If you have the Original Medicare Plan, you might find gaps in your coverage that you want to address. Luckily, there are options to help supplement your Medicare: Medigap and Medicare Advantage. However, Medigap and Medicare Advantage can’t be used together. You have to decide which plan works for you. Discover what the difference between the two plans are and which option will best serve you.
What Is Medigap?Medigap, also known as Medicare Supplement Insurance, is a type of health insurance that offers additional coverage for normal Medicare plans. It helps fill in the “gaps” in normal Medicare coverage by helping you pay for out-of-pocket costs that Medicare won’t cover. Some of these expenses include:
What Is Medicare Advantage?Medicare Advantage, sometimes called “Plan C,” offers an alternative to the original Medicare plans. These plans are bundled with the typical Medicare Plan A and B plans, creating more complete coverage for the insured person. If you opt for Medicare Advantage, you are still a Medicare patient. Medicare Advantage plans are typically provided by private insurance companies that are approved by Medicare, but they are funded by the government. In addition to normal Medicare coverage, the Medicare Advantage plan covers expenses for:
Medigap vs. Medicare Advantage - Key DifferencesWhile the Medigap and Medicare Advantage plans can each be beneficial, there are key differences between the two. Being well acquainted with these differences can help you choose the type of plan that works best for you.
PriceThe primary difference between the Medigap and Medicare Advantage plans come at a different cost. Generally speaking, Medigap plans have higher premiums than Medicare Advantage plans. However, Medicare Advantage plans often cover less expenses than Medigap — potentially resulting in more out-of-pocket expenses. You can save money by choosing the plan that makes sense for your specific conditions and lifestyle.
Choice of PhysiciansOne key difference that might influence your decision to select Medigap or Medicare Advantage plan is the choice of physicians they offer. Be mindful of the limitations of both plans if you have a chronic condition that requires you to see specific specialists. Medicare Advantage offers a limited selection of physicians and facilities within their network. Certain Medicare Advantage plans don’t cover out-of-network physicians at all. Some Medigap plans offer more flexibility. Both Medigap and Medicare Advantage will cover any physician or facility that accepts Medicare.
LocationOne major determinant of which plan you choose is where you are located and your lifestyle. If you live in one state and rarely travel, then Medicare Advantage might be best suited to you. If you live in more than one state throughout the year or travel frequently, then Medigap may be a better choice. Medicare Advantage plans usually offer coverage in one region exclusively. They also don’t typically offer coverage when traveling internationally. In contrast, many Medigap plans provide coverage in all 50 states and when traveling outside of the U.S.
Benefits of MedigapMedigap bolsters Medicare plans A and B by filling in the “gaps” in coverage and providing more comprehensive options for the insured person. It covers almost all of the out-of-pocket costs in the Original Medicare plan.
Aside from having more comprehensive coverage in general, one of the top benefits of Medigap is the cost. While the premiums can be higher than Medicare Advantage, these premiums result in few to no out-of-pocket costs.
It also offers a great deal of flexibility in terms of the physician network. Generally, any physician or facility that accepts Medicare is covered by Medigap. This stands in stark contrast to the more limited network offered by Medicare Advantage.
Another great advantage of Medigap is the lack of effort involved in filing a claim. There is virtually no paperwork to deal with. Checks are automatically made to providers and facilities after Medicare pays its portion of the bill.
Benefits of Medicare AdvantageMedicare Advantage is an extension of Medicare plans A and B, offering more coverage than Original Medicare. This option is very popular because it replaces the Original Medicare Plan while still remaining affordable. It often has much lower premiums than Medigap, making it an attractive option if you don’t anticipate using it frequently. For many plans, if you hit the maximum out-of-pocket costs, the plan will cover you for the rest of the year.
Another benefit of the Medicare Advantage plan is that enrollment is simple. You qualify for the Medicare Advantage plan once you qualify for the Original Medicare plan, and enrollment occurs annually.
Most Medicare Advantage plans also include prescription drug coverage, otherwise known as Plan D. In contrast, Medigap does not offer prescription drug coverage. This means that the person being insured must purchase a prescription plan separately.
Author: Jacquelyn White
Source: © 2021 TheStreet, Inc.
Retrieved from: https://www.thestreet.com/
FINRA Compliance Reviewed by Red Oak: 1593464
Families without health insurance have a new opportunity to sign up for coverage through the health insurance marketplace through healthcare.gov.
Certified healthcare navigators, who can assist with the sign-up process for free, said four out of five customers can get a plan for around $10 a month with financial help.
For people who missed open enrollment in the fall, there is a new opportunity for you to sign up on healthcare.gov with expanded financial assistance opportunities.
Usually, everyone would only have the open enrollment period to go in, shop for plans, compare the one they have and then enroll in coverage. But now, everyone can look for new plans through August 15. But right now, everyone can look for new plans. That means families can change the plan they're in as well as sign up for the first time.
The Family Healthcare Foundation, a non-profit agency in the Tampa Bay area that helps families find health coverage for free, is helping families take advantage of new, expanded financial assistance opportunities.
Navigators said people are resubmitting their original application for the marketplace and saving an average of $5-$100 per person for medical coverage.
"Previously, families who made too much money were not eligible for advanced premium tax credits on the marketplace," said Katie Turner with the Family Healthcare Foundation. "That is no longer the case. So those who were told previously that they made too much should definitely come back and look at their options."
Additionally, for people who lost their jobs during the pandemic and would like to keep their existing health coverage, the American Rescue Plan will also provide subsidies for COBRA through Sept. 31.
COBRA gives workers and their families who lose their health benefits the right to continue their health insurance after losing a job.
Author: Lauren Rozyla
Source: © 2021 Scripps Media, Inc
Retrieved from: https://www.abcactionnews.com/
FINRA Compliance Reviewed by Red Oak: 1637146
Fixed indexed annuities are often pegged as a safer way to invest in the market. As such, many financial advisers spurn the product due to its perceived inefficiencies in growing wealth when compared to straightforward investment strategies.
This is based on a huge misconception of the FIA product, which many people incorrectly view as nothing more than a tax-advantaged wrapper that allows insurance companies to take a cut off the top when they’re actually just buying into the S&P or another underlying index security.
This is one of the biggest misconceptions that advisers have about the returns generated by the FIA. Most believe that the insurance company is keeping the difference between what the index generates and the cap. However, this isn’t how the product works. In reality, FIAs result in interest growth being credited to the account based on market returns without actually buying underlying securities in the account.
FIAs should be compared to insurance products, not investment security products like mutual funds. They allow clients to protect the principal of their investment in the insurance product while letting the annuity be credited with growth based on certain indexes like the S&P.
1. Bond replacementThe data on using FIAs as a bond replacement in retirement income planning look very favorable. Research by academics like Roger Ibbotson has shown FIAs can outperform bonds, making them a solid bond alternative. With interest rates at extremely low levels, an FIA could be a better way to chase yields and provide return while protecting the investor’s principal balance.
2. Steady income for lifeThe other thing an FIA can do that most other investments, strategies or products cannot is provide a steady income for life. Incorporating lifetime income sources into a retirement income plan is valuable. Annuities — more specifically, FIAs — offer one such option.
Having a secure floor of income throughout retirement can allow investors to take more risk with the rest of their portfolio, which can even result in investors ending up with a higher total spending amount in retirement and a higher legacy amount.
Dave Alison, executive vice president at C2P Enterprises, said many FIAs also allow for a penalty-free withdrawal of up to 10% even in the early years of the contract. So the products don’t completely lack liquidity even during the surrender charge period.
3. Tax-deferred growthFIAs boast tax-deferred growth. Any interest gains earned inside the account aren’t taxed until investors withdraw their money, providing them with tax-free growth. Moreover, when investors are taxed upon withdrawal, it’s likely during retirement when they’re earning less and therefore are in a lower tax bracket.
In addition, if the FIA is purchased outside of a retirement account and it is annuitized, the income will be taxed pro rata. This can be a helpful way to manage taxable income in retirement and a tax-efficient way to grow wealth.
FIAs allow investors to grow their principal up to a certain cap without the threat of market volatility. With an interest-rate floor, investors will never earn anything less than their investment. The security, safety and growth opportunity that FIAs offer investors makes them a solid option for a retirement.
Author: Jamie Hopkins
Source: © 2021 InvestmentNews LLC.
Retrieved from: https://www.investmentnews.com
FINRA Compliance Reviewed by Red Oak: 1581658
Indexed Universal Life Insurance is an insurance contract that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company, not an outside entity. Investors are cautioned to carefully review an indexed universal life insurance for its features, costs, risks, and how the variables are calculated.
There are 2 guarantees that will happen from this Coronavirus crisis. First, people wearing face masks in public will become commonplace and won’t even draw a second glance. The second guarantee is that if you are an adult with a brokerage or bank account, some advisor or agent is going to pitch you an annuity as a one size fits all solution to your investment problems...so get ready. Spoiler alert...no product like that exists.
Even though I’m known as Stan The Annuity Man and “America’s Annuity Agent,” I’m the first person to say that annuities are definitely not for everyone, even though every U.S. citizen with a Social Security number already owns one. In fact, they own the best inflation annuity on the planet. You guessed it, your Social Security payments are an annuity structure.
Annuities were first introduced in the Roman Times as a lifetime pension gift for the dutiful Roman Soldiers and their families. To this day, the annuity category has a monopoly on lifetime income, and is the primary reason that people consider adding an annuity to their portfolio. But lifetime income isn’t the only contractual goal that annuities solve for, and the annuity company doesn’t have to keep any unused money when you die. I thought I would kill two “misinformation birds” using one factual stone with that sentence.
Principal protection, legacy, and long term care are additional goals that annuities contractually solve for. In addition, if the annuity company keeps a penny of the initial premium when you die, that was a decision YOU made when structuring the policy during the application process.
Do You Even Need An Annuity?
So how do you determine if you need an annuity? One definite answer is to never ask an agent or advisor that question! Too many of them will say yes without knowing any fiduciary type specifics, and then steer you to their favorite annuity product.
There are only 2 questions that you need to ask and answer to determine if you need an annuity.
In a perfect annuity world, these 2 questions would be on every annuity application and the answers would be part of the policy approval process. Unfortunately, we do not live in that annuity utopia yet...but I'm working on it!
Annuities, regardless of type, are contracts issued by life insurance companies. The claims paying ability of that issuing life insurance company is what’s backing up the guarantee. There are State Guaranty Funds that cover policies to a specific dollar amount, but this coverage can’t be used within the sales presentation. That little tidbit should tell you right there that State Guaranty Fund coverage isn’t the warm fuzzy blanket you love with FDIC type backing.
Specific Answers = Specific Solutions
Answering the 2 questions listed above will either point you toward the exact type of annuity that will provide the highest contractual guarantee, or it will confirm that you don’t need to buy an annuity. If guaranteed income is the first answer, then the second answer of when that income starts will determine the best type of annuity that will provide the highest income for life payment. Below are some examples of how answering the 2 questions for lifetime income can pair you up with the correct annuity type.
With SPIAs, DIAs, QLACs, and Income Riders...there can be variations of the start date and all carrier types should be quoted for the highest contractual guarantee for your specific situation. But you get the basic picture on how this works.
If you answered the question that you wanted no income but full principal protection, then you have 2 tax deferred annuities to choose from...Fixed Index Annuities (FIAs) and Multi-Year Guarantee Annuities (MYGAs). Both are CD products, have no annual fees, and fully protect the principal. Even though FIAs are typically over-hyped as market return products, they are not. FIAs are life insurance products, approved at the state level, and are not securities.
If you answer the first question that you wanted a “reasonable rate of return” or “market type growth,” then you should not buy an annuity of any type. A Variable Annuity (VAs) has the best argument for "potential growth," but load VAs have annual fees that typically range from 2% up to 4% annually for the life of the policy. No load VAs at least strip out those fees, but you are still limited with your mutual fund (i.e. separate account) choices. In full disclosure, I don’t sell VAs because I believe that annuities should only be owned for their contractual guarantees.
In addition to being contracts issued by life insurance companies, annuities are transfer of risk strategies. Another easy way to determine if you need an annuity or not is if you need to transfer risk. Transferring risk has nothing to do with age, gender, or your net worth. Transferring risk is all about not wanting to shoulder all of the risk yourself.
The best example of this is longevity risk, which is the fear of outliving your money. Annuities are the only financial product that contractually solves for longevity risk, so the fact that we are all living longer is driving people to find those lifetime payment solutions. Retirement income and creating a guaranteed income floor is where annuities seem to fit with the over 10,000 baby boomers that reach retirement age every single day. Most are already receiving payments from a pension or their Social Security, and some realize that those income streams don’t provide enough guaranteed income. This is where guaranteed annuity payments can fill in that needed income floor gap, and can be a crucial piece to the retirement planning process.
Using your retirement accounts and retirement savings to buy an annuity only makes sense if you are solving for a contractual goal. The key with any annuity purchase is to use a little money as possible to contractually hit that transfer of risk goal. It’s really that basic, in my opinion.
Regardless of what you are told, what the email message reads, or what the TV ad says, there is NEVER an urgency to buy an annuity. Let me put it another way, there is never an urgency to sign a contract until you fully understand what’s in that specific contract. Remember that annuities are contracts.
The only urgency is to fully understand what you are buying and the annuity paperwork that you are getting ready to sign. Always own an annuity for what it “Will Do,” not what it might do. “Will Do” are the contractual guarantees. The “might do” is the sales sizzle, not the contractual steak. Never purchase an annuity for the hypothetical, theoretical, back-tested, projected, hopeful agent return scenarios. If you buy that dream, you will always end up owning the contractual realities.
So do you need an annuity? Maybe. Maybe not. It all comes down to what you want the money to contractually do and when you want those contractual guarantees to start. Then always shop all carriers for the best deal.
Buying an annuity is like buying a plane ticket. You have to know where you want to go first before you can find the best price.
Author: Stan the Annuity Man
Source: © 2021 TheStreet, Inc.
Retrieved from: https://www.thestreet.com
FINRA Compliance Reviewed by Red Oak:
Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company. Surrender charges apply if not held to the end of the term. Withdrawals are taxed as ordinary income and, if taken prior to 59 ½, a 10% federal tax penalty. Investors are cautioned to carefully review an indexed annuity for its features, costs, risks, and how the variables are calculated.
Owning a home inevitably means facing unexpected repairs. From a broken-
down furnace to hail damage on the roof, fixes can add up fast. There are two
primary ways to limit your exposure to these surprise bills: Home insurance
and home warranties. Do you need both? Here are the main differences.
What is Home Insurance?
Homeowners insurance pays for damage to your home due to problems such as
fire, vandalism, explosions and more. It also covers your belongings and,
importantly, provides liability coverage if you’re sued—such as a lawsuit brought
by someone who is injured at your house.
Home insurance has some significant exclusions: floods, earthquakes and
landslides are some of the notable problems not covered. Home insurance also
won’t pay for wear and tear or mechanical breakdowns, like an air conditioning
system that suddenly stops working.
What is a Home Warranty?
A home warranty is not insurance, but rather a contract that covers certain
appliances and systems in your house. While manufacturer warranties cover
specific items for a particular time frame, home warranties can offer various
coverage levels and protect multiple items (depending on the contract).
Home warranties typically cover common systems and appliances such as:
maintenance problems that started before you bought the warranty. A home
warranty also won’t cover problems that fall under a home insurance policy, like fire damage.
Home Insurance vs. Home Warranties: Key Differences
Coverage. While home insurance covers structural damage to your house or
personal property, it doesn’t cover damage due to wear and tear on household
items such as appliances. Home warranties cover the cost of repairing or
replacing systems like plumbing but won’t pay for water damage caused by a leaky pipe.
Requirements. If you have a mortgage you’re likely required to have home insurance. Warranties, on the other hand, are optional. Sometimes the seller of a house will include a home warranty as a selling point of the property.
Claims. When an item covered under a home warranty breaks, you can request
service through the home warranty provider. They will then send out a repair
professional to assess and diagnose the problem. If they can’t repair the item, a
home warranty generally pays to replace it. Depending on your warranty, you
may run into coverage limits or extra fees that won’t cover the entire cost of the
repair, leaving you responsible for the remaining bill.
With a home insurance policy, an insurance adjuster will typically come out and
assess your damage and offer a settlement for repairs. Some home insurers
today use drones to evaluate damage, especially after a widespread disaster like a tornado.
If you have a damage claim your insurance check will be reduced by the amount of your deductible.
Home insurance coverage examples
cover. Buyers of new homes that have new appliances and systems likely have
far less need for a home warranty. But if you’ve got an older house and/or
appliances that have seen better days, a warranty can be a way to cut your potential losses.
Author: Ashley Chorppening & Jason Metz
Source: © 2021 Forbes Media LLC.
Retrieved from: https://www.forbes.com
FINRA Compliance Reviewed by Red Oak: 1578318
Does your college graduate need health insurance? Perhaps this is the last thing
you are asking yourself but may be among the most significant. About one in five
people in their 20s do not have health insurance, according to recent studies. However, one unexpected illness or accident could have long-lasting health and financial consequences.
“Choosing the right health coverage may seem difficult as many people have never shopped for their own health insurance or worry that they cannot afford it, There is a wide range of coverage options available to meet your child’s unique care needs and financial situation post-graduation.”
And now is the time to start. Many colleges and universities require under-graduate and graduate students to purchase health care coverage while enrolled. While some may have coverage under your health insurance, others choose health insurance offered through the school, in collaboration with health insurers. Students have until their plan expiration dates, which vary by plans, to enroll in new ones. So “Step One,” know when that is.
Health Care Coverage Guidance and Enrollment Support
Families can find support through health care marketplaces, insurance carriers, insurance brokers and other licensed insurance agents to help determine what plan is best.
Questions to Ask
To find the right coverage, it’s important to know what’s available, what to ask, and what information is needed to enroll. To narrow the options, know:
•When does your child’s current coverage end?
•Is coverage under my plan an option? —Under the Affordable Care Act’s “Age 26” rule, you may maintain or add your children to your plan until their 26th birthday or another date that year, as long as you are enrolled, and additional premiums are paid. Go to https://www.hhs.gov/healthcare/about-the-aca/young-adult-coverage for more details. Also be sure to check your state regulations as some have extended eligibility beyond age 26.
•What benefits does my child need or want?
•What can we afford?—Think about what portion of his or her monthly budget can be used for health coverage or other insurance. Young adults may be eligible for additional options based on their specific financial situation.
Health Coverage Options
If coverage under the “Age 26” rule is not an option, here are others to consider:
•Medicaid/Medicare--While Medicare coverage is primarily available to individuals over age 65, Medicaid eligibility is based on income, disability and other circumstances.
•Individual exchange/marketplace plans--These ACA plans are available through federal or state enrollment sites. Based on your income, you may be eligible for plan subsidies making one of these plans more affordable. Graduation would be a “qualifying life event” to enroll in an ACA plan outside of the annual Open Enrollment Period.
•Short-term plans--Short-term limited duration insurance coverage provides temporary coverage to bridge the gap between longer-term insurance coverage. These plans have a fixed duration of a few months to even several years and generally will offer less robust coverage than ACA plans.
“Health coverage decisions can be made simpler? and there are resources to help”. “Regardless if your family chooses to do their own research and enrollment or engage outside services, determining what your graduate may need and can afford will help you find good health coverage that ensures your child has access to care now.”
Source: © 2021, Richner Communications
Retrieved from: https://www.liherald.com/
FINRA Compliance Reviewed by Red Oak: 1637276
As a kid, I spent an abnormally large amount of time in nursing homes. My mom was a nurse who worked in convalescent care, and my elementary school was a couple blocks from my mom's work. So every morning I sat in the waiting room for a bit before I walked to school. I sat in what felt like a spacious armchair for an 8 year old, surrounded by four walls of floral wallpaper, and kept busy organizing schoolwork in my Trapper Keeper.
On the other side of the waiting room I knew there were patients, some bedridden, others using walkers and wheelchairs. From my time spent roaming the hallways, I knew their days were filled with scheduled meals, punctuated by rounds of medications, and games in the activity room.
Having a mom who was a nurse in convalescent care, I witnessed firsthand what life could be like if you aren't able to care for yourself. I learned early that, should I fall ill or get into an accident and not be able to dress myself or get up on my own in the morning, long-term care insurance would help cover the out-of-pocket costs.
Whether you're in a nursing home, adult daycare, or an assisted living facility, and depending on the type of insurance you get, LTC insurance could help your financial situation. So I decided to get a policy in my late 20s.
I was offered an insurance plan at a low monthly premiumWhen a benefits representative from my workplace talked about long-term care insurance and said it was being offered to all employees, I perked up. I know it seems strange that someone in their late 20s would purchase such an insurance policy, but because I was far younger than those who typically buy LTC insurance — mostly those in their 50s and 60s — my monthly premium would also be far below the norm. Plus, I didn't have to undergo a medical exam.
The average long-term care insurance rate for a 55-year-old single male is $1,700 a year, which breaks down to $141 a month. For a single female, it's $2,675 a year, or $223 a month. My monthly premium? It was $28 a month, or $336 a year, and just recently increased to $43 a month, or $516 a year. It's certainly not pocket change, but since I can have up to $6,000 a month in out-of-pocket costs covered, it could pay for itself in six months' time.
Long-term care insurance can help protect me in retirement Should I need long-term care, while there are no guarantees, it'll most likely happen during my retirement years. If that's the case, then long-term care insurance could prevent me from dipping into my cash reserve that's part of my nest egg.
The cost of such care certainly isn't cheap — a private room in a nursing home can cost $100,000 a year. If you want in-home care, the median cost of an aide is $50,000 annually. Having long-term care insurance can help me live more comfortably and my family won't have to worry about me or be responsible for tending to me.
I set up autopay to cover premiums To make sure I'm able to cover my monthly premiums, I set up autopay so that my premium payment is taken directly from my bank account. Plus, it's folded into my budget. Sure, I could use that money toward a dinner out or to add a few streaming subscription services to my rotating queue, but I want to feel confident that the cost of care will be taken care of should I need it.
From a young age, I was fully aware of the aging process and knew that it would be a natural part of the life and death cycle to grow old and perhaps need some help. Insurance can be a prickly thing to get, partly because something ill-fated has to happen for you to benefit from it. But long-term care insurance is really there to protect you, your family, and your assets. Should I need long-term care, knowing I have the funds to pay for any assistance will be a huge relief.
Author: Jackie Lam
Source: © 2021 Insider Inc
Retrieved from: https://www.businessinsider.com/
FINRA Compliance Reviewed by Red Oak: 1636913
While many people are underinsured, some of us are carrying more insurance than we need. We may have too much or the wrong kind. There are times when dropping your insurance coverage makes sense. Making unnecessary premium payments is wasteful. Always seek to make the best use of your financial resources.
Consider these circumstances:
In a world with seemingly unlimited insurance opportunities, there are times when it makes sense to drop certain policies and use the money for other purposes. Sometimes dropping your insurance is the financially responsible thing to do. Determine if all your insurance policies make sense for your situation and adjust accordingly.