We Got Trouble?

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In the Broadway musical The Music Man, one of the most famous songs is called “Ya Got Trouble?” During the song, a smooth-talking con man named Harold Hill tries to convince River City, Iowa locals that they need to give him money for band uniforms and instruments so that he can put together a marching band for the young people and protect them from the debauchery of a pool hall. I’m no con man, and I’m not asking for money for a marching band, but I’m sad to say my words today sound a little like Professor Harold Hill’s in the sense that I think we might be about to be in for some trouble, right here in the good ‘ole US of A.

You see, for many employees and retirees, open enrollment is about to begin, and for people insured through the Health Insurance Marketplace, open enrollment starts November 1st. And the word on the street is not good. I have read numerous pieces from typically liberal-leaning and typically conservative-leaning outlets and I've listened to multiple industry experts talk about 2017 health insurance coverage, and they all seem to be saying the same basic thing: brace yourself. The number of insurance carriers is going down, the number of plans available is going down, and the quality of coverage seems to be going down while the cost of coverage is going up, considerably. Last week some of this projected trouble came to fruition as the White House announced marketplace plan premiums will go up by an average of 25% in 2017.

If you read my blog, you know I’m not often one to sound the alarm. I’m not sounding the alarm today either, but I am trying to get your attention. When your open enrollment packet comes, you need to treat it like you are a member of the bomb squad. Carefully analyze every detail of your situation and proceed only with extreme caution.

We’ll have to see what happens to your premium. We’ll have to see what happens to mine. For now, here are a few general thoughts:

• If you get a scary letter that your plan doesn’t exist anymore, don’t panic. You’re just going to have to pick another one.
• If your plan is discontinued, don’t assume you will roll into a similar plan. Likewise, if your plan is still available, don’t assume you will automatically be reenrolled. In some cases, insurance companies feel they are now better off if they don’t have you as a customer at all, so the days of them trying to keep you with some sort of automatic election or renewal may be over. Be careful. You need coverage.
• A lot of deductible amounts are supposedly going to be higher. If you are looking at a lower deductible plan option, look closely. It may not be as favorable as it once was.
• A lot of co-insurance percentages are supposedly going to be less, so read carefully.
• If you are considering going to a lower coverage plan to try and minimize increased premiums or to actually try to reduce your premium, consider your financial situation if you have a major medical event. You could be setting yourself up to win the financial battle if you’re healthy, but lose the financial war if you get sick.
• The length of covered physical therapy treatments is supposedly going to be reduced. Read the fine print, particularly if you are planning or expecting a surgery that will require extended physical therapy.
• Some procedures now require other procedures in order to be covered. For example, you might need a CT scan, but it might only be covered if you first have an X-ray. I can personally attest to that little quirk, so read the fine print now, and if the time to use your coverage comes, ask a lot of questions, work with your doctor, and be proactive with your health insurance provider to make sure you play the game as best as you can to reduce your out-of-pocket expenses.
• If you are considering changing health insurance providers or plans, make sure your doctors you really like are still going to be willing to see you. A trusted, experienced physician might be worth a little higher premium if you can still see them.
• If you are a retiree and your old employer has always paid your health insurance premiums, you might want to look into how much longer that is going to be the case. With the premium increases of recent years, the expected premium increases in 2017, and the projected premium increases going forward, many companies are beginning to pass some of the health insurance coverage burden to their retirees.
• If your deductible or maximum out of pocket figure is greater than your cash on hand and rainy day fund, it may be time to boost those up so you can remain financially solvent even if you get hit with a real medical issue.

I’m truly sorry I can’t offer you something more concrete. I just want to warn you about the common tremors I am hearing from media sources that rarely agree. I hope I’m wrong, I hope there’s no trouble in River City, and I hope I can just go play pool!

-Tom

When the Stork is Looming

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I don’t know about you, but I know a lot of pregnant people right now. Maybe it’s my age and stage in life, maybe there is something in the air, or maybe there is something in the water! I don’t know what it is, but there are going to be some overworked storks in 2015!

If we know one another personally, you probably know that my wife and I just had a child of our own. I'm still working on my swaddling technique and I haven't quite figured out how to shove the “pack and play” back in that tiny little bag, but I have learned a few things over these past several months. For my currently pregnant and maybe one-day pregnant readers out there (and their spouses), here are seven financial tips:

1. If possible, get health coverage where the insurance company will pay 100% of your costs after your deductible and copayments have been met. Call me Captain Obvious, but births are significant health care events, so they are going to have a price tag. If you’re on a plan that covers 100% after you reach your deductible, you have the comfort of being able to back-in to what your birth medical expenses will likely be without having to wonder how much it could cost if there are complications. If you are planning to have children, health insurance is a good thing to address before you are pregnant because you don’t always get an open enrollment period before the baby arrives. You can also go ahead and strategize about whose plan the baby is going to be on if both parents have health insurance.
2. Boost your life insurance or get life insurance if you haven’t already. If Mom is going to stay at home for a while or shift to part-time, Mom needs to have some significant life insurance on Dad should something happen to Dad and his paycheck. If Dad is going to keep working and Mom is going to look after the baby, Dad needs to have some significant life insurance on Mom should something happen to Mom and her child care services. Interchange “Mom” and “Dad” here as needed, but you get the picture. An article I recently read pointed out that going ahead and boosting a woman’s life insurance early in her pregnancy may be a good idea as complications such as gestational diabetes could arise during the pregnancy and obviously, situations could occur at birth. As you would probably expect, it’s cheaper and easier to get life insurance if you have fewer health issues and less treatment history.
3. If Mom is going on maternity leave, there is a good chance she will be drawing short-term disability that will very likely not be 100% of her pay. This means you have a pay cut coming, and you need to plan accordingly! I’d suggest ratcheting up the savings now if Mom is still working so that you can offset your upcoming pay cut when the time comes and not have to significantly change your lifestyle.
4. Many of our friends that are already parents have warned us about looking after “us.” A baby can be a wonderful addition, but he or she takes time and energy, and can subtract from what you can offer your spouse and your friends. In that spirit, I’d also start saving for date nights and friend nights. It’s not just dinner and a movie anymore! It’s going to be dinner, a movie, and a babysitter. Look after the baby, but look after your marriage and your friends, too!
5. Pay off your credit cards! You should do this whether you are having a baby or not, but I can already tell you that you’re going to want to have as much spending power available to you as you can. Baby stuff is expensive! I’m sure you’ll get some gifts (and my wife and I are very appreciative of what we have received), but you’re not going to get all that you need without buying some of the stuff yourself.
6. In the spirit of my comment about baby “stuff” not being terribly cheap, don’t overspend or overbuy baby stuff, either. It makes me sound like an old man, but I can tell you for a fact I wasn’t raised with all the gadgets and gizmos that some of these baby stores tell you that you “have to have.” My wife asked a good friend of hers who was a recent Mom to accompany us as we started considering what we would need for our new family member, and I think that was one of the best ideas we’ve had. My wife may have invited her friend for comfort, support, and wisdom, but every time she told us we didn’t need the premium plus version of that bottle, or the spa edition of the bath apparatus, or the nuclear-powered thermometer, I literally felt money going back into my wallet!
7. Try to figure out what the new normal budget is going to look like. Whether it’s pay cuts, health insurance expense increases, double income households becoming single income households, daycare expenses, or lots and lots and lots of diapers to be purchased, your budget probably won’t look the same after the little one arrives. No matter how cute those little hats and booties are, your financial principles need to stay the same: spend less than you make and live within your means.

I’ve got a feeling I’m going to be writing a lot of posts at strange hours over the next few months…

-Tom

Open Enrollment

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Let’s be honest: open enrollment stinks. At best, your human resources department goes over your medical, dental, and vision insurance plan options with you at a staff meeting and offers to help you fill out the forms. At worst, your human resources department sends you a bunch of information and a bunch of forms and asks you to make a bunch of decisions by yesterday. Either way, it’s probably not anyone’s favorite time of the year. It’s certainly not mine!

This year is particularly vile. With all of the changes going on in the realm of health care, there are a lot of new rules and revised wording in plan options, and most of the information I’ve had the joy of reading for friends, family, and clients seems to be a grotesque concoction of insurance jargon written by a group of long-winded lawyers. Fret no more, though. I’ve got 10 tips to help you get through your next open enrollment period:

1. Read it - all of it. It’s probably a daunting amount of confusing material, but we’re talking about your medical insurance benefits, and possibly your spouse’s and children’s medical benefits. You are about to make irrevocable decisions (at least until your next open enrollment or qualifying life-changing event) that could have real consequences (both medical and financial) to your overall well-being. Make sure you’re giving your elections the time and due diligence they deserve.
2. When in doubt, ask. If you don’t have any questions after reading through your materials, you should probably read them again! No question is too small, and you don’t want to find yourself wishing you had asked your “little” question back during open enrollment while you’re at the check-in counter in the ER!
3. What’s changing? This is probably the easiest and best question you can ask your human resources department (or your insurance provider if your company is keeping the same provider it had last year). If you are a really organized person and can get your hands on last year’s plan, lay this year’s plan next to it, side by side, and go at it. Highlight the differences so you can know the new rules of the game and be ready to go with a different plan option if needed.
4. What costs are increasing? Unless the benefits you are being offered are being reduced, there’s a pretty good chance your health insurance expenses are going up. We can argue about whether the government, the insurance companies, the hospitals, or the doctors are behind this, but at the end of the day, what matters is that your costs are still probably going up. It’s important to know what specific areas of your plan are becoming more expensive. Are your premiums (the amounts you pay for insurance coverages) going up? Are your deductibles (limits you have to hit before the insurance company starts substantially paying for health care costs) going up? Are your co-pays (fixed charges for visiting a doctor) going up? These increases should be considered when determining which plan option is best for you and your family.
5. In-network or out-of-network? An in-network doctor is one who your health insurance provider is contracted to work with, and an out-of–network doctor is one who your health insurance provider is not contracted to work with. Typically in-network doctor visits will cost you less because your health insurance provider has already negotiated set prices with the doctor for his or her services. If you love your doctor and are not cost sensitive, this may not mean much to you, but if you’re neutral towards your doctor, I’d suggest you make sure he or she is in-network, and if not, find a doctor who is. This is particularly worth looking into if your company is changing providers or you are looking into an obstetrician.
6. Consider dental insurance. If your company offers dental coverage, give it a look. I know it’s more coming out of your check, but you may find that for a relatively minimal cost you can have a lot more coverage and flexibility should that dreaded toothache strike. If you go to your dentist regularly, and you should, it’s possible your savings on basic preventative care could be almost equal to the cost of your insurance.
7. Consider vision insurance. I’ll just be frank and tell you that, in general, I rank basic health insurance needs in order of importance: medical, dental, and then vision. In a lot of cases, if something serious happens to your eyes, it’s possible your medical insurance will be there for you. That being said, vision insurance can also add a lot more coverage and flexibility to your insurance arsenal should something happen to your baby blues. Particularly in years where you know your prescription has changed, you need new glasses, or you need new contacts, your savings on those appointments, products, and services could almost equal the cost of your insurance. I’d give it a look (pun intended).
8. Make sure everyone is covered. This may seem obvious to some people, but trust me when I tell you this tip is embarrassing to some people. Please, please don’t leave off a spouse or a child who is eligible and needs insurance benefits. Even if your company and the insurance provider can fix your paperwork mistake, by the time you get through the process, you’ll wish you hadn’t forgotten anyone.
9. Ask about wellness programs. This suggestion may be a tad early, but I am beginning to see, read, and hear about more and more programs companies and insurance providers are putting in place that offer rewards, incentives, and in some cases, reduced costs to employees who participate in wellness programs. These programs can be yoga classes, gym memberships, online classes about eating right, and lots of other things, but if you’re interested in getting healthier and potentially getting some perks for doing so, see if you can participate in a wellness program.
10. What do you want your health insurance to do? I saved what I think is my most important tip for last. Many people I know go with whatever plan option has the lowest premium, and I’m not sure that’s the smartest move. In my book, health insurance is a last line of defense to protect you and your family’s assets should something really serious come about medically. Personally, I always look for the plan options that offer the highest coinsurance. Coinsurance is how medical expenses are shared between you and your insurance provider once the deductible is met. If there is an option that offers 100% coinsurance (or close to it), it will probably have a relatively high deductible and be one of the options that takes a bigger bite out of your paycheck, but it will likely offer more financial protection should a very expensive medical issue come up. If you don’t have the healthiest family history, you or your spouse are thinking about having a child, or your abdomen felt really bad the last time you had spicy food, I would certainly encourage you to consider this type of plan. Playing with your insurance election is not how you get a raise. Remember, if you have an adequate rainy day fund, you should be able to handle a higher deductible. If you follow this tip, you may curse me every two weeks, but I would wager there will eventually be a year where you will be glad you went with an option that offered more protection to your overall wealth. 

 

Today’s tips are pretty general, so please let me know if there’s something specific I can try to help you with. Just like you, I do hate reading the insurance lingo, but I love helping others.

 

-Tom