Health Insurance And Your 26 Year Old Kid

Your kid is now turning 26 years old and you have more planning to do than just a birthday get together. The Affordable Care Act has made it possible to maintain coverage for your adult kid until they reach the age of 26. With the new law, they no longer have to be a full-time student. Your kid could be unemployed and sitting at home; or working, paying their student loans and making a name for themselves, you are able maintain health coverage for them. This could be a blessing and a curse. You need to know your options to help with transitioning your kid off your plan when they are kicked off the health coverage.

For years, your kid had to be a full-time student in order to cover them until the age of 24. Then they were on their own. With the current employment crisis, college graduates were left without jobs when they graduated from school. This also meant no insurance.

Just like their auto insurance, they could buy their own health insurance policy. Many parents were not aware of this until the Health Insurance Marketplace (Obamacare) push their marketing efforts out. There were many affordable options prior to the new healthcare law for the young adult dependent and pre-existing conditions was hardly an issue with a 24-year-old.

Now your kid is 26 and the big question is what to do about health coverage…

Here are your options:

Step one: Is there insurance through their current employer and are they eligible for the coverage? You may need to push them to get this information, but that is step one.

Step two: Depending on their income, they may qualify for a tax credit through the government website, aka “Obamacare”. Only do this if you think they may qualify for a tax credit after some preliminary questions. It is highly recommended to seek out a professional on the matter beforehand to minimize wasting your valuable time. There has been many times that young adults do not qualify for a tax credit, for multiple reasons. Just because they are young and healthy has nothing to do with the tax credit.

Step three: Purchase the plans outright through a professional insurance agent. The plans are the same in comparison as the “Obamacare” plans. The only difference is what tax credit you qualify for. If they do not qualify for a tax credit, there is no point of going onto the Marketplace. Again, it will help if you seek a professional in this area.

Note: Sometimes your kid will lose coverage on their birthday instead of being covered for the whole month. This is a concern. Most, or all, new coverage will start the 1st of the month, of the following month. What are your options so your kid does not lose coverage?

  1. Pay for the rest of the month through your employer, if possible. Many will allow this at the employee dependent rate. Some will not.
  2. Buy COBRA for a month. This is not ideal because COBRA is expensive and coverage will overlap.
  3. Purchase a short-term medical through an insurance agent. You can buy them for 30 days at a time and coverage will overlap. Good news is they are inexpensive. If you can pass 4-5 questions (health and eligibility questions), you can get coverage within 24 hours. The bad news is there is no coverage for pre-existing conditions. Typically this is not a problem for a 26-year-old, but could be. Why is this? Because it was designed as a “gap” plan, not a qualified health plan with the new healthcare law.
  4. Take the gamble until the new coverage starts the 1st of the following month.

Just like each one of your kids having different personalities, every situation is different. Fighting it yourself could drive you crazy. There are too many options and with the tax credits, it just makes it that much more complicated.

As a parent, you should know your options and be prepared. You should start the process about three moths out from their birthday month. That may be a little early, but better early than late.

What Have You Read Lately About Long-Term Care Insurance?

“Never let the truth get in the way of a good story,”. I am sure Mark Twain wasn’t thinking about Long-Term Care or today’s news media when he said this long ago. Today it is very easy to place a news story for people to consume. Between traditional TV and radio, an expanded 24/7 news cycle with cable news there is a lot of information available. The biggest difference today, like the old days when anyone with a printing press could print anything they like, now you just need a computer to create a news story. It seems almost everyone has a computer or smart phone and they are not afraid to use it.

The topic of Long-Term Care has become a big one with an aging America. By 2030, 1 in 4 Americans will be over the age of 50. By 2050, 1 of every 5 Americans will be 65+ according to data from data from the Centers for Disease Control and Prevention. It seems like once you get around the age of 50 the conversation about Long-Term Care starts coming up. In today’s world that means you hit the internet and see what information you can find. However, some articles are providing misleading or even completely erroneous information on Long-Term Care Insurance.

We have heard the term fake news, but perhaps the best way to define what is being written about Long-Term Care is just “lazy news” or “advocacy news”. It seems like everyone with a computer, including myself, has an agenda. How much of this is “truth” is a matter to discuss.

Generally, there is more to a story… and the stuff left out is usually very important. The stories about Long-Term Care insurance premium rate increases are very misleading. They usually leave out many details. The reporters or “professionals” writing these articles often have an agenda to push the public in one direction or another.

The other thing to remember is the internet is also “old news” as nothing on the internet usually gets deleted. You may find and read something that is old but that story may have been updated numerous times since the first story was published making the information you are reading outdated. You must do more due diligence today to see if you are getting accurate information.

Since the issue of planning for the financial costs and burdens of aging is so important to American families you should know the facts. Often the reason the articles talk about premium increases is to scare the consumer. Maybe the writer wants the government to pay for all long-term care (not going to happen as too many people require care and budgets are tight as it is trying to take care of those with little or no savings). Perhaps the writer wants to have the consumer spend large sums of money of certain type of financial product they are selling. The consumer should understand the truth, so they can plan in advance with more peace-of-mind.

These increases that are being reported are primarily on “legacy products” These are older plans that were priced well before the interest rate crash and rate stabilization regulations.

Today, all plans are priced with the very low interest rate environment in mind (interest rates have been low in the United States over the last decade). These older plans which had increases were based on a few factors:

· Interest rates

· Lapse rates (meaning, how many people drop their policies. In practice, very few do, but this was not factored into premium pricing on many older plans)

· Claims and underwriting experience

These policies are paying huge benefits as well. In 2017 over $9.2 billion was paid in benefits to American families protecting assets and easing family burden.

The fact is these older policies were underpriced to start with and even with increases they still have outstanding value and huge benefits. Nobody likes an increase, but you must put that increase in perspective. Many of these people I speak with have huge benefits which have been increasing 5% compounded every year since they had the policy. Many have unlimited lifetime benefits as well. Since they have these huge benefits many can reduce the benefit or inflation factor to keep the premium the same. As their benefits increase far greater compared to the cost of long-term care they remain in an outstanding position.

Today’s Long-Term Care insurance policies remain very affordable as people start purchasing plans prior to retirement. Underwriting is more conservative but since consumers are younger most people can still find an appropriate plan.

Experts say that the risks of increases are small but like anything there is always a chance of an approved increase. However, if you read some of the articles being published you would think the industry is dead and consumers no longer have any interest in the product.

The fact is there are still numerous insurance companies marketing Long-Term Care insurance. Consumer interest has never been greater. As I speak to other Long-Term Care Insurance specialists, like myself, we have all noticed a big increase in both consumer awareness and interest. Consumers are younger, more knowledgeable with the risks (often with first-hand experience with an elder parent or other family member) and we are bombarded with requests for information and quotes.

Consumers are seeking help from Long-Term Care specialists as most financial advisors and general insurance agents have limited knowledge and experience with the products, underwriting, policy design, benefit options and the federal/state partnership program which is available in most states. Therefore, some of these professionals push consumers into options they are more comfortable with despite the fact they might not be the best and most affordable way to address the costs and burdens of aging.

Long-Term Care Insurance, despite what you read, is very affordable for most people. With regulation and better pricing consumers enjoy additional peace-of-mind knowing they have a plan they can count on in the decades to come that will remain affordable once they retire and get older.

Many people can obtain outstanding coverage for under $150 a month, some even under $100. Premiums are based on your age at the time to get a plan, your health and the amount of benefits who wish to have. Most of the people I speak with nationwide are from ages 45 to 60.

A true Long-Term Care specialist will ask you numerous questions about your health, family history and retirement plans in order to make the proper recommendation. Anyone willing to give you “quotes” without asking very many questions should be avoided.

Long-Term Care insurance is custom designed. Plus, every insurance company has its own underwriting criteria. A true Long-Term Care specialist will represent most or all the major companies. They will have a keen understanding of underwriting and policy design. They should have processed many claims, so they have the first-hand knowledge of how these policies get used at the time of claim.

Finally, a real Long-Term Care specialist will not steer you to certain type of policy without spending time speaking with you to determine which type of plan fits your specific situation. Working with a Long-Term Care specialist will allow you to get the accurate information you seek. There are several reference websites for research:

LTC News offers articles and resources: http://www.ltcnews.com

US Department of Health and Human Services: https://longtermcare.acl.gov/

The main concern for most people is they understand caregiving is hard. An older spouse can’t be expected to be a caregiver without impact their own health. Adult children and their own families, careers and responsibilities. Paid care is expensive and drains savings and impacts lifestyle.

For many, Long-Term Care Insurance is easy, affordable, rate stable income and asset protection. It reduces the burdens which your aging will have on your family. However, speak with a true specialist. There are not many Long-Term Care specialists with extensive experience, but I help people nationwide and a number of others like myself do as well.

This will give you and your family tremendous peace-of-mind and that is not fake news.

Health Insurance: The Race Against the Clock

There is still time for Congress to pick up the pieces of changing the healthcare system to help stabilize it. The fate of the Affordable Care Act is yet to be determined. In the meantime, people wait while paying extremely high premiums and have mountains of out-of-pocket bills on the kitchen table. Where is the affordability of the Affordable Care Act?

Tick Tock for the insurance companies as well. They are under a timeline for filing dates this summer. Insurance companies have time to decide if they will still offer ACA plans or not. By withdrawing ACA plans, things will start moving back to before the law was signed. This time capsule can be good for many.

The insurance companies may begin screening for health conditions. Do not panic just yet! Years ago, the only problem with pre-existing conditions was not ‘if’ an insurance company would take you, but which one. Each insurance companies had personalities for health conditions. Just because a big name insurance company turned someone down, that did not mean you could not get health insurance from another company. Insurance brokers just had to match the personality with the insurance company. It is as simple as that.

If nothing happens by late March, we could be moving into more increases on the health plans in 2019. This is terrible news for folks on the brink of losing their health insurance due to cost. Not everyone does well enough to pay for their health insurance with no problem, and much more do not qualify for any government subsidies for the premiums.

Governors in Alaska, Ohio, Colorado, Pennsylvania, and Nevada came up with “A Bipartisan Blueprint for Improving Our Nation’s Health System Performance.” It brings together a high-level overview of what some changes should occur. It does not get specific enough to make a difference. Maybe it is too soon at this point. However, policyholders need some answers, and hard proof something will change that will benefit them.

Collective action by 20 U.S. States recently sued the federal government claiming the law was no longer constitutional after the repeal of individual mandate starting in 2019. Individuals and families not having ACA compliant coverage will no longer be fined a tax penalty in 2019. The Individual Mandate was the very rule that was determined by the Supreme Court in 2012 saying it was constitutional as a tax penalty.

The future of the law and health plans are yet to be determined. Since 2014, it seems that most policies are changing every year. Every year the premiums go up, and the policies cover less. At what point is the breaking point? With this race against the clock, we will have to wait until the clock stops to know if we have real change coming.