Term Insurance Vs. Whole Life Insurance
Term life insurance covers you for a term of one or more years. It pays a death benefit only if you die in that term. Term insurance generally provides the largest immediate death protection for your premium dollar. Many term insurance policies can be traded before the end of a conversion period for a permanent policy - even if you are not in good health. Premiums for the new policy will be higher than you have been paying for the term insurance.
Whole life provides lifetime coverage. The premiums are more expensive in the early years, but you get level cost, a cash value buildup in a tax friendly environment, low cost loans, and lifetime coverage. Your cash value is tax-deferred until you withdraw it and you can borrow against it. This can be an excellent long-term solution.
Medical Insurance
Co-payments: Co-payments are charged and paid at the time you receive certain types of services, such as office visits, prescription drugs, and emergency room services. These charges do not apply to the out-of-pocket maximum.
Coinsurance: Coinsurance is the percentage of each claim above the deductible that you pay. If the coinsurance is 20%, you pay for the deductible plus 20% of the covered expenses. The amount you pay will be determined by the plan you select, they type of service you receive, as well as whether the service is received from an in-network or an out-of-network (if applicable) provider. Out-of-pocket costs for coinsurance usually apply towards a total maximum amount that you are liable for during the year.
Out-of-pocket maximums for in-network and out-of-network services are separate. Your share of coinsurance expenses applies towards the out-of-pocket maximum. Co-payments and deductibles do not apply towards the out-of-pocket maximum (on most plans).
Health Maintenance Organization (HMO)
An HMO is a health care system that assumes or shares both the financial risks and the delivery risks associated with providing comprehensive medical services to a voluntarily enrolled population in a particular geographic area, usually in return for a fixed, prepaid fee.
What is a PPO?
A PPO is a buying pool, which allows you, as a consumer to take
advantage of pre-arranged contracted discounts with hospitals,
physicians and ancillary providers. You can take advantage of these
discounts if your insurance company, third party administrator, or
employer contracts with a PPO to provide those discounts. The advantage
of a PPO over most other managed care plans is that you may go to any
hospital or physician you desire. However, you will save money by taking
advantage of those pre-arranged discounts by going to providers who are
listed in the PPO network.
AB1672 (Assembly Bill 1672)
The following constitutes a Guarantee-Issue Small Group for health care coverage:
*Small companies (2-50 employees) are guaranteed coverage under AB1672
* Company’s size is determined by the number of eligible employees during at least 50% of its working days during the previous calendar quarter (min. 2 people)
* Eligible employees must work at least 30 hours /week (must be shown on a DE-6)
* A majority of the firm’s employees (51%) must work in California
* Employer pays any portion of premium or reimburses employee in any way to offset cost of insurance (minimum employer contribution is 50% of the premium or $100).
Small Group laws dictate that 75% of eligible employees must participate (be enrolled) on the group. An eligible employee is one who is NOT on their spouse’s group medical plan, nor is part-time, a 1099 employee, nor on Medicare or MediCal.
HSA's
Introduced by Congress on January 1, 2004
An HSA is a savings account that is paired with a qualified High-Deductible Health Plan to cover eligible medical expenses not covered by the health plan.
A High-Deductible Health Plan (HDHP) satisfies certain requirements with respect to deductibles and out-of-pocket expenses. A qualified HDHP must have: an annual deductible of at least $1,000 and annual out-of-pocket maximum not exceeding $5,100 for individuals, or an annual deductible of at least $2,000 and annual out-of-pocket maximum not exceeding $10,200 for families.
No amounts are payable from a HDHP until the family has incurred annual covered medical expenses in excess of the minimum annual deductible.
An individual is ineligible for an HSA if they are also covered by another health plan (individual, spouse, dependent) that is not an HDHP.
HSAs use pre-tax dollars.
If you enroll in an HSA-eligible health plan in the middle of the calendar year, your maximum contribution for the first year will be prorated based on the number of months you have the HSA-eligible health plan. For example, if your individual health plan's annual deductible is $2,400, and you enroll in the HSA-eligible mid-year, then your maximum contribution for the first year can be up to $1,200 (i.e. 6/12 of $2,400). If you are enrolled for all twelve calendar months, then you can contribute the full amount of the deductible.
HSA funds can grow tax-free in a variety of investment vehicles: Passbook savings, mutual funds, or stocks.
