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Are your medical bills pushing you towards bankruptcy?

Medical bills are one of the major causes of filing bankruptcy in America. Of all the bankruptcy cases lined up before the USA court, 50% were caused by insurmountable medical costs, even when around 40% of the bankrupts had health insurance to take care of the medical costs. Following are some startling statistics,

• Around 2 million Americans every year are forced to consider bankruptcy owing to their overwhelming medical costs.
• Around 7 million children were affected due to bankruptcy filed by their parents.
• The worst affected section of the population is the middle class.
• Almost 60% of the bankrupts were forced to go without much needed health care to avoid owing further debts.
• Many of the households were forced to curtail their consumptions.
• Many were forced to drop health insurance since they can no longer pay the premium and thus slipped into more debts.

Bankrupt even when you had health insurance!

Often times the co-payment alone can force the individual to consider bankruptcy. Today’s health insurance policies with high deductibles, co-payments and other such costs offer very little protection to the policy holder. Therefore, even when you are covered you can accumulate sufficient amount of outstanding to find bankruptcy as the sole option.

But, you may still try to avoid bankruptcy!

Bankruptcy should be looked upon as the last option because not only it ruins your credit report by staying on it for ten years, it also ruins families and their dreams. But what would you do when buried nose deep into medical bill debt.

• First, you should try to negotiate with the hospitals. Some hospitals would waive the medical expenses if you qualify for the low income group waiver.
• There are also non-profit organizations which help people dealing with medical bill debts. Some of these organizations may also play the part of negotiator in reducing your share in medical bills.
• You can try to work out a payment plan with the hospitals as well. At least it’d look good on your credit report. Further, always try to work-out a deal with the primary creditor and avoid the bills going to collection. Collection agencies are always hard to deal with.

Has health insurance fraud caused you to lose health insurance?

Do you know that one of the reasons for high health insurance premium is health insurance frauds? That’s right, health insurance frauds cost the insurance companies millions of dollars and to mitigate the loss health carriers pass it to the consumers in the form of increased premium. Health insurance is gradually becoming an item of luxury and frauds have contributed towards it in a great way.

Forms of frauds

Health insurance fraud may evolve around people like- doctors/therapists/hospitals, consumers, agents and at times even the health insurance carrier. However, false/improper billing may be the most common form of health insurance fraud. Also it is illegal to charge more from the insured patients than uninsured ones for the same service rendered. Health fraud can occur in any of the following ways.

• The doctor’s office may charge for services that were not rendered or tests that were not performed.
• May bill twice for the same treatment or can file multiple claims for single treatment performed.
• May charge for unnecessary treatments and tests. Also the treatment process can be stretched in an attempt to collect more from the insurance companies.

Prepare yourself against scams

Awareness and knowledge are the main weapons in the battle against. Actually by practicing few simple steps you can protect both yourself and your family.

• When you are planning to buy health insurance, check with the authenticity of the company. The BBB and the State Insurance Department would give you the idea of the company which has approached you to sell insurance coverage.  Don’t forget to look up for the licensing detail of both the insurance company and the agent.
• If a deal sounds too good, most likely it’s a fraud. Remember that no benefit comes for free. Therefore, if you are offered too many benefits at a very low cost, be weary of it.
• Look for possible signs of fraud. If the sales person is too eager to sell the product, simply tell him that you need more time to think.
• Most of the billing related frauds can be detected by examining the insurance payment statement. Preserve the bills of the services that you have received. It’d help you in comparing the actual charge and claim value.
• If you suspect any fraudulent activity immediately make the respective departments and/or insurance company aware of it.

Let’s the congress battle it out whether or not we should have healthcare for all but for the time being we can educate ourselves against health insurance fraud so that we don’t end up losing what we have.

How HRA’s can help you save in health insurance costs?

Health Reimbursement Arrangement or HRA is a government based program which can help in reducing the constantly rising health insurance costs. HRAs are offered as a part of consumer directed health plans (CDHP) which can help in reducing the cost without compromising on the coverage aspect.

Features of HRA

The following are the features which has made the idea of HRA so popular.

• HRA is an employer funded account which would contain the employer’s contribution towards employees’ health benefits. The charges of healthcare would be paid from this account on qualified medical expenses.
• HRA plans have helped in spreading awareness amongst the consumers and thus have reduces over utilisation of health insurance.
• The amount in a HRA account can be rolled over to next year if the member doesn’t use entire fund available to him. Therefore, the money in the HRA account can grow tax deferred.
• The HRA account is free from state, federal and FICA taxes.
• The health reimbursement arrangement has also improved the quality of healthcare rendered to the members since preventive care, immunization and child care benefits are normally covered on the first dollar basis and are not charged against the employee’s fund.

How does HRA function?

HRAs are associated with high deductible health plans. The employers can save on the premium by raising the deductible level. The saving therefore can be directed to the HRA accounts.

The employer contributes a pre determined amount towards the HRA account on a regular basis which the employee can access upon submitting a reimbursement request. The following two documents should accompany your claim.

• The HRA reimbursement form
• Explanation of benefit form, copies of the receipts of the services rendered.

How to deal with health claim denial?

Procuring an insurance policy doesn’t guarantee that all your claims would be paid. A policy document normally describes the conditions which would be covered and which wouldn’t. Therefore, you should always read the policy paper thoroughly to make yourself aware of the terms and conditions of the insurance company. But, there are times when a claim may get denied wrongfully. And, you may then leave with the option either to accept the cost and pay yourself or fight it back.

Know your rights!!

When it comes to fight a denial, knowledge would be your key. If the insurance company decides to deny a claim they would also issue a claim denial letter citing the clause from the policy. Therefore, it’s important that you know what your policy offers.

Ways to avoid a claim denial

• Review the policy time to time to make sure you have the coverage you want. If there are ambiguities regarding coverage, ask the agent to clarify it for you. You are entitled to proper explanation regarding benefits.
• Make yourself aware of the limitations of the policy. If your policy practices referral system, make sure that you obtain it before seeing a specialist. Also keep yourself updated with availing the services of out-of-network physicians.
• Make sure that your doctor understands the coverage of your policy. Often the doctors have to deal with various insurance companies and therefore it isn’t possible for them to remember each and every policy details.
• Save the documents of the treatment that you have received. It’d help at the later stage of disputing with the insurance company.
• Some policies would have a time limit within which a claim needs to be filed. Confirm that the doctor’s office send the claim to the insurer immediately.

But, what would you do if your claim gets denied?

Inspite of your best efforts your claim may still get denied. What would you do if such a situation arises?

• Call up the insurance company and speak to the customer care representative if you feel that the claim was wrongly denied. Many a times a claim may get denied because of administrative errors and a call to the insurance company can sort the matter out.
• If the problem persists, ask the insurance company to send you customized bills. Check if the list has listed services that were not rendered to you. If such a thing has happened, take-up the issue with the hospital or the doctor’s office.
• Ask for a formal review of the claim when the denial seems legit but you still feel that it should be covered. Most of the states have a time limit within which one is required to request for review.
• When everything else fails your option would be to contact the state insurance department. Every state has definite rules to deal with such situations and most of the times these policies would favour the customers.

Premium waiver a welcoming option for laid-offs

With the economy going south, maintaining coverage and at the same time saving money on the premium has become a concern with the professionals. Therefore they are looking for policies that would react according to their income fluctuation. Premium waiver can be a welcoming relief for people in financial crunch.

What does premium waiver do?

Premium waiver has been a known option with the life insurance policies. Under normal circumstances you would have to discontinue the life policy if can’t afford the premium. But premium waiver allows the insured to continue enjoying the coverage when he/she is receiving disability benefits and can’t afford the large premium payment towards life insurance. However, you need to specifically ask the agent for this rider because it may not come with every life insurance plans.

Guardian’s ProVider Plus with premium waiver option for unemployed

The Guardian Life Insurance Company of America has recently announced a policy called ProVider Plus, which would have the option of premium waiver for a year if you become unemployed.

The ProVider Plus is an individual disability plan which would continue covering the insured even during the period of unemployment, so that you no longer have to put-off the idea of purchasing policy when you are not earning.

Irrevocable trust and life insurance

Recently the ampminsure community had a discussion where a member posed a problem before the community member regarding a life insurance policy held in an irrevocable trust. Following is the post made by her.

I am the beneficiary of a life insurance policy. My step mother put the policy into an irrevocable trust. She is mad at me and told her son not to give me the money from the policy after her death. She can’t remove me as a beneficiary, can she legally not give me the money? My share is 1 million dollars.
No doubts members have come forward to her rescue and tried to clear her doubts as much as possible.

The above discussion has made me interested in delving more into the subject of irrevocable trust and life insurance. Now, in this article I’d try to compile my findings regarding irrevocable trust.

Why should I create an irrevocable trust?

The purpose of irrevocable trust is to keep the life insurance benefits outside the estate to avoid paying estate taxes on the death benefit. The life insurance benefits paid to the beneficiaries may not attract income tax but federal estate taxes may get levied on it if the grantor remains the owner of the policy.

However, the major disadvantage for someone to set-up such trust is that once the assets and policies are sifted to the trust the grantor loses his/her control over such property. In a word, an irrevocable trust is irreversible. An irrevocable trust is a separate legal entity and therefore should obtain separate tax identification number for this purpose.

Who can be my trustee?

A trustee needs to be an uninterested party, it neither can be you nor your spouse. And for the same reason not one of the beneficiaries of the trust. If a beneficiary also plays the role of trustee, he/she would enjoy the capacity to cheat the other beneficiaries. The best party to appoint as the trustee would be the bank or your accountant/lawyer.

What if I don’t want to lose control over my assets?

If you want to retain the control over the trust you should consider creating revocable trust/living trust instead. With the revocable trust you would retain the power to manipulate and amend the terms of the trust at any point of time. Even you can fire, dissolve and appoint new trustee whenever situation arises.

The main advantage of creating a living trust is that upon your death the assets with the trust wouldn’t require to be probated. But remember to be careful about choosing the proper trustee for the rust and also appoint a successor trustee to avoid future complications.

Terminally ill? But you may still get life insurance!

Becoming terminally ill isn’t the end of your insurability for the insurers anymore, at least the situation has improved over the time. New medicines have ensured longer life for many critically ill people and the insurance companies too have receognised this fact by extending life coverage to them.

But, what would you qualify for?

Though there is a change in the situation, but you might not still qualify for the standard life insurance policies. What most people with chronic health condition would qualify for is a guaranteed issue policy.

What is guaranteed issue policy?

The guaranteed issue policies are basically no medical underwriting policy, i.e. you neither have to reply to the health related questions nor have to undergo medical tests to qualify for the coverage.
Often guaranteed issue plans are rated higher than the standard life insurance plans but it is a good alternative for people with health issues and seniors who otherwise won’t qualify for life insurance.

These policies, however, have lower death benefits. One may get only upto $50,000 coverage with the guaranteed issue plan. Therefore, it often doesn’t make a good bargain for standard lives.

It might have occurred to you that insurance companies would lose a lot of money by insuring terminally ill people but the situation is little different. The guaranteed issue plans have several restrictions imposed upon it to prevent the insurers from losing money.

Longer waiting period
It has longer waiting period, may be 2 to 3 years, i.e. if the insured die within the first two years of the policy then only the premium paid would be refunded instead of death benefit. Therefore, if you are in good heath you may consider getting policies which would offer immediate death benefit.

Very high premium rate
The premium rate is very high. A policy of $25,000 death benefit then perhaps would cost $2400 in terms of premium each year. So, apparently at the end of the 10th year the premium paid would become equal to the death benefit.

Importance of quotes in buying life insurance policy

The search for life insurance begins with the search for quotes. You want to know how much it would cost to buy the needed protection for your family. But finding the right quotes isn’t as easy as it sounds. You need to know where and how to search for the right solution.

Where to search for life insurance quotes?

• Google over the years have become the answer for all our internet related queries. If you are confident using internet you should search in Google with the term ‘life insurance quotes’.
• There are plenty of sites online which would offer insurance quotes for free. You may have to fill in certain information about yourself in order to obtain a quote. The site would then forward your application to the various agents they have tie-ups with. You would eventually get a call from one or some of those agents. But before providing information on these sites confirm their authenticity. There are many of these sites which operate fraudulently.
• You may visit the sites of the life insurance carriers. Almost all now offer free online quotes for the convenience of the customers. Some would also offer the option to comparing the quotes of their close competitors.

When you may go online, contacting an agent is still a better option since you would then have a personal representative to take care of your insurance needs. An agent wouldn’t work on behalf of the company only but would also help the client to understand his financial needs and plan the coverage accordingly. He would also shop around to help you choose the best deal. Further, the agent can help explaining the policy, its benefits and limitations.

What information is required in life insurance quote form?

The information that you may need to furnish in the online quote form should be general. Any information regarding your bank account and SSN should be excluded. The minimum information that you may need to provide are:

• Your Name
• Age
• Marital Status
• Sex
• No. of dependent in the family
• Occupation
• Annual Income

Further, you may also have to fill out the medical underwriting questionnaire on- height & weight, smoking habit, blood pressure, history of medical issues and the like. Finally, you would have to provide your contact details and the best time to receive a call so that the agents can contact you to finalize the deal.

Beware of phantom quote sites!!

The online quote business is minting gold for the several quote providing sites therefore everyday you would find numbers of companies becoming live on internet. But not all of them are authentic. There are many sites which are simply in the business with the evil intention to scam you. If you find any site that would ask for your personal details such as- social security number in order to offer quotes, it’d be wise to quit immediately.

You shouldn’t buy credit life insurance!

Almost anyone who you would talk about getting credit life insurance would tell you the line: you shouldn’t put money in credit life insurance. But what makes credit life insurance a bad purchase?

The other day when you have spoken to the eloquent sales person at the car lot he almost convinced you that credit life insurance is the solution to all your owes about not being able to repay the loan. He said…

The credit life insurance would restore your peace of mind since it would take care of the loan burden if you die (God forbid!) unexpectedly before repaying the loan. If you don’t have this protection then your spouse and family would be left with the duty to compensate the lender. And, you of course know how these loan sharks are, don’t you??

Now, when it sounds so good then why shouldn’t you purchase it? For that you need to know what credit life insurance is.

What exactly is credit life insurance?

Credit life insurance is typically a term life plan in which the term matches the term of the loan and the coverage level matches the loan amount. It promises to pay-off the loan if you die before repaying the it so that the lender doesn’t suffer the loss.

Now, what are the arguments against credit life policies?

If you can buy life insurance, you shouldn’t purchase credit life insurance since it would be redundant in that case. if you have enough life insurance coverage that it would take care of all the financial needs after your death, that’s sufficient.

Credit life insurance plans are greatly overpriced. If you do some research in the market and have no health issues that may prevent you from getting life coverage from the market, you don’t need protection against loans.

It’s a decreasing term life plan, i.e. the coverage level would decrease with the loan amount, but the premium rate isn’t attuned to the decreasing level of the policy. Hence, you would see very little change in the premium rate as compare to the death benefit. The credit life plan may have several other limitations too.

You AREN’T required to sign the insurance policy papers in order to receive the loan. It’s the sales people who would try to create the impression that you wouldn’t get the loan if you don’t buy the policy because it earns them great commission. If you face such situation complain against the salesperson and find another lender.

Most importantly you should know that in credit life insurance the beneficiary would be the lender and your family wouldn’t receive a dime upon your death. Hence, if you want to plan a perfect life for you children you may get a life insurance policy and not credit life insurance.

Anyway, at times a credit life plan may make a sense to people who can’t otherwise get life insurance at standard rates from the market, i.e. people with severe health issues and pre-existing conditions.

AmPmInsure Community Debated over the importance of Accidental Death Benefit

Accidental death benefit(ADB) is also known as double indemnity plan, i.e. ADB would pay double the death amount if the insured died in an accident. Now, the ADB benefit makes sense to some since they are receiving double their value of life insurance without increasing their premium amount much. But we have experienced seasoned agents debating over the usefulness of accidental death benefit. In fact their opinion was really torn on this issue, when a group would support the idea of adding accidental death benefit to avoid unwelcome situations; the other group thinks its really redundant. Recently we had a great debate over the same topic in the AmPmInsure community. You can read it in details here.

However, if you decide to add this benefit to your life policy make sure that you read the fine prints. The ADB rider would include several conditions and exclusions about paying the benefits.

Most important that you read the definition of accident as described by the insurer. It may so happen that one incident may not meet the policy definition and therefore gets disqualified for the benefits.

Some policies would also describe time limit such as- the policy holder should die within 90 days after the accident in order to receive the double benefit.