Chapter 6: health insurance planning.
Health insurance is the most popular and widely used form of non-property insurance in the U.S. today. Health insurance or the lack thereof, is a topic that goes beyond traditional financial planning. When working with clients, planners should anticipate the fear of financial loss associated with the costs of health care and related out-of-pocket expenses. Health coverage is one of the most complex types of insurance offered in the marketplace--whether through an employer or a private health insurance contract. While financial planners may or may not sell the actual insurance that they recommend, it is, nevertheless, important that planners understand the basic issues involved in medical insurance planning and policy selection.
High costs are associated with health care in America. According to the 2006 Kaiser/HRET Employer Health Benefits Survey1 the annual premium for an employer-provided health plan covering a family of four averaged nearly $11,500, with the employee's portion averaging $2,973. Annual premiums for single coverage averaged over $4,200. Employees contributed 10 percent more than in 2005. In fact, 16% of the U.S. gross domestic product is tied directly to health care, and this is expected to increase to 20% by 2015. But perhaps most alarming is that the percentage of all firms offering health benefits declined from 69 percent to 60 percent over the last 5 years. Retirees are not immune to cost increases as evidenced by the substantial annual increases in Medicare Part B premiums over the past five years. Further compounding this problem is the projection that national health expenditures, and the personal share of that cost, will continue to increase for everyone.
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This chapter provides a review of the fundamental steps that can be used to analyze a client's current health insurance situation. The process is outlined in Figure 6.1--the Systematic Financial Planning Process for Health Insurance Planning.
Analyze the Client's Current Situation
Analyzing a client's current health insurance situation is relatively straight-forward, but nuances must be considered. Insurance information is typically collected during the data-gathering phase of the planning process. By exploring the current and future need for coverage as well the currently available coverage, the planner and client become informed of issues that may impact the need for or selection of health coverage. Issues to be considered during this step include:
* family health status and related health history;
* family demographics which may trigger insurance needs;
* assets available for use in the case of a catastrophic health claim;
* lifestyle choices that may impact the availability of insurance benefits;
* working in a hazardous profession or occupation; and
* concerns over future unemployment, career changes, or retirement.
The next step in the analysis of the current situation focuses on a review of the client's currently in-force coverage or tax-advantaged accounts. Gathering a variety of information about a client's health insurance situation is critical to a thorough analysis of the current situation.
Determine and Quantify the Client's Need for Health Insurance
Unlike the analysis of life insurance needs--where the answer to the question of "how much" yielded a dollar need for life insurance--the analysis of needed health insurance coverage is not so straightforward. Yet, the logic of the question is similar. Recall that the formulas for determining life insurance needs considered financial risks or potential financial needs to be funded through life insurance proceeds. Similarly, determination of the amount of health insurance needed must focus first and foremost on the potential financial risks, or needs, to be met. Family health history can be an important indicator. Anticipating significant medical expenses, for example, based on family history will help determine if the lifetime coverage limit for a plan is sufficient.
Unfortunately, quantifying the amount of need and the associated costs is likely an unknown. Given the vagaries of life, there's no way to predict a major accident or disease. In comparison, the impact of premium payments on cash flow may be significantly less than the impact of possible uninsured losses on net worth or the potential restrictions on care for the uninsured. The fear of the unknown must also be tempered by client realities and the logic of balancing insurance premium costs with other competing financial objectives.
With the different group coverage options available to two-income households, clients may wonder if "he, she, or we" should purchase/provide health insurance coverage. The planner can be instrumental in helping clients analyze the optimum balance between "how much coverage," "who's coverage," and premiums paid. But resolution of these questions hinges on a thorough analysis of the current situation so that both planner and client are alerted to potential needs for health insurance coverage.
Some may question how new options for "opting out" impact health insurance coverage decisions. Two-income households should consider questions of coordination of benefits between plans, the cash flow advantage of opting out of coverage, and the ease of recordkeeping through one plan. Clearly, opting out should not be a consideration unless comprehensive coverage is available through another household member. With children, the situation becomes even more difficult. If both parents provide family coverage, then the parent whose birthday comes first in the year is the primary provider according to the coordination-of-benefit rules developed by the National Association of Insurance Commissioners (NAIC).
A child's college graduation or a 23rd, 24th, or 25th birthday may precipitate the loss of health insurance coverage under a parentally provided policy. Children of clients who, because of age or educational status, move from dependent to independent tax status may be eligible to continue health insurance coverage through a COBRA extension from their parent's health insurance policy. This strategy is appropriate when a child has a pre-existing condition and may not obtain a job for an indefinite period of time or has a job but is not immediately eligible for coverage through the new employer. The premium for the continuation of the coverage through a COBRA extension may be high. However, the premium costs may seem minimal when compared to the potential costs faced by an uninsured young adult.
Less expensive alternatives than the COBRA extension may also be available. For example, the child may be able to purchase short-term coverage from a private provider. For a child enrolled in college or graduate school, it may be possible to purchase a health policy through a university-sponsored provider. The planner can serve an important role by alerting the client to the issues surrounding the loss of health insurance coverage, by analyzing alternatives available, and by recommending a choice.
Health Insurance Planning Tip: Continuation of Coverage for Graduates
Clients with children approaching college graduation should consider purchasing a short-term health insurance policy as a graduation gift. While families with COBRA eligible coverage have a window of 63 days for a child to find replacement coverage without being subject to pre-existing condition rules, those families with a non-COBRA eligible policy have zero days. Either way, the child has no health insurance coverage during the lapse.
Finally, health plans of retired or self-employed clients need special evaluation. Some retired clients may be covered under a former employer's health plan. Typically, this type of coverage is secondary to Medicare, but not always. Knowing exactly how a plan is structured is important. If a client qualifies for Medicare the use of Medicare supplemental plans should be reviewed, including the six-month window for purchasing a Medigap policy following the client turning age 65 or enrolling in Medicare Part B. Self-employed clients may be restricted in the type of coverage available, as may be clients who work for small employers. Some self-employed individuals access available group coverage through a spouse or partner. Otherwise, a thorough analysis of underwriting issues, product providers, and needs of the small business owner or employees, as well as the tax implications, must be considered.
Whereas planners may have little flexibility in recommending a specific health insurance plan to clients, they can be instrumental in the choice of plan and plan options available. The majority of Americans purchase health insurance through employer-sponsored plans. Costs for employer-sponsored plans can be as much as 50% less than purchasing insurance in the private market; but this is not always the case due to the size, type, or claims history of the covered group. The majority of plans offered through an employer are generic, although multiple managed care plans and options for coverage may be available. Compounding the complexity of this analysis is the availability of multiple plans in two-earner households, as noted above.
Furthermore, an analysis of the current situation should include a comprehensive evaluation of other types of medical coverage or benefits either used or available--from one or both partners. The use of high deductible plans in conjunction with a Health Savings Account or other available benefits within a Section 125 plan, including flexible spending arrangements, also should be considered. As these simple examples illustrate, the first question regarding the need for and amount of health insurance coverage needed is a very relevant question to explore with financial planning clients. The second step in the process further expands the analysis and informs the decision on the type of plan(s) chosen.
Medicare Planning and Eligibility
Generally, Medicare is available for people age 65 or older, younger people with disabilities, and people with end stage renal disease. End stage renal disease is defined as permanent kidney failure requiring dialysis or a transplant. Medicare has three primary parts. Part A is a hospital insurance plan. Part B is a voluntary medical insurance plan with a monthly premium. Part D is a prescription drug benefit. Those who did not pay Medicare taxes for at least 10 years or were never married may not be eligible for Part A, but may be able to purchase the coverage if age 65 or older and a citizen or permanent resident of the United States. A brief description of Part A, B, and D follows.
Medicare Part A, hospital insurance, helps cover costs for in-patient care in hospitals, critical access hospitals, and skilled nursing facilities. Benefits for the latter are available only following a related 3-day hospital stay. Part A also covers hospice care for the terminally ill and some home health services prescribed by a doctor, including durable medical equipment and supplies. In addition to services and supplies covered as part of hospital or skilled nursing home care, Part A includes coverage for pints of blood given at a hospital or skilled nursing facility. Although the costs of some benefits are fully covered, coinsurance and deductibles also may apply.
Medicare Part B, medical insurance, provides benefits for doctors' services, outpatient hospital care, some home health services, and some other medical services excluded from Part A, such as services of physical and occupational therapists or speech pathologists. Part B helps pay for these covered services and diagnostic testing and supplies when judged medically necessary. The listing of covered services is extensive, ranging from ambulance services when medically necessary to transplants, yet restrictions and limitations on services do apply.
The base monthly Part B premium in 2008 is $96.40 for those with 2008 income less than $164,000. The premium is higher for those with incomes that exceed this threshold. This monthly premium is generally deducted from the client's Social Security, Railroad Retirement, or Civil Service Retirement check. In addition to the monthly premium for Part B, annual deductible and coinsurance provisions also apply. Effective in 2007, premium charges for Part B are "means tested." In 2008, consumers with incomes in excess of $82,000, or $164,000 for couples, are required to pay a higher premium with the premium pro-rated on the basis of income. Singles earning over $205,000, or couples earning over $410,000 will pay the highest premiums of $238.40. Some programs are available to reduce Part B premiums for those with limited incomes.
Medicare Part D, Medicare prescription drug coverage, provides coverage for both brand-name and generic prescription drugs at participating pharmacies. Medicare prescription drug coverage provides protection for people who have very high drug costs. Everyone with Medicare is eligible for this coverage, regardless of income and resources, health status, or current prescription expenses. A client's decision to enroll in Part D depends on the kind of health care coverage available at retirement. Clients may either join a Medicare prescription drug plan or they can join a Medicare Advantage Plan or other Medicare Health Plans that offer drug coverage. According to the Social Security Administration, when clients join Part D they will pay a monthly premium, which varies by plan, and a yearly deductible (no more than $250 in 2008). Clients will also pay a part of their prescriptions costs, including a co-payment or coinsurance.
The Medicare + Choice program, which is sometimes referred to as Part C of Medicare, is an alternative to traditional Medicare programs. Medicare Part A and Part B coverage is required to be eligible. Medicare + Choice Plans allow consumers to seek benefits through a private health maintenance organization (HMO) or a preferred provider organization (PPO, which will probably cost more) and may include extra benefits such as prescription drugs, dental care, and routine physical and vision services. Originally enacted in 1997, this program has been renamed the Medicare Advantage Program and was expanded in 2006 to offer more choices for both urban and rural consumers.
To learn more about the changes in Medicare plans and benefits, visit the Internet site at www.medicare.gov. To identify Medicare Advantage Programs available in a geographic area and any extra benefits offered by these plans, visit the Medicare Personal Plan Finder at the same site.
There are a variety of expenses that are not covered under either Medicare Part A or Part B. Some exclusions affect only selected groups of Medicare beneficiaries (e.g., exclusions for acupuncture, cosmetic surgery, or health care received outside the U.S.). Other exclusions for routine physicals, eye care, foot care, dental care, hearing aids or custodial care at home or in a nursing home affect far more consumers. It is important that financial planners and their clients are fully informed of these exclusions. Clients who assume coverage may find themselves exposed to unreimbursed costs if they use these services. Knowledge of this may help a planner develop strategies to cover such expenses with other private sources of insurance, such as Medigap coverage, or through self-insurance techniques.
Document and Evaluate Current Health Insurance Coverage_
The second step in the assessment of the current situation focuses on documenting and analyzing all currently in-force health insurance coverage and use of tax-advantaged accounts for all household members. At this point, the planner should have a solid foundation for considering the match between the current and projected needs, as outlined above, and the available health care plans and tax-advantaged accounts in place.
Essentially, there are two ways in which a planner can assist a client who has an employer-sponsored plan(s). First, the planner can offer advice regarding the attractiveness of the plan(s) by conducting a thorough evaluation of the plan features. The following factors should then be evaluated to ensure that the coverage is meeting current and anticipated needs:
* current deductible;
* current co-payment;
* current co-insurance;
* current stop-loss limit;
* lifetime maximum or catastrophic coverage;
* excluded coverages;
* out-of-network restrictions and freedom of choice if an HMO, PPO, point-of-service (POS), or exclusive provider organization (EPO) plan;
* current annual premium; and
* access to COBRA benefits.
If a particular insurance plan is the only one available to the client, then the analysis stops here, aside from perhaps establishing a flexible spending account, if judged a prudent method for meeting out-of-pocket expenses.
The second and maybe more important way the planner can offer advice is in cases where more than one health plan is available, either by one employer, or for couples or partners, across both employers. If multiple plans are available, then a similar cost-benefit analysis should be conducted by the planner for each health provider, assuming that human resources, or other employer-provided sources, are not available to assist with the analysis. On the basis of this information, the planner and client can begin to take action to adequately protect the health of the client's household while minimizing or eliminating duplicative coverage. For instance, some organizations provide employees with a choice of managed care plans (e.g., HMO, PPO, etc.) or a traditional indemnity plan. Decisions about the coordination of benefits between two plans must also be considered, as well as the option for each partner to carry an individual plan, if no coverage is required for children.
Special consideration must be given to couples with children. In cases where both parents are providing family coverage, the child's primary coverage will be determined by which parent's birthday comes first in the calendar year. In these cases, any coverage provided by the other parent, spouse, or guardian will be considered excess coverage for benefit purposes. In the case of unwed or divorced parents, the primary provider of coverage is generally the parent granted custody, unless otherwise determined by a court decree. Therefore, matching a client's lifestyle, as well as budget or health needs, with an appropriate plan is one way for a comprehensive financial planner to add value to the client/planner relationship.
Although the analysis of the client's current coverage is the advisor's responsibility, based on client provided information, another important task is communicating findings to the client. Summarizing and presenting a review of the current policy coverage within a comprehensive plan can be done in a number of ways. The Health Insurance Current Situation Summary below provides a simple, but thorough approach.
Health Insurance Current Situation Summary
* You currently are insured under a health maintenance organization (HMO) plan provided by your employer: all family members are covered under this plan.
* The plan does not charge a deductible; co-payments are $20 per visit.
* Based on the data you provided, your household is annually paying:
* $444 in dental premiums;
* $240 in eye care premiums;
* $2,700 in health insurance premiums.
* $180 annually in medical co-payments; and
* $300 annually for prescriptions.
* Your health insurance is an employer-provided benefit, paid on a pre-tax basis.
* You have adequate insurance to provide for your health, dental, and visual needs.
* Your employer offers a Section 125 cafeteria plan, with other benefits that you are not currently utilizing. These benefits and other changes in your employer-provided health plans should be periodically reviewed for future applicability to your situation.
Review Prospective Health Insurance Planning Strategies
After completing the analysis of the client's current and projected health plan needs, the second step in the analysis and evaluation of the client's financial status focuses on the array of strategies for choosing the most appropriate product(s), structuring the insurance contracts, coordinating benefits between contracts, coordinating benefits with social insurance, if applicable, and establishing or optimizing other tax-advantaged accounts to meet the client's needs. Increasing a client's confidence to handle the financial loss associated with serious illness and to minimize the lingering financial and emotional affects of that loss solidifies a strong working relationship.
Choosing the Health Insurance Plan: General Considerations
Before considering specific health insurance planning strategies, the planner should ascertain if the client's current and short-term needs are best met through a traditional indemnity health insurance plan or a managed care plan option. The Comparison of Health Insurance Plans table below provides a comparison of common health insurance plans.
Keep in mind that choices are sometimes limited to plans offered by the client's employer and that annual plan changes are typically allowed. But it is important to explore client preferences that reflect both quantitative aspects of the analysis as well as qualitative, or more intangible preferences that may supersede cash flow issues, when something as personal as family health care is concerned.
Figure 6.2 provides a decision tree to help address the question of which type of health policy may be the most appropriate. Helping the client choose the type of health insurance that best matches lifestyle, health situation, medical usage, and anticipated wellness is an important consideration when making health insurance recommendations. A clear preference on health insurance coverage can further inform the review of specific product and procedural strategies.
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Identify Prospective Health Insurance Planning Strategies
The following generic strategies represent a cross-section of product and procedural approaches used by planners to meet a client's health insurance needs over the life cycle. Fundamental advantages and disadvantages of each are noted, as well as unique caveats that must be considered.
Product Strategy 1: Establish a Health Savings Account (HSA) in conjunction with a Qualified High-Deductible Health Insurance Plan (HDHP) (For clients aged 64 or younger and not a dependent of another individual)
Advantage: This strategy works well for self-employed clients, for those without access to cost-efficient group plans, or for those with access to qualifying high-deductible group health plans (HDHP), an option increasingly available from more employers. The combination of a health savings account (HSA) and HDHP offers a number of benefits to those who have minimal health care needs and want greater control over the cost of medical care and insurance. Because of the high deductible plan, premiums are significantly lower than typical health care plans.
To qualify as a high deductible health insurance plan in 2008, an individual insurance plan must have at least a $1,100 deductible and a stop-loss limit of no more than $5,600. For a family plan to qualify, the deductible must be at least $2,200, with a stop-loss limit of $11,200.
The HSA is similar to an Individual Retirement Account (IRA) for health care related expenses. The client has access to a catastrophic health plan, and the benefit of an above-the-line tax deduction for post-tax contributions or a tax-exemption for pre-tax contributions to the account. If available to an employee, a HSA may be funded up to the 2008 contribution limit of $2,900 for an individual and $5,800 for a family, with pre-tax salary reductions or with employer contributions that may be available through a Section 125 plan. Contributions are not subject to state or federal income tax or FICA withholding. There is also a catch-up contribution ($900 in 2008) available for persons aged 55 to 64.
Assets in the account are not taxed as they accumulate. Distributions for qualifying medical expenses are excluded from income. Any funds remaining in the account not used for medical expenses can be used after age 65 for any purpose without penalty.
To be eligible for an HSA, a person must be covered by a qualifying highdeductible health insurance plan and not have access to other health insurance, such as a spouse's plan. Also, the person must be younger than age 65, the age of eligibility for Medicare. In addition, the person must not be a dependent of another person.
Disadvantage: Only clients covered by a qualifying high-deductible health insurance plan are eligible. Annual contribution limits, as well as the allowable above-the-line tax deduction, are limited, but increase annually.
Distributions made for any other reason than to pay for qualified medical expenses are subject to income taxes. In addition, such distributions are subject to a 10% penalty unless made after death, disability, or age 65.
Caveat: HSA accounts are portable and require that contributions be managed, most typically through mutual funds or bank accounts. As is the case whenever an investment is made, the custodian of the account should be evaluated in terms of investment alternatives, costs, and fee structure. Many smaller banks, and even some specialty banks, are acting as HSA trustees. They offer fixed-interest funds and other account types for the qualified deposits.
Product Strategy 2: Maximize the Benefits of a Section 125 Plan (For employed clients)
Advantage: IRC Section 125 provides employees with several advantages for choosing, using, and paying for health insurance premiums, health care expenses, and other benefits. Section 125 plans, commonly known as "cafeteria plans" or flexible benefit plans, make it possible for employers to offer their employees a choice between cash and a variety of nontaxable benefits. These plans must allow employees to choose between two or more qualified benefits (i.e., life insurance, health insurance, accidental death and dismemberment, long-term disability insurance, child and dependent care costs or adoption assistance, group legal services, or medical expense reimbursement) and cash, or another taxable benefit which is treated as cash. Nontaxable benefits, such as disability insurance purchased with after-tax dollars, may also be included in a cafeteria plan.
The benefits chosen are typically paid for with pre-tax dollars through employee salary reduction agreements or "credits" provided by the employer. Employee contributions are made by contributing a portion of salary, on a pre-tax basis, to pay for qualified benefits. Salary reduction contributions are not considered to be actually or "constructively received" by the participant. Therefore, contributions are generally not considered wages for federal or state income tax purposes (some exclusions apply). Also, plan contributions generally are not subject to FICA. In addition, employer-provided "credits," often stated in dollar amounts, are used to purchase qualified, or non-taxable, benefits. Although the credits may vary with employee age, service, or salary, the plan cannot offer an undue advantage to highly compensated employees.
Because of their complexity, cafeteria plans are generally available in mid- to large-size firms. Self-employed clients are not eligible to establish these plans, although other tax advantages for health and retirement plan contributions are available.
Once an employee has elected benefits for that plan-year, the choice can only be changed in limited circumstances. Under change-in-status rules, a plan may permit participants to revoke an election or make a new election with respect to accident and health coverage, dependent care expenses, group-term life insurance, or adoption assistance if a qualifying event occurs and the participant makes a change in a plan within 31 days of the qualifying event.
Qualifying change in status events include
* a change in legal marital status;
* a change in number of dependents or eligible family members;
* a change in employment status of the employee or changes affecting the employment of covered family member;
* cases where the dependent satisfies or ceases to satisfy the requirements for eligibility;
* a change in residence for the employee, spouse, or dependent; and
* the commencement or termination of an adoption proceeding, for purposes of adoption assistance.
Many cafeteria plans offer a salary reduction agreement, or premium-conversion plan, or premium-only plan for the purchase of health or life insurance coverage. Pre-tax salary reduction agreements may also be used to fund a Health Savings Account and high deductible health plan. A flexible spending arrangement (FSA) is another tax-favored tool that allows employees to accumulate pre-tax dollars through salary-reductions for the reimbursement of selected expenses.
For health FSAs and dependent care assistance FSAs, the allowable reimbursements are limited to those eligible for the medical deduction or the dependent care tax credit, respectively. Health FSA-eligible medical expenses have been broadened to include over-the-counter medications. Vitamins, dietary supplements, and cosmetics continue to be excluded. But expenses for an herbal remedy or a weight loss program, if prescribed by a physician as medically necessary, may be covered.
A health FSA must provide "uniform coverage" throughout the coverage period. (2) FSA expenses are treated as having been incurred when the participant is provided with the medical care resulting in an expense, not when the participant is billed or pays for the care. Reimbursement requests can be submitted, with restrictions, after the plan year ends for expenses incurred during the plan year.
A dependent care FSA is established and maintained in a similar manner as a health FSA. The dependent care FSA is used to pay for qualified dependent care expenses, such as child care and elder care costs incurred, when both spouses are employed, unless one is disabled or a full-time student. Dependent care FSA coverage does not have to be uniform during the coverage period. Thus, a participant is only entitled to reimbursement of amounts actually contributed to the plan and available in the participant's account to date. The maximum tax-free reimbursement is $5,000, although income restrictions apply to determine the maximum allowable contribution.
Disadvantage: Section 125 plan options usually must be chosen prior to the beginning of the plan year during the open-enrollment period. Once established, adjustments to the amount of salary reduction during the year are not allowed, unless there is a qualifying change of family or work status. Careful estimates of out-of-pocket medical and dependent care expenses are necessary to avoid loss of contributions if flexible spending accounts are used. Any balance remaining in the account at year-end will be forfeited.3 "Bunching" of medical services within a year can avert the loss of account funds. In addition to nonqualifying health expenses, premiums for other health care coverage or for long term care insurance are also excluded. Dependent care reimbursements from a FSA reduce the total dependent care expenses eligible for calculation of the dependent care credit.
Product Strategy 3: Purchase a Medigap Policy to Supplement Medicare Coverage (For clients aged 65 or older)
Advantage: Traditional Medigap insurance is available to residents of most states. A few states have their own specific Medicare supplemental policies. Acceptance by an insurance company into a Medigap plan is guaranteed once a client reaches age 65 and enrolls in Medicare. Clients have six months to apply for a Medigap policy. Clients cannot be turned down, regardless of health status, if they apply within the six-month window.
Most Medigap insurance is sold in 10 standardized plans, shown in Figure 6.3. Every insurance company offering Medigap insurance provides the same coverage, although premiums may differ. Every company offering Medigap insurance must offer Plan A. In addition, companies may have some, all, or none of the other plans.
Basic benefits include
* In-patient Hospital Care: Covers the cost of Part A coinsurance and the cost of 365 extra days of hospital care during the client's lifetime after Medicare coverage ends.
* Medical Costs: Covers the Part B coinsurance (generally 20% of Medicare-approved payment amount) or co-payment amount, which may vary according to the service.
* Blood: Covers the first 3 pints of blood each year.
Beginning in 2006, two new standard Medigap plans are available. These two plans do not include the entire core benefit package. Instead they offer catastrophic coverage at a lower premium.
* New Plan K includes (1) coverage of 50% of the cost-sharing otherwise applicable under Parts A and B, except for the Part B deductible; (2) coverage of 100% of hospital inpatient coinsurance and 365 extra lifetime days of coverage of inpatient hospital services; (3) coverage of 100% of any cost-sharing otherwise applicable for preventive benefits; and (4) a limit on annual out-of-pocket spending under Part A and Part B to $4,440 (in 2008).
* New Plan L includes (1) coverage of 75% of the cost-sharing otherwise applicable under Parts A and B, except for the Part B deductible; (2) coverage of 100% of hospital inpatient coinsurance and 365 extra lifetime days of coverage of inpatient hospital services; (3) coverage of 100% of any cost-sharing otherwise applicable for preventive benefits; and (4) a limit on annual out-of-pocket spending under Part A and Part B to $2,220 (in 2008).
Medigap insurance offers the advantages of a standardized insurance policy, with a range of supplemental coverage, for those on Medicare. With careful selection, and attention to company ratings and consumer satisfaction rankings, a Medigap policy can be a cost-effective solution to the limitations of Medicare coverage. Advisors and their clients should compare the projected Medigap premium with the potential out-of-pocket costs for deductibles, coinsurance, and other health care needs not covered by Medicare to make the cost-effective selection. Medigap policies are particularly useful for clients who cannot continue or cannot afford to continue any companyprovided health benefits after retirement.
Disadvantage: Premium costs for the 12 standard plans can be quite varied. Clients who do not enroll within six months of turning age 65 can be denied coverage or shifted to higher risk groups at higher premiums.
Caveat: It is illegal for an insurance company to sell clients a Medigap policy that substantially duplicates any existing coverage, including Medicare coverage. A client may postpone purchasing a Medigap policy if working past age 65 and covered by employer-sponsored health insurance, or if not working but still covered by a spouse's employer-sponsored plan. Clients may still enroll in Medicare, but the employer-sponsored insurance will be the primary payer, and Medicare will be the secondary payer. Medicare will pay any costs covered by Medicare that are not covered by the employer's plan. If clients find themselves in this situation, they may want to enroll in Medicare Part A, since it is free. Remember, however, that if clients enroll in Medicare Part B, the open enrollment period for Medigap starts.
Procedural Strategy 1: Monitor Health Insurance Coverage
Advantage: Conducting an ongoing review of a client's health insurance plans is something that comprehensive planners routinely do as part of the planning process. For this reason, it may seem redundant and unnecessary. Including this strategy as a specific recommendation or in a structured client-planner "to do" list reminds clients that they too have a responsibility for staying abreast of plan changes and insurance triggers.
Disadvantage: In many cases, the flexibility of changing the plan within any give year will be minimal and likely limited to the plan open-enrollment period. It is still prudent to recommend that the client continue to monitor any potential employer-provided alternatives or modifications available to the client or spouse/partner, as well as any other household changes that may impact health care planning options.
Procedural Strategy 2: Use COBRA to Bridge Employment Termination or Continue Group Health Coverage for Dependents
Advantage: The COBRA law requires employers with 20 or more employees offering group health plans to provide employees and certain family members the opportunity to continue group health coverage in a number of instances when coverage would otherwise have lapsed. The lapse must occur as the result of an employee qualifying event, defined as:
* voluntary or involuntary termination of employment, except in the case of gross misconduct;
* coverage termination due to reduction in hours worked;
* eligibility for Medicare;
* divorce or legal separation; or
Two other non-employee qualifying events also are included: (1) dependents that cease to meet the dependency definition, or (2) the filing of Chapter 11 bankruptcy by the employer.
The cost of continuing this coverage must be entirely paid for by the employee. The employee or qualified beneficiary may be charged 102% of the applicable premium for this benefit. Although expensive, coverage would be available--while a privately-provided policy may not be available, might offer more limited coverage, or might be equally expensive.
Employers must send COBRA notifications to employees and their spouses when the employee is first covered under the group health plan. They must also send notices to both the employee and qualified beneficiaries whenever a qualifying event occurs. The latter notice must be sent within 14 days of learning of the qualifying event.
Qualified beneficiaries have 60 days to elect continuation of coverage. The maximum period that this continued coverage must be provided is generally 18 months, but in some cases it is 36 months.
Depending on the state, there may be a "small group COBRA" benefit available.
Disadvantage: A timely response is required. Election of coverage continuation must occur within 60 days of the employer-provided COBRA notification. The cost of insurance continuance can be 102% of total premiums, calculated as the employer and employee contributions and a 2% surcharge. Thus, it is possible that a policy that cost a client $2,500 annually as an employee may actually cost, for example, as much as $6,500 when COBRA benefits are used. The effect on cash flow must be weighed relative to the potential financial loss of an uninsured accident or illness for one or more household members.
Procedural Strategy 3: Maximize the Benefits of HIPPA to Extend COBRA Coverage
Advantage: The original COBRA law was amended by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The first change dealt with a disability extension. COBRA required that the 18-month maximum coverage continuation period be extended to 29 months if the qualified beneficiary was determined under the Social Security Act to have been disabled at the time of the qualifying event. HIPAA provided that if the disability existed at any time during the first 60 days of COBRA coverage, then the 29-month period applies. The 29-month period also applies to a nondisabled qualified beneficiary of the covered employee.
HIPAA also provide that a newborn infant or child placed for adoption with the covered employee during the period of COBRA coverage is entitled to receive COBRA continuation coverage as a qualified beneficiary. COBRA coverage can be terminated early for individuals who are covered under another group health plan. HIPAA provides that COBRA coverage may be cut short even if the new plan has a pre-existing condition exclusion unless the exclusion applies to a condition for which the insured is receiving treatment.
The most universally applicable modification dealt with the length of time pre-existing conditions can be excluded from a group policy. For instance, an employer may require that a new hire wait 60 days or more before participating in a group plan. Once the elimination period has been met, all medical expenses for the employee will be covered, after deductibles and co-payments have been paid. HIPAA states that pre-existing conditions cannot be secondarily excluded once the waiting period has been satisfied, as long as there has not been a break in health care coverage. In fact, HIPPAA allows individuals to switch jobs and obtain employer-sponsored health insurance coverage without satisfying any waiting period for pre-existing conditions.
To take advantage of HIPAA, a person must prove that he or she was insured during the previous 12 months and has not been uninsured for more than 63 days. Workers who may be unemployed more than 63 days should consider the COBRA "bridge" or purchasing an individual short-term policy to maintain continuous coverage, and thus avoid loss of coverage for preexisting conditions. (Some insurers do not consider short-term medical or individual coverage to be creditable toward the continuous coverage requirement.)
The maximum allowable pre-existing period exclusion is 12 months for regular enrollment and 18 months for late enrollment. Group coverage time of less than one year with a previous employer applies to these limits (i.e., prior coverage of 3 months would reduce the waiting period with the new employer to 9 months). The exclusion can only be applied to expenses associated with the pre-existing condition. HIPAA defines these as any condition for which treatment was received during the 6 months prior to enrolling with the new employer.
These term and coverage limits are very important and should be discussed with any client that is anticipating a job or career change, change in employment or marital status, or other qualifying event. Recommending the COBRA "bridge," or the purchase of a private policy, is especially important when ever a client anticipates being between positions, or ineligible for coverage, for more than 63 days and has a pre-existing condition.
Disadvantage: While the HIPPA changes in the disability extension, coverage for an adopted child, and continuation of COBRA coverage for treatment of a pre-existing condition are beneficial, applicability is fairly limited in scope. Eliminating the exclusion on pre-existing conditions is more widely applicable, but utilizing the benefit requires careful planning to insure continuous coverage requirements are met and are consistent with the individual insurer. Election of the COBRA "bridge" benefits requires a timely response and may be expensive, as can be a privately-provided individual policy. But the fiscal and emotional benefits of continuous insurance protection, including the pre-existing condition coverage, should not be overlooked.
Chapter-Based Case Study
A Client-Based Health Insurance Recommendation
As with each financial planning issue, once the analysis of the current situation is complete, the next step is to cull or combine possible strategies and develop an actionable recommendation. Implementation is also an important part of any financial plan, but attention to timing is especially important when health insurance issues are considered. For example, the meeting of client and planner may occur at one time, while the open-enrollment for employer-provided plans may occur during another month (often different months for two-income households). The need for coverage changes prompted by demographic or lifestyle changes may occur at yet another time. It is necessary that the planner and client coordinate their required actions.
Health care plans must provide ample, yet cost-effective coverage for all household members, as well as meet the client's desires for care provider flexibility. It is for these reasons that health care planning recommendations can offer unique challenges--many of which focus on issues of coordination, as outlined below.
* Coordination of Plans. A combination of product and procedural strategies may be necessary to best meet the needs across multiple employer group plans or between plans for the coordination of benefits and primary and secondary payments. Plan choices must also be coordinated with the use of tax-advantaged options to pay for unreimbursed medical expenses or policy premiums. Options to consider, if applicable, include premium conversion, flexible spending accounts, HSAs, or the inclusion of premium costs or medical expenses as an itemized income tax deduction. For the self-employed, the effect of premium costs as an adjustment to income, or an above-the-line deduction, must also be considered. Finally, a recommendation to change a health care provider may also impact the decision on the long-term care provider, as well as the decision to participate in an HSA-qualified health plan or a flexible spending account. These aspects of plan coordination must be taken into account.
* Coordination of Plan Changes. Most clients will only be eligible to make changes during the annual open-enrollment period or in response to a qualifying mid-year event. Of course, these limitations do not apply if the client purchases a private policy, but this is the exception and not the rule. As with any sound recommendation, health care recommendations must be developed in anticipation of events that might create coverage gaps or restrictions.
Life events that should be considered in scheduled client meetings or that would necessitate a health care policy review include:
* employment change (especially retirement),
* impending high school or college graduation or a child reaching the plan age limit for coverage, or
* a change in the overall health of the client or other household member.
Coordinating needed health care plan changes and these life events, to the extent, possible, can help the client avoid hasty decisions. In the worse case, they may help avoid a negative impact on cash flow resulting from a lapse in coverage or coverage replacement with a more expensive policy. Furthermore, if there is a break in continuous coverage, then the client could be subjected to pre-existing condition exclusions for 12 to 18 month in accordance with HIPAA.
* Coordination of Timing. With most other forms of insurance, the planner can directly execute or at least facilitate the implementation. However, health insurance changes are often left solely to the client. While waiting for the open enrollment period, clients could forget or fail to make the necessary changes. It is very important that the planner and client have a system in place to ensure that changes are made.
In addition to coordinating the timing of plan changes, the client may also need to coordinate the timing of health care expenditures to maximize benefits. For example, the "bunching" of medical expenses in one year may allow a client to periodically satisfy the 7.5% floor for claiming an itemized tax deduction. Conversely, that same strategy of "bunching" expenses may allow for more effective management of a health FSA, or the coordination of periodic elective expenses (e.g., new glass frames) with health FSA funding.
A Sample Recommendation: Maintain the Existing Group Coverage but Add a Flexible Spending Account_
Comprehensive health insurance plans often offer additional coverage for vision and dental needs for an additional premium cost. Depending on the age and health status of the household members, expanded coverage of this nature may be most cost-effective when children are younger or during the later years of employment when health costs for the client may be increasing. Although this example may be a gross generalization, it is important to attempt to match anticipated medical costs with the coverage purchased.
Routinely selecting the least expensive or most expensive health insurance coverage, without regard to the suitability of the plan, can have a negative effect on cash flow. The fear of the unknown surrounding questions of health status and future benefit needs may encourage the risk adverse client to select the most expensive coverage--"just in case." Conversely, those who are more comfortable with risk, or those who have not seriously considered the ramifications of limited or no coverage, may select the least expensive coverage. The benefits of the coverage relative to the anticipated costs incurred by the client's household, as well as the alternatives of meeting these expenses with post-tax dollars, and a possible tax deduction, or pre-tax dollars in a flexible spending account (FSA) must be weighed.
Sujana, a health-conscious divorced professional with no children, decided that turning 50 warranted a comprehensive financial checkup. She had recently completed a comprehensive physical exam and knew that health costs might start to rise with increasing age and more frequent diagnostic testing. Her doctor had declared her in excellent physical health, but her conservative nature and her concern over personal and financial independence prompted her to pursue an equally extensive financial checkup.
The planner asked about her various health plans available at work, including the option of a high deductible plan, and her typical annual out-of-pocket spending on health care. The planner also asked if she had considered an FSA--the same question her accountant had asked. Questions about the number of employees where she worked baffled Sujana until the planner explained that company size controlled the availability of federally-authorized protection of a lapse in insurance benefits should she leave the company or experience other qualifying events.
Based on her research from the company's Internet site, Sujana learned that both a preferred provider organization (PPO) and health maintenance organization (HMO) were offered, but the latter was not available at her company location. The monthly premium for comprehensive coverage for a single person was $32 per month, with five options for different combinations of out-of-network provider, vision, hearing, and expanded dental benefits. Applicable premiums ranged from $40 to $57 per month, depending on the combination of benefits.
Because of her good health, Sujana's expenses last year totaled only $1,225, over half of which was spent on her annual ophthalmologist exam and new eyeglass frames and lenses. No expense for dental care was incurred due to the "basic services" included in the comprehensive plan. Expanded dental would pay up to $1,500 annually for restorative and orthodontic services, neither of which she anticipated needing. Sujana's current health care providers were all in-network. Based on this information, Sujana and her planner agreed that only two options were viable: add vision care to her coverage or consider a FSA.
The plan packaged vision, hearing, and expanded dental together at a monthly premium of $49, or an additional cost of $17 per month. Because Sujana did not reasonably anticipate a need for the hearing or expanded dental coverage, analysis focused on the vision care. Over a 24 month period, the insured would pay a maximum of $35 for a routine examination and the plan would pay up to $75 for frames and up to $75 for bifocal lenses. A review of her expenses revealed that for an additional $404 in premiums, Sujana would receive benefits of approximately $220 in benefits (maximum of $70 to the ophthalmologist and $150 for frames and lenses). Given her anticipated need for services, adding the package of vision, hearing, and expanded dental was not cost effective.
Because of the combination of salary, good health, and good health care coverage, Sujana was unlikely to ever incur out-of-pocket expenses in excess of 7.5% of her adjusted gross income. Her plan year deductible was $200 and the out-of-pocket expense limit was $1,500. However, a FSA offered the benefit of tax-advantaged dollars (30% federal and state marginal tax bracket plus 7.65% FICA). Given Sujana's most recent annual expenses of $1,225, a FSA offered an estimated tax savings of $461 [$1,225 x (30% + 7.65%)].
Sujana learned that no fees were incurred to establish the account. The allowable annual deposit ranged from $200 to $5,000 per plan year. On the basis of her anticipated expenses and the "use or lose it" rule, Sujana and her planner agreed that funding the account for $1,080 was a good compromise. This would result in a tax-savings of approximately $407 [$1,225 x (30% + 7.65%)], which could off-set any post-tax dollars that might be necessary to meet expenses in excess of $1,000.
With the analysis complete and the recommendation resolved, Sujana made notations to sequence the necessary steps for action. She learned that the FSA plan year is July 1 through June 30, with all account forms due to the employer by May 15. To maximize the benefits, she would need to postpone her routinely scheduled spring eye care exam until after July 1. The health care plan year follows the calendar year of January through December, with an open-enrollment period during the preceding October. No changes would be necessary to her basic coverage.
The Insurance Planning Recommendation Form below illustrates how a recommendation to maintain current coverage and add a flexible spending account can be explained and presented to a client using a Planning Recommendation Form.
Health Insurance Cost Information: www.nchc.org
Information about Medicare: www.medicare.gov
All About Medicare, published annually (Cincinnati, OH: National Underwriter Company).
General insurance information: www.insurance.com or www.insurance.info/ individuals/health/ or familydoctor.org
Section 125 plan information: www.irs.gov
Health Savings Account Information: www.hsabank.com or www.hsafinder.com or hsainsider.com
Quantitative / Analytical Mini-Case Problems
1. A 40 year-old, unmarried client has been contributing to an HSA for the last three years using a salary reduction agreement through his employer. The stated effective annual rate on the account is 3% and the interest is compounded on a monthly basis. The client is in the 25% marginal federal tax bracket and the 5% marginal state tax bracket. Use this information to answer the following questions.
a. How much money does the client currently have in the HSA if the client has deposited $200 per month and did not make any withdrawals?
b. Because the client is in exceptionally good health, the client is also using this account as an additional retirement savings vehicle. How much money will the client have in the account at age 65 if the client maintains his current level of contribution?
c. How much will the client have at age 65 if the client contributes the maximum currently allowable every year? (Assume that the contribution and catch-up provision limits remain at 2008 levels.)
d. How much will the client have at age 65 if the client contributes the maximum currently allowable every year? (Assume that the contribution and catch-up provision limits increase by 2.5% each year (use 2008 limits as starting level) and ignore any minimum or maximum dollar change limitations.)
2. A 52 year-old client has come to you for assistance with funding her HSA. She has been told by her doctor that she will be facing knee-replacement surgery within the next five years. She was also told that her out-of-pocket expenses (deductibles, co-pays, and various other uncovered expenses including rehab) for the operation would total $4,000 if the operation happened today. Her open-enrollment period is currently open. She plans to wait exactly five years for the surgery.
How much money should she contribute on a monthly basis if the account pays a stated rate (APR) of 4% compounded quarterly. To determine her outof-pocket expenses at the time of her surgery, inflate the current cost by an effective annual rate of 7%.
Comprehensive Bedo Case--Analysis Questions
Often, health insurance is overlooked in the planning process because it is generally employer provided. As such, the planner has little control over the selection of the product and coverage of the insurance. Health insurance assessment, however, should not be overlooked in the planning process. Adequate lifetime limits should be examined, as should other aspects of the coverage and the potential for future changes.
Strategies using Section 125 plans and flexible spending account (FSA) alternatives should also be developed based on the Bedos' annual health care spending patterns, deductibles, and co-payments. Although it is unlikely that a planner would recommend that either Mia or Tyler purchase a private insurance policy, a cost analysis of other available policies offered during the open-enrollment periods would be appropriate. The family's goal of living a financially satisfying life must be weighed against the relative costs of health care options.
1. Develop a health insurance planning goal for the Bedos. When conceptualizing this goal, consider the following.
a. Is the goal developed in agreement with any or all goals and objectives that the clients have identified regarding health insurance planning?
b. What situational factors might influence their health insurance goal? Are these factors explicit, implied, or assumed? Is additional information required from the Bedos? If so, what?
c. What is the desired health insurance planning outcome for the clients?
2. Make a list of the lifestyle, occupational, and health factors that should be documented and evaluated for the Bedos. How might this information be obtained? How might it be useful in the current health insurance situation analysis? Also, make a list of life events that may impact the health insurance planning analysis for Tyler and Mia and that should be reviewed at subsequent client meetings.
3. Are there globally-accepted, client-specific, or planner-generated planning assumptions that will influence the health insurance situation analysis? List the assumptions as they might appear in a plan.
4. Make a list of specific policy features that should be evaluated as part of the documentation and evaluation of the Bedos' health insurance planning efforts.
5. Conduct a current health insurance situation analysis for the Bedos. Be sure to assess the following:
a. The lifetime benefit coverage provided by the Bedos' health plans.
b. The after-tax costs of their current plans compared to purchasing a private policy.
c. The use of a FSA as a heath insurance planning tool.
d. How COBRA impacts health insurance planning for the Bedos.
e. Should one of the Bedos' employers offer the option, would an HMO or high deductible health plan and Health Savings Account be a viable option for this household?
6. Summarize your observations about the Bedos' health insurance planning situation as they might appear in a client letter or plan.
7. Based on the goals originally identified and the completed analysis, what product or procedural strategies might be most useful to satisfy the Bedos' health insurance protection needs? When reviewing the strategies, be careful to consider an approximate cost of implementation, as well as the most likely outcome(s) associated with each strategy.
8. Write at least one primary and one alternative recommendation from selected strategies in response to each identified planning need. More than one recommendation may be needed to address all of the planning needs. Include specific, defensible answers to the who, what, when, where, why, how, and how much implementation questions for each recommendation.
a. It is suggested that each strategy be summarized in a Recommendation Form.
b. Assign a priority to each recommendation based on the liklihood of meeting client goals and desired outcomes. This priority will be important when recommendations from other core planning content areas are considered relative to the available discretionary funds for subsidizing all recommendations.
c. Comment briefly on the outcomes associated with each recommendation.
9. Complete the following for the Health Insurance section of the Bedos' financial plan.
a. Draft an introduction to this section of the plan (no more than 1 paragraph).
b. Explain the purpose of a FSA and the potential benefit to the Bedos.
(1.) The 2006 Kaiser/HRET Employer Health Benefit Survey is available at www.kff.org/insurance/7527/.
(2.) Uniform coverage means that the maximum amount of reimbursement (i.e., the annual election) must be available to the participant at all times. For example, if an employee elects a salary reduction of $100 per month for a health FSA, the annual election of $1,200, less any prior reimbursements, must be available for employee reimbursement at any time during the plan year without regard to the employee's actual accumulated contributions. The plan may not accelerate the payment schedule based upon the prior claims of the employee and reimbursements may only be made for claims incurred during the plan year. The plan year is typically 12 months, as specified by the employer plan.
(3.) IRS changes in 2005 permit a 2%-month grace period for the health FSA "use it or lose it" provision, but few employers have adopted the change due to the easier to manage "use it or lose it" calendar-year provision.
Comparison of Health Insurance Plans Preferred Provider Organization Plan Type Traditional (PPO) Cost Highest Middle-High Physician Least restrictive, Restricted to Choice but restrictions network; may go are increasing to outside network control costs with higher deductible and co-payment Hospital Least restrictive, Restricted to Choice but restrictions network; may go are increasing to outside network control costs with higher deductible and co-payment Estimated No estimate $11,765 * Annual Group available Plan Cost For a Four-person Family Appropriate Households that Households that For Whom? demand maximum would like some choice choice but with less expenses than a traditional plan Health Maintenance Point-of-service Organization Plan Type (POS) Plan (HMO) Cost Middle-Low Lowest Physician Restricted but Restricted Choice insured may see out-of-network provider for additional cost Hospital Restricted to Restricted Choice network Estimated $11,107 * $11,278 * Annual Group Plan Cost For a Four-person Family Appropriate Households that Households that For Whom? use medical services use medical services frequently, frequently but occasionally visit out-of-network providers * Source: 2006 Kaiser/HRET Employer Health Benefits Survey available at www.kff.org/insurance/7527/ Insurance Planning Recommendation Form Planning Recommendation Form Financial Planning Health Insurance Content Area Client Goal To maximize cost-effective health care options. Recommendation #: Priority (1 - 6) lowest to highest 5 Projected/Target $1,080 tax-exempt salary withdrawal Value ($) Product Profile Type Flexible Spending Account for Health Care Duration July 2008 - June 2009 Provider NECO Insurance Funding Cost per $1,080 tax-exempt contribution Period ($) Maintenance Cost per $0 Period ($) Current Income Tax Status Tax-Qualified X Taxable Projected Rate of Return NA Major Policy Provisions NA Procedural Factors Implement by Whom Planner Client X Implementation Date Before May 15, 2008 or Timeframe Implementation Procedure Contact employer benefits office and submit forms to NECO Insurance Ownership Factors Owner(s) Sujana A. Manawyth Form of Ownership NA Insured(s) Sujana A. Manawyth Custodial Account Yes No X Custodian NA In Trust For (ITF) Yes No X Transfer On Death (TOD) Yes No X Beneficiary(ies) NA Contingent NA Beneficiary(ies) Proposed Benefit Given the current employer-provided health insurance plan options, no change is recommended. However, funding a FSA for health care expenses will result in a net tax savings of approximately $407 on projected annual eligible reimbursements. Figure 6.3 Standard Medigap Plans Matched To Benefit Provisions Medigap Identifiers A B C D Basic Benefits [check] [check] [check] [check] Medicare Part A: [check] [check] [check] In-patient Hospital Deductible Medicare [check] [check] Part A: Skilled-Nursing Facility Coinsurance Medicare Part B: [check] Deductible Foreign Travel [check] [check] Emergency At-Home [check] Recovery Medicare Part B: Excess Charges Preventive Care Prescription Drugs Average Premium ** $1,000 $1,400 $1,500 $1,200 Medigap Identifiers E F * G Basic Benefits [check] [check] [check] Medicare Part A: [check] [check] [check] In-patient Hospital Deductible Medicare [check] [check] [check] Part A: Skilled-Nursing Facility Coinsurance Medicare Part B: [check] Deductible Foreign Travel [check] [check] [check] Emergency At-Home [check] Recovery Medicare Part B: 100% 80% Excess Charges Preventive Care [check] Prescription Drugs Average Premium ** $1,300 $1,500 $1,600 Medigap Identifiers H I J * Basic Benefits [check] [check] [check] Medicare Part A: [check] [check] [check] In-patient Hospital Deductible Medicare [check] [check] [check] Part A: Skilled-Nursing Facility Coinsurance Medicare Part B: [check] Deductible Foreign Travel [check] [check] [check] Emergency At-Home [check] [check] Recovery Medicare Part B: 100% 100% Excess Charges Preventive Care [check] Prescription Basic Basic Extended Drugs Coverage Coverage Coverage Average Premium ** $2,400 $2,500 $3,400 * Plans F and J also have a high deductible option. If clients choose this option, clients must pay $1,900 (in 2008) out-of-pocket per year before the plans pay anything. Insurance policies with a high deductible option generally cost less than those with lower deductibles. A client's out-of-pocket costs for services may be higher if clients need to see a doctor or go to the hospital. ** Average premium rates based on fixed annual premium for a male age 65 in the state of Kansas. Source: Kansas Insurance Commissioner: www.ksinsurance.org
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|Publication:||The Case Approach to Financial Planning|
|Date:||Jan 1, 2008|
|Previous Article:||Chapter 5: life insurance planning.|
|Next Article:||Chapter 7: disability insurance planning.|