Re: Health Insurance for REI - Posted by JT - IN
Posted by JT - IN on August 12, 2001 at 08:58:14:
Frank:
As you are discovering, there is much to consider in the determination of which plan and the best way to set this up. I will certainly not be able to get as detailed in this post, with as many caveats as I could list, with available space and time, so let me take a stab at a couple of suggestions, and this will be the tip of the iceberg only. Let me also mention that I used to be very involved in this type of advice for a living, until 10 yrs ago, as a Certified Financial Planner, however, many things have changed in that span of time, and I am not current on recent changes. With that said, please take these ideas as such, and verify everything that I will say with a (current) professional.
Plan selection:
Yes, there are so many options, and most ppl look at the obvious differences, price, deductible, co-insurance, AM Best rating of the carrier, group vs. non-group; and these are all important. However, one of the most misunderstood buying decisions, even by many who are supposed to know, (agents), is that of experience rating in health insurance. In other words, how does the underwriter determine your rates, now and more improtantly, in the future? Are the rates based upon the “groups” experience? What is the group? Is it a group of a pool? Pool, being evryone that is insured by that company.
Why is this so important? Well, let me give you a couple of e.g., with very different outcomes. Lets say you select a plan that based renewal upon the entire group/pool experience rating. Obviously, the “law of large numbers”, in dealing with insurance risks, the more ppl the risk is spread accross, the more likely you are to get a true and accurate rate of affordable insurance. There are many plans that use the experience rating of “your group” only, to figure renewal rates. This is OK until you have a catasrophic claim, for heart surgery, cancer,or other large illness. Shuld your rates be based upon this system, in a matter of a couple of years, the insurance carrier can price you out of your plan, with a series of healthy rate increases, all at a time when you may be uninsurable, and have no portability. Now most companies use the combination method, which is OK, but when the rates begin to climb for the entire pool, then the healthy groups shop for coverage and jump to a cheaper plan, leaving the residue, who can no longer move due to insurablilty reasons, to bear the burder over a smaller group size. And, you guessed it, the rates skyrocket.
This feture of how rates are udnerwritten is the single most important feature, in the insurance decision. Now, my other caveat here is, do not take the word of the insurance professional, when asking about this feature, as I have heard on numerous occasions when the question comes up, an answer that the agent thought was correct, but in checking, find out the answer was partially correct or flat out wrong. Just do your homework here, directly with the company, and check with the insurance commission in your state, on some of these answers, too. Each state regulates insurance differently, and if I remember correctly, you are in NY, and NY has some of the strangest insurance laws, that are on record. Maybe the sate has curtailed some of the insurance company discretions, due to state law, but I find the more restrictive the state law is, then fewer companies are willing to do business in the state. Some/many companies have pulled out of NY periodically, due to these encumbrances.
One of the other features to look at, when setting up a plan inside of a corporation, as you are considering, is a medical reimbursement plan, for corporate officers. This will allow you to set up a plan with high deductibles, and when there is a claim, your corp, can pay these deductibles, and deduct the payment as and expense. This gives you total deductiblity, but you have to set up a plan in the beginning, in writing and you can not descriminate, so this will need the attention of a professional, as well. Again, it has been a while for me on these details, as far as staying current, and I’m sure there have been changes in the laws, that I am not current on, so take this as intended good advice, but it will be dated.
Retirement planning is another deeeeeep subject. It mainly depends upon where you are trying to get to, and in what time span. To list off some of the possible solutions, would be lenghty and too general, but I would be happy to give more sprecifics, with more input here.
Well Frank, I know from reading your past posts, that you are certinly intelligetn, detailed and analytical, so should you go shopping for health insurance, maybe you will be better armed to analyze the situation. I hope that this info is useful to you, and I will gladly assist you with anything else that I’m able.
Good Luck.
JT - IN
