The Right Options For You
Health
Off Exchange Health Insurance:
This is where the consumer purchases the health plan directly from the insurance carrier’s website or broker portal. It is always a good idea to utilize the professional advice of a licensed broker as this is an easy insurance product to get wrong. Brokers serve as a valuable resources that can help a consumer navigate and understand doctors and hospital networks and the definitions and mechanics of your policy. Since health insurance prices are fixed by law it only makes sense to get free advice on such a complicated product. If someday insurance companies stop paying commissions then we may see a broker consulting fee come into play. The nice aspect about going direct with a carrier is that there are variations on core plans offered and there is no burden of proof on the consumer to project and verify wages and income. The only negative is the fact that those who qualify for a financial subsidy will not be able to receive the government assistance unless they purchase through the Covered California Exchange.
On Exchange Health Insurance :
When we use the term “On Exchange” we are referring to purchasing your plan through the state website www.Covered California.com
known as “Obamacare”. For our clients the only reason that people should purchase through this site is if we determine that the client is eligible for a subsidy. If that is not an option then we will help navigate the consumer through the process and help them choose the best plan for their needs. The benefits of the subsidized plans can be the reduction of monthly premiums as well as reduced copays, cost sharing, deductibles and MOOP ( max out of pocket) . The consumer needs to understand that a Silver level plan can often have benefits as good, or better benefits than a gold or even platinum level plan. The formula for determining a subsidy is a moving target determined by the number and age of people in a family being insured relative to their household family income. This is then compared to the Federal Poverty Limit. This is a floating number and is redetermined each year .
Companies offering health insurance in California:
Anthem Blue Cross (HMO)
Blue Shield (HMO and PPO) PPO has both Cedars Sinai and UCLA
Oscar (EPO) UCLA Network off exchange
Molina (HMO)
LA CARE (HMO) UCLA Network
Kaiser (HMO)
Medicare
If you are just turning 65 or are new to Medicare...there is much to know and consider.
While Original Medicare (Part A and Part B) covers many health-care expenses, it doesn’t cover everything. Even with covered health-cares services, beneficiaries are still responsible for a number of copayments and deductibles, which can easily add up. In addition, Medicare Part A
( Hospitalization) and Part B (doctor visits, labs, ex-rays and all other procedures outside of the hospital) don’t cover certain benefits, such as routine vision and dental, prescription drugs, or overseas emergency health coverage. If all you have is Original Medicare, you’ll need to pay for these costs out-of-pocket.
As a result, many people with Medicare enroll in two types of plans to cover these gaps in coverage. There are two options commonly used to replace or supplement Original Medicare.
One option, called Medicare Advantage plans, are an alternative way to get Original Medicare.
The other option, Medicare Supplement (or Medigap) insurance plans work alongside your Original Medicare coverage.
These plans have significant differences when it comes to costs, benefits, and how they work. It’s important to understand these differences as you review your Medicare coverage options.
Medicare Advantage vs. Medicare Supplement (Medigap) insurance plans
Medigap supplement insurance plans are true PPO plans. There are not networks! You can literally go to any doctor or hospital that takes Medicare. They do come with a monthly premium however which rises as you age. There are also annual rate increases as well. So these plans can get quite costly as time goes on. These plans work with Original Medicare, Part A and Part B, and may help pay for certain costs that Original Medicare doesn’t cover.
Also...In order to enroll in a a Medigap Supplement plan, you have one guarantee issue period and that is when you first turn 65, or when you are leaving an employer based plan. Guarantee issue means that the insurance company will not ask you about pre-existing conditions. However, if you choose a Medicare Advantage plan and later on you want to switch to a Medigap supplement plan, your health history will be considered and you may be denied enrollment.
These plans don’t provide stand-alone coverage; you need to remain enrolled in Part A and Part B for your hospital and medical coverage. If you need prescription drug coverage, you’d need to enroll in a stand-alone Medicare Prescription Drug Plan.
When you buy a Medicare Supplement insurance plan, you are still enrolled in Original Medicare, Part A and Part B. Medicare pays for your health-care bills primarily, while the Medigap plan simply covers certain cost-sharing expenses required by Medicare, such as copayments or deductibles. In addition, Medigap insurance plans may help with other costs that Original Medicare doesn’t cover, such as Medicare Part B excess charges or emergency medical coverage when you’re traveling outside of the country. Keep in mind that Medicare Supplement insurance plans can only be used to supplement original Medicare costs.
They can't be used with Medicare Advantage plans.
Medicare Advantage and prescription drug plans (MAPD plans):
Most of these plans are HMO plans and many do not have monthly premiums.
MAPD plans, also known as part C plans,
are an alternative to Original Medicare. If you enroll in a Medicare Advantage plan, you’re still in the Medicare program. However, you’ll get your Medicare benefits through your Medicare Advantage plan, instead of through the federally administered program, and the Medicare Advantage plan replaces your Original Medicare coverage.
To enroll in a Medicare Advantage plan, you must:
Have Original Medicare, Part A and Part B.
Live in the service area of the Medicare Advantage plan you’re considering.
Not have end-stage renal disease (with some exceptions).
Medicare Advantage plans must provide the same level of coverage as Original Medicare, with the exception of hospice care (which is still covered by Part A). Some plans may also cover additional benefits that Original Medicare doesn’t cover, such as routine vision and/or dental, health wellness programs, chiropractor, acupuncture, travel, over the counter items found in a drug store, Life support system, telehealth, gym membership,
pest control, and prescription drug coverage.
Medicare Advantage plans will have restricted networks, depending on the plan. For example, some Medicare Advantage plans, like Health Maintenance Organization (HMO) plans, use a provider network that you must use to be covered, meaning you can only see doctors and hospitals that are contracted with your Medicare Advantage plan and part of its provider network. Other plans ( PPO plans)
let you see both in-network and out-of-network providers; however, you may pay higher copayments and coinsurance when using non-network providers.
Every person’s situation is different, and it’s important to consider both your Medigap insurance and Medicare Advantage plan options to find the coverage that fits your needs.
It can be quite confusing so be sure to speak to a certified Medicare specialist that can help you sort through the myriad of programs available to you.
Other Insurance Products Available
Dental / Vision
Dental Insurance Plans Available In California Dental HMO’s:
Similar to a regular HMO, a dental HMO or DHMO includes a network of pre-approved providers. These dentists provide services for free or for a fixed copay, which has been pre-determined. Dental HMO’s (Health Maintenance Organization’s) are very popular for their ability to encourage preventative dental work and discounts on more comprehensive procedures.
Dental PPO’s :
(Preferred Provider Organization).... provides dental procedures for a pre-negotiated percentage of the total bill. There is a preferred network in most PPO plans and it more cost effective to stay in network. However, in a PPO plan, the insurance carrier will still pay some percentage of costs out of network as well.
Vision:
Many vision plans are combined with dental plans. These vision plans are more like discount plans than insurance plans. There is typically a network of optometrists to choose from and typically you would need to stay in network.
Travel
You should know your medical coverage travel limitation before planning your trip. For a Medigap Supplement plan for example...you pay a $250 deductible , your plan will only pay 80% up to a maximum of $50,000 over your lifetime. This is not very much coverage! Some MAPD plan have unlimited coverage for emergency and urgent care. However, still a good idea to get a Travel Protection Insurance plan if going abroad.
Travel Insurance Coverage:
Medical
Medivac
Pre existing conditions
Companies we are contracted with:
IMG (International Medical Group)
Geo Blue
Other Ways We Can Help
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Life
As you consider the wide range of life insurance products that are available to California residents, you may wonder what type of policy fits your needs now, and how you should plan for the future. A good way to start is to ask yourself why you are buying life insurance, and how will it satisfy your personal and family financial security requirements. Do you want insurance to cover final expenses? A new home or mortgage? A business investment? Your retirement? Leaving a legacy for your children. Once you answer these questions, look at the 3 basic types of coverage, whole life, universal life, and term life and determine which suits your needs.
Whole Life :
This coverage typically remains in force for your lifetime as long as premiums are paid. You pay the same premiums every year. The premiums are initially higher than what you would pay for the same amount of term life insurance. However, they are less than the premiums you would eventually pay if you were to continue renewing that same term policy beyond its designated term.
An important feature of any type of cash value life insurance policy is its ability to build a sum of money inside the policy over its lifetime. You have access to this cash value and can generally either take it as cash or use it to buy some continuing insurance protection. The amount of the cash value depends on the kind of policy you have, premiums you are paying into it, and how long you have owned it. You may also use your policy cash value as collateral for a loan. Policy surrenders and loans incur charges and/or interest. They can also affect policy values and the death benefit.
Tax Free Retirement supplement is also available by accessing cash value through taking policy loans.
Universal Indexed Life:
This coverage is similar to whole life insurance, but more flexible. It allows the policy owner to vary the amount and timing of premium payments (subject to satisfying policy premium minimums to maintain the policy), and increase or decrease the death benefit (subject to underwriting for an increase). Cash values accumulate based on premium payments and current interest rates that the carrier is offering. This is a very flexible product.
It allows for you to choose from various indices and participate in the upside of the market without exposure to down markets.
It offers a death benefit, Long Term Care option, and tax free retirement supplement.
Term Life :
This coverage provides financial protection for a limited, specified period of time and is the least expensive form of life insurance coverage. The death benefit face value is paid only if the insured dies within the specified term. Term insurance has no cash value. Many California life insurance carriers offer term insurance with the option to convert it to a permanent policy. A good analogy to compare Term Life vs Whole or Universal Life Insurance is to compare Renting vs Purchasing a home. Term Life is analogous to renting a home and Whole/Universal Life is much like purchasing a home because you actually build equity in the policy.
Disability
Your most valuable asset isn’t your house, car or retirement account. It’s the ability to make a living.
Disability insurance pays a portion of your income if you can’t work for an extended period because of an illness or injury. Anyone who relies on paycheck should have this coverage.
What you need to know:
The chance of missing months or years of work because of an injury or illness may seem remote, especially if you’re young and healthy and you work at a desk.
But more than one in four 20-year-olds will experience a disability for 90 days or more before they reach 67, according to the Social Security Administration. One reason people shrug off the risk is they think about worst-case scenarios, such as spinal cord injuries leading to quadriplegia or horrific accidents that result in amputation, But back injuries, cancer, heart attacks, diabetes and other illnesses lead to most disability claims. The questions people have to ask are, ‘What would you do if you couldn’t work? How far could you go without a paycheck?
Types of disability insurance:
There are two main types of disability insurance — short-term and long-term coverage. Both replace a portion of your monthly base salary up to a cap, such as $10,000, during disability. Some long-term policies pay for additional services, such as training to return to the workforce.
SHORT TERM VS. LONG-TERM
Short-term disability insurance typically replaces 60 to 70% of base salary
Pays out for a few months to one year, depending on the policy and ....
May have a short waiting period, such as two weeks, after you become disabled and before benefits are paid.
Long Term Disability
Typically replaces 40% to 60% of base salary
Benefits end when the disability ends. If the disability continues, benefits end after a certain number of years or at retirement age
A common waiting period is 90 days after disability before benefits are paid.
Disability policies vary in how they define “disabled.” Some policies pay out only if you can’t work any job for which you’re qualified. Others pay out if you can’t perform a job in your occupation. Some policies cover partial disability, which means they pay a portion of the benefit if you can work part time. Others pay only if you can’t work at all.
Here are ways to get coverage:
Sign up for employer-sponsored coverage at work.
Employer-sponsored disability insurance usually pays only a portion of your base salary, up to a cap. It’s a good idea to supplement that coverage if your salary far exceeds the cap or you depend on bonuses or commissions.
An insurer will consider other sources of disability insurance to determine how much coverage you can buy. Generally, you can’t replace more than 75% of your income from all the coverage combined.
Buying your own policy lets you:
Customize the coverage with extra features, such as annual cost-of-living adjustments
Choose the insurance company with the best offerings
Keep the coverage when you change jobs. Employer-paid coverage ends when you leave the company. (You might be able to take the coverage if you pay the full premium for disability insurance offered through the workplace.)
Control the disability insurance. The coverage stays intact as long as you pay for it. But employer-sponsored coverage will end if the employer decides to stop providing disability benefits.
Collect benefits tax-free if you become disabled. If the employer pays for the coverage, you must pay taxes on the benefits.
The annual price for a long-term disability insurance policy generally ranges from 1% to 3% of your annual income, according to the Council for Disability Awareness. A variety of factors affect the cost.
Your age and health: You’ll pay more the older you are and the more health problems you have
Your gender: Women usually pay more because they tend to file more claims
Whether you smoke: You pay less if you don’t smoke
Your occupation: You’ll pay more if you work in a job with a high risk of injuries
The definition of disability:
The broader the definition of disability, the higher the premium. A policy that covers you if you can’t work in your own occupation but could earn income in a lower-paying job will cost more than a policy that covers you only if you can’t work at all.
Length of waiting period: This is known as the elimination period. You can reduce the premium by increasing the waiting period before benefits kick in.
Your income: The more income you have to protect, the more you’ll pay for coverage
Length of benefits: The longer the period that the policy promises to pay out if you become disabled, the more you’ll pay in premiums
Extra features:
Additional features, such as cost-of-living adjustments to protect against inflation, will increase the premium
Long Term Care
When people consider the subject of long-term care, they often think about nursing homes. In fact, long-term care has little to do with nursing homes.
THE CONSEQUENCES OF LIVING LONGER
Long-term care is a continuum of care services and housing you will need when you live a long life. If you think you will not live a long life, just think back 30 years ago. If you had cancer or a stroke, you simply died. Few ever heard of Alzheimer's. Today, it is the leading cause for long-term care services. The longer you live, the more likely you are to need care. The question is not whether you will need care but when! And, when you do need care who will take care of you? Your family will most often, If you have family, but what will providing that care do to your family and their finances.
LONG TERM CARE IS USUALLY CUSTODIAL CARE
Long-term care is defined as needing assistance with your activities of daily living (toileting, bathing, dressing, eating, transferring from one point to another, and continence). It also includes cognitive impairment so severe that the individual needs constant supervision.
If you need custodial care, chances are it will be delivered in the community, not in a nursing home. Many of you have heard compelling statistics from The New England Journal of Medicine stating that 43% of those over age 65 will need nursing home care. What the article actually said is that that some may spend some time in a facility, but few end their days in one.
Every study conducted finds that care is overwhelmingly provided at home.
MYTHS ABOUT LTC :
I cannot afford long term care insurance.
FACT: Without insurance, you may have a
harder time affording long term care services. A long term care insurance plan can be designed to fit a range of personal budgets.
MYTH: I don't need long term care insurance. I have health insurance.
FACT: Long term care is the assistance, care or services a person needs when they are unable to perform basic activities of daily living - such as bathing, dressing, eating, toileting, transferring, and continence. Most long term care is due to a chronic illness and is progressive in nature with the need for care often growing over time. This type of care is not covered by health insurance plans, which are designed to cover the skilled or acute care needed to return someone to good health.
MYTH: There is a government program that will take care of me.
FACT: Medicaid/Medi-Cal is a government program that will pay for certain long term care services. However, eligibility for Medicaid requires that you meet state-specific poverty guidelines. Medicare is a senior health insurance plan that covers skilled care designed to improve an individual's health condition. It does not cover custodial care.
MYTH: Long term care insurance only covers care in a nursing facility.
FACT: Long term care insurance will provide benefits for care in the following settings: your own home, adult day care, hospice care, residential care facility, assisted living or a nursing facility
MYTH: I can save the money I need for long term care.
FACT: The median annual costs in California for the following long term care example scenarios are:
$23,400 for care at home (based on 20 hours of care per week);
$42,000 for care in a residential care facility; $93,988 for care in a nursing facility (private room).
And costs rise each year.
For this reason, many financial planners now consider long term care insurance an integral part of an individual's financial plan.
MYTH: We don't need long term care insurance because we have each other.
FACT: Consider the chances that your spouse/partner will be physically capable of providing care if needed? According to a study performed by the US Department of Labor/Bureau of Labor Statistics, there are growing demands on the "Sandwich Generation", which is defined as individuals (typically women between the ages of 46 to 56) who must care for their own families (sometimes young children and teenagers) in addition to an older relative who needs assistance. The reality is that the need for long term care does not only affect the individual in need of care, but can also impact the entire family - across multiple generations. Long term care insurance can support and supplement such informal care.
MYTH: Long term care insurance is only for old people.
FACT: Accidents and chronic illness can happen at any age and can include the need for extended custodial care. The availability and cost of long term care insurance are based on your health
By the time you reach 65, chances are about 50-50 that you’ll require paid long-term care (LTC) someday. If you pay out of pocket, you’ll spend $140,000 on average. Yet you probably haven’t planned for that financial risk. Only 7.2 million or so Americans have LTC insurance, which covers many of the costs of a nursing home, assisted living or in-home care — expenses that aren’t covered by Medicare. “Long-term care is the unsolved problem for so many people,” says Christine Benz, director of personal finance at Morningstar, an investment research firm in Chicago. Here’s what you need to know about LTC insurance today.
Types of LTC plans:
Traditional policies have fewer fans
For years, long-term care insurance entailed paying an annual premium in return for financial assistance if you ever needed help with day-to-day activities such as bathing, dressing and eating meals. Typical terms today include a daily benefit of $160 for nursing home coverage, a waiting period of about three months before insurance kicks in and a maximum of three years’ worth of coverage.
But these stand-alone LTC policies have had a troubled history of premium spikes and insurer losses, thanks in part to faulty forecasts by insurers of the amount of care they’d be on the hook for. Sales have fallen sharply. While more than 100 insurers sold policies in the 1990s, now fewer than 15 do.
As traditional LTC insurance sputters, another policy is taking off: whole or universal life insurance that you can draw from for long-term care. Unlike the older variety of LTC insurance, these “hybrid” policies will return money to your heirs even if you don’t end up needing long-term care. You don’t run traditional policies’ risk of a rate hike, because you lock in your premium upfront. If you’re older or have health problems, you may be more likely to qualify. But old-school policies are cheaper
If all you want is cost-effective coverage — even if that means nothing back if you never need help — traditional LTC insurance has the edge. A hybrid policy may make the most sense if your alternative is to use your savings, or you have another whole life policy with a large cash value.
Speed and smart shopping pay off
If you want insurance, start looking in your 50s or early 60s, before premiums rise sharply or worsening health rules out robust coverage. “Every year you delay, it will be more expensive,” Initial premiums at age 65, for example, are 8 to 10 percent higher than those for new customers who are 64.
Asset Based Long Term Care planning can provide an important solution for you, your clients and your loved ones. My aim is to customize a solution addressing your specific needs and concerns.
Asset-Based Long-Term Care :
Currently more than 70 percent of people over the age of 65 will need long-term care in their lifetime. Who would take care of you? How would you pay for long-term care? Life insurance with asset-based long-term care benefits could help your family maintain its quality of life and give you a comfortable level of care using existing assets to protect you and your loved ones from the expenses, and emotional strain, that can arise when a family faces the need for long-term care.
Premium options:
Use existing assets, such as a CD, savings or IRA, as a one-time-only premium payment, or choose guaranteed annual premiums that can never increase .
Asset protection :
Get the security of a life insurance policy that grows at a minimum, tax-deferred interest rate
Tax-free benefits :
Pay no income tax if you use your life insurance for qualifying long-term care expenses, should you need it. If not, leave a legacy for your names beneficiaries tax free.
Annuities
What are annuities?
An annuity is a contract between you and an insurance company that requires the insurer to make payments to you, either immediately or in the future. You buy an annuity by making either a single payment or a series of payments. Similarly, your payout may come either as one lump-sum payment or as a series of payments over time.
Why do people buy annuities?
People typically buy annuities to help manage their income in retirement.
Annuities provide three things:
Periodic payments for a specific amount of time. This may be for the rest of your life, or the life of your spouse or another person.
Death benefits. If you die before you start receiving payments, the person you name as your beneficiary receives a specific payment.
Tax-deferred growth. You pay no taxes on the income and investment gains from your annuity until you withdraw the money.
What kinds of annuities are there?
There are three basic types of annuities, fixed, variable and indexed. Here is how they work:
Fixed annuity. The insurance company promises you a minimum rate of interest and a fixed amount of periodic payments. Fixed annuities are regulated by state insurance commissioners. Please check with your state insurance commission about the risks and benefits of fixed annuities and to confirm that your insurance broker is registered to sell insurance in your state.
Variable annuity. The insurance company allows you to direct your annuity payments to different investment options, usually mutual funds. Your payout will vary depending on how much you put in, the rate of return on your investments, and expenses. The SEC regulates variable annuities.
Indexed annuity. This annuity combines features of securities and insurance products. The insurance company credits you with a return that is based on a stock market index, such as the Standard & Poor’s 500 Index. Indexed annuities are regulated by state insurance commissioners.
What are the benefits and risks of variable annuities?
Some people look to annuities to “insure” their retirement and to receive periodic payments once they no longer receive a salary. There are two phases to annuities, the accumulation phase and the payout phase.
During the accumulation phase, you make payments that may be split among various investment options. In addition, variable annuities often allow you to put some of your money in an account that pays a fixed rate of interest.
During the payout phase, you get your payments back, along with any investment income and gains. You may take the payout in one lump-sum payment, or you may choose to receive a regular stream of payments, generally monthly.
All investments carry a level of risk. Make sure you consider the financial strength of the insurance company issuing the annuity. You want to be sure the company will still be around, and financially sound, during your payout phase.
Variable annuities have a number of features that you need to understand before you invest. Understand that variable annuities are designed as an investment for long-term goals, such as retirement. They are not suitable for short-term goals because you typically will pay substantial taxes and charges or other penalties if you withdraw your money early. Variable annuities also involve investment risks, just as mutual funds do.
Understanding fees :
You will pay several charges when you invest in a variable annuity. Be sure you understand all charges before you invest. Besides surrender charges, there are a number of other charges, including:
Mortality and expense risk charge. This charge is equal to a certain percentage of your account value, typically about 1.25% per year. This charge pays the issuer for the insurance risk it assumes under the annuity contract. The profit from this charge sometimes is used to pay a commission to the person who sold you the annuity.
Administrative fees. The issuer may charge you for record keeping and other administrative expenses. This may be a flat annual fee, or a percentage of your account value.
Underlying fund expenses. In addition to fees charged by the issuer, you will pay the fees and expenses for underlying mutual fund investments.
Fees and charges for other features. Additional fees typically apply for special features, such as a guaranteed minimum income benefit or long-term care insurance. Initial sales loads, fees for transferring part of your account from one investment option to another, and other fees also may apply.
Penalties. If you withdraw money from an annuity before you are age 59 ½, you may have to pay a 10% tax penalty to the Internal Revenue Service on top of any taxes you owe on the income.
How to buy and sell annuities
Insurance companies sell annuities, as do some banks, brokerage firms, and mutual fund companies. Make sure you read and understand your annuity contract. All fees should be clearly stated in the contract. Your most important source of information about investment options within a variable annuity is the mutual fund prospectus. Request prospectuses for all the mutual fund options you might want to select. Read the prospectuses carefully before you decide how to allocate your purchase payments among the investment options.
Realize that if you are investing in a variable annuity through a tax-advantaged retirement plan, such as a 401(k) plan or an Individual Retirement Account, you will get no additional tax advantages from a variable annuity. In such cases, consider buying a variable annuity only if it makes sense because of the annuity’s other features.
Note that if you sell or withdraw money from a variable annuity too soon after your purchase, the insurance company will impose a “surrender charge.” This is a type of sales charge that applies in the "surrender period," typically six to eight years after you buy the annuity. Surrender charges will reduce the value of -- and the return on -- your investment.