actual income and the estimated income you used when applying for health coverage — it determines if you received too little or too much of a health care subsidy and will affect your tax refund or tax bill.

“Where the whole thing starts getting hairy is when you have an A-B or an A-C combination — the person got a credit part of the year and had company-provided insurance part of the year,” Farmer said. It’s common for such taxpayers to have to repay the credits they received, he added.

It can be understandably stressful to end up owing taxes you didn’t expect to have to pay, but figuring out a way to cover that bill is important. You could pay your taxes with a credit card, though there are fees associated with that option, or you could take out a personal loan if you need help. You could also work out a payment plan with the IRS. Not paying isn’t a great option, because it can eventually get more expensive with fees and interest, not to mention the potential impact on your credit score.

Whether or not you’re fretting over 1095s, it’s probably a good idea to started filing those tax returns, if you haven’t already. Either you’ll get your refund sooner or have more time to ask questions and figure out how to tackle the tax bill you need to pay by April 15.

More on Income Tax:

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3 Tax Breaks You Can Get For Taking Care of Aging Parents

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If you’re caring for an elderly parent, likely the last thing on your mind is whether that care entitles you to a tax break. But when you get a few moments, discussing available tax deductions and exemptions with a tax adviser could be well worth your time.

“Like pretty much anything having to do with tax law, there is the potential for missteps, and some of those can wind up being very expensive,” said Mark Luscombe, principal federal tax analyst with Wolters Kluwer Tax & Accounting. “If you know the rules, you can plan properly to avoid [mistakes], but that information isn’t within the purview of the average person. It’s really important in this kind of situation to seek guidance from a tax professional.”

1. Personal Exemption

First and foremost, Luscombe advised, you’ll want to figure out if a parent meets the criteria. Here’s what that criteria involves.

  • Relationship. The person you are claiming as a dependent must be related to you. It shouldn’t be a problem when it comes to claiming a parent (in-laws and step-parents also are allowed). To claim a foster parent, he or she must live with you for a year as a member of your household, but otherwise, your parent does not have to live with you in order for you to claim him or her as a dependent.
  • Income. Your parent must not have a gross income of more than $4,050 a year or more. Gross income does not include Social Security payments or other tax-exempt income.
  • Support. You must provide more than half of the support for your parent during the year. If they are living in your home, fair market rent should be considered in the support, Luscombe said. Also included are amounts spent to provide food, clothing, education, medical and dental care, recreation, transportation and other necessities. Even if you do not pay more than half your parent’s total support for the year, you may still be able to claim your parent as a dependent — If you and other siblings collectively pay more than half of your parent’s total support and you’re paying at least 10% toward the total amount making up the more than half, you can claim them.

Again, speaking to a tax professional is important when determining dependent eligibility as there are many nuances within the tax code. (The IRS audits a small percentage of tax returns, but you don’t want yours to be one, especially if you weren’t careful during the preparation) If you qualify, here are some tax benefits from caring for your parents that may help you maximize your refund.

2. Dependent Care Credit

If you paid another person to care for your parents while you worked or looked for work, you may be eligible to claim the child and dependent care credit. You (and, if you’re married, your spouse), must earn income during the year to take the credit. You must also be able to claim your parents as dependents. If you qualify, you can claim up to 35% of the expenses you paid toward one parent’s care up to a maximum of $3,000 in expenses. The limit is $6,000 if you paid dependent care expenses for both parents. The 35% claim allowance ends at the $43,000 income threshold, Luscombe warned, but no matter your income, you should be able to claim some allowance if you meet the other criteria.

3. Medical Expense Deduction

Even if you can’t claim your parents as dependents, you might be able to deduct medical expenses you paid. And the Internal Revenue Service allows you to use the the amount you pay for their medical care when itemizing your deductions if you can’t claim them as a dependent, but only when you can’t claim them based upon their income. Allowable medical expenses include prescription drugs, dental care, hospital stays, long-term care services and premiums you pay for your parents’ supplemental Medicare coverage.

More on Income Tax:

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