Saturday, December 1, 2012

Health Insurance in 2013

If you are buying health insurance for yourself and or your family, you have seen notices from your company about rate hikes coming in January 2013.  LifeWise, Regence BlueShield and Group Health have filed with the Office of Insurance for rate increases. Their requests were not granted. That is , the amount of increase they sought was not approved. Instead, the OIC approved rate increases lower than what the companies needed or wanted.

What is driving these rate increases?  Several factors including rising costs of health care in general, mandated benefits (58 at last count) initiated by our OIC in Olympia, and new regulations and mandates involved with the PPACA (Health Care Reform).

What is coming in the future?  The PPACA is the law of the land. Effects of the new law started showing up in 2011 and continued in 2012. For 2013 there are several new segments of the law being instituted. New taxes, new mandates and regulations are being implemented now and yet even more are being written as time goes on.

By October 2013 we should have a Health Insurance Exchange up and running. The new government program has a new name - Washington Health Plan Finder - and can be tracked at this web site

The Health Care Authority is in charge of establishing WHPF. The HCA testified to the Office of Insurance in the fall of 2012 that A) the WHPF will cost about $50 Million a year to operate, B) health insurance premiums may be 70% higher than similar plans offered on the market today.

Interestingly, the OIC operates on about $50 Million every biennium and gets most of its funding from premium taxes levied on all insurance companies operating in Washington. The WHPF will operate for a couple of years on Federal grants but must be self-sustaining by 2015 when that Federal money dries up. The WHPF has no idea how they can afford to operate and is trying to figure it out.

In my opinion, we are in for a rough ride over the next couple of years. I will be involved in helping people navigate the new choices coming in the fall of 2013. Watch for updates to this subject. If you want to be notified by email of unfolding details, let me know.

Wednesday, October 10, 2012

Guaranteed returns, guaranteed lifetime income

Interest rates are at an all time low. Market conditions, real estate and other investments are iffy at best. Incomes are shrinking and portfolios are no longer holding their own. What to do?

My clients have never lost money.
My clients have always earned a reasonable rate of return.
My clients watch their money grow when the economy surges.
My clients never lose a  nickel when the economy takes a dive.
My clients have a guaranteed lifetime income they cannot outlive.

If you have a CD, money market or other cash investment that is going nowhere, or one that makes you nervous, call me at 425.338.1000 or email me at today!

Friday, September 7, 2012

The Great Medicare Battle

Now that the Republican and Democratic Conventions are over, it's clear that Medicare has become the issue that will determine the outcome of the 2012 presidential election. And the parties' proposals couldn't be more different.

President Obama's health care law will cut $716 billion from Medicare . Where does this number come from? The majority will come from reductions in payments to doctors and hospitals, and to Medicare Advantage plans. As this NCPA study shows, the cuts in Medicare provider fees are not sustainable if seniors are to have continued access to health care.

On the other hand, Mitt Romney and Paul Ryan offer a plan that gives seniors more control over their Medicare dollars and unleashes competitive forces to slow Medicare spending. This is the power of the free market at work.

Tuesday, September 4, 2012

If You Like Your Insurance...

Kathleen Sibelius, Secretary of HHS, spoke at the opening session of the Democratic National Convention in Charlotte, NC on September 4, 2012. Her main points were essentially all the same lies we've heard since early 2009. So many things to say but I will focus on only one falsehood.

Ms. Sibelius repeated the common lie of the Affordable Care Act; "If you like your insurance you can keep it."  This is patently untrue unless she is speaking to someone on another planet. I sell health insurance and have seen policies evolve to meet the incredible standards and regulations spawned by the ACA. There isn't one policy left in Washington State that resembles policies bought and paid for in 2008 or earlier. Nobody gets to keep the policy they like. Nobody.

Insurance companies are strangled by onerous regulations. They are hindered by, in Washington anyway, a commissioner of insurance that hates insurance companies and insurance agents. Always has, always will. His view: government - good, private business - bad.

Deductible and coinsurance have skyrocketed. Gone are the days of $100,$500 or even $1,000 deductibles. The majority of policies have deductibles starting at $1,800 and go up to $10,000. Most companies are no longer offering traditional drug coverage. Now they offer discount programs worth 18% to 20% off retail. After ACA it's no longer possible to keep the policy you like.

Preventive care is now the norm but you'd better be careful - the big print giveth and the small print taketh away. For example, preventive care offers cancer screenings including screenings for colon cancer. This may be a colonoscopy (if coded accurately by the provider) or a fecal occult blood test. You never know if you're going to end up paying $1,200 for a procedure or end up getting it for no charge. And guess who becomes the bad guy? The insurance company, of course.

No, Ms. Sibelius is flat out wrong. Nobody gets to keep the insurance they like. It isn't happening anywhere in the country and she gets the Pinocchio award for today.

Tuesday, August 21, 2012

College Savings Plans: A Better Alternative?

With the rising costs of university and college tuition what does a parent do? I have helped thousands of people put away money for one purpose or another for over thirty years and I am often asked about College Savings Plans, also known as 529 plans after the IRS code section that allows them. Parents and grandparents want to know if investing in them is a good idea.

529 Plans
A 529 plan is basically a way to save money for college with tax-free growth, as long as those funds are used for qualified educational expenses. This sounds good, but there are three distinct reasons why you may want to avoid them.

First, most of these programs aren't savings accounts at all; they are mutual funds that are invested in the stock market with all the risks that investing in the market entails. As I write this, looking at the five-year rates of return, both the Dow Jones Industrial Average and the Standard & Poor's Index were negative over this time period. So, a family that sets up this account because of the tax advantages for college may find that none exist, or worse, they have actually lost money in this account when it is time to pay for school.

Second, most parents need to focus on college planning long before their children are in high school. The major advantage to a 529 plan is that if there is considerable compound interest in the plan, it can be withdrawn tax free. But, if a family is funding the plan when the student is older, it doesn't really have time to grow.

The Real Reason to Consider Other Options
The real reason that a 529 savings plan isn't usually a good option for many families, though, is because it can actually prevent them from receiving need-based financial aid if they would have been otherwise eligible for it. Yet I have seen many families that make very good incomes qualify for need-based financial aid if they understand the system. Let me explain.

According to the Department of Education, at a public school, 529 savings plans are counted against a parent at 5.40% annually. In other words, a family that saved $100,000 in this account would be expected to pay $5,400 more than a family that didn't. That's not so bad, but it can actually get worse. Some private colleges and universities will actually take up to $20,000 (20% of the $100,000) and set that aside for education purposes. Under these circumstances, that family would lose $80,000 in need-based financial aid (if they would otherwise been eligible for it) because nobody bothered to explain to them how a 529 savings plan is counted in the financial aid formula.

Obviously, every situation is different, and there are plenty of cases where using one of these vehicles makes some sense. However, we have found that we can accomplish some of the same things that a 529 savings plan can with dividend paying whole life insurance.

Advantages of Using Whole Life Insurance
The advantages of using whole life insurance are numerous. First, the policy pays a guaranteed interest rate that is not subject to the ups and downs of the stock market. Second, if constructed and used correctly, the money in the account can be used tax-advantaged, just like a 529 plan. Third, insurance is specifically excluded from being counted as an asset in the federal formula that the Department of Education uses to determine what a family can pay for college. This, in turn, could make a student eligible for grants and scholarships. So, when thinking about saving for college, be sure to consider whole life insurance as an alternative to a 529 savings plan. 

Wednesday, July 11, 2012

Obamacare vs. Romneycare - There IS a difference

OBAMACARE                                       ROMNEYCARE
HC Bill: 2,700 pages long                    HC Bill: 70 pages long
No one read it before passing it          Everyone read is before passing it
Regulates entire HC industry               Does not regulate HC industry
Raises taxes on indiv & Biz                  Did not raise taxes
Cuts Medicare                                     Does not cut Medicare
Gives Medicaid to non-poor                 Didn't affect Medicaid expenditures
No indiv HC tax Deduction                  Expands HC indiv tax incentive
Unfunded by current revenues            Shifted costs from funded programs
Bill had no bi-partisan support            Bill had bi-partisan support
Enforcement by the I.R.S.                    Enforcement by MassHealth
16.7% of US still uninsured                  1.8% of MA still uninsured
11% of US children uninsured              0.2% of MA children uninsured
U.S. ranks lowest in world                   MA ranks highest of 50 states
$1.9T incr. costs over 10 years           Net cost to reform < 2% budget
Ruled unconstitutional twice               Constitutionality upheld in court
Obama supported 100% of OC            Romney vetoed 8 parts of RC
Obama pushed for more HC reg         Romney pushed for less HC reg
US:Obamacare approval 35%               MA: 67% "satisfied" in 2010
Don't like it? Tough.                           Don't like it" Try another state.

More at 

Tuesday, July 3, 2012

Health Care Reform and Me

What does the ruling of the Supreme Court mean to me?
Q: Does this mean the Affordable Care Act is in place forever?
A: When SCOTUS ruled on Thursday, June 28, 2012, it meant the ACA is in place for now. The future of the law depends on who controls the White House and Congress after elections in November 2012.

Q: What about benefits that are now in place?
A: For now, parents can still keep their children on their insurance plans until age 26. People on Medicare will continue to see the "doughnut hole" or coverage gap for prescription drugs close.

Q: What is next if the law stands?
A: Most of the big changes, or mandates, begin January 1, 2014. For one, most Americans will be required to carry [approved] health insurance or pay a tax penalty. The tax penalty is set at $95 a year, initially, but will increase significantly in later years.
The Medicaid program will be expanded to cover millions of people, effectively adding Billions to the deficit. Another batch of people with low incomes will get tax credits to offset the premiums they will pay for health insurance.

Q: I already have health insurance. What about me?
A: You are bound to see changes in your health insurance coverage as your employer plan or your individual plan will have to meet new regulations under the law. You will probably see more  preventive services covered without out-of-pocket costs. If your current plan does not provide for prescription drug coverage, you may see those benefits added to your plan.

Q: I'm already paying high premiums. What will happen to my insurance premiums?
A: Health insurance premiums will only increase and co-payments rise. Why? For one, the cost of health care continues to increase. Secondly, the new law requires insurance plans to cover more and more preventive benefits as well as new benefits that add to costs. The law contains a few mechanisms to curb premiums but not by much.

Q: What about these new Health Insurance Exchanges?
A: The mandated exchanges are to be in place January 1, 2014 (October 1, 2013 in Washington). These are to be the new way to purchase health insurance. There will be State controlled Exchanges as well as Private Exchanges. The State Exchanges and Private Exchanges are to offer identical plans. The State Exchanges will likely serve people eligible for tax credits or subsidies to help them pay the premiums - people with low incomes. There will be four plans currently referred to as "metal plans" namely Platinum, Gold, Silver and Bronze. Details of each plan are not yet available and premiums are yet to be determined.

Contact Richard Ek at if you have other questions about health insurance, Medicare health plans or other coverage.