Archive for February 2014

OK I am confused, will Obama Care work or not?

Well the question is not will it work because everything works, just not always the way you want it to, or thought it would.

ACA, or Obama Care, has always been intended to produce what is called a single payor system that provides medical coverage for every American Citizen. So if you ask “Does Medicare work?” because it is a model of a single payor system, the answer would be “Yes”. You really need to be asking other questions to get the answers you need.

How about “If Medicare has been working for so long why would’t it work for everybody?”

For many generations Medicare had a slowly increasing enrollment, a human life span planned for about age 70, and a baby boomer population that was paying taxes to the system. That changed dramatically in the last three years.

Now Medicare has baby boomers by the tens of thousands who are entering the Medicare system, and they essentially stop paying into the system and start taking money out.

AND – we all live longer now so people take more money out of the system and for a longer time. That longer time now includes age 100 more frequently.

If you have ever been unemployed you know how fast your savings account disappears when your income stops. That is the dilemma Medicare faces right now. Lots of bills to pay and not enough income to pay them.

So how to fix that? How about we just take all that money people pay to insurance companies and make them pay it to Medicare. We could call that the Affordable Care Act so people will like it because everybody like affordable care. And if we do it to everybody the young people will pay more than they use in services and it will all turn out peachy!

As Dr. Phil says “How’s that workin for ya?

The US has a birth rate below replacement (not enough tax payers) and young people don’t want to participate (not enough enrollment) anymore now than they ever have. So revenue is not coming in fast enough to offset the rapidly increasing claims cost of the seniors.

Will Obama Care work? Of course it will work, payment for services will have to go down, drug formularies will have to remove expensive drugs, physician PPO lists will have to be reduced, and (wait for it) premium cost will have to increase.

Apparently I am late to the party with this notice because I see that all of that has already begun to happen.

For more information, contact Bill Weaver, Focus Benefits Group, 602-381-9900!

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What is Short-Term or temporary medical insurance?

In a previous article I addressed the difference between real insurance and the appearance of insurance and I think that may be applicable to this subject.

First, Short Term Medical Insurance is a product designed to provide short-term or temporary medical coverage during a short-term loss of major medical coverage. You can typically purchase this for one to six months and depending on the company you can renew it to extend the period of coverage.

In the past short term medical plans filled in for people between jobs when they had lost their employer coverage but would regain coverage with their new job. In the era of ACA this may not be as necessary as it has been in the past as people can now obtain coverage on a guaranteed issue basis with no pre-existing limitations.

Although I believe this is a very valuable type of insurance and that there’s a place for it, I bring it up in the context of the “appearance of insurance” due to a recent conversation with an insurance company.

In speaking to a company representative he told me he had convinced a person to drop their COBRA coverage and replace it with short-term medical because it was so much cheaper. Oh really!

This would be a classic case of the appearance of insurance over real insurance. While the COBRA coverage may have been very expensive it did have unlimited coverage and could be retained for 18 to 36 months. In addition instead of taking the COBRA coverage the individual could have obtained a full major medical policy. The temporary plan would cover for the period of time that he purchased it (1 to 12 months), and should he elect to renew it in most cases it would not have covered pre-existing conditions.

If this highlights nothing else it does point to the necessity of getting qualified information and in most cases I would tell you that comes from licensed and highly experienced agents.

For more information, contact Bill Weaver, Focus Benefits Group, 602-381-9900!

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Is this real love or are you just happy to see me?

One of our initial questions for a new client is “Will you be looking for real insurance or the appearance of insurance?”

Silly question you might say because who actually wants the “appearance” of insurance? Actually more times than you might expect a client may respond “I really just need to show I got coverage.”

  • Wellness programs – some employers just want to say they did it?
  • Job requirement – contractors sometimes just need to check a box on a bid form saying they have a coverage.
  • Car insurance – using personal auto coverage for a commercial vehicle.

There are more examples but I think you get the idea.

The typical reason for taking the “appearance” approach is to save premium dollars for a coverage or benefit the client sees no real need for, and that they do not ever expect to use for a claim. “There was this box on a form asking if I have that coverage so I just said yes to get the work!” I would tell you that is just asking to waste insurance money and set yourself up for disaster.

It is important to understand that insurance is a contract to accept risk not a product like your car tires or new cell phone. Under the contract the insurance company agrees to do specific things if a “covered” event (risk) occurs. Risks that have not been included are not covered and it really only matters when the claim is for more that you could ever hope to pay for.

When you purchase the “appearance of insurance” you typically get a contract that is much cheaper but also has been severely limited to achieve that lower cost. That does not mean these policies may not have value it only means you need realize the restrictions and then not be surprised when an event is not covered.

For more information, contact Bill Weaver, Focus Benefits Group, 602-381-9900

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