All Posts By

Mark Deschenes

How To Use Life Insurance In Your Retirement Planning

By | Life Insurance

Tax deferred plan for retirementInvesting in the market without taking losses — is it too good to be true?

Not according to the University of Michigan’s head coach Jim Harbaugh. In August, University of Michigan helped Harbaugh become the top-paid college football coach in the nation, according to USA Today figures, by creating a deferred compensation package utilizing cash value life insurance called Indexed Universal Life Insurance (IUL).

Just like in Harbaugh’s case, IULs appeal to many executives and business owners because of the advantages they provide. IULs allow cash value within the policy to grow tax-free over time. IULs are funded with post-tax dollars which allow clients to withdraw money tax-free at any age and provide financial security in the form of a death benefit for the family after the client passes.

One of the main advantages of IULs is that the cash value is protected from drops in the market. An IUL is a cash value policy that has both a death benefit and a savings portion. In an IUL the investments are not placed directly in the market where they would be subject to a loss. Rather, they are put into a strategy that mirrors an index such as the S&P 500, which allows the participant to realize all or most of the gains in the market. These gains are then locked in to protect against potential losses.

In addition, when compared to an IRA or a 401(k), IULs provide more flexibility. Unlike IRAs and 401(k)s, there is no limit on how much money can be added annually, as long as the added cash does not create a Modified Endowment Contract (MEC), which is taxable. A MEC is where the funding has exceeded the IRS limitations known as the “7-pay test,” which limits the amount of excess cash that can be put into a policy in any seven-year period before it loses its tax advantages. IULs allow for a high cash value at the beginning of the policy. There are no restrictions on when the money can be taken out, unlike an IRA. Also, the money inside an IUL can be taken out at any age by the client tax-free and without extra fees.

An IUL is beneficial to those who are looking to invest their extra money tax-deferred after they have fully utilized their other retirement accounts, such as a 401(k). IULs are also beneficial to those who clients who do not qualify for a Roth IRA. IULs provide an opportunity for individuals to allocate premiums to flexible and accessible tax-deferred accounts. For younger clients, savings can be rolled over from a previous retirement plan. IULs can also help people who started retirement planning later, due to the fact that an IUL can be over-funded, unlike a 401(k) or IRA, which have strict contribution limits.

Along with tax-free wealth building, IULs provide a source of financial security to the family in the event of death or disability. In an event of the death of the policyholder, the death benefit is received tax-free by the beneficiary of the policy in a lump sum. Some policies can be constructed to include living benefits in the event of disability or chronic illness. In this way, IULs provide a way in which individuals can grow and protect their income, as well as provide extra funds for retirement.

In the case of coach Harbaugh, an IUL was used to save millions in tax-free retirement. This was possible due to the growth of the cash value inside of the policy that increased his retirement funds, which are accessible tax-free at the age of 70. Upon being hired at Michigan, Harbaugh entered a split-dollar loan agreement, in which the premium, cash value and death benefit is split between two parties. This split-dollar agreement was funded by cash value life insurance policy or IUL.

Under this split-dollar agreement, the University of Michigan agreed to pay seven $2 million loan advances into a life insurance policy. By implementing this policy, Harbaugh does not have to pay back the loan taken on the policy until his death, and his beneficiaries will receive the remainder of the death benefit. While he is alive, Harbaugh is able to borrow money out of the policy tax-free. Through this plan, it is projected that Harbaugh could begin taking $1.4 million per year out of the policy tax-free, beginning at the age of 66.

IULs are a popular choice amongst clients who would like the gains of the markets without the losses, as well as protection for their family after death. This makes IULs a comprehensive and flexible wealth-building option.

We have trusted solutions to your retirement/insurance needs, including long term care in the event of catastrophic illness.  Call us today at 1-800-257-1723 or click here to schedule an appointment.

 

Based on the Forbes Expert Panel post written by Jacob Alphin

The Best Living Benefits Policies Yet!

By | Living Benefits

I’ve been talking about living benefits for years now — and I am happy to say that living benefits have caught on like wildfire!

I’m also happy to report that dozens of my client’s financial futures have been saved with this miracle policy.

Now I want to introduce the evolution of living benefits — the second generation of plans has come out and the triggers for paying off are greatly expanded.
Here is an example between a legacy (“old style”) plan and the new evolved 2nd generation living benefits plan:

Old Style

Old Style Living Benefits Plan

New, evolved. 2nd Generation Living Benefits Plan

New Living Benefits Policy

Notice that in this case there are 17 triggers or medical qualifying events vs 6.

Not all living benefits plans are created the same! Let me help you get the best.

We have trusted solutions to your insurance needs, including long term care in the event of catastrophic illness.  Call us today at 1-800-257-1723 or click here to schedule an appointment.

State files lawsuit against Aliera Healthcare

By | Health Insurance

Stdownloadate files lawsuit against Aliera Healthcare

The State of Texas has filed a lawsuit seeking to stop Aliera Healthcare from selling health insurance in Texas and engaging in the business of insurance without a state license. The lawsuit also seeks civil penalties. After filing the lawsuit June 13 in the 53rd Civil District Court in Travis County (Cause Number D-1-GN-19-003388), TDI dismissed the administrative action pending with the State Office of Administrative Hearings.

How many people bought coverage from Aliera?

TDI estimates that Aliera has about 17,000 customers in Texas and 100,000 nationwide.

What if an Aliera consumer is having problems getting claims paid?

TDI is asking consumers who have information to share or a complaint to email EnforcementInfo@tdi.texas.gov.

What options are available to consumers looking for new coverage?

You may be able to buy health coverage through your employer or directly from an insurance company. Short-term health plans may provide coverage for up to a year.

Health insurance through HealthCare.gov is typically only available during open enrollment from November 1 through December 15 for coverage to begin in January. You can submit a request online to buy coverage now, and the Centers for Medicaid and Medicare Services will determine if you meet the qualifications for an exemption.

What are the requirements to be a health-sharing ministry in Texas?

Chapter 1681 of the Insurance Code requirements for a health-sharing ministry include:

  • The organization must be faith-based and nonprofit. Participants must be of a similar faith.
  • The organization matches participants who have medical bills with other participants able to help pay those bills.
  • There is no assumption of risk or promise to pay among the participants or the health care sharing ministry.
  • The organization must provide a monthly statement that includes administrative fees and costs to participants.
  • All applications, guidelines and plan cards must clearly indicate that the participant is part of a health care sharing ministry that is not engaging in the business of insurance.

Confused by health insurance? We have trusted solutions to your healthcare insurance needs, including long term care in the event of catastrophic illness.  Call us today at 1-800-257-1723 or click here to schedule an appointment.

 

Get More than Health Insurance: Get a Health Care Survival Strategy

By | Health Insurance

Let us show you how a healthy family can have health insurance and keep money in your pocket if you suffer a critical or chronic illness.

Confused by health insurance? We have trusted solutions to your healthcare insurance needs, including long term care in the event of catastrophic illness.  Call us today at 1-800-257-1723 or click here to schedule an appointment.

 

The Rise of Health Care Sharing Ministries

By | Health Insurance, Health Reform

Healthcare-Sharing-MinistriesEarlier this year, insurance regulators from both Texas and Washington state filed orders against Aliera Healthcare, a health care sharing ministry (HCSM), after some of its members filed complaints about denied or delayed payments on their medical claims.

At first glance, this may seem like business as usual in the insurance commissioner’s office. Yet, organizations like Aliera—religious groups where members pay a set monthly amount to share costs and help pay each other’s medical bills—are not insurance plans, per se. Rather, they are alternatives to ACA health plans that allow members to pay.

“HCSMs have been around since well before the ACA—the first ones came about in the 1990s,” says JoAnn Volk, a member of the Center on Health Insurance Reforms at Georgetown University who contributed to a 2018 Commonwealth Fund report discussing the risks of health care sharing ministries to consumers and insurance plans. “Think of them a bit like Amish communities who all come together, sharing resources and labor to build a neighbor’s barn. With these ministries, like-minded individuals can come together and share in each other’s medical costs.”

While, originally, members of such ministries may have flocked together because of shared religious beliefs, Volk says the ACA has pushed more people to consider these arrangements for other reasons.

“We are hearing about a lot of growth in HCSMs now,” she says. “And that increase in growth seems more spurred by people who are concerned about higher premiums for ACA coverage than truly believing in a ministry’s religious tenets. They can pay less per month and have confidence that they won’t be hit by with a mandate penalty. There’s only one problem: it’s not insurance and there is no actual promise that an HCSM will pay your medical bills.”

Related: The Future of the ACA

In fact, most HCSMs do not cover pre-existing conditions or preventative services. Due to their religious foundation, they also aren’t inclined to cover birth control, mental health services, or addiction treatment. In addition, there may be caps, or limits on the total amount that the group will pay for any single medical treatment. And more consumers are reporting that HCSMs are not paying their claims for medical care.

Despite those limitations, the number of memberships continues to grow. The Alliance for Health Care Sharing Ministries, the trade group that represents these groups, suggests that memberships have grown into the millions over the past few years. But it’s unclear whether or not that is accurate, says Volk. Unlike health insurance plan numbers, membership in HCSMs is not tracked by regulatory agencies. Nor do those agencies have much leverage to educate consumers about what HCSMs are required—and not required—to provide with membership or to intervene with consumer complaints.

“These organizations get a carve out from insurance regulations because they are not insurance,” she says. “But nomenclature that can be quite confusing to consumers. And even though they are required to say they are not insurance, it gets overwhelmed by all the insurance-like features they use to market and promote themselves. Again, there is no promise to pay—and members often don’t seem to realize that.”

Volk cites coverage options with descriptions like “bronze, silver, and gold,” as well as monthly contributions based on age and the number of people in your family that look and work much like the premiums one might see with insurance plans. And brokers who also sell ACA plans may also have HCSMs on their option lists, which make them seem like actual insurance plans.

It’s why many members are registering complaints. But with religious exemptions and other legislative protections in place, there is little recourse. Aliera, in fact, plans to fight the cease-and-desist action filed against them by Washington state.

“It really is a wild, wild west out there for fraudsters and aggressive marketing tactics with these kinds of organizations,” says Volk. “It’s been hard for state officials to step in and do anything. And as we hear more about stories about people not having their bills paid, it should raise pressure for states to take a fresh look on what they should be doing to protect consumers and providers from these HCSMs.”

Confused by health insurance? We have trusted solutions to your healthcare insurance needs, including long term care in the event of catastrophic illness.  Call us today at 1-800-257-1723 or click here to schedule an appointment.

 

 

Kayt Sukel, June 24, 2019, Executive Express, Industry Analysis, News

Nursing home costs in the U.S. are rising even faster than health care

By | Health Insurance, Living Benefits

Nursing home costs can cost upwards of $100,000 a year, a heavy financial burden even for Americans who have set money aside for their later years — and a crushing one for those who haven’t. And those costs are rising, even outstripping the rising cost of health care in the U.S.

Nursing Home Care“What is already expensive is only getting more so,” said Dr. Sean Huang, lead author of a study by researchers at the Georgetown University Medical Center.

The cost of nursing home care is a particular risk for people without long-term care insurance or Medicaid coverage, Huang said, noting the number of Americans who are already short on retirement savings. Annual out-of-pocket expenditures can easily exceed $70,000, found the analysis of prices from 2005 through 2010 across eight U.S. states.

“For someone who is not poor enough for Medicaid or who doesn’t have long-term care insurance, this will be a huge financial burden,” Huang told CBS MoneyWatch.

For-profit nursing home chains were the least expensive, while nonprofit chains were the most costly, according to the report. Independently operated for-profit and nonprofit facilities were similarly priced. Nursing homes in New York had the highest average cost in the U.S. at $302.30 per day, while Texas had the lowest at $121.90, according to the study, which drew on data from 2005 to 2010. Over that period, costs in the eights states rose faster than the roughly 20% increase in overall medical care prices.

Most Americans are eligible for Medicare at 65, with the government program covering some routine and emergency health care, but not long-term care, such as that provided by nursing homes. Although it’s cheaper to buy long-term care insurance in your 40s and 50s, most people don’t, focusing instead on other financial priorities like paying for a child’s college expenses.

That can prove costly. Huang noted that three-quarters of Americans 65 and older will need to use a nursing home at some point, but only a small fraction had long-term care coverage.

Wondering how to plan for long term care?

We have trusted solutions to your healthcare insurance needs, including long term care in the event of catastrophic illness.  Call us today at 1-800-257-1723 or click here to schedule an appointment.

As of 2020, Workers Can Use Individual Coverage HRAs to Purchase Their Own Plans

By | Health Insurance

New Final Rule Lets Employees Use HRAs to Buy Health Insurance

Happy Multi-ethnic Employees Sales Team Giving High Five TogetheOn June 13, the U.S. departments of Health and Human Services, Labor and the Treasury issued a final rule allowing employers of all sizes that do not offer a group coverage plan to fund a new kind of health reimbursement arrangement (HRA), known as an individual coverage HRA (ICHRA). The departments also posted FAQs on the new rule.

Starting Jan. 1, 2020, employees will be able to use employer-funded ICHRAs to buy individual-market insurance, including insurance purchased on the public exchanges formed under the Affordable Care Act (ACA).

Under IRS guidance from the Obama administration, IRS Notice 2013-54, employers were effectively prevented from offering stand-alone HRAs that allow employees to purchase coverage on the individual market.

“Using an individual coverage HRA, employers will be able to provide their workers and their workers’ families with tax-preferred funds to pay all or a portion of the cost of coverage that workers purchase in the individual market,” said Joe Grogan, director of the White House Domestic Policy Council, during a June 13 conference call. “The departments estimate that once employers fully adjust to the new rules, roughly 800,000 employers will offer individual coverage HRAs to pay for insurance for more than 11 million employees and their family members, providing them with more options for selecting health insurance coverage that better meets their needs.”

The new rule “is primarily about increasing employer flexibility and worker choice of coverage,” said Brian Blase, special assistant to the president for health care policy. “We expect this rule to particularly benefit small employers and make it easier for them to compete with larger businesses by creating another option for financing worker health insurance coverage.”

“Employers and employees alike will have more options for health care coverage as a result of the new rules,” said James A. Klein, president of the American Benefits Council, which represents employers that sponsor health and retirement plans.

The final rule is in response to the Trump administration’s October 2017 executive order on health care choice and competition, which also resulted in:

  • An earlier final rule on association health plans that is now being challenged in the courts.
  • A final rule allowing low-cost short-term insurance that provides less coverage than a standard ACA plan.

Do you need help sorting health insurance out and making the right decision for you and your family?  Call us 1-800-257-1723 or click here to schedule an appointment.

Even with a good job and insurance — high health care costs still drove me to bankruptcy

By | Health Insurance

Many Americans assume that if they have a good job, they’ll have a good health care plan.

Sophia A. Nelson in Vienna, Virginia, in 2017. (Photo: Family handout)

Sophia A. Nelson in Vienna, Virginia, in 2017. (Photo: Family handout)

They assume that if they have insurance, they are immune from the health care debate. In reality, many of us are just one major illness away from financial devastation. I know, I’ve been there.

About a decade ago, I was severely injured after I was run off the road by a vehicle while riding my bicycle. The injury caused a series of health issues resulting in more than $50,000 worth of medical bills that I was responsible for paying, despite having good health insurance and financial security. That was $50,000 beyond my premiums, deductibles and out-of-pocket maximums that I already paid. In my case, my injury slowed my ability to work, generate income for my business, and keep up with prescription medications, follow-up procedures and large deductibles.

Sadly, my situation is not unique. According to Gallup polls, 70% of Americans say our health care “is in a state of crisis,” and rising insurance premiums are a major concern for 61% of Americans. Nearly half (46%) are worried they won’t be able to afford their care.

A quarter of Americans have skipped treatment because of its cost and, even among people of means (households earning $180,000 or more a year), a third fear a major health event could lead them to file for bankruptcy.

I am a single woman, with no dependent children. I own a successful consulting firm. My health care costs run more than $600 a month just for the premiums (what I pay in order to have my insurance policy). Nationwide, average premiums vary widely by age, plan and state of residence. Then, there are $50 copays for every doctor visit, prescription costs and visits to urgent care.

With an eye to the future, I also have long-term care insurance, which three-quarters of Americans say they don’t have and more than half say is too expensive. What happens if you cannot work? What happens if you get disabled temporarily? How will you pay your bills, keep your home and cover medical expenses? Health care costs do not just begin and end with your health care coverage.

Health care costs add up

Despite running my own business and doing well, my medical emergency devastated me financially. Unable to work as hard as I was used to, and having gone through my savings and 401(k) from my days working in law, I could not pay my mortgage, the debt piled up and I filed bankruptcy. I had to start over in my mid-40s. It took me five years just to recover, get another home and rebuild a normal life, but with my health care costs I will always be looking over my shoulder with worry.

Sophia A. Nelson, Opinion contributor, USA Today

Do you plan to retire by 50? Great, but can you cover your health care?

By | Health Insurance

Early RetirementBut a big obstacle threatens to keep you from joining the financial independence/retire early movement, popularly known as FIRE: the high costs of health care and health insurance.

Without a job and too young for Medicare, what health care insurance options remain for early retirees and their family?

A handful, it turns out.  BUT – the best alternative is still the total strategy that we created to take advantage of banking on your good health while you have it and banking a chunk AFTER your bad health crops up with a living benefit.

If your still not convinced that our total strategy is not the best alternative – read on – and then call us at 1-800-257-1723 or schedule an appointment.

Private market

You don’t need an employer to buy health coverage straight from an insurer. In some cases, if you have a side gig that you incorporate, you may be able to write off some of health care insurance costs as a business expense, says Sam Dogen, founder of the blog Financial Samurai who has been financially independent since 2012.

Considerations: It’s costly. Dogen, 41, pays $1,760 a month, or $21,120 a year, out of pocket for a platinum plan for his family of three. They could have saved $100 to $200 a month by opting for a bronze or silver plan, but the cost would still total more than $1,500 a month.

“It’s an absurd amount of money,” Dogen says. “Either way you cut it, paying for unsubsidized healthcare is extremely expensive in America.”

Bare-bones plans

New rules created under the Trump administration allow insurers to sell short-term policies – up to 364 days – that exclude the minimum benefits that the Affordable Care Act plans must provide, such as prescription drugs, maternity, and mental health care.

These plans, which often cover more catastrophic medical events, are cheaper, but come with high deductibles. Some early retirees rely on these plans for basic coverage and then use their own funds to pay for uncovered expenses, typically routine check-ups.

Considerations: Many of these short-term plans are limiting. For instance, many won’t cover any pre-existing conditions. So, if you develop a chronic condition like diabetes, you may no longer qualify for coverage when it comes time to renew the plan.

Subsidized care

If your income is low enough in your early retirement years, you may qualify for subsidies for purchasing insurance through the health insurance exchanges or marketplaces created by the Affordable Care Act. That’s what many FIRE aspirants do, says Dogen.

“For a family of three, I need to make less than 400% of the Federal Poverty Limit, or $83,120, to be eligible for healthcare subsidies under the ACA,” he says.

Considerations: The less you make in income the more you qualify for a subsidy. Make too much, you won’t qualify. There’s also an uncertain future surrounding the ACA given the political climate.

“If you’re getting a subsidy, that’s great but I wouldn’t count on that lasting forever,” Dahleen says. “It’s subject to change at any time.”

Part-time job

Some early retirees choose to work a part-time job to get health insurance. For instance, Johnsrud has a friend who is a bus attendant for the school system, working an hour and a half in the morning and again in the afternoon.

“They get full benefits and if the bus isn’t running, they aren’t working,” she says, noting her friend gets plenty of time off, including summers and other school breaks off, but still maintains coverage.

Another popular part-time job among FIRE achievers is working at Starbucks, which provides health insurance to part-time workers.

Considerations: It’s may not be the “early retirement” you’re looking for. You lose some of the flexibility and are tied to a job for benefits only.

Medical tourism

Those who plan to spend those golden years abroad often depend on travel medical insurance, which often comes with evacuation insurance in case you need to be flown back to the U.S., says Dahleen. These ex-pats typically pay for more routine medical and dental procedures out of pocket in other countries where health care is more affordable,

“It all depends on what your current level of health and level of risk are,” he says.

Considerations: This only works if you’re traveling overseas for much of the year. You also need to be comfortable with seeking medical care in a foreign country.

, USA TODAY

New evidence that short-term plans offer good coverage for many.

By | Health Insurance

Its Not ‘Junk’ Health Insurance

You decideHouse Democrats last week voted to reverse a Trump Administration rule that the left has branded as promoting “junk insurance.” So note that the vote arrives the same week as a fresh analysis about how short-term health insurance can be a better option than ObamaCare.

The Trump Administration last year allowed for short-term, limited-duration health insurance that can last up to a year. Plans can be renewed up to 36 months without new medical underwriting, which can protect against higher premiums if someone falls sick. The Obama Administration limited short-term insurance to three months to force everyone into the ObamaCare exchanges. The Trump crowd thought short-term plans could be viable for relatively healthy folks who earn too much for subsidies and are soaked by Affordable Care Act prices.

Democrats claim these are “garbage” plans designed to trick Americans. Speaker Nancy Pelosi tweeted this month that the Trump Administration “is fighting to replace many Americans’ health care with junk insurance policies that are allowed to discriminate against people with pre-existing conditions.”

Short-term offerings are nascent and several states ban them, with restrictions in about two dozen others, which limits data. But Chris Pope at the Manhattan Institute offered a useful comparison in a paper last week. Mr. Pope examines Fulton County in Georgia, where ObamaCare premiums hover around the national average and multiple insurers compete on the exchange. Short-term insurance is available, consistent with the new federal rules.

A Blue Cross bronze ObamaCare plan—which covers about 60% of medical expenses—for a 30-year-old male who doesn’t smoke runs $296 a month in premiums. The plan carries a $5,200 deductible, with a maximum out-of-pocket cost of $7,900. UnitedHealthcare’s short-term plan that lasts 360 days? Monthly premium: $209, nearly 30% lower. The deductible and out-of-pocket caps are also lower, at $5,000 and $7,000, respectively.

The savings are greater for a more generous silver plan: $467 a month in premiums on the exchange versus $250 for a comparable short-term plan. Mr. Pope says that while “narrow-network HMOs are often the only plans available through the ACA exchange,” short-term plans “tend to be PPOs that offer broader access to providers.”

Not every plan covers, say, mental health or prescription drugs, but many do, and not every customer wants to pay for every benefit. A February survey from eHealth found that 80% of those who bought short-term insurance said affordable premiums were more important than comprehensive benefits. Some 61% considered coverage that complies with the Affordable Care Act before looking at short-term options.

Democrats predicted that the short-term rule would siphon patients from the exchanges and send premiums soaring, which hasn’t happened. Mr. Pope notes that Affordable Care Act premiums increased 3% on average for 2019, and that 92 of 124 requested rate increases didn’t even mention short-term insurance as a significant factor in higher rates. The effect on premiums has been negligible.

Anyone with a tough medical condition and modest earnings will likely be better off on the exchanges, where coverage is generously subsidized. But plenty of Americans may conclude that short-term plans are better. The Democratic response to this individual choice? In the words of Senate Minority Leader Chuck Schumer: “Democrats will do everything in our power to stop this.”

Do you need help sorting health insurance out and making the right decision for you and your family?  Call us 1-800-257-1723 or click here to schedule an appointment.