Trying to understand Medicare?

This document is one of the better ones I’ve found for Medicare basics.  If you know someone nearing age 65 pass it along:Medicare basics (1)

medicare plan F vs. plan G

Came across these two videos that compare Medicare supplement plans F and G.  Most folks naturally gravitate toward Plan F since it covers the deductible, but that may not be the best choice.  Especially once you consider the higher premiums and higher annual increases associated with Plan F.

https://www.youtube.com/watch?v=sHj3-Y_gwUs

https://www.youtube.com/watch?v=bmU0KdQuxbU

Something to think about

We never know if this will happen to us or how it could affect our retirement dreams.  A very real disease that we all need to have a plan for:  https://www.yahoo.com/style/this-son-is-documenting-his-mothers-dementia-in-a-heartbreaking-video-series-173544541.html

appealing medicare premium surcharge

To follow up on the previous video post: If you would like to appeal the “income surcharge” attached to your medicare part b premium, here is the form https://www.ssa.gov/forms/ssa-44.pdf

Personal Finance FYI: Episode 8 – Tony Robbin’s book review part 2

Today we wrap up the series with a review of the annuity and life insurance strategies discussed in Tony Robbins’ book, Money Master the Game

guide to Medicare

A local benefits specialist forwarded me this guide he put together on Medicare, so rather than rehash all the particulars feel free to download a copy here.  This is an excellent summary for folks getting close to the magic age of 65 and need a primer on Medicare:

Busy Executive Guide to Medicare 2014_March 12 2014

rental cars & HOA’s

Okay, its a strange title with absolutely nothing in common except protecting yourself from surprise out of pocket expenses.  Both topics sort of popped in my head recently so thought a combo 2 for 1 blog post was warranted.

First topic:  Should I purchase the optional insurance when renting a car?

With Spring/Summer travel season coming up the question is do you take the insurance they offer when renting a car?  My gut reaction up to this point has always been, absolutely not!  My existing auto insurance extends to rental cars so why waste the money.  However, after the workshop the P&C agent gave a few weeks ago I am rethinking this.  For one, if you travel out of the country and rent a car you may or may not be covered.  If you are covered your liability limits might not be in full effect.  Second, if you are in a wreck or the car is stolen you still have your deductibles and the hassle of dealing with rental car agency to settle the claim.  By taking the rental car insurance any problems are transferred to them and you don’t have to deal with it.

I know this isn’t a frugal way of thinking of this, but just throwing out a counter argument for you to consider.  Along these lines many credit cards offer insurance on rentals as well.  Just know in advance of your travels what your auto policy covers and credit card covers, it could definitely pay off.  For more reading here is another article on the subject:  http://money.usnews.com/money/personal-finance/articles/2012/06/04/should-you-purchase-rental-car-insurance

Second topic: Did you look at your HOA’s financial position before buying your home?

A conversation with a client who happens to be a real estate attorney along with an article in this months Kiplinger got me thinking of this topic.  How many of us actually knew the financial position of our Homeowners Association when we bought our home or condo?  I certainly didn’t and it never crossed my mind to ask for a copy of the HOA financials before buying my home.  However, ask anyone who has moved into a community only to get hit with a large special assessment and you quickly learn why it is important to know the financial position of your community up front.  With the real estate bust many HOA’s are still underfunded and if large repairs are needed in the community (pool, tennis other amenities), then all residents will get hit with an assessment.  For condo/townhome owners with shared roofs or structural items this is especially true as those assessments can be many thousands of dollars.

Before you buy, ask for a copy of the HOA’s financials and take a look at their reserves in relation to the most recent reserve study.  Buying into a community that is well funded will make your wallet much happier.

protect your assets

The local NAPFA chapter hosted a quarterly workshop on Property and Casualty Insurance recently with Ashley Healy of Yates Insurance.  Now before you roll your eyes and stop reading, the info below may help you big time one day.  Ashley shared with us some common things to look for in a policy and some basic rules for what a policy will and won’t cover.

P&C Insurance is one of those areas that you don’t typically think about that often.  Us planners jump up and down telling clients to make sure their liability limits are sufficient, but honestly no one really thinks much about it.  That is until you or someone you know is in an accident, has a major claim at their house or is sued.

Understanding your homeowners policy, auto policy and umbrella coverage can help you and your insurance agent figure out the right coverage for your situation:

• Ever notice the codes beside your Home Owners insurance?  HO3 stands for Named Peril and HO5 stands for All Risk.  HO5 is typically the type of coverage you want.
• Guaranteed vs. Replacement  Cost on a homeowners policy:  The guaranteed coverage will cover the cost to rebuild no matter what, the replacement cost has a fixed amount and usually a rider up to 20% additional.
• What does standard Home owners insurance not cover:   Floods, Earthquakes, Maintenance Damage, Sewer Backup, termites or squirrel damage.
• Mold:  many policies that cover have a very low dollar amount for mold.  It is typically buried low on the list of coverage, so be aware how much your policy covers if anything.
• As for liability limits on your homeowners policy:  strive for the highest you can get which is typically $500k.
• When to claim:  be cognizant that the insurance company keeps track of your claim history.  You should not file a claim for every little item that comes up.  For the insurance company it isn’t the size of the claim but frequency.  After the 3rd claim they may cancel you.

Autos:

This was an eye opener for me.  The state minimum coverage in Georgia is $25k.  That means that if someone hits you and has only the state minimum coverage they are only required to pay out $25k, if your $35k car is totaled then your insurance company has to cover the rest through your uninsured motorist coverage.  So how many of you have taken a look at your Uninsured Motorist Coverage limits lately?  If someone hits you and you end up in the hospital, your bills could be very high.  Better make sure your Uninsured Motorist limits are maxed:  $250k each person / $500k each accident / $100k medical payments.

Lastly the Personal Umbrella coverage:

This is excess liability insurance that sits on top of your home/auto policy  Should you be sued this will kick in once those policy limits are met.  One interesting thing we learned is that some Umbrella policies will actually include Excess Uninsured Motorist Coverage to protect “you” above and beyond the limits mentioned above.

As for deductibles on both Home and Auto, the takeaway was to raise them high enough that it makes a substantial difference in your premium payments, but really take a look at how much savings you get.  There are points that raising your deductible on your homeowners from $2500 to $10,000 would not make sense as the premium savings doesn’t offset the exposure.  The idea is to talk with your agent and find the best level to suit your needs.

Long Term Scare

An article in the Atlanta Journal yesterday confirmed industry news that I had been hearing for sometime, namely that as Americans we are woefully unprepared for the potential costs of Long Term Care.  The article stated that an estimated 70% of those turning age 65 will eventually need some form of assistance with the Activities of Daily Living (ADL’s) during their retirement years.  The problem is that only a fraction of those have any form of Long Term Care insurance so they will be forced to dip into their retirement savings to cover and/or have a family member help them.

The Activities of Daily Living are defined as someone needing help with: bathing, continence, mobility, dressing and feeding.

The story in the AJC highlighted a man who went to put his wife in an assisted living center only to learn that Medicare doesn’t cover it.  This is a very common misconception about medicare.  Medicare is designed to be coverage for healthcare, not custodial type care.  If transferred to an Assisted Living facility out of the hospital for recuperation, medicare will generally cover 20 days.  After than you are on the hook for $148/day co-pay until day 100.  After day 100 you are completely responsible for the cost of care.

I realize it isn’t the most encouraging topic to think about, but whether you are retiring or have parents in this age group the topic should be discussed.  For additional info on Medicare here are some links:

http://www.ssa.gov/pubs/EN-05-10043.pdf

http://www.medicare.gov/coverage/skilled-nursing-facility-care.html

medicare resources

It’s open enrollment season for Medicare and Medicare Prescription Drug Plans through Dec 7th.  During this time you can jump back and forth between Original Medicare and an Advantage Plan, switch Advantage Plans, join a Medicare Drug plan.  Confusing isn’t it?  I spent a little time in the insurance world long ago but this area still confuses me enough that I have to really devote some time to grasp all the moving parts.

If you are in the 65+ age bracket some things to consider when shopping your plans:  health status, medications and health providers.  Armed with that info you then need to begin your search for plans where your health providers are “in network” and your needed meds are on the Tier 1 list of approved medications.  Start your search with that focus first and try not to focus on who has the lowest initial premium.  If shopping on premium alone you could then get a nasty surprise when it comes to out of pocket costs.

As for resources, the first would be the www.medicare.gov website.  It is loaded with all the info you could ever hope to learn on Medicare, for all you analytics.  Another source for an independent review would be a Medicare consultant such as Goodcare:  http://www.goodcare.com/consumers/promotions.php  this organization will walk you through all the variables and counsel you on the best type of plan based on your parameters.