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The average 5 year CD rate is 1.16% nationally and 1.34% in Connecticut. An A rate insurance carrier is currently offering a 6 year fixed rate at 3.15% for deposits under $100,000 and 3.25% for $100,000 and above. The plan comes with a 100% return of premium feature at any time, even if surrendered during the first year.

The company has stated that they will be offering this rate until March 15, 2012. The rate is subject to change after that date. 3.15% is certainly a strong rate compared to current CD offerings but it is bolstered even further by the return of premium feature.

It is always advisable to have reserve or emergency money to guard against financial crisis.   Those who are fortunate enough to have reserve money set aside usually keep it in a savings account or money market.   The idea is to keep the money in an easily accessible account and to limit any fluctuation in value.  In other words, it is not a good idea to have risk in an account that you may need to draw money out of for an emergency.

Money markets and savings accounts keep money liquid and safe from fluctuation but they do not provide much of a return either.   The average savings account yields less than half a percent of interest per year.  The cost of sacrificed return can add up over time.   For example, consider a 54 year old that keeps 50,000 in a savings account of some type of money market for 10 years.  Assuming they are getting a .25% return at the end of 10 years they will have $51,264.00 in their account.   The money certainly was accessible the entire time but the client only made $1,264.00 over the 10 year period.

As an alternative,  a return of premium fixed indexed annuity with an income rider could be considered.  The plan has 100% return of premium at any time. This provides quick (3 day turnaround) access to the initial investment at any time without any risk.  If $50,000 is put into the account, it can always be surrendered for a minimum of $50,000.  Accounts of this type will gain anywhere from 0% to 5% interest a year for an average of 2.5% to 3% which can offer greater growth potential than a savings account or money market. 

 The bigger benefit is the  account will also grow as a guaranteed income stream over time.  One of the more competitive companies currently offers a guaranteed growth of 10% simple interest per year.   If the same 54 year old put $50,000 into this account and did not ever need to access it, they would have a benefit base of $100,000 that they could draw 5.4% out of per year guaranteed.  This would generate $540 a month on a guaranteed basis for life.  They would not be forced to use this option but could do so if the need for extra income arose in the future.

Many return of premium annuities also offer a death benefit option  with the account.   If the account holder was to pass away at any time during the 10 year period, the account would pay out the income rider value as a death benefit. To stay with our example, if the 54 year old died in year 6, the account would pay out $80,000 as a death benefit to the current beneficiary.

A return of premium annuity offers a number of advantages over the traditional safe money strategies. The account holder can still maintain  liquidity while having the  additional earning potential and the ability to use the money for income purposes down the road.

One of the biggest points of confusion for seniors seems to be making a decision between a Medicare Advantage Plan and Medicare Supplement Plan. I receive phone calls on a daily basis from people either turning 65, moving from an employer plan to Medicare or just trying to decide what to do for the Medicare Annual Election period. Often they are confused and feel overwhelmed by the amount of information and plan choices available.

The reality is that it is actually very easy to learn enough to make an educated decision. This article is going to point out the basic differences between the plans and point out the strengths and weaknesses of each. With this info, anyone will be on their way to having enough information to make a confident decision on the best plan for them. (This Article is for people in Connecticut and NY- I will write one for other states in the next few days)

First, we need to break down the differences between the two types of plans and also dispel some myths about both.

Medicare supplement plans-

-They are secondary to your Medicare A and B (In other words, providers bill Medicare first and then your supplement covers some or all of the remaining costs depending on the plan you choose.

-They are for Medical only. You buy Rx coverage separately

-There is not a network. You can go to any doctor that accepts Medicare

-There are plans A-N available but only a few are popular. They Plan F, Plan N and High deductible F

-The plans are standardized in both Ct and NY. If a company offers a plan N, the benefits are identical regardless of the company offering it. Price is the only difference. Once companies plan N is not better than other companies. Just go by the price.

-There is no medical underwriting for them and in Connecticut and New York you can change them the first of any month at any time during the year.

Supplements are a good choice for people that do not want to have any network constraints. They also work well if you have doctors that do not take managed care plans (Medicare Advantage Plans) or if you travel to other states often.

Some clients like the fact that some of the supplements basically cover all of their costs for medical care. (Plan F and Plan C, Plan J for those whom still have it)

Finally, supplements work well for people that are very sick and receiving a high volume of care such as multiple injections at an outpatient facility or in the doctor’s office or people going to a number of physical therapy visits on a weekly basis. If you are on a plan F, you will not be billed for the services

I hear a tremendous amount of incorrect information being given out on a daily basis when it comes to Medicare Supplement plans. Here are some of the major areas where bad info tends to be most prevalent.

-” Such and such a company has the best Supplement plans”- In the world of supplements, there is no such thing as one companies supplement being better than the others. Supplements are mandated to have identical benefits. If United offers a plan F supplement, it has the EXACT same benefits as every other companies Plan F benefits. Supplement plans A-N are subsidized in Connecticut and New York. All plan benefits are the same. The only difference is the price that the company charges for them. If you have decided on a supplement and know which plan you want, take the company with the lowest cost for that supplement. (Example: You decide to take a plan N, Simply choose the lowest cost plan N being offered at the time.)

– “I can’t find all the companies offering supplements and the prices” – This is easy. Each state has a list of all companies in the state offering supplement plans and the prices of them. They can be found on the insurance websites of each respective state. Here is a link to Connecticut Supplement plans and prices for 2011

https://croweandassociates.com/images/stories/Medicare_Supplement_Rates_Connecticut_2011.pdf

“Supplements have underwriting outside of the guaranteed issue period”- There is no underwriting for supplements in Connecticut and NY. Both are guaranteed issue states even outside of the election periods.

“High Deductible F is not a good plan” – This could not be more off base. In Connecticut and Ny there are plans that have very low high deductible F plans. In fact, in Connecticut, Anthem BCBS offers a high deductible F plan for $39.00 a month. This math cannot be beat by any other supplement plan offered in CT. For more information on High Deductible F go to… https://croweandassociates.com/blog/?p=223 for NY

Although there are many good things about supplements, there is also a negative or two. First off is that they do not cover RX, you need to buy a separate drug plan if you want coverage. The going rate for Rx plans is about $32.00 a month. Secondly is the price of the supplements. The lowest cost plan F in CT is about $219.00 a month. When you add your Rx cost to that it brings you to about $250.00 a month for a plan. Keep in mind that you are going to be paying $3,000 in premium for the year no matter what. Even if you have a very healthy year you will have $3,000 less at the end of the year.

Medicare Advantage Plans
Medicare Advantage plans are managed care plans being offered by private insurance companies. They give you your A and B coverage, secondary coverage and Rx coverage all in one package. With a Medicare Advantage plan, your Medicare A and B is administered by the insurance company. As a result, when you go to the doctor you show them your Medicare advantage plan instead of your A and B card.

There are many positives and also negatives about an advantage plan. Here are the positives….

-They are included in your Medical and Rx in one package. You do not need to go and purchase a separate PDP plan.

-They are very inexpensive. All major carriers even offer $0 monthly premium* plans.

-They have out of pocket maximums.

-Preventative care is covered at no cost to the member.

*They can offer you a plan for $0 monthly premium because Medicare is paying the insurance company money to handle your enrollment and care for the year.

-Some carriers have national networks and plans with out of network coverage.

Some negatives about advantage plans…

-They have networks. If you take an HMO advantage plan (Which does not have out of network coverage) and you try to go to an out of network doctor, you will NOT be covered. Many people believe that Medicare will still cover them for the usual Medicare A and B amount if they go to an out of network doctor but it does not. You will need to pay the full cost.

-They have copays for services. You need to be aware of the copays on the plans you choose. Some plans cover certain services better than others. For example, one carrier may cover Major Radiology at 80% while the other covers it for an $80 copay.

-They have pre-certification requirements for some procedures. Your doctor is responsible for obtaining pre certs but they can hold things up at times.

Advantage plans tend to work very well for people in relatively good health that see a reasonable amount of doctors. You need to check to see that all your Docs and any hospitals you go to are in the network. There are now a number of plans with out of network coverage and national networks. This is good if you have a doc or two that is out of network.* The copays on most plans are reasonable and with $0 premium plans available, they can save the right person a lot of money for the year.

*Make sure your out of network doctor will bill your insurance company for you and not make you submit yourself.

Often clients get upset when they go on an advantage plan and incur a large copay. (For example, a CAT scan which is a $150 copay on some advantage plans) They will say “If I was on a supplement, I would not have paid anything”. They tend to forget that the supplement is costing them money every month when the advantage plan is not.

The math on advantage plans actually makes sense for the majority of people but not everyone. Make sure you review the benefits and check networks prior to enrolling. Do the math and see how much you will save in monthly premium vs. how much exposure you have to copays. In the end, the advantage plan will likely win out but a little time needs to be devoted to make a comparison before you make a final decision.

*Make sure your out of network doctor will bill your insurance company for you and not make you submit yourself.

The number of companies offering Individual Health Insurance in Connecticut is not a large list.  As of June 2011, you have a total of 6 companies offering plans.  Each company is offering a similar line of products from a benefit standpoint.  Today you will see all  companies offering multiple HSA plans with a range of deductibles and co-insurance options.  Read more

First United American has lowered rates on their high deductible F plan throughout NY state.  They are now offering a Plan F high deductible supplement for $67.00 a month in NYC and surrounding areas.  This represents the lowest rate available for a supplement in NYC.

Anyone currently in a Medicare Supplement plan should review the benefits and price point of  a high deductible F plan to see if it would be advantageous for them to change to one.  The High F plan is not often understood by the medicare eligible population and is not always popular with the companies offering them due to the low premium revenue they generate.

Medicare supplement plans offer freedom to access any doctor accepting medicare and also do not have a managed care component.  The high deductible F plan can offer considerable savings over the standard supplement plans currently on the market.

New Tax Credit May Help Small Businesses

Small businesses may be able to claim a new credit on their 2010 tax returns if they pay employee insurance premiums in 2010.

The credit, available through the Patient Protection and Affordable Care Act, is intended to:

1.Give small employers a tax break if they pay at least half the cost of single coverage for their employees on the group health plan.
2.Encourage small employers to offer health insurance for the first time or maintain the coverage they currently have.
These frequently asked questions may be helpful. More information about the credit, including tax tips, guides and FAQs is available on the IRS website at www.irs.gov.

This link will take you to the general overview on the IRS web page IRS LINK

Use this link to determine eligibility Eligibility chart

Medicare Supplement Plan N was approved for enrollment on June 1, 2010. The plan is offered at a competative price point by Anthem BCBS and United Healthcare “AARP Branded”. They both offer plan N for around $150 a month depending on availability of discounts.

Plan N is a departure from other supplements in that is allows the physician to bill up to a max of $20 per visit. It also has a $50 emergency room copay and does not cover the part B deductible (disappointing) of $155 a year. Many seniors have been willing to give the plan a try in order to save $50 a month in premium. This has been especially true of those in plan F supplements. Plan J enrollees need to be careful as plan J is a closed plan an they will not be able to go back to it in the event they try plan N and decide they do not like it.

The most suprissing part plan N has been the low number of providers that actually bill any type of excess on the plan. Providers are allowed to bill up to $20 dollars but seem not to do so often. (That has been our limited experience so far anyway)

People switching from their current plan to Plan N do not need to pay the $155 part B deductible as it has already been met for the year. They will however be subject to the Part B deductible in 2011.

Walmart will be offering Medicare Part D Prescription drug plans for 2011. While there has not been much detail provided about the plan design, it is suggested that the plan will have a $0 copay for generic drugs and very low cost monthly premiums

Walmart will utilize small kiosks in the store staffed by representatives licensed to sell the Medicare Part D Rx plans. There are not yet many details on the plan formulary but it will be offered through Humana. Members will only be able to use the new drug card at Walmart pharmacies. The plan will be available on November 15th which is the start of the Medicare Annual Election Period which is when Medicare Eligible members may sign up for a Part D Rx plan.

AARP Supplement Changes For June 1, 2010

AARP released the new supplement changes for 2010.  Plan changes and Rates are as follows…

Supplement Plan M- Will not be offered in CT for 2010 Read more

Employer Reporting Requirements

Notice of Coverage Options. Not later than March 1, 2013, employers must provide a written notice to newly-hired and current employees informing employees: 1) that healthcare exchanges are available, the services provided by the exchange, and how to contact the exchange; 2) if the employer pays less than 60% of the costs of benefits, that the employee may be eligible for a premium tax credit and a cost-sharing reduction if the employee purchases health insurance from an exchange.

Reporting Cost of Employer-Sponsored Health Coverage on W-2. Effective January 1, 2011, an employer will be required to report the aggregate value of medical benefits, dental, vision, and supplemental insurance coverage on the Form W-2 that is provided to each employee annually.

Uniform Explanation of Coverage. By March 23, 2012, group health plans and sponsors of self-insured health plans must provide participants a uniform summary of benefits and coverage. The uniform summary cannot be longer than four pages and must describe the health benefits offered under the plan, limitations on coverage, cost-sharing provisions, and any restrictions on continuation of coverage. Failure to provide this summary will result in a $1,000 fine per failure. Read more

Do You Have A Competitive Life Insurance Rate?

The old saying goes that you should keep you life insurance policy once you purchase it because it costs more as you get older.  This saying is only partially true for most and can cost you thousands is you follow it. Many believe that this was simply a ploy by insurance carries to help keep business on the books and prevent people from rate shopping once they had a policy.

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Small Group Employers In Connecticut May Want To Consider Alternatives

Group health insurance rates are becoming a greater burden on small employers with every renewal.  Double digit rate increases have become the norm.  So what can a small employer do to help off-set rate hikes?

Most employers have simply been going by the standard formula of increasing the employees contribution toward the plan premium and raising medical and Rx copays to keep things at a manageable level.  More proactive groups use either HSA or HRA designs in order to offer a plan with a more substantial deductible in order to lower premiums.  Such strategies are becoming more and more popular every year.

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