health insurance

Time Flies and It’ll Cost You

February 7, 2013 By Jennifer Derrick 1 Comment

Last year there were changes to our health insurance plan. The employer has always used a high deductible plan and they have always been kind enough to contribute $2,000 toward that deductible. The money has always been available at the first of the year. Well, last year, they got a new plan. It’s still a high-deductible plan and they still contribute $2,000 toward the deductible, but the catch now is that instead of putting the full 2K in at the beginning of the year, they put $1,000 in at the first of the year and only give you the remaining $1,000 in July, if you have met certain requirements and earned enough “points” through the wellness plan. (The wellness plan gives you points for completing activities like getting your preventive screenings, taking a health assessment, listening to health related podcasts, and signing up for programs like nutritional counseling, weight loss, etc.)

In the first year of this program, too many people waited until the last-minute to accrue the required points. Since it takes a while to get scheduled for physicals and screenings and many of the other activities involve checking in over the course of a month, many people didn’t earn enough points and so lost out on the extra $1,000. The way the program is set up, it’s impossible to wait until the last-minute and hope to get enough points. And that’s sort of the point of the program. The insurer/employer wants you continually taking care of your health, not just going on a points blitz over one weekend and forgetting about it.

When the money didn’t appear in people’s accounts, there was the predictable uproar about how it was unfair and ridiculous to lose that money just because they didn’t get the points. How were they supposed to remember this stuff, or do it when they were so busy? Time got away from them and it wasn’t fair. Some said the employer should have sent out reminders, or walked them through the points activities.

To some extent I sympathize. It is hard to remember sometimes when a program suddenly changes. It can be hard to remember to do the things you need to do when so much else in life is more pressing or fun. At the same time, however, the program changes were announced more than a year in advance. People had time to set up calendar reminders, to go to the new website and get a feeling for how long each program would take and how long they would need to get the required points. The employer was treating the employees like adults by saying, “Here’s what’s happening and it’s your responsibility to meet these requirements.” That time got away from the employees is their own fault, not the fault of the employer or the insurer.

Time does indeed fly by faster than we realize. It seems like one day you’re celebrating New Year’s and the next it’s Memorial Day. And then you’re asking yourself how did Christmas come around so fast again. It happens to all of us. But when money is on the line, you have to make a conscious effort to keep up with what day it is and make certain you meet your obligations. Otherwise both time and your money will fly out the door.

This is true for many money matters, not just insurance programs. Rebates have to be redeemed within a certain period of time or you’re no longer eligible for the money. Coupons expire. Taxes must be filed by a certain date. Bills have to be paid or you incur late fees. Many benefits (government and those provided by your employer) have an “opt in” or enrollment period during which you have to change your elections or stick with the same thing for another year. Many money matters are time sensitive.

And then there’s the biggie: Retirement. You think time flies when you’re trying to redeem a rebate or complete an insurance program, think how fast it flies when it comes to your retirement. One day you’re twenty-two and just out of college and then seemingly just a few months later you’re forty-two and retirement is no longer so far away. It’s barreling down on you. Seemingly a few minutes later and you’re sixty-five and you’re there, ready or not. This is why financial gurus harp on people to start saving with their first jobs. Not only can you earn more interest that way, but it’s all too easy to put it off for too long. When you put it off and then wake up at fifty, it’s impossible to catch up unless you’re earning a huge income. You have to be on top of it from the beginning because time will fly by, and what seems like an eternity in the beginning looks like five minutes on the other side.

It’s up to us to manage the passage of time. We may not be able to slow it down, but we can take charge and make certain that we’re doing what we need to do when we need to do it. Start saving for retirement early. Make lists or spreadsheets of important financial dates so you’re constantly reminded that they are coming up. Frequently check your coupon binder for expiring coupons that you want to use. Leave rebate forms in a conspicuous place so they get turned in. When a new program is announced that’s time sensitive, don’t put off learning about it. Figure out what you need to know immediately so you know the requirements and can plan your time accordingly to meet those requirements.

Of course, all the knowledge in the world won’t help you if you still insist on procrastinating. Not only do you have to make yourself aware of time sensitive issues, you have to overcome your natural tendency to put things off until the last-minute. But if you can do those two things well, you’ll never leave money on the table because time got away from you.

(Photo courtesy of aussiegall)

Bye-Bye $485: Day 29

January 31, 2013 By Jeffrey Strain 7 Comments

Reality set in today as I received my monthly health insurance bill: a painful $485. That will be nearly $6,000 a year out of the $17,000 budget or about one-third of all the money I have. This makes it very easy to understand why most people on a minimum wage simply choose to go without medical insurance, and it’s certainly going to make my minimum wage challenge more challenging.

When I started this challenge, I looked at the different health insurance policies. I knew I was paying more than I had to and I wanted to see what else was available out there that might be at a more reasonable price point. Looking at high deductible plans, I could get insurance at about $150 a month. Still quite a bit for someone on a minimum wage, but two-thirds less than what I’m currently paying. Since I am relatively healthy, I could probably get away with a high deductible policy and have some extra money to spend on other things. The reality is that if I have any type of major health issue, I am going to end up losing this challenge no matter what type of health insurance I have.

Even though the savings would likely be much more, I simply wasn’t willing to change my current health insurance for this challenge. I also wasn’t willing to go without any insurance which is what a lot of people on minimum wage do. I personally view basic health insurance as something that is far more important to me than anything I could ever buy. I would give up my car without a thought before I would give this up (which may be something that I have to do depending on how things progress with this challenge).

Even though the health insurance is quite expensive, I feel that I can make the budget work. This choice means I’m going to have to give up a lot of other things I could have used that money for, but I weighed the options and decided that for me, this was the best action to take. What would have been your choice on health insurance in this situation?

To make matters worse, on my way home from Point Reyes yesterday, the clicking clutch came back, and this time louder than before. While I really would like to do some more traveling while I am house sitting, I’m wary that if the clutch goes out while I’m exploring, that could be a very expensive situation to try to resolve since I would be forced to get back to the house no matter what to take care of the dogs, not to mention having to get the clutch repaired in the middle of nowhere. For that reason, I’ve decided to cancel any more travel on this trip (it’s very disappointing that I couldn’t have it taken care of when I went in before travelling here). I’m not real happy about it, but it’s the financially smart thing to do. I will take it in and have it checked out as soon as this house sitting job is over. The good news is that I should be able to get a lot done on my writing over the next few days.

Today’s Spending

Food: $0.00
Car: $0.00
Housing: $0.00
Travel: $0.00
Health: $485.00
Misc: $0.00

Total: $485.00

Total Spending

Food: $21.76
Car: $0.00
Housing: $0.00
Travel: $0.00
Health: $485.00
Misc: $19.00

Total: $525.76

(Photo courtesy of Bill David Brooks)

The Easiest Way To Save On Healthcare

May 11, 2012 By Jennifer Derrick 3 Comments

Most financial writers, including me, counsel people to be their own advocate for less-expensive healthcare. We teach that you should question everything on your bill, know the limits and allowances of your health insurance policy, and negotiate prices where possible and look for lower cost options. All of this is great and can certainly save you some money. However, one of the best ways to save on your healthcare is also easy and within your control: Do what your doctor tells you to do.

I know many people whose doctors tell them to take certain medications, do certain exercises, or eat certain things and yet they won’t do them. Or they do them only halfway or only for a while and then stop. This is not going to cure or help you manage your condition. This is only going to result in more visits to the doctor, more prescriptions, and more health problems that never seem to go away. Granted, there might not be a complete cure for your medical problem, but your doctor is going to give you the best advice for how to manage and minimize that condition. Doing what he or she says is the path to wellness.

Here’s an example of what I’m talking about. I’m currently in physical therapy for a back/hip injury. The exercises are killer and harder than anything I’ve ever done and that includes running 39.3 miles over two days. They aren’t fun, but I’m doing them because it’s the only way I’m going to get better and avoid being on pain pills for the rest of my life. Yet the other day a woman on the treatment table next to mine was getting reamed out by her therapist for not doing her exercises. She’s been in therapy for months and is about to exhaust her insurance coverage. The therapist was telling her that she would be better by now if she’d do what she was told, but the woman says, “I’m always too busy and it’s hard.”

This woman’s insurance will run out and she’ll still be in pain and probably paying for pain medication to deal with her issues. In a few months or a year, she’ll probably be back in the doctor complaining of the same problem again. However, if she’d done what her therapist told her to do, she’d be fine and not have to pay any more money.

I know someone else who, without his doctors’ approval, started cutting his pills in half because, “I don’t need that much and it’s cheaper this way.” Yet he’s always in chronic pain and his condition never gets better. Hmmm. Maybe if he took the drug as directed, he wouldn’t have a problem. This is also why some doctors use a drug testing service to make sure patients are taking their medication as prescribed.

Then there are the people who are told by medical professionals that their conditions can be managed or cured with some lifestyle changes such as more exercise, quitting smoking, or a specific diet. Yet they won’t make the changes. They’d rather head to the doctor every couple of months and take expensive medications and then wonder why their healthcare bills are soaring through the roof than eat better or go for a walk.

If you think your doctor is way off base with his orders, by all means get a second opinion. If you come across another treatment approach that you think might work just as well or better, by all means discuss it with your doctor. But if all the doctors say the same thing, you probably need to be obeying their orders.

Do what your doctors tell you to do. If you follow their orders exactly and you don’t get better, then it’s time for another conversation with the doctor or to find another one. But you’re never going to know if a treatment will work until you do what you’re told. If you don’t take your doctors’ advice, you won’t get better, or you might get better for a while but then relapse. You’ll have to make more visits to the doctor, outstrip your insurance coverage, and maybe stay on medications that you could have gotten off of if you’d done what you were supposed to do. Doctors aren’t infallible, but if you’re paying them for advice and help, doesn’t it make sense to take that advice and help and follow their instructions?

(Photo courtesy of Alex E. Proimos)

10 Important Personal Finance Lessons Every Person Should Know

April 2, 2012 By Dana O. Crandell 5 Comments

Managing your money is hard and the current times make it more so. The fact is, though, it’s never been more important to get a handle on your personal finances than in today’s economy. Regardless of whether you’re a wage earner or one of the growing number of self-employed individuals, knowing where you stand financially is critical to ensure your success and perhaps even your survival in this tough economic climate. Here’s a list of important financial lessons, offered in the hope that readers won’t have to learn them the hard way.

Start and Maintain a Budget

As difficult as it may be to believe, not creating a budget is still the most common mistake people make in managing – or mismanaging, as the case may be – their money. Trying to juggle your money and bills without a budget is like performing a high-wire act without a net; eventually you’re going to fall and the damage may be irreparable. Preparing at least a basic record of how much you’re earning and where it’s going is the first and most important step in assuring financial security.

Set Financial Goals and Work Toward Them

The harder we work, the easier it becomes to get caught up in a never-ending cycle of work and rest that leads nowhere. If you’re living to work, rather than working to live, it’s probably because you haven’t set goals. We all need to be working toward something to measure our success. Think about where you want to be in 10 years, 5 years, or even next month and focus on getting there. The prize itself doesn’t matter; it could be a European vacation, early retirement or a pedicure. The point is to have a target and use your budget to get there.

Build an Emergency Fund

No matter how faithfully we plan, emergencies happen and nothing can break the budget and the bank quicker. The best way to avoid disaster is to plan for it. Emergency cash should be an integral part of your budget and it should be contributed to faithfully. It’s also important to determine your definition of an emergency. A broken garage door probably qualifies; tickets to the Megadeath concert probably don’t.

It’s Never Too Early To Invest in Your Retirement

No matter what you do for a living, chances are you won’t be able to do it forever. Most of us don’t want to. Many never have the opportunity to enjoy their golden years, even though they’ve worked hard to get there. With the cost of living soaring daily, too many individuals forced to retire end up working at least one job just to put food on the table. The way to avoid the trap is to start building up retirement funds as early as possible. Whether it’s investments, corporate plans, or simple savings, everyone needs a retirement plan.

Health Insurance is an Investment, Too

Accidents or illness shouldn’t wipe out your emergency fund or put you in debt for life. Hospital stays and medical care can devastate your finances and your credit in a heartbeat – pun intended. Be prepared for the worst with health insurance. If it isn’t provided by your company, shop around and find the best plan for your lifestyle, but don’t go without it. Like it or not, health insurance is a necessity and needs to be budgeted for.

Credit is a Double-Edged Sword

This should come as no surprise if you pay attention to the news. Over the past several decades, easy credit has been the downfall of countless individuals, families and even major corporations. There’s nothing like a credit card or line of credit to provide purchasing power. There’s also no quicker way to break that budget I keep referring to. When that happens, and you’re unable to repay the debts you’ve accumulated, you’ll find those once-friendly creditors will be closing their doors to you, as well as the door to your future. Use credit sparingly and be sure to include your payments in the budget.

Know How to File Your Income Tax Return

Even if you pay a tax preparer each year, you should know how to file your own taxes. Even the most honest tax rep or accountant is capable of making an error and if you’re not capable of recognizing when something’s not right in your tax return, you may end up losing benefits you should have received. Worse, you could end up owing back taxes with expensive penalties. You need to have at least a basic understanding of the process to avoid real trouble.

Look Before You Leap

Wise money management requires a slow, careful approach, from preparing the budget to investing and purchasing. Anything that affects your future is worth taking the time to consider and nothing will affect your future like finances. Before you buy that new iPad, consider whether there’s room in the budget, and then wait a month. If you still think you need it, it will probably be less expensive by that time. Before you invest in that new hot stock, take the time to research it. Remember your goals. “Haste makes waste” is a valuable principle in the world of finance.

Learn Not to Waste

Remember the adage, “Waste not, want not”? Unfortunately, many of us, especially in the U.S., never really learn the value of that statement. We prepare bigger portions than we should eat, make impulse purchases and forget about simple things like turning off lights and unplugging cell phone chargers and other devices around the house. We pay huge utility bills while neglecting to check and replace weatherstripping and repair leaky faucets. Learning to be frugal can make a tremendous difference in the money left over at the end of the month.

Don’t Forget the Purpose of the Budget

If it seems I’ve been mentioning the budget a lot in this article, it’s because I have, and with good reason. The purpose of preparing the budget in the first place is to ensure that you don’t spend more than you make. Adhering to this single, basic principle is the financial strategy that will get you farther than any magic formulas you may find.

(Photo courtesy of j.o.h.n. walker)

A Reminder of What Matters

April 25, 2011 By Jennifer Derrick 2 Comments

Normally I write about ways to save and make money. It’s a necessary part of life, particularly if you want to live responsibly and well. But today I am reminded that, while money may matter, it is far from the most important thing in life.

My area was hit by deadly tornadoes this week. The damage is mind bending. Houses are completely gone, cars are crushed, businesses are closed, and stuff is everywhere. People are picking up insulation and bits of debris that was carried from two counties away. I was fortunate. We suffered no major damage and all of my loved ones are safe. Some people that I know peripherally were injured or lost homes. As scary as the event was, it has served as a reminder of what really matters in life.

People who have lost entire homes as well as those who suffered no damage all say the same thing. “Thank goodness we’re safe.” Over and over again I’ve heard from friends and strangers the same phrase: “Stuff can be replaced. Life cannot.” How true this is. While we fret over which shoes or gizmo to buy, or whether our lifestyle measures up to the neighbors, we should remember that these concerns really don’t matter. It doesn’t really matter if you have the latest car or the biggest house. It doesn’t matter if your DVD collection is complete. All of that stuff can be gone in seconds. Literally.

People who survived the storms say that it lasted maybe thirty seconds. Thirty seconds to completely erase your home and belongings. Thirty seconds to destroy both million dollar homes and mobile homes. Thirty seconds and people who were alive just thirty seconds before are dead. Your status or income doesn’t matter in the face of that kind of disaster. While most of us (we all hope) will never face that kind of disaster, facing it firsthand makes you think long and hard about what’s important in life.

So today I’m sitting here reflecting on what’s really important financially. Stuff isn’t important. Neither are cars, homes, or toys like motorcycles, jet skis and campers. It’s all just metal, glass, plastic, or wood. I don’t argue that you need some form of shelter and probably a car to get to work in, but on the grand scale of things, they don’t matter because they are replaceable. We spend a lot of our financial time worrying about how to get “things” and not enough time on what’s really important.

Insurance is important, including property, health and life insurance. People who had good insurance will have an easier recovery from these tornadoes than those who neglected that detail. Property insurance will replace the stuff, life insurance will help if you lose a loved one, and health insurance will make any injuries suffered much easier to handle. Those without good insurance will be at the mercy of federal agencies like FEMA, which can take years to pay any money. Others will simply have to start from scratch with nothing but their wages.

An emergency fund is important. If you have money saved, you can get by until your insurance settlement comes in. If you have a large stash of cash, you may not even need to draw upon insurance. You can start getting your life back on track much faster than the person who has to wait for insurance or the government to pay out. If you don’t have decent savings, you’ll be at the mercy of friends, family, or organizations like the Red Cross until you can get back on your feet. Savings are also important because you might not be able to work. Many people around here are either out of work because their employer was destroyed or because they were injured in the storms. Until they recover or new work can be found, they need money. Without an emergency fund, it’s a much harder path to recovery.

Beyond those two things, many of our financial concerns are minor, even though we assign them major importance in our own minds. A big house and car are great and can make life easier. Belongings are fun and can provide some comfort. Retirement savings and college accounts are great to have and something to strive for, but should only come after you’ve got your insurance and emergency fund situation straight. Things like cell phones, cable, and Internet are luxuries. They’re fun and helpful, but ultimately unimportant. We worry about all of these things, but without good insurance and an emergency fund, we’re worrying about things in the wrong order.

When you start worrying obsessively about how you’re going to afford that expensive vacation, new house, better car, or new iPad, stop and think for a second. Are you fully insured? Do you have an emergency fund? If not, take care of that first. Those are the things that are most important. Those are the things that will really save you and your family if disaster strikes. The rest of it is just window dressing that can be gone in seconds.

Instead of going shopping or fretting over your outward appearance, take some time to hug your family and spend some quality time with your friends. Instead of thinking about the object that you don’t have and want, focus on your life and the non-material blessings that you have. Get to know your neighbors and build some bonds there. You may need them one day. You may never face a tornado, but all of us risk facing some sort of life altering event that will remind us of what’s really important. It might be a fire, hurricane, earthquake, or life threatening illness or injury. One day you might find yourself facing the truth that stuff is stuff and that what really matters is your life and the lives of those you care about.

The Relationship between Health Insurance Costs and Auto Insurance

May 5, 2010 By Jennifer Derrick 1 Comment

Health care costs continue to skyrocket. You’ve probably noticed your health insurance premiums jumping up every year. That’s bad news, but unfortunately the hit to your wallet doesn’t stop there. If you drive a car and have auto insurance, you can expect your auto insurance premium to jump every time your health insurance goes up.

It’s not a relationship that stands out as immediately obvious, but it is there. Anita Flippin, a branch sales manager with AAA said, “It costs more to cover your liability if you’re in an accident. Every time health insurance goes up, car insurance goes up.” What she’s saying is that, if you cause an accident and hurt someone else, it’s going to cost a lot more to treat that person when health care and insurance goes up. Therefore, what your insurance has to pay out in medical payments and potential lawsuits rises every time health care costs go up. To cover themselves, the insurers want to collect higher premiums from you. Since most states now require you to carry liability insurance that will pay not only for cars and other property that you may damage but also medical payments for those you hurt, you can’t avoid the increases.

Even if someone else causes the accident it’s still a problem in your insurers eyes. What if the person who hits you is uninsured or under-insured? Your insurer will likely have to pick up the tab and it may cost quite a lot to patch you up. If you carry uninsured motorist coverage, you can expect that premium to increase when health insurance rises.

Is there anything you can do? Unfortunately much of this is out of your hands. The health insurers raise their costs so the auto insurers raise theirs in turn. Much of it has nothing to do with you, personally. However, you can take steps to reduce your medical exposure and thus your premium.

Drive safely: Obey all traffic laws, don’t engage in road rage, don’t drink and drive, don’t text or talk on the phone while driving, don’t race other cars, and don’t speed. Insurers like people who aren’t likely to cause a bunch of accidents and who are alert enough to avoid many crashes. Do your part to be safe on the road and you’ll reduce the chance your insurer has to make medical payouts on your behalf.

Have (and use) good vehicle safety features: Wear your seat belt, get a car with airbags and anti-lock brakes and, if you’re looking for a newer car, look for features like lane deviation warnings and back up cameras. Good safety features on your car make insurers less nervous. It doesn’t help the person you hit if they aren’t wearing a seatbelt, but you reduce your personal exposure to medical trauma.

Don’t drive a death machine: A lot of insurers charge more now for big trucks and SUV’s because they’ve been shown to cause much greater injuries to the people in the other cars in an accident. You may be safer in your big SUV, but the guy in the VW bug that you hit is likely toast. Insurers know this and will charge you more because it’s likely that they will have to pay out big bucks in medical payments if you hit someone.

You may not be able to stop or avoid the auto insurance increases that are tied to health care costs, but you can at least keep the increases to a minimum if you can continually demonstrate that you are a lower risk driver and that you have done your part to reduce medical payouts on your behalf.