Check out my Non Profit pet, AAwesomeKids.org’s 2nd Annual Skydiving for Kids Event

Let it buffer completely and then watch the AAwesomeness!

Final numbers were actually OVER $10,000!!

Every year thousands of children are diagnosed with catastrophic diseases that can be fatal – but they don’t have to be. There is a fantastic opportunity to save these children by utilizing the technology of experimental treatments. The problem is most major medical insurance does NOT cover even a small bit of the cost and by the time families are given this option it is financially too late. We can provide these children with that life giving 2nd chance by simply funding the treatment!

If you are a parent, you know what it’s like to have a sick child whether it be for a simple cold or chicken pox. During the time the child is in the hospital, many parents are unable to be with them. Reasons vary from having to work to maintain health insurance coverage, siblings to take care of, and financial concerns arise almost immediately. Doctors and nurses become the parents and support system for the child. This is fundamentally wrong. Mom and dad should be there. We can provide these children with Love by simply funding their parent’s travel and living costs!

Thirdly, we believe a positive experience leads to a positive recovery. To give a sick child a wonderful gift lightens their hearts and strengthens the spirit. To give a child joy is perhaps the greatest healing one can offer. Dream Factory does this. We are proud to support their mission to help a child experience their childhood despite health related troubles.

All monies donated this year, 2012, will be given equally amongst the Children’s Healthcare of Atlanta supported in part by Aflac, and Dream Factory of Merrimack Valley. While in some circumstances we are able to give locally, in others we have found it difficult to have our donations accepted by local organizations due to the extreme nature of our event. Know that 99% of children receive care far from home, and research benefits all.

Be First in Line for Your Dividend!

Stock versus a Mutual Company

thinking face stock 2-21-12Knowing differences about a company you are choosing to do business with can be absolutely critical to the outcome you are looking to achieve. Most of us have taken a business class or two, or have come across the explanations of different types of business entities somewhere in life. Some of us know the benefits and tax advantages of the different entities. But I have found that few of us understand the impact the entities can have on our choice to purchase insurance from that company. In every life and long term care consultation I do, I always ask, “Do you know the difference between a stock company and a mutual company?” Once in a while I get a ‘yes, a stock company has stocks and a mutual company doesn’t’. Yes, but that doesn’t tell you how one has a personal advantage to you over the other, does it? So I dig right into it, because I find the advantageous difference exciting. I am that side of geek ;-)

Here’s the simple definition I give my clients. I can literally see the sun come up on their faces when they get it.

A stock company is indeed made up of stocks. Let’s go one step further: who owns those stocks? Why the stockholders of course! So basically, the stockholders own the company. Owners like to see profit. Profit comes by way of what is called a Dividend: surplus money left over after all the expenses for the year have been paid and expenses for the upcoming year have been anticipated. The stockholder is entitled to receive a dividend every year. This is not guaranteed, because as we know about business, maybe there is no profit at the end of the year. But when there is and dividends are distributed, there is a hierarchy that occurs in a stock company.

First, the preferred stockholders receive their piece of the profit. They are preferred because they paid more money into the company to buy into that privilege of receiving profits first in line. Yes, not a typo, a LINE of recipients. ppl line stock 2-21-12  Next the common stockholders get their piece, then, IF anything is left in the profit pot, the policyholders receive a dividend to help grow their policies. Being last in line, how good do you feel about the value of a policy’s ability to grow well?

A mutual company, on the other hand, is owned by…(drum roll please)… the policyholders! There is NO LINE to receive dividends. Everyone gets a dividend distribution if there is one for the year as it is not guaranteed.

handing money stock 2-21-12

So, the bottom line is: if you are in the market for a whole life policy which has a cash value component, and/or a long term care policy, it is best to go with a mutual company for these. A whole life policy will gain greater dividends which can be used to eventually pay for the policy’s premium. A long term care policy’s dividends can be used to offset the premium. And let’s notice that historically, it has been the mutual companies that are able to maintain and grow in the long term care sector, without raising rates. They are using the dividends to offset this inflationary cost of care when claims are made on the policies. A stock company generally cannot keep up and raises rates. stock chart stock 2-21-12

Hancock was allowed to raise rates in 2008 as much as 13% (http://www.startribune.com/business/134148318.html?page=1&c=y) and in 2010 10-40% depending on your state of residence. This year they are requesting a rate increase as high as 40%. These increases on are top of each other, not the original purchase premium. Genworth is seeking an 18% increase (http://money.cnn.com/2011/01/24/pf/long-term-care_insurance.moneymag/index.htm) and let’s remember that this company is less than 6 years old. GE separated from Genworth officially in 2006 which completely changes the game for this company (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZB598srhOvk&refer=us)

And while some stock companies are solid and pay the claims, so can a mutual company, but with a major difference I find extremely important to point out to my clients. Although not contractually guaranteed, most mutual companies have not and do not plan to raise their long term care premium rates. When necessary, they come out with a new plan every few years that adds benefits to keep up with the changes in the care industry and the premium is a little higher for the newer plans, while the older plans maintain a level premium.

thinking money stock 2-21-12   In my opinion, I appreciate the forethought and love the idea of stable rates. My clients do too.

HSA’s = Medical IRA’s

How to lower your premium and increase your income tax savings!
HSA’s = Medical IRA’s
A Very Cool Way to Save A Lot of Money on Health Insurance Premiums

            A Health Savings Account is very advantageous to the person who hates sending good hard ca$h to the health insurance company every month, and getting no benefit from it. If you have an IRA, then you know how it works. Its tax deferred savings for retirement. Some self directed IRA’s allow you to borrow the money and purchase asset growing investments such as real estate, metal, notes, in order to maximize the future value of your IRA.

Well, good news. In 2004, Congress got together  Congress voting HSA   and decided, hey let’s offer the average Joe a way to contain healthcare costs AND save for their future needs. And TA DA! The HSA was born. It’s also referred to as a medical IRA. A self directed HSA allows you to utilize the funds just like any other self directed IRA, but with a significant advantage; any qualifying medical expenses are taken out now income tax and penalty free. Huh? That’s right! Other than the premiums you pay for your health insurance, most of what you are paying out of pocket for medical expenses, like copays, deductibles, prescriptions, and medical equipment can be paid from the HSA and in turn it is income tax free to you!

Now what exactly does this mean? And hey, what’s the catch? If the government set this thing up there’s got to be some requirements and limitations; of course, but there are benefits to these rules as well. You must have a High Deductible Health Plan. That’s a deductible (your piece of the bill you are responsible for before the health insurance has to pay, not the copay) of at least $1200 or higher per plan year for an individual. For a family, the deductible must be equal to or higher than $2400 per plan year. So let’s put this in context.

I recently helped 2 individuals; each had a plan with a $500 deductible. They were paying almost $600 a month for this privilege. They thought that if they had a low deductible that they were saving money, a very common misconception. The fact is, the health insurance company is going to get its money one way or the other: either a high premium every month to enjoy a low deductible, or a low premium to get a high deductible.

So the question is; HI vs Money hsa 9-11-11Do you want to give the money to them now or when you need services? So let’s look at this a little closer, and do some math, shall we? $600 a month x 12 months = $7200 a year. (I call this outrageous). So if they never use it, it’s a huge out of pocket, after tax, cost. Yes, after tax. In order for you to legitimately deduct this from your income taxes as a medical expense, the federal government says the cost of your medical expenses has to be more than 7.5% of your taxable gross. That’s gross. Most of us can’t deduct it, so we pay taxes on it too. This means we have to earn, in an average tax bracket of 25%, we need 25% more to clear $7200 to send to the health insurance company. This is approximately $9000 of earnings. Add the $500 deductible and the after tax cost, which then equals $625, a total out of pocket preliminary annual cost of approximately $9625. Now that’s just really gross. And every copay and prescription, etc is also after tax out of pocket, and some have a sales tax on top of it. No bang for the buck there. BUT, using an HSA and changing to a high deductible like $2000, the premium drops almost $300 a month, an after tax savings of nearly $4800 in earnings. That’s half the cost of the low deductible plan! But wait! There’s more! The $2000 health insurance deductible is coming out of the HSA as income tax deductible, tax free money AND you got service with that $2000! That’s like a coupon, earning $2500 and actually getting to use every dollar of it. AND, every dollar you spend money exchanging hands hsa 9-11-11 on co-pays, prescription and a multitude of medical expenses, even vitamins, can be paid with HSA, income tax free money.

But what if I don’t use the money I set aside in the account? Oh there’s more, much more…It rolls over! For 2011, an individual can contribute up to $3050 tax free dollars; a family can contribute up to $6150 tax free dollars which is taken off your total taxable base. So if you make $50,000 as a family, you start your taxable base, before business expenses, at $43,850. After a few years the contributions can add up and you can use it at any time for investments. Other than medical expenses, the HSA follows the same IRA rules: tax deferred, penalty if withdrawn prior to age 65, IRA will own whatever it invests in and that profit percentage must therefore be returned to its owner, ie the IRA until you turn 65. And yes, it also has a beneficiary feature so you can feel good about how it’s distributed at the time your heirs pull the plug.

sitting on money hsa 9-11-11Wow, I think the government came up with a good idea, finally. They are rare, so take advantage of this opportunity. Call Your Insurance Chick today to get the pieces put together for you! It’s always a good time to save money on insurance,

Help is Always Here ;)   YourInsuranceChick@gmail.com