The irrational fear of deductibles and large numbers

Does a $5,000 deductible make you freak out and make you wonder "why the heck am I paying a monthly insurance premium when I have to pay the first $5k of my medical bills?!" Well, you're not the only one. The trouble we have though is asking ourselves, is this assumption really rational?

I think it all boils down to the fact that we like it when other people pay for things. It is much easier to pay an insurance company $100/mo more just to save ourselves $50 on a doctor visit, because when we went to see the doctor we didn't get a bill. We do this all of the time with all sorts of products. Vehicles, Television programming, insurance, furniture, etc. We finance those purchases and break them into monthly costs because we get what we want now and then just pay a little bit later on. Had we been a little more savvy we would have saved our money up, paid cash for the purchase and saved ourselves the extra interest payments and negotiated a better deal.

In order to get over our irrational fears we need to take a step back and think about what insurance really is. It is a safety net meant to help protect us from large financial losses. Insurance companies don't want you to be in a better position after you have submitted claims to them, they just want to make sure you aren't in the worse position. If we were all better off submitting insurance claims we would be looking for ways to profit from them constantly. (some people try, but then they go to jail)

If insurance is there to protect us against large losses, then it makes sense to have a deductible and your monthly payment you pay will determine how much of a deductible you will have. If you can't afford paying $5,000 in medical expenses, maybe consider paying more for your insurance. The trouble is that if you can't afford the higher insurance premiums, then having a higher deductible isn't a bad idea. How often will you meet that deductible? Do you incur medical expenses every year? If so, how much do you really incur? A regular doctor visit might cost you $100. A prescription drug maybe $20 for most people. Insuring yourself against those smaller expenses might not make sense as you pay an additional $100/mo for a policy that gives you a $50 copay to see a doctor as opposed to you paying the entire $100 for that same visit.

The Dummies' Guide to Health Insurance Tax Penalties

- Individuals:

      - 2015: $325.00 or 2% of income, whichever is greater

      - 2016: $695.00 or 2.5% of income, whichever is greater

      - Children 18 and under, the minimum per-person tax is half of that for adults ($162.50). 

      - The tax penalty is pro-rated, so that a person who is not covered for only a single month would pay 1/12th of the tax that would be due for the full year.

- Families:

       - 2015: $975 per family or 2% of family income, whichever is greater

       - 2016: $2,085 per family or 2.5% of family income, whichever is greater

       - The minimum amount per family is capped at triple the per-person tax, no matter how many individuals are in the taxpayer’s household.

- Tax Forms:

        - Those who bought insurance on the health insurance exchanges with the help of federal subsidies will receive a form 1095-A detailed their coverage and have to reconcile their payments with their income level.  HealthCare.gov, the federal exchange that serves 37 states, started to mail out 1095-A forms to customers said all forms should be mailed out by the end of January. This end of month deadline is also the same for state-run exchanges

        - Taxpayers who get their health insurance through their employer or government sponsored programs like Medicare or Medicaid, which will be the majority, will be able to prove their compliance via their tax filing by check a box on their normal tax (1040 series) return validating they had insurance.

        - If you have exemptions to claim, you will need to complete the tax form 8965.

          More information on exemptions: http://obamacarefacts.com/obamacare-exemptions-list/

Emergent vs. Urgent - Planning Ahead for the Minor Stuff

If your health plan is like most, it offers a persuasive disincentive to visit the emergency room when an urgent care center will do. This disincentive often takes the form of a higher 
co-payment for emergency care. (The 
co-payment is your share of the cost.) Moreover, if you go to an emergency room for an ailment that seems questionable as an “emergency”, the insurance company may deny the claim, leaving you on the hook for the entire bill.

PPACA (i.e., “Obamacare”) defines a medical emergency as symptoms which would cause a reasonable layperson to fear that an absence of immediate care could mean a loss of life, limb, or organ; or the loss of function in a limb or organ.

Generally speaking, emergency rooms are connected to hospitals. They are heavily staffed, expensively equipped, and never closed. Patients typically wait for hours to see a doctor. Emergency rooms treat major traumas, broken bones, heart attacks, uncontrollable bleeding, unconsciousness, and the like.

Urgent care centers, by contrast, are free-standing facilities, lightly staffed, less equipped, and open later than normal business hours (but not open all night). Patients typically wait a matter of minutes, not hours, to be see a physician’s assistant or nurse practitioner. Urgent care centers treat flu symptoms, fevers, chills, sprains, headaches, and the like.

One of the most common reasons policyholders go to the emergency room for symptoms that do not meet the PPACA criteria above is a lack of planning. Nevada Benefits recommends that you take a moment now, while you are well, to locate the urgent care centers nearest your home and place of employment; then make a note for future reference. Waiting until you are sick or injured before mapping your way to the nearest urgent care center will prove more difficult than doing so in advance of your actual need.

Of course, if you experience a medical emergency, then you should call 911 or go to the nearest emergency room. Otherwise, an urgent care center, if appropriate to the ailment, can save you money, time, and aggravation.   

Do not hesitate to contact us with any questions about the emergent and urgent care benefits under your plan.

Telehealth- what is it?

Virtual House Call

Telehealth is a word coined to describe a doctor-patient encounter mediated entirely by technology. In its simplest form, telehealth is your primary care doctor hearing your complaint, forming a diagnosis, and recommending an over-the-counter remedy, all in the course of a single phone call. You receive care without darkening your doctor’s door.

In its more evolved form, telehealth is a video link-up through a corporate vendor specializing in just such electronic encounters. Or instead of taking a half-day off work to drive across town and haunt your doctor’s waiting room, you simply use your smartphone to transmit to her office a photo of that mysterious rash.

With carriers like Anthem, Cigna, and UnitedHealth Group expanding their telehealth networks, and pharmacies like CVS, Rite Aid, and Walgreens investing in telehealth platforms, it’s safe to say that multimedia medicine is more than a trend; it’s an important solution to the problem of healthcare scarcity.

Dallas-based Teladoc is at the forefront of this technological movement. Teladoc’s physicians are available for consultation 24/7. Place a call to Teledoc and an experienced, state-licensed, board-certified physician will get back to you in minutes (16 minutes on average). This service is ideal for cold and flu symptoms, allergies, respiratory infections, urinary tract infections, ear infections, sinus disorders, and the like. Teledoc physicians can prescribe certain short-term prescriptions, such as antibiotics.

(Remember, however, that in the event of a medical or psychiatric emergency, you should always call 911. Telehealth is not for emergency treatment. Nor is it for chronic ailments or specialty care; although Teladoc can provide guidance as to whether you require a specialist.)

Perhaps best of all, expenses incurred through Teladoc qualify for reimbursement under your FSA, HSA, and HRA.

The expansion of consumer access to limited healthcare resources is among the great economic and social challenges of our time. Nevada Benefits supports and encourages the spirit of innovation embodied in the telehealth approach.  

Professionals are worse as predictions than the crowd

NPR put out a great podcast that describes a small sampling o how the crowd generally is good at averaging the right guess of what things really are. http://www.npr.org/sections/money/2015/08/07/430372183/episode-644-how-much-does-this-cow-weigh

This goes well with timing of the overall market. It is becoming widely accepted that most fund managers under perform the market almost 95%+ of the time. We all just assume this is the case because they have to charge fees for their services on top of matching the market, but it seems it might be a little more than that. So why do we need fund managers or professionals?

We can always just invest ourselves and try to take a jab at it. We would maybe fall short or maybe we will get lucky and pull ahead. We can also try and become experts, but then if we do we will probably be doomed to under perform just like other experts. I have quite a few clients who do their own investing and actually live off of their income from trading. I kind of put these clients in the same realm of my professional gambler clients. I notice their actual incomes to be quite dismal in the grand scheme of losses and gains, but they sure have some really big roller coaster rides along the way. Living in a gambling town we always hear about the extraordinary big wins, but we never hear about how much was lost to make that money.

Working in insurance I see some these same big mistakes made. People look at insurance as a way to win the jackpot in having someone else pay for your losses. The way insurance is sold is through telling you about one incident where someone had a huge tragic loss and then the insurance came and saved the day. What they didn't tell you was about how much that family spent and the many other families that never used that coverage.

Life never works out the way we plan. We learn good principles and adhere to making good decisions and we create good outcomes. When insuring yourself against anything, take a look at what resources you have and think about what your real risks are. If you are making random decisions in your investments, maybe it would be a good idea to use an advisor who can minimize the downsides. If you are young and have a family, maybe get some term life insurance to protect them if you were to die prematurely. If you have a job that relies heavily on your good health, consider a good disability policy. If you are concerned about staying in good health, make sure and get a good health insurance policy, but don't be afraid of deductibles.

To sum up my question of why do we need fund managers and professionals, it is because we sometimes need some perspective on what we are missing. Maybe we have too much insurance or maybe we are under performing the market and just making less ideal choices. It is always helpful to take a look at what the crowd is doing on average and make sure we are't missing the boat.

Roth or not to Roth

What if you could save money on taxes now and still be able to save money on taxes in the future? Try splitting up your savings by investing in both pre tax and post tax accounts. If you invest 30% or so of your savings into a Roth account or even life insurance, you can use that tax free money to pay the taxes due on your taxable income. If you use Life Insurance as a tax free funding tool you also get the death benefit proceeds to help your family out with the tax issues and complications if you die prematurely.

Assurant Health announcement

Assurant announced on April 29 that they are getting out of the health insurance industry. See the press release here. To those in the industry this doesn't come as a huge surprise as the company stopped paying commissions on new business in January and has been terminating people as soon as the grace periods are over. Does this mean people are going to lose their coverage and be up the boat without a paddle? NO! They still will be covered and Assurant will still pay their claims. As soon as they figure out what is going to happen (either a sale or closing of the business) the insurance company will have to pay their claims and take care of all business for 6 months after they stop the health plans. Anyone who is enrolled in a plan with them now will continue to have business as usual without fear. It sounds like the changes won't go into affect until open enrollment, which means it will be super easy to go searching for a new plan. The question still remains of what will your options be for 2016 and will you be able to keep your doctor? (My guess is yes, but give us a call first to make sure)