High Deductible Health Plan + Health Savings Account Plan

September 10th, 2008  |  Published in Insurance  |  Comments Off on High Deductible Health Plan + Health Savings Account Plan

One of the biggest concerns for retirees is medical costs. As we live longer, the need for health insurance grows and the cost of that insurance will also increase. It’s simple math, older people are simply more expensive to insure. Since you’ll be living on a fixed income, the increasing costs of your insurance will introduce longevity risk, the risk that you’ll outlive what your assets can fund.

Suze Orman proposes a plan that might work to mitigate this risk – combining a high deductible health plan and a health savings account. A High Deductible Health Plan (HDHP) is one in which you are willing to accept a higher deductible in return for lower recurring premiums. In 2009, the minimum deductible is $1,150 for individuals and $2,300 for family coverage. HDHP will also have higher annual out of pocket limits too. You couple this with a health savings account, which is a tax free investment account, to maximize your savings. You pay the deductibles of the HDHP with the earnings from the HSA.

It’s not a perfect solution but certainly one to investigate.

The Health Scare Lurking in Your Retirement Plan [Yahoo! Finance]

Boomer Misconceptions on Long Term Care

November 9th, 2007  |  Published in Insurance  |  Comments Off on Boomer Misconceptions on Long Term Care

Jenna Kozen at Edelman sent along a presentation about a nationwide survey conducted by America’s Health Insurance Plans (AHIP) on the misconceptions of long term care coverage and services by Baby Boomers. AHIP is a national trade association that represents 1300 insurance companies and their presentation was interesting in that it showed some very common misconceptions.

Here were their key findings after talking to around 2,000 boomers:

  • One in four Baby Boomers erroneously believe that they have coverage for long-term care expenses. According to the National Association of Insurance Commissioners, at most about 5 percent of Baby Boomers are covered.
  • 54 percent of Baby Boomers think Medicare will pay for long-term care services. Forty-four percent believe “other health insurance” will pay. Even half of those who say they have long-term care insurance believe Medicare will pay for the care. Medicare doesn’t cover long-term care indefinitely, Medicaid will cover these services, but only after requiring individuals to spend down nearly all of their assets to qualify for assistance.
  • Even among Baby Boomers nearing or at the age of 60 ? when concerns about the potential impact of long-term care on retirement savings might be most prominent in their minds ? only one in four say they are “very familiar” with long-term care insurance. In addition, 41 percent say they have not had any discussions about long-term care in the past twelve months.

Check out the presentation and make sure you’re not one of the folks who is misinformed.

Have You Created A Safety Net?

July 23rd, 2007  |  Published in Insurance  |  Comments Off on Have You Created A Safety Net?

This is the fourth and final question in the Money Magazine “Get on track for retirement” series and it’s a nice closer. Did you know that 70% of workers think they have enough for retirement but only 43% have actually done the math to prove it? That’s according to a 2007 Employee Confidence survey by Employee Benefits Research Institute and I wonder how many people aren’t ready for retirement but think they are?

Well, that’s not even the point of this last question, this last question is focused on one thing – insurance. If something bad happens, is it going to wipe out your savings? Do you have life insurance and disability insurance. If you do, wonderful; if you don’t, shame on you.

A term life policy gives you the largest death benefit for the smallest premium – generally, you should get coverage equal to five to 10 times your salary. As for disability insurance, look for a policy that will pay 60% of your salary. Before you shop, though, see if you already have coverage (or the option to get it) through your job.