The first use of insurance was to insure property for over sea voyages. Soon after there was insurance for property that didn’t move, buildings, inventory, raw materials, and the like. It wasn’t until recently that life insurance has come into its prime. In the beginning of the 20th century limited life insurance policies were written to cover the cost of funerals but that was as far as they went. Then in the 1950’s people began to realize the need for health and life insurance as a means to offset unexpected occurrences.
The reason that health and life insurance started to become commonplace is that for all of the time that people were insuring their property they weren’t insuring their greatest asset. Unless someone is independently wealthy the greatest asset they have is their ability to earn money. This ability to secure a paycheck far outweighs any current asset that someone may have.
What is Economic Death
Any unforeseen event that limits the ability of an individual to secure a paycheck is considered an economic death. Even if the event is not substantial enough to force a person completely out of work, if it significantly lowers the income attainable, it can be construed as a partial economic death.
For example, Joe Smith works at a factory where he makes $50,000 a year. If he works for 40 years he can safely assume he’ll make $2,000,000. With a little financial planning this should be enough to assure him a nice retirement.
However, there are several circumstances that could limit this potential income. There are potential accidents, illnesses, or economic situations that may cause him to either not be able to perform his job or cause his company to go out of business. These situations, these risk factors, are considered his exposure.
Three Types of Economic Death
How Can an Individual Respond to Risk
There are four universal responses to risk. These responses, and the actions they produce, define the probability of an individual succeeding or failing in the avoidance of serious risk repercussions
Risks that are Often Insured Against
There are an almost unlimited number of risks that can be insured against. Lloyd’s of London has become infamous for insuring celebrity body parts from Keith Richards two million dollar hands to Mariah Carey’s one billion dollar legs (CalgarySun.com 9). These are far from the norm but anything can be insured for a price. For those of us without such outlandish salaries the most common risks that are covered are accident and sickness.
These risks are monetarily offset in a legal contract that sets a premium (payable at a set interval) for an individual to obtain a lump sum disbursement upon either the completion of a set term or upon the occurrence of the risk that was being contracted to offset.
Health insurance coverage is important because one never knows when one will become ill. Granted, health insurance can be costly. Also, there are life circumstances which can make it seem impossible to get adequate health insurance coverage or payment of costs. For instance, denial of claims, reduced retirement benefits, job layoffs, and pre-existing conditions can be burdensome. Fortunately, there are ways to deal with these challenges.
Health Insurance Enrollment Choices and Subsidies
If working for an employer who offers health insurance coverage, during the open enrollment period, sign up to get a flexible spending account. The benefit of this is that one can use up to $5000 tax free to pay for out-of-pocket medical expenses. Also, participate in a mail-order prescription opportunity which enables payment of half of what one normally might pay for prescriptions at a drug store. In addition, purchase generic prescriptions when possible.
Until 2014, purchasing low cost group health insurance coverage via a professional association is one option to reduce health insurance costs if one is self employed or if an employer has suddenly cut health insurance benefits. However, in 2014, individuals with low income or middle income will be able to get subsidies that will enable them to purchase health insurance.
Stick With Medicare for Health Insurance as a Senior Citizen
If one has an illness and wants to be able to see any physician of choice, it is better to stick with traditional Medicare coverage. Also, most likely, getting Part D coverage for prescriptions along with Medigap can be a helpful choice to cover deductible costs and co-insurance costs.
Of note, some senior citizens have been signing up for private Medicare Advantage plans rather than the typical Medicare coverage. However, the fees to the plan administrators are going to be cut and there are concerns that some of these administrators will cut benefits or leave the health coverage market totally. That is why staying with Medicare coverage could be the best bet.
If Health Insurance Claims are Denied Keep Trying
If a claim is submitted and it gets denied, try again. In fact, chances are strong that the claim could get paid if one is very exact in going through the process described in the denial note. Always appeal in writing and send it via certified mail. In a formal letter, include documentation and be specific in the response to the reason that was given for the rejection of payment of the claim.
Also, include discussion of what the illness was, previous treatments that failed, consequences of not being able to receive care, medical records, and also put into the packet a note from the doctor. If the medical procedure was experimental, attach a copy of a medical journal article which says that the treatment can be an effective treatment. Or, if all else fails, go to the state insurance department and ask to get a patient advocate.
If things go far enough, the case will likely be reviewed by an independent review board. The review board may get involved through an employer’s health insurance plan or through the state insurance regulatory board. In the meantime, also negotiate with the physician and work out a payment plan which stretches payments out over time and makes treatment more financially affordable.
Health Insurance Options If Laid Off Work or If You Have A Pre-Existing Condition
Joining a health insurance group plan that one’s employed spouse is already a member of is an option for health insurance coverage if one has no job. Or, thanks to Consolidation Omnibus Budget Reconciliation Act (COBRA) requirements, one could remain in the group health insurance policy provided by one’s employer for 18 months after the job was ended although companies with fewer than 20 workers might be exempt from having to provide this.
Having a pre-existing condition or having a condition which is not included in coverage means that it might be necessary to be a part of the state high risk health insurance pool. In addition to the state high risk pools, there is also now a national high risk coverage pool that one can join as a result of health reform law.
Also, healthcare such as medical tests and medical exams are available at Walgreens or other drug stores these days. Medical evaluation may be done by a nurse practitioner instead of a physician. However, the medical care is available. Also, going to a community health care center is an option because community healthcare centers in many urban areas provide free medical care for those without health insurance or those who have low income.
Should a pet owner purchase pet health insurance? This is a question that should be considered carefully. Vets are now able to treat many more conditions in companion animals successfully, including feline cancer, and canine diabetes. However, these treatments come with a high price tag.
Statistics show that one out of every three pets will need some type of emergency pet care every year. Two out of every three companion animals will face a serious health problem sometime in their lives. Many pet owners believe that purchasing a pet health insurance policy is the best way to be prepared for unexpected veterinary emergencies. But is this really true?
Here are questions that should be answered before buying any kind of health insurance for pets.
Is Lifelong Pet Insurance a Good Idea?
Many people wonder if they should get pet insurance for a new puppy or kitten or wait until the animal is older. This is a good question.
Just like people, pets face many more health issues as they get older. This can make it very difficult to find pet health insurance for an older animal. Most companies won’t cover a companion animal who is older than nine years. If they do, the premiums will be very high.
Is the answer to buy pet insurance when the companion animal is younger? Maybe not. That $10-a-month premium for a kitten may increase as she gets older. How much will premiums increase? Can a certain premium be locked in until the pet is ten or twelve years old?
If she is treated for a certain condition, like feline diabetes, will this condition be considered a “pre-existing condition” when it comes time to renew the policy? If so, the company may refuse to insure her any longer, or may increase the premium substantially.
Also consider the cost of premiums over the pet’s lifetime. $15 a month comes to $180 a year. If the premium remains the same for ten years, the cost would be $1800, just for premiums. The premiums will probably increase if any claims are filed. Don’t forget about the co-pays and deductibles, too.
How Much is the Deductible? How Much Co-Pay is Required?
Every pet insurance plan has a deductible, which is the amount that the owner has to pay himself. Depending on the pet’s age, the deductible may be $50 or more for each procedure (not each visit). This can add up quickly if the animal requires several procedures.
The insurance company may also require that the pet owner co-pays ten to twenty percent of the vet bill.
Ask About Caps
The maximum amount an insurance company will pay per animal per year is called a cap. There may be a cap for each covered condition, plus an annual cap and a lifetime cap for each animal. Avoid nasty surprises by learning which caps apply to the pet, or its condition.
How Long Does It Take to be Reimbursed?
Be aware that the pet owner is expected to pay the vet at the time service is rendered. The pet owner fills out the insurance form and mails it in. It can take two to four weeks, or longer, to receive reimbursement.
Before buying a policy, ask how the reimbursement is calculated. The owner may be reimbursed for a certain percentage of the vet’s bill. Or the company may have a benefit schedule that lists what it will pay for each procedure. The company may only pay a certain percentage of this amount, not a percentage of what the bill actually was.
Always Read the Fine Print
Know ahead of time which conditions are covered, and which are excluded. Is there a waiting period before the insurance goes into effect? Does the owner get to choose which vet to use? Are prescriptions covered? What about emergency care?
Every insurance company is different, and each company offers many different plans. If a pet owner decides to invest in pet health insurance, it’s important to compare plans carefully, and to read the find print to find the best value for pet insurance.
Every day is a good day to start learning new ways to save money from that ever–loving saving money expert, Granny Ruby. She was always looking for new and better ways to save money on just about everything. Taking care of one’s family, especially their health care, is perhaps the most noble of all pursuits, and finding ways to do it cheaper was a life–long goal of Granny Ruby.
According to Hewitt Associates, a human resources consulting firm, the average worker’s out–of–pocket medical expenses fro 2017 will increase 10.1 percent to an average of $1,880. That means that in order to keep current levels of health care and health insurance, folks are going to have to increase overall income by 10 percent, or start cutting costs from an already strained budget. Here’s a few of Granny’s helpful tips for cutting medical and health care costs.
Save Money by Using Retail Clinics, not the ER
Prevention is always the best medicine, but there are times when a visit to the doctor or clinic is a necessity. For minor problems like a sore throat, flu shot, muscle sprain, or ear infection, try going to the local drug store or grocery store pharmacy. These days, most of these retail stores in–house care facilities are staffed with a nurse practitioner or physician’s assistant. There are several insurance companies that offer coverage for these retail care facilities.
These professional care givers are able to treat and diagnose most problems and they can offer treatment for a lot less than going to a doctor’s office. According to the Rand Corporation, a non–profit think tank, a visit to a local retail clinic can cost about a third less than going to an urgent care clinic or the family physician. Compare that with $570 for the average ER visit, according to the Rand study. Check with an the HR department at work, or with an agent or insurance representative for more details on specific insurance coverage.
Health Insurance Savings
It may be a good time to check all health insurance coverage limits and benefits. Getting the right amount of coverage and the right type of coverage is one of the best ways to save money. Some health insurance policies are made to appear like a great deal and may offer a low premium or deductible. Be careful and make sure all the details of the policy are adequate to cover any emergency or long–term health care issues.
Some health insurance policies that offer super low premiums or deductibles may only provide for less than $100,000 per accident or illness. If a person were to encounter a serious illness for which care might be months or even years, that small amount of coverage isn’t going to go very far. Someone’s going to get stuck with a lot of hospital, doctor, and medical bills and it won’t be the insurance company.
Granny would say that the best way to save money is to spend money wisely and get the most bang for a buck. In this case, buy a high–deductible health insurance policy with a minimum of $1 million coverage for each accident or illness. Also, make sure that all the policy coverage rules are understood clearly before signing anything. Different insurance companies have different rules for what is covered. Be sure to check with an agent or representative.
Check Medical Bills and Save Money
According to Medical Billing Advocates of America, as many as 80% of doctor and hospital bills contain some sort of error. Something as simple as a wrong billing code, wrong account number, or even incomplete information can cost the unwary consumer a great deal of money. These mistakes are so costly, a billing error discovery industry has sprung up in this country to find and recover these overcharges and errors in medical bills. Consumers can also get help with reviewing medical bills for free at the Patient Advocate Foundation at patientadvocate.org.
Mark Twain once said that the holy passion of friendship is so sweet and steady and loyal and enduring in nature that it will last through a whole lifetime, if not asked to lend money. Make a commitment today to start changing attitudes and misconceptions about money. Money is indeed a good thing if one learns to use it wisely.
As companies around the world look to save as much money as possible on their operations, employers are carefully evaluating employee benefit plan costs.
Group insurance benefits are typically subject to an annual renewal process.
At renewal, benefit plan managers have an opportunity to ensure that their insurance carrier is effectively providing essential employee benefits as economically as possible.
A popular option for saving clients money at renewal is the Administrative Services Only (ASO) plan.
Group ASO Plan Defined
ASO is now one of the fastest growing types of employee benefit arrangements. Under an ASO plan, employers are responsible for directly funding all claims that their employees incur. Plus, employers pay a fixed fee for administrative services like claim payment and management reporting. An insurance company or other financial institution usually provides those administrative services, but doesn’t collect any premiums where no insurance risk has been underwritten.
Health and dental benefits are most commonly covered under ASO plans. Self-insuring short-term and long-term disability benefits requires that employers set aside reserves to ensure that future claim payments are made even if coverage terminates. Larger employers fund ASO disability plans.
Fast-Growing ASO Plans
For the year ending December 31, 2008, Canada’s Great West Life Assurance Company garnered US$1.9 billion in self-funded premium equivalents under ASO contracts, up 8% from $1.8 billion in 2007. In contrast, Manulife Financial reported a 25% decrease from more traditional group insurance products in 2008. Competitor Sun Life Financial had a 7% slide in premiums for its more conservative portfolio of group insurance clients.
Costs That ASO Benefits Save
Under traditional experience-rated group insurance, employers pay a group premium that includes charges for claims, reserves, inflation factors, administrative fees, risk management and profit. Also included are sales commissions. The insurance company calculates group renewal premiums, looking at each group’s claims experience history but also adding rate adjustments and assumptions to improve profitability for the block of business to which the employer belongs.
In contrast, an Administrative Services Only plan limits client funding to actual paid claims plus a fixed fee for administrative charges. An ASO client saves the following group insurance charges:
ASO Advantages Over Group Insurance Premium Renewals
The annual renewal negotiation for insured health and dental benefits is often painful, with the insurance company trying to win maximum rate gains at the expense of their clients. Tactics used include waiting until the last minute to force through excessive premium renewals before the client has a chance to respond intelligently.
Employers do have the option of taking their insured plans out to market for competitive bids, either directly or through a group benefits broker. But if repeated annually, employee benefits re-marketing can become expensive both in terms of time and money.
An ASO plan eliminates the need for the premium renewal process. With an ASO plan, the administrative services fee is fixed and charges are more directly linked to the actual claims that employees incur.
Claims Advantages Of ASO Benefits
Administrators provide their clients with detailed reports of claim payments, then help their clients focus on claims’ cost control strategies without having to worry about other insurance charges.
For example, an ASO plan enables the client to take away overused benefit components like anti-depression medication that might be standard coverage under an insurer’s package plan for companies of a certain size.
US Health Plans Involve Major Risks
Here’s an important note for American group policyholders contemplating a switch of their Major Medical plans to ASO.
Canadian provinces offer medical care. Thus, a major portion of the costs for highly expensive treatment like cancer chemotherapy is provided for under government plans. Therefore, Canadian companies are insulated from major medical costs should their employees require extensive surgery, transplants or other expensive treatment.
In contrast, an American company that self-insures the Major Medical benefit may have to pay millions of dollars for medical complications from a pregnancy especially if there are no limits on coverage.
Therefore, ASO plans in the U.S. usually are sold with stop-loss policies that require an insurance company to assume the risk when claims exceed a contractually specified dollar amount or percentage.
Seniors enrolled in Medicare Parts A and B often discover once they become ill that these two Medicare parts won’t pay for all their medical costs. Part A pays most hospital, skilled nursing and some home health care costs; Part B pays most physician, outpatient services and some other home health care costs – but both parts have deductibles, limits and gaps in coverage. Neither pays for any prescription drugs and many medical supplies are not covered.
The private insurance marketplace responded with products designed to cover many costs not paid by Medicare coverage. Products can be chosen to help with cost sharing depending on the need of the Medicare consumer, and seniors continue to be enrolled in Medicare Parts A and B. Plan design and scope are heavily regulated by both Congress and the Centers for Medicare and Medicaid Services to make certain that these plans and products pay exactly what they are required to cover. Seniors can choose from stand-alone supplemental plans and or prescriptions drug plans (Part D), chronic illness special needs plans, or a comprehensive HMO or PPO type plan (Medicare Advantage) that bundles Parts A, B and D together with additional coverage that covers all medical costs and is referred to as Part C.
Each Medicare product is designed to cover different services, and may not be available where you live. While Congress has passed many laws to make the design of these products uniformly specific and the sale ethical and careful, making a choice can be a confusing experience. Here are the basics of a few products:
Part D plans cover most all prescription drug costs, but insurance carriers will offer differing lists of covered drugs and pharmacies. You must be enrolled in both Part A and Part B of Medicare to be eligible for a Medicare Part D plan. The federal guidelines require insurance pays for a prescription after an initial deductible of $320. After this deductible, you pay only a small copay for each drug until drug costs equal an annual total of $2,840, including your copay charges and drug costs. After this $2,840 total is reached, you will will pay any subsequent drug costs for the year (the “donut hole”) up to a total drug cost of $4550, including all costs, charges and copays for the year. During this “donut hole” period, you receive a discount of 50% off the cost of generic drugs, and some insurance companies also offer a discount for brand name drugs. After drug costs have reached $4550, the insurance will pay all drug costs after a small copay for the rest of the year (called Catastrophic coverage). Carriers may enhance their plans to cover the deductible, copays or some of the donut hole but may not offer a plan with lesser benefits than the minimum required coverage. Part D coverage premiums range between $15 and $60 per month, depending on the plan’s design and where you reside.
Supplemental coverage pays some of the out of pocket medical charges (except drug charges) that are not covered by Original Medicare Parts A and B. Medical charges contracted to be covered and paid for by each Medigap plan have been outlined by Congress. The different plans are labeled A, B, E, F and so on up to N. For the outline of each plan’s covered services, go to: Medigap policies . In other words, if you buy a Medicare Supplement F or N from any insurance carrier, each carrier will pay exactly the same for each Medigap alphabet policy. Supplement plans are allowed to vary their premiums and the plan’s provider network, but must cover what the federal guidelines for that specific plan require: no more, no less. Monthly premiums range from $100 to $500 or more, depending on the plan you choose, age when you enroll, and where you reside.
Advantage plans bundle Parts A and Part B (and usually D) costs along with other medical services into a comprehensive health insurance plan with varying but limited copays and deductibles. Insurance carriers receive payment from the federal government (through the Centers for Medicare and Medicaid Services – CMS) for covered medical services as well as the Part B premiums paid by members to the government. Plans can be offered as an HMO (Health Maintenance Organization) with gatekeepers and authorizations; a PPO (Preferred Provider Organization) plan, where you can visit any physician, but pay less with network providers; a POS (Point of Service) plan, which is a hybrid HMO/PPO type plan; or a PFFS (Private Fee for Service) type plan where you can see any provider who accepts the plan. Costs and available plans depend on where you live; HMO, PPO and POS plans are typically only available in metropolitan areas due to provider network requirements.
These plans help offset the significant medical costs related to certain chronic or serious conditions and offer a comprehensive care review and coordination not available in original Medicare. Many people with these long term conditions also may qualify for premium subsidies. Plans and coverages, again, will vary by state and by insurance company.
Review each plan’s options carefully and choose wisely as you may only be able to change your plan once a year. Finding the right Medicare product can offer financial security and save out of pocket charges once a serious illness strikes.