Insider's Guide To Life Health and Disability

How does the new health law impact my HSA? This newsletter answers the top 10 questions.

1. Does the new law eliminate HSAs? No, the new health law does not eliminate HSAs and you can continue to use your HSA as you have – at least until the end of 2010.

2. What are the specific changes to HSAs in the new law? Starting in 2011, the 10% penalty for non-eligible (non-medical) distributions is increased to 20% and you can no longer use your HSA for over-the-counter drugs.

3. Can I continue to contribute the same amount to my HSA? The new law does not change the HSA contribution limits. However, new rules on the definition of what is a Qualified Health Plan could change your eligibility to contribute to an HSA in 2014 or later.

4. Can I still use my HSA for over-the-counter drugs? Yes, for the rest of 2010. No, starting January 1, 2011, over-the-counter drugs are no longer considered eligible medical expenses.

This is your last year to buy aspirin, non-prescription cold medicine, contact lense cleaner and other over-the-counter items tax-free and penalty-free with your HSA.

5. I heard that FSAs are now limited to $2,500, does that rule apply to HSAs? No. The new law will limit Flexible Spending Accounts (FSAs) contributions to $2,500 starting in 2013, but that new law does not apply to HSAs.

6. Did the penalty increase for HSAs? Yes, the 10% penalty for using your HSA for non-eligible medical expenses will increase to 20% in 2011.

7. Will the law change my HSA in the future? Other than items discussed, the new law does not directly change HSAs. Indirectly, however, the new law may eliminate the ability to make contributions in the future.

Starting in 2014, the new law requires Americans to buy Qualified Health Insurance that offers an Essential Health Benefits Package.

Your current High Deductible Health Plan (HDHP) required to be eligible to make a contribution to your HSA may not qualify as a Qualified Health Plan. In other words, you may have to buy different insurance coverage in order to avoid taxes and penalties. Regulatory agency rulings and interpretations will provide more information on this point over the coming months.

8. What happens to my HSA balance in the case where I can no longer contribute new money? You can continue to use any amounts in your HSA for eligible medical expenses or save it for later even if you are no longer eligible to contribute more to your HSA.

This is important to know in case you do change insurance plans to a non-HSA eligible plan to comply with the new law. The HSA remains one of the best tax favored options available. One good strategy is to accumulate assets now in the HSA to prepare for whatever happens.

9. Should I change anything based on the new law? The new law is a foundational change to our health care and insurance system and mostly likely will impact everyone.

For now; however, the combination of a High Deductible Health Plan and HSA remain very competitive and a good choice for many businesses and consumers.

10. How do I keep up on the changes as they take place? Watch for changes posted here. We post additional information as we learn more.

Duaine Owings-President
Plan To Win Ins Agency
duaineowings@gmail.com
Toll-Free: 800-559-8777

Will health care reform mean headaches … or hidden dividends?

provided by Duaine Owings-Plan To Win Ins Agency

Increased costs or savings in years to come? What do the federal health care reforms mean for your company? Will they lead to thousands of dollars in extra costs and more paperwork? Or will federal subsidies make this a “game changer” for small companies that have struggled to provide insurance plans?

If you employ 50 or more, you will face a major choice. Businesses with 50 or more employees will have a choice beginning in 2014: they can sponsor a health plan for 100% of their workers (even those signed up for government-subsidized health insurance) or pay $750 per worker in penalties to the federal government.1

A business might opt to take the penalty and do away with health insurance. Paying the annual penalty might be cheaper. So that would leave the employees uninsured, and they would have to go to state health plan exchanges to buy health coverage that could be more expensive.

Some analysts warn that another macroeconomic effect might result – years of high unemployment. They think that increased insurance costs will discourage business hiring in the next decade.

The new reforms don’t put any caps on health insurance premiums. Insurers have every reason to hike rates before the new insurance markets come around in 2014 with added competition.2

If you employ 25-49 people, you won’t face this choice. The government won’t require companies with fewer than 50 employees to offer health insurance starting in 2014, and therefore these companies won’t have to contend with possible fines like their big brothers. But while firms with 50 or fewer workers would be exempt from coverage provisions, they will still have to contend with rising premiums.1,3

A major tax credit for smaller firms and solopreneurs. If you employ less than 25 or are self-employed, you may find that the healthcare reforms bring you tax relief.

Beginning in 2010, companies with less than 25 employees that pay the majority of health care premiums for their workers qualify for a tax credit up to 35% of their premiums. (In 2014, that credit could be as great as 50% of premiums if you arrange insurance via one of the Small Business Health Options Programs, or SHOP Exchanges). The tax break you get will depend on a couple of variables: the number of employees you have and their average salary.2

However, this tax break won’t be offered to sole proprietorships. That factor may encourage you to incorporate or become an LLC.2

If you own a smaller company, insurance might become cheaper. The idea is that small businesses can pool together in the SHOP Exchanges and negotiate insurance coverage as a group. Greater buying power implies lower premium costs (in theory).

Businesses with 100 or fewer workers can jump into a state SHOP Exchange pool starting in 2014; states may choose to limit the pools to firms with 50 or fewer employees through 2016.4

The non-partisan Congressional Budget Office estimates that the SHOP Exchanges would lower annual premiums for these businesses by 1-4% with a 3% increase in the amount of coverage. That could mean a savings of more than $10 billion nationally.1,4

If you work for yourself, you will likely be able to take advantage of government health care subsidies in 2014. If you are self-employed in 2014 and earn less than four times the poverty level, you can qualify for these subsidies. (To give you some idea, in 2010 400% of the poverty level comes to $88,200 for a family of four.)2

Some notes for 2011. In 2011 as a result of the new law, a business will have to report the value of an employee’s health care coverage on W-2 forms.

Many companies provide coverage for employee dependents not enrolled in other employer-based health plans up to age 22 or 23; next year, that age limit will rise to 26. All lifetime caps on insurance policies offered through employer-sponsored plans will be eliminated in 2011. Penalties will increase for the misuse of HSA funds, and workers with FSAs and HSAs will not be reimbursed for money used for over-the-counter drug purchases.5

Duaine Owings is a Representative with Plan To Win Ins Agency and may be reached at www.Life2Health.com , duaineowings@gmail.com or 816-224-9466.

This should not be construed as investment advice. The named Representative does not give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional.

Citations.
1 cbsnews.com/stories/2010/03/23/eveningnews/main6326955.shtml [3/23/10]
2 usatoday.com/money/smallbusiness/columnist/abrams/2010-03-26-what-health-care-reform-means_N.htm [3/26/10]
4 usatoday.com/news/washington/2010-03-25-healthqa_N.htm [3/25/10]
4 money.cnn.com/2010/03/22/smallbusiness/small_business_health_reform/ [3/22/10]5 money.cnn.com/2010/03/26/news/economy/health_care_changes_to_employer_benefits/index.htm [3/26/10]

With all of the options and information out there, deciding which insurance plan is best can be a daunting task. How can you find out what’s available to you? And to whom should you turn in order to find the best choice for you and your family?

Step 1

The first and best thing you can do for yourself before wading into the world of insurance shopping is arming yourself with the language of the industry. Familiarize yourself with terms such as deductible, co-insurance, co-pay, covered benefits, and exclusions. Once you’re comfortable, you can take that next step and start gathering quotes.

Step 2

Think about what you want to get out of your insurance plan. Do you visit the doctor a lot? Do you or any member of your immediate family have ongoing health concerns? Are you going to need any special requirements, such as maternity benefits? Keep this list handy as you start gathering information, so you stay on track as you review your options.

A good place to start is by checking out some of the comparison tools available online, where, with a few quick clicks, you can input your age, location, and lifestyle, and come up with some initial figures for your specific area. This will help you narrow down your focus, and match you with plans that fit both your needs and price-range.

Step 3

Next, talk to an expert. By meeting with a licensed representative, you can discuss your specific needs and budget and get personalized recommendations that will best suit your lifestyle. This is your chance to talk one-on-one with someone who knows all the ins and outs of the industry, so don’t be afraid to ask questions and clarify any points about which you may feel uncertain.

Keep in mind that some representatives may only offer you a few plans from a couple of different companies, so it is up to you to do your homework to make sure you end up comparing multiple plans from multiple carriers in order to get the best price for the best plan.

Step 4

Once you have this list in place, you can start reviewing which of these plans is the best choice for you. You can call our office at: (800-559-8777) for a free consultation.

Term life insurance has always been a competitive alternative to whole life insurance.

However, a major drawback was the relatively short terms covered by term life insurance, usually 10 years or so. But changes in the term life insurance industry, including more sophisticated financial modeling, mean that term life insurance is available for much longer times now–often up to 30 years–and is cheaper than ever.

But you can deny yourself this cheap term life insurance in a number of ways. The following information shows five things you can do to miss out on the improved options in cheap term life insurance.

Be a Smoker

Premiums for all insurance–including term life insurance–are based on the risk the insurance company believes you pose. The shorter your life expectancy based on intricate actuarial tables for your age and gender, the higher your term life insurance premiums will be. The insurance industry estimates your life expectancy to be about seven years shorter if you are a smoker. That fact will be reflected in the cost of your insurance, and as a smoker you will not get the cheap term life insurance rates.

Be Overweight

If you’re carrying about 10 pounds over the recommended weight for someone of your age, height and gender, it is unlikely to affect your term life insurance rates. However, if you are considered obese based on your Body Mass Index, or BMI, the insurer considers you to be at greater risk of other diseases. Insurers are quick to point to a relationship between obese people and coronary disease and type 2 diabetes, to name just two conditions. Being morbidly overweight will deny you cheap term life insurance.

Have a Specific Health Condition

Again, the cheap term life insurance rates are available to those who pose the least risk of dying. If you have one of a number of medical conditions, you will not get the cheapest term life insurance. The top five conditions are high blood pressure, high cholesterol, depression, asthma and type 2 diabetes.

Have a Dangerous Job or Hobby

Since the premium you pay for term life insurance–or whether you can get term life insurance at all–is related to the risk you pose for collecting on the policy during its term, not only your health but also the nature of your occupation or hobby can affect you. Certain occupations, such as pilot or scuba diver, are considered more dangerous. A hobby such as skydiving can get you disqualified for cheap term life insurance. And some jobs, such as serving in the military, might not disqualify you except at certain times, as when you are serving in a designated combat zone.

Falsify an Application

Knowing what insurance companies are looking for means you can omit information on an application that would raise your rates. This is particularly possible in a competitive term life insurance market when some insurers offer policies without a physical exam. However, if the cause of your death can be shown to result from a condition you claimed not to have, you will not collect on your term life insurance policy.

If you have one of the first four items listed call my office for advice.

With out proprietary software we can find the best rates offered for smokers, build, certain medical conditions or hazardous jobs.

If you lied on an application, well good luck.

We have the expertise to find you the best rate and plan for your needs.

Duaine Owings-800-559-8777
duaineowings@uslifeplans.com