Having health insurance helps to protect us from high health care costs that most people could not meet in any other way. It helps us pay for health care, and it ensures that we have access to care when we need it. Research has shown that having health insurance is closely tied to the quality and timeliness of care.

 

Shopping for health insurance can be a daunting task and the research to find the right plan can be quite tedious. This guide will help you better understand the important aspects of the Texas Health Insurance market and help you feel more confident in making the best decision for you and your family.

 

This guide is intended to help you sort through your Texas Health Insurance options. Before you make a decision, be sure to consult the brochures and policies of the plans you are considering for more specific information. The time you invest in researching your Texas Health Insurance choices will make a big difference, not only in how much you pay out-of pocket, but also in how easy it is for you to get care and how satisfied you are with the health care services that are available to you.

 

In this guide, you will receive general information about the various types of health insurance. You will also learn about things you should consider when choosing a health insurance plan.

 

It is very important to compare plans carefully to find the one that is best for your situation. Read and compare policies. You should contact each plan you are considering and ask them for a summary of their benefits. Be sure to ask questions if something is unclear. Also, ask whether your doctor or a doctor you may be considering participates in the plan. To be safe, you should also contact the doctor’s office to confirm that they will accept the plan.

 

Who needs Individual & Family Health Insurance?

 

The simple answer is any one who can’t get Health Insurance through their employer or seeks an alternative to their employer group plan.

 

Here are some scenarios to consider:

 

 

For You – Companies are only required to pay for 50% of an employee’s coverage (some companies may pay more or even all of your cost) and depending on the average age and overall health of your fellow employees even your half can cost hundreds of dollars a month. Also, corporate health insurance plans tend to have lower deductibles and stronger coverage than you might want to pay for. If you find yourself in this scenario, it might make sense to explore Individual Health Insurance on your own. Keep in mind that individual health insurance can exclude coverage for pre-existing health conditions and usually do not cover maternity in Texas.

 

For Your Dependents (wife, husband, children) – While an employer

will pay anywhere from half to all of the cost of the employee’s corporate health insurance plan they may not cover the cost of including your spouse and/or children on the plan. Adding a member of your family on your corporate plan can be quite expensive. In this scenario it definitely makes sense to explore individual or family health insurance outside of the corporate plan for your dependent(s).

 

 

Health insurance benefits are typically offered by larger and more established and profitable companies to ensure employees are well taken care of and to reduce employee turnover. If you’re employed by a company that doesn’t yet have the resources to offer group health insurance you may want to cover yourself with Individual or Family Health Insurance. You might even hit your boss up for a monthly allowance for health insurance if you consider yourself of value to the company.

 

 

You are responsible for covering yourself first and then your employees. Obtaining a health insurance policy for you and your family is part of good financial planning and important in ensuring business continuity. In this scenario you should absolutely consider covering yourself with individual or family health insurance first and when the time is right cover your employees with group health insurance.

 

 

When people leave a company, in certain situations, they are often offered, by law, the ability to continue their corporate coverage but at their own expense. This means they will need to pay full price for their plan. This is usually an exorbitant amount that may not make sense to pay if you’re in good health. If you are in good health and are offered COBRA you should absolutely consider obtaining individual/ family health insurance on your own.

 

What are My Options for Individual & Family Health Insurance?

 

Co-pay Plans – This is a very common type of health insurance plan for individuals and families. It has a catastrophic portion to the plan for major medical expenses but also, in many cases, offers co-pays for office visits, medication coverage, and annual preventative benefits. There are usually

some limitations of these plans including separate deductibles for drugs, limitations on preventative care, and some plans will limit the number of available co-pays (i.e. four office visit co-pays per year) and may exclude preventative benefits all together.

 

Catastrophic/Major Medical Plans – These plans are typically lower in cost than co-pay plans because they are generally more profitable for the insurance companies. These plans do not cover any medical expenses (no co-pays, preventative benefits, or medications) until you meet the selected

deductible.

 

Before you consider this type of plan you should also think about the psychological aspects of having this type of plan. You will have to pay for many of your medical expenses, so you could be looking at $100 for a doctor’s visit and full price for your medications.

 

Some feel it’s almost like not having health insurance unless something major happens and it’s relatively rare that people have large medical expenses. Some prefer this but others, especially those with children, might be better off considering a co-pay plan for the co-pays for doctor visits, prescription drugs, and preventive benefits.

 

This type of plan is ideal for someone who is generally healthy and/or doesn’t mind paying out-of-pocket for medical expenses as long as they’re protected for the “catastrophic” medical expenses.

 

HSA Qualified Plans – These plans work much like a catastrophic/major medical plan, but with the option of opening a specific type of financial account (Health Savings Account) in which you can put away pre-tax dollars to cover any out-of-pocket medical expenses. But the majority of people who take these plans either never open the financial account or do but never contribute. So, before you

consider this type of plan, determine if you are OK with paying for upfront medical expenses out-of-pocket or if you feel you would take the time to open the financial account and contribute to it on a regular basis.

 

SCAMS - Stay away from or be concerned about…

 

High Pressure Tactics – A bit of a “no-brainer” but if someone is trying to get you to make a decision immediately without allowing you to see a proposal with details of the plan, or ask for an expensive application fee – STAY AWAY!

 

Common tactics include telemarketers telling people that they have a group plan that the prospect can take part in. but they have to order right then as there are only “x” number of spots left or that the plan has no co-pay and no deductible and allows them to go to any doctor they want.

 

These are typically discount plans that very few medical facilities will accept and are missing the most important parts of an insurance plan. General Rule is if someone wants to charge an application fee and wants you to make a decision right then.  Ask for more details and if they resist excuse yourself politely from the call and try another independent agent!

 

Agents Pushing for dace-to-face Appointments – I realize this might sound counter-intuitive. Why wouldn’t you want to have someone come to your house to go over plans? A good agent will often be willing to sit down with you if you ask. As you might probably guess many agents feel that by meeting with you face-to-face it increases their chance of “closing” before they leave. Many shopper prefer to gather information and digest it before making a decision.

 

Agents that claim they offer a plan that accepts everyone without underwriting – There are a very limited number of situations where individuals are offered a policy without going through a medical underwriting process to determine your coverage ability.

 

If you’re being offered a health plan that an agent claims takes everyone and has no underwriting then you are likely being offered a discount plan and you should consider benefits and network carefully before making your final decision. Do not make an immediate decision – especially if they are asking you to sign up via phone and ask for payment and a pricey application fee.

 

If you are a part of a group (i.e. corporate, association, franchise, unions) you might be offered a plan that does not exclude you due to pre-existing conditions. Even with these plans you should consider benefits and limitation carefully before you make a decision. You should be especially careful if the agent is pressuring you to make an immediate decision via phone without providing you with plan details and requiring a high “application” or “enrollment” fee.

 

If it sounds to good to be true or you’re being pressured to make an immediate decision or are asked to pay a high application fee or are told it is guaranteed issue without having to go through underwriting or are being propositioned for a face-to-face pitch – you should have your guard up and fully understand what you’re getting into before making an immediate decision.

 

Top 10 Things to Consider in a Health Insurance Plan

 

1) Maximum Out-of-pocket (AKA Coinsurance Maximum, AKA Stop Loss)

 

This is the dollar amount that indicates the most you could spend on medical expenses in-network and out-of-network within the calendar year should something catastrophic happen. This dollar amount consists of the deductible and coinsurance limit.

 

2) Lifetime Maximum (No Annual Maximums)

 

Most companies have adequate lifetime maximums which is the maximum they will pay for medical expenses during your life as long as you’re on the policy.

 

A $3 million or higher lifetime maximum should be sufficient.

 

BE CAREFUL - Some plans might also have per incident or per year maximums that supersede the lifetime maximums.

 

3) Price

 

We all have budgets. Once you have determined what type of plan makes most sense for your situation and preferences you should comparison shop. A good independent agent can help you quickly shop apples-to-apples between the major insurance providers. You can also use online quoting and comparison systems provided by many agent/broker’s websites.

 

You may find huge differences in pricing for comparable plans offered by different companies. No one insurance company will always be the low cost insurer for every situation and for every time period… This year’s lowest, could well be next year’s highest.

 

4) Network

 

The two main types of networks for individual & family plans in Texas are HMO and PPO.

 

HMO (Health Maintenance Organizations) - HMO’s can offer better benefits for comparable pricing to a PPO. What you might give up in return is freedom to go to any doctor you would like at anytime and often have to get referred to specialists, etc.

 

PPO (Preferred Provider Organizations) - These networks are typically much larger than the HMO networks and allow you to go to any doctor you would like but the insurance company will pay more if you go to one of the medical facilities that will take that particular insurance company.

 

5) Reputation

 

Research the company. Check the Texas Department of Insurance (TDI) website and check a search engine using the name of the insurance company and the word “complaint” or “scam” or “ripoff”. Every insurance company has complaints against them but you can determine the serious violators pretty easily with a little research. Part of the reason people complain about insurance (other than price and coverage) is that they do not understand how their coverage works when they first buy and think the insurance company is not paying what they should. A good independent agent will always ensure you fully understand the benefits and limitations of your chosen plan.

 

6) Underwriting

 

Waivers, riders, exclusions, rate increases, declines – Each insurance company has different underwriting policies and this could be a top three most important factor in some cases. If you have asthma, you might find one company would decline you, another might cover you but not the asthma, yet another might just charge more, but cover you and the condition. It should be obvious which company would be the best to choose. Your independent agent should be able to determine these things before you even apply.

 

Being Declined/ Ineligible - You might find that you are not eligible for coverage from any of the individual health insurance companies due to your pre-existing condition(s) and treatments. First off, don’t think that this means the underwriters think you’re on your death bed.

 

Their decision is not based on mortality but on whether or not they have a likelihood of being profitable. If you take multiple medications or have a possibility of needing surgery or other expensive treatments you could be declined by one or all of the individual health insurance companies.

 

The State of Texas has made health insurance available to individuals who are otherwise declined by insurance companies or don’t have other means for getting covered. You can visit the Texas Health Insurance Risk Pool at www.txhealthpool.org for coverage options and associated pricing.

 

Waiver/Riders/Exclusions – In considering your medical history, many insurance companies consider the option of placing a waiver, rider, or exclusion on coverage of a pre-existing condition. These terms essentially mean that they will not cover medical expenses related to the waivered, ridered, or excluded pre existing condition.

 

Rate Increases – Underwriting departments responsibility is to understand an applicant’s pre-existing condition(s) and determine if they can be approved with or without an exclusion. In order to increase the chances of being profitable an insurance company may increase the “preferred” rate on your policy during the initial underwriting (only) to cover likely medical expenses for any preexisting condition. Once you have been approved for coverage an insurance company can not single you out for a rate increase.

 

7) Drug Coverage

 

Many plans have a drug deductible before you can pay co-pays for medications. They may also have a maximum allowable – If you prefer a plan with drug co-pays there are a few important things to consider.

 

a. Drug Deductible – some companies’ drug benefits may have some type of drug deductible. Some have an overall drug deductible for each person applying meaning you will have to spend that much on medications before you can pay co-pays for generic or name brand drugs. Others only apply the drug deductible to name brand drugs so you can pay a co-pay from the start for generic medications. This is helpful since many medications have generic alternatives.

 

b. Annual Maximum – Many policies are going to have a limit on the retail value of outpatient medications they will cover per year.

 

8) Preventive (Wellness) Benefits

 

Many co-pay plans (not all) will have some level of preventative benefits. Many times these plans have a dollar limit to be used toward preventative benefits. And many of the plans limit the benefit to specified procedures such as…

 

a. Women – benefits can be used to cover cost of pap smears and after a certain age (or younger if family history) mammography’s for women. Any blood work or other routine labs or tests are typically out-of-pocket.

 

b. Men – the benefit might be limited to PSA (prostate screening) tests and colorectal screenings and at older ages could help pay for such things as a colonoscopy.

 

9) Office Visit Co-Pays

 

Many co-pays are relatively low so this feature shouldn’t be a primary deciding factor in your decision. However, when considering co-pay plans understand that some may limit the number of office visits (typically 2 to 4) with co-pays and not subject to the overall plan deductible.

 

10) Financial Rating

 

Ability to pay claims is very important and a company’s financial rating is the primary indicator of the insurance company’s ability to pay. Companies with an A+, A, or A- A.M Best rating should be your preferred choice.

 

 

How to Search for the Best Plan

 

Online Quoting Systems – You can get pricing for most plans offered in Texas online from many agent/broker websites including ours at www.eSureTexas.com. Websites such as ours will show you plans and the associated preferred pricing from most of the major insurance providers.

 

Some things to understand as you’re reviewing pricing:

 

 

 

Working with a good insurance agent/broker can ensure you make the best decision –An honest and experienced independent agent can help you make a decision on the best plan or help validate your thoughts on plans. The surprising thing to many people is that, by law, there are NO FEES of any type to work with an independent agent. A good independent agent will also help with any issues, changes, re-evaluations, or other matters, through the life of the plan

 

Frequently Asked Questions (FAQs)

 

Q. Can I buy health insurance for less if I deal directly with an insurance company?

A. No. Health insurance rates for the same plan will be the same whether you use an independent health insurance agent or deal directly with the insurance company offering the plan.

 

Q. Must I pay a fee to an independent health insurance agent?

A. No. An independent health insurance agent is paid a commission by the health insurance company. No additional fees are added to your health insurance cost

 

Q. I have previous group health insurance coverage. Does this mean the health insurance company must accept my application and apply no pre-existing condition limitations?

A. No. In Texas it does not matter that you have previous group health insurance coverage. A health insurance company can still deny your application for individual or family coverage. However, if your application is declined, you may be eligible to participate in the Texas Health Risk Pool (www.txhealthpool.org) established for persons who are unable to obtain health insurance coverage

on the open market.

 

Q. What are my options if I my application for coverage is denied?

It depends on the specific health condition(s) at issue. If you are denied coverage by one company for medical underwriting reasons you can apply to another health insurance company. Different insurance companies use different underwriting guidelines. You may obtain coverage with another provider who may have more lenient guidelines for the same pre-existing condition(s). Also, if a health insurance company declines to cover you, you may qualify for enrollment in the Texas Health Risk Pool (www.txhealthpool.org).

 

Q. Can my health insurance be terminated for any reason?

A. Texas provides strong consumer protection. In general, once you have been approved for coverage, the insurance company can terminate your coverage for only the following reasons: (1) failure to make premium payment within the payment grace period, (2) material omission or misrepresentation on your health insurance application, or (3) the insurance company becomes insolvent or bankrupt.

 

Q. What are "pooled" health insurance rates?

A. Pooling is a common and, in our opinion, the fairest approach to setting health insurance rates. A health insurance company operating under a pure "pooled" approach uses the same method in determining rates for both new and existing clients, regardless of the client's health status or claims history. In other words, insurance companies with "pooled" rates do not charge lower rates to entice

new customers, while charging higher rates to long-time customers. This issue has very important implications for people intending to be enrolled in a health insurance plan for more than a year.

 

Q. Under a new health insurance plan, can I keep my doctor?

A. You should review a health insurance plan's physician network before applying to the plan. Each insurance provider has different network restrictions. PPO plans, for example, may allow you to visit any doctor but will offer better benefits if you use a provider within their network. HMOs might not provide benefits outside of their doctors network except in emergency situations where a network doctor is not available.

 

Q. Are there meaningful differences in how insurance companies underwrite health insurance applications?

A. Yes. For example, one insurance company assigns "preferred" rates to a 5'10" male who weighs 215 pounds. Another insurance company would assess an additional 40% charge for this person. One insurance company charges an additional 40% for smokers. Another charges an additional 25%. One might not charge a rate increase at all. There are many distinctions such as these. To get the best health insurance value for your own situation, you need the advice of a good health insurance agent.

 

Q. What is health insurance trend (medical inflation)?

A. Health insurance trend is an annual percentage increase in health insurance claim costs. The two primary components of health insurance trend are (1) inflation of costs physicians and hospitals charge for health care services and (2) increases in the average utilization of these services.

 

Q. How do PPO plans and HMO plans differ?

A. The primary difference is that HMOs limit your non-emergency health care coverage to a limited network of physicians and hospitals. PPO plans insure covered services delivered by any licensed physician or hospital, though a PPO plan will offer improved benefits if you use physicians and hospitals participating in the PPO's preferred network. PPO networks are normally much larger than HMO networks, though HMOs provide higher benefit levels. For many individuals and families in Texas, PPO rates will be lower than HMO rates. In addition, HMO plans are rarely an option for persons not participating in employer-sponsored

programs. The large majority of our individual and family health insurance clients enroll in PPO plans.

 

Q. How long does it take to enroll in a health insurance plan?

A. It depends on the health status of the applicant and the health insurance company to which the applicant applies. Some health insurance companies may approve, within a few days, the application of a healthy young adult. However, for less healthy or older applicants, processing of an application can take several weeks or more. Each circumstance is different. You should consult your

independent health insurance agent to get a realistic expectation.

 

Q. Can my health insurance application be denied?

A. Yes. Whether an application is approved or denied depends on the applicant's health and the underwriting guidelines of the insurance company. Contact your independent health insurance agent to get a realistic assessment regarding your own circumstance.

 

Q. Why should I use an independent health insurance agent?

A. Because he/she is not an employee of an insurance company, the independent agent can more objectively recommend the best health insurance company for your situation. In addition, an independent agent will be familiar with insurance company bureaucracies, which can save you a lot of aggravation. Further, if your circumstances change, an independent health insurance agent can recommend a more appropriate health insurance plan for you.

 

Q. How do health insurance companies define "pre-existing condition?"

A. Each health insurance company has its own specific wording. However, the following statement is in line with many insurance company provisions: Preexisting condition means the existence of symptoms which would cause an ordinarily prudent person to seek diagnosis, care or treatment within a five year period preceding the effective date of the coverage of the insured person or a condition for which medical advice or treatment was recommended by a physician or received from a physician within a five year period preceding the effective date of the coverage or the insured person.

 

Q. Do I have to take a physical exam in order to obtain health insurance coverage?

A. The health insurance companies represented by Texas Health & Life rarely require physical exams. The exceptions usually involve applicants who have not consulted a physician in the last couple years.

 

Q. What are the options for making my initial health insurance premium payment?

A. An initial payment (usually one month of insurance premium) is required with your health insurance application. Checks, money orders, credit or debit cards are usually acceptable. Health insurance companies will not accept cash. Online applications, now the norm, do not require hard copy payment. The first month’s premium is withdrawn from your designated bank account or your designated charge/debit card account.

 

Q. I am pregnant. Can I obtain health insurance?

A. No insurance company underwriting individual or family health coverage will agree to insure you while you are pregnant. However, group health insurance plans will accept new enrollees who are pregnant. So, if you are pregnant and have an opportunity to enroll in a group health insurance plan, take advantage. Otherwise, you may wish to look into the Texas Health Risk Pool or Medicaid if you have a low income.

 

Q. Will a new health insurance policy cover my pre-existing condition?

A. Many individual and family health insurance policies limit coverage for pre-existing conditions during the first nine to twelve months of coverage – sometimes longer. However, the pre-existing condition exclusion period is waived to the extent that the applicant has "qualifying" prior group coverage. This is a government-mandated requirement, though the health insurance company can still deny the application of someone whose health does not meet the insurance company's underwriting requirements. However, the insurance company can still waive coverage of the condition altogether rather than outright decline coverage. In the absence of prior group coverage, some health insurance companies will waive their pre-existing condition exclusion for any health conditions listed on the application. Many HMO plans do not have pre-existing condition exclusions, though HMO coverage is rarely available to people not participating in employer-sponsored plans. In addition, when such HMO coverage is available, the rates tend to be quite high or the HMO can decline coverage all together. You should fully discuss your pre-existing conditions with your independent health insurance agent before you submit a health insurance application

 

Q. Will this website keep my personal information private?

A. Yes. What little personal information you may volunteer while visiting this website will not be distributed to any outside organizations -- including health insurance companies.

 

Q. Do my health insurance premiums increase as I get older?

A. Yes. Health insurance companies providing individual coverage can charge higher rates to older persons and lower rates to younger persons. For example, the health insurance rate charged to a 50- year-old can be more than twice the health insurance rate charged to a 25-year-old.

 

Q. Can my weight make a difference in my health insurance rates?

A. Yes. All Texas health insurers use height/weight tables to make risk determinations. People with "non-standard" height/weight ratios may be charged higher rates or refused coverage. These height/weight standards vary from health insurer to health insurer.

 

Q. For how long am I committed to keep any health insurance I purchase?

A. Health insurance is generally purchased in one month increments, so your commitment is typically one month at a time. If you stop making health insurance payments, the insurance company will simply terminate your coverage.

 

Life is so unpredictable and leaving your loved ones to grieve the loss of you on top of no financial support should never be an option.

 

Life insurance is the primary funding vehicle for business buy-sell agreements, deferred compensation agreements, and is often required as collateral for otherwise unsecured loans.

 

What Kind of Life Insurance Coverage Do You Need?

 

There are three basic types of life insurance policies. It is important to take the time to learn about the three different types of life insurance polices and then decide which policy will suit your needs best. The three different types of life insurance policies are:

 

Term Life

 

Term life insurance policy premiums are generally much lower than cash-value policies (universal and whole life).

 

Term life insurance is purchased for a specified time period (usually one, five, ten, fifteen, twenty, or thirty years). During that "term" the premium remains level. At the end of the term, most policies are renewable at the premium rate for the insured’s age at that time.

 

Many term policies are convertible to a permanent form of life insurance without new evidence of insurability.

 

Special term forms such as decreasing term and increasing term policies are available but uncommon.

 

The face amount of the policy is paid if death of the insured occurs during the term of the policy.

 

Facts About a Low Cost Term Life Insurance Policy

 

Term life insurance does not build cash-value or have the tax benefits that universal or whole life might provide.

 

Term life insurance might be the right choice for you if…

 

 

Whole Life

 

A whole life insurance policy covers you for your entire life, not just for a specific period such as term insurance. Your death benefit and premium in most cases will remain the same. Whole life insurance accumulates cash value.  The cash value is tax-deferred until you withdraw it. The cash value can be borrowed.

 

In addition to the traditional whole life form, common variations include interest-sensitive, and single-premium whole life insurance. A traditional whole life insurance policy provides a guaranteed minimum rate of return on your cash value portion. An interest-sensitive whole life insurance policy provides a variable rate on your cash value portion, similar to an adjustable rate mortgage. An interest-sensitive whole life can provide an increasing your death benefit without raising your premiums. Single-premium whole life is a lump sum payment for a fully paid up benefit. Like the other whole life insurance options, single-premium whole life insurance accrues cash value and has the same tax shelter on returns.

 

Unlike term life insurance, a portion of your premium money provides cash value which in turn could pay off your entire policy only after a few years. Your premium will remain constant during the time you are covered unless you choose otherwise. And, unless you make a change to your whole life insurance policy, you have lifelong coverage with no future medical exams.

 

The rate of return on a whole life insurance policy is relatively low compared to other investments, even with the tax savings factored in.

 

Universal Life

 

Along with providing a death benefit, universal life insurance also incorporates a savings vehicle. It is like combining a term life insurance policy with a tax-deferred interest accumulating savings account.

 

One benefit of purchasing a universal life insurance policy is that besides accumulating a tax-deferred savings, one may not have to pay premiums during the entire policy. If money to pay the death benefit and other related costs accumulates in the tax-deferred savings portion of the policy, then premiums may eventually not be required to keep the policy in force.

 

So who could benefit from a universal life policy? Since a universal life policy is an investment vehicle along with a life insurance policy, only people who feel they need life insurance into their 70's would benefit from a universal life policy. This would give the savings portion enough time to possibly accumulate into an investment. Most persons will not need life insurance that late in life, and in the case life insurance is not needed that late, it may be more beneficial to purchase a term life insurance policy and plan a proper retirement investment savings account such as a 401K or annuity.

 

If a universal policy looks right for you there are a few important points to remember. First, make sure you plan to have the policy long term since you will need to have the policy in force at least 15 years to be eligible for any return of the policy. Second, make sure you have a knowledgeable insurance agent to review your other options such as term and whole life insurance.

 

 

 

Could you continue to pay your bills if you were unable to work for any length of time because of illness or injury? If you were to become disabled, do you know how much money would be coming in each month and from what sources?

 

Some people can rely on disability benefits from their employers and/or the government. But, for a great many people, income stops when work stops. Individual disability income insurance is designed to replace income when illness or injury stands in the way of earning a living.

 

This guide explains the various sources of disability income, what disability income insurance is, and what it covers. With this information, you’ll be able to make an informed decision about whether you need individual disability income insurance and, if so, what features are most important to you.

 

What Is Disability Income Insurance?

 

Disability Insurance is the industry name for a plan that provides for periodic payments of benefits when a disabled insured is unable to work. The insurance product is designed to replace anywhere from 45 to 65% of your gross income on a tax-free basis should illness keep you from earning an income in your occupation. Every disability policy is different and should be assessed by the consumer based on the quality of plan created for the individual’s needs and not by the cheapest disability insurance policy on the market. Many consumers do not plan for the possibility that they will be faced with a debilitating accident or illness during their working years. A professional with a family, for example, should consider disability insurance a necessity. For a consumer, it is not a required purchase like home owner’s insurance. Individuals believe they may have disability coverage through their employer. This at times may be true, but the quality of coverage often leaves the disabled employee short of the protection he/she thought they had. A qualified insurance agent can assist the consumer with exploring the sources of income the consumer will need and have available during a disability.

 

Disability income insurance comes in two major forms

 

• A variety of employer-paid and government sponsored programs, generally cost-free to the recipient, covering certain categories of workers.

 

• Private policies (paid for by individuals) that protect income when there are no applicable employer or government programs or when those programs do not adequately meet income needs.

 

As with all insurance, disability income insurance operates on the principle that many people pool small sums of money to benefit those who need help. The beneficiaries are people who need adequate income should they become disabled.

 

Are You Covered By Group Disability Benefits?

 

First, find out exactly what benefits your employer offers in the event of a disabling illness or injury. Most employers allow some short-term sick leave, which may last from a few days to as much as six months, depending both on employer policy and on duration of employment. In some states (for example, Hawaii, New Jersey, New York, and Rhode Island), state law requires most employers to provide disability benefits for up to 26 weeks. In California, most employers must provide coverage for up to 52 weeks.

 

No laws require employers to offer long-term disability (LTD) insurance but it is estimated that almost half of mid-size to large employers provide long-term benefits for at least five years. Typical group long-term disability benefits replace about 60 percent of salary, start when short-term benefits are exhausted, and continue anywhere from five years to life. Often, group long-term insurance is fully paid for by employers without contributions by employees. (That’s why employer-paid disability income benefits are subject to income tax.)

 

Check with your employer’s benefits office to see if you are covered and, if so, what is available to you. Find out how long you must wait before benefits begin and how long payments will continue during your disability. Find out, too, whether your employer’s plan takes other disability coverage (such as government programs) into account when calculating your long-term disability pay. Ask for a booklet describing the disability coverage your company offers.

 

What About Social Security Disability Benefits?

 

Most salaried workers in the United States participate in the federal government’s Social Security program. Social Security is best known for its retirement benefits. But the Social Security Administration (SSA) also administers disability benefits.

 

Your salary and the number of years you have been covered under Social Security determine how much you can receive.

 

Here are some important points to remember:

 

Eligibility is based on being unable to perform any gainful employment, not just the job you were performing at the time the disability began.

 

You are eligible for benefits after you have been disabled for 5 months and if the disability is expected to last 12 months or to result in death. Claim processing may take up to 3 months, so file as soon as possible.

 

Social Security payments may be reduced by disability entitlements under other government programs. Why? Because total combined payments under Social Security, workers compensation, civil service, and military programs generally cannot exceed 80 percent of average pre disability earnings. A government pension also may reduce Social Security disability payments.

 

After 24 months of benefits, recipients qualify for Medicare. If you want the medical insurance portion of Medicare, in addition to hospital coverage, you must enroll and pay a monthly premium.

 

Social Security disability payments are subject to federal income tax if your "combined income" adjusted gross income plus any nontaxable interest income and half of your Social Security benefits exceeds certain limits. If you file an individual tax return, you may have to pay income tax on 50 percent of your Social Security disability payments if your combined income is between $25,000 and $34,000. If your combined income is greater than $34,000, then 85 percent of your benefit payments are subject to income tax. If you file a joint tax return, and your combined income is between $32,000 and $44,000, then you may have to pay taxes on 50 percent of your Social Security disability benefits. If your combined income exceeds $44,000, then 85 percent of your bnefit payments are subject to income tax.

 

Social Security disability payments can be an important part of your income should you suffer a disabling illness or injury. Contact your local Social Security Administration office for an estimate of the disability benefits to which you would be entitled.

 

Are You Eligible For Other Disability Income?

 

There are many other potential sources of income if you become disabled:

 

•  Workers’ compensation benefits, if you suffer an accident at work or an illness that results from your employment.

 

•  Veterans Administration pension disability benefits, for eligible veterans.

 

•  Civil service disability pay, for federal or state government workers.

 

•  Black lung program for miners.

 

•  State vocational rehabilitation programs.

 

•  Group union disability coverage.

 

•  Automobile insurance, if disability results from an auto accident.

 

•  Private insurance, such as credit disability insurance, that makes monthly loan payments when you are disabled.

 

•  Supplemental Security Income (SSI) for persons with low incomes and limited assets.

 

•  Medicaid, also for persons with low incomes and limited assets.

 

The availability and extent of these and other programs vary widely. But, because one or more may be an important source of income should you become disabled, it’s important to determine whether you are eligible. If you are, you should also find out how long benefits will be paid. And, of course, your own resources the savings you’ve put aside over the years are another valuable source of income.

 

How Much Disability Income Will You Need?

 

Add up all the benefits you are entitled to under the public and private programs mentioned, along with the monthly income you could count on from other sources such as your savings. If the total approaches your required income after taxes, you can assume that, should total disability strike, you would be able to pay your day-to-day bills while recuperating. You must remember that eligibility for Social Security disability benefits is contingent upon your disability being expected to last for at least 12 months or lead to your death. If the total from employer benefits, Social Security, and other programs along with your own resources will not be close to your pre-disability, after-tax income and will not be adequate to support your family, you will want to consider buying additional disability income insurance to make up the difference.

 

The amount of long-term disability benefits you may receive through your employer’s group plan or your personal insurance benefits may be reduced by the amount of Social Security or other government benefits that maybe paid.

 

If you are your own employer, consider a group policy for you and your employees. If you are a sole practitioner, or if you work for a business that does not provide benefits under a group policy, an individual policy is a good idea. After all, if you do not receive benefits, your entire business may suffer.

 

Whether you are an employee or an employer, your insurance agent can help analyze your sources of disability income, determine waiting periods for various benefits, and determine whether additional coverage would be wise.

 

What to Look For in a Policy

 

If you find that you need an individual disability income policy over and above any other income protection you may have, here’s what you need to know:

 

Definition of Disability

 

Policies vary. Some pay benefits if you are unable to perform the duties of your customary occupation, others only if you can engage in no gainful employment at all. Be sure to ask your insurance agent how various policies define disability.

 

Extent of Disability

 

Some older policies require that you be totally disabled before payments begin. Partial disability sometimes is covered for a limited time but most often only if the partial disability follows a period of total disability for the same cause. Some policies may not require total disability before partial disability payment.

 

"Residual" Benefits

 

If you are able to work but your income is reduced because you cannot fulfill all of your job responsibilities, residual benefits can help to make up the difference in your income. A standard feature in some policies (added with a rider to others), a residual benefit allows partial payment based on your loss of income generally without prior total disability.

 

Presumptive disability

 

Even if you can still perform some or all of your regular job, you are presumed fully disabled and are entitled to full benefits under specified conditions, such as loss of sight, speech, hearing, or use of limbs.

 

Size of benefits

 

Monthly benefits are calculated in terms of stable, earned income at the time of purchase. Most insurers, not wanting to provide benefits so sizable that they would encourage workers to remain at home, limit benefits from all sources to no more than 70 to 80 percent of monthly income. Lower-paid workers can expect to receive more of their pre disability incomes while higher-paid workers generally receive less.

 

When the payments begin

 

Today’s policies allow you to decide when benefit payments begin. You can choose a waiting period at the time of application; these range anywhere from the 31st day to six months or more after the onset of the disability. Depending on how much money you have saved, and your other resources, you can reduce your premiums by electing to wait 60 days, 90 days, or even six months before you start to receive benefit payments. Remember, though, that the first check is usually not paid until 30 days after the waiting period.

 

Length of coverage

 

By choosing a benefit term, you will elect benefits that are payable for one year, two years, five years, to age 65, or for a lifetime. Since disability benefits are designed to replace the income you would otherwise earn by working, most people do not need benefits extending beyond the working years. Electing shorter benefit periods can save premium dollars, but bear in mind that if you need this insurance at all, you probably need it most to cover a disability that permanently removes you from the workforce. A lengthy disability threatens your financial security much more than a short-term disability.

 

Keeping pace with inflation

 

For an additional premium, you can add a cost-of-living adjustment (COLA) to basic disability income coverage. This provision increases benefit payouts by a specified percentage, generally 4 to 10 percent, after each year of disability and can be important particularly during a lengthy period of total disability. While this is a relatively expensive option, it could be vital to maintaining your standard of living.

 

 

Most policies include a waiver of premium provision, so that you don’t have to pay any more premiums after you’re disabled for 90 days. Some policies offer the opportunity to buy additional disability coverage to keep pace with a rising income, without having to pass a medical examination or to submit further medical evidence of insurability.

 

What Else Do You Need To Know?

 

Selecting the level and duration of benefits is only the first step. To be sure that coverage will continue, you should ask about renewability. Most disability income insurance comes with one of two types of renewability provisions: Non-cancelable policies give you the right to continue a policy by timely payment of premiums, and the insurance company cannot change the premiums and benefits shown in the policy. Guaranteed renewable policies will be automatically renewed, with the same benefits, but the premium may be increased if it is changed for an entire class of policyholders.

 

While most individually purchased disability income policies are either non-cancelable or guaranteed renewable, other kinds do exist. Conditionally renewable policies can be declined by class, geographic area or for reasons stated in the policy other than deterioration of health. Optionally renewable or conditionally renewable policies are extended at each anniversary or premium due date if the insurance company decides to do so. (Some policies are renewable to age 75 if you are still employed full-time.)

 

In general, if you pay the premiums for an individual disability policy, payments you receive under the policy are not subject to income tax. If your employer had paid some or all of the premiums, some or all of the benefits may be taxable.

 

When you buy, consider a policy that pays disability benefits for both accident and illness. Some policies pay only for accidents, but you want to be insured for illness too. In fact, as you get older, it is more likely that you will need to be covered for an illness than for an injury.

 

Is Business Protection Available?

 

Income replacement insurance is particularly important if you own a small business. In addition to standard disability policies, some policies have such special features as:

 

•  Recovery benefits that pay after you return to work full-time, during the period in which you are reestablishing a customer or client base.

 

•  Overhead expense coverage that pays for certain office expenses.

 

•  For jointly owned businesses, a disability buy-out policy disburses funds for one partner, or the business entity, to buy a disabled partner’s share of the business.

 

•  Key-person insurance, which protects a firm against the loss of income resulting from the disability of a key employee.

 

And Remember...

 

A well-trained benefits consultant, financial counselor, or insurance agent can help. Ask about the following.

 

•  What is an adequate level of benefits, in relation to your present and future obligations?

 

•  How long of a waiting period should you select to fit your circumstances until benefits begin?

 

•  How long do you want to receive disability income should it become necessary?

 

•  What related benefits, such as partial or residual disability, are available?

 

•  Is the policy noncancelable, guaranteed renewable, or conditionally renewable?

 

•  How much coverage are you eligible for at your present salary?

 

DI Policy Checklist

 

Take into consideration that every policy may have different features. The following checklist will help you compare policies you may be considering:

 

 1.  How is disability defined? inability to perform your own job? inability to perform any job?

 

 2. Does the policy cover accidents? illness?

 

 3.  Are benefits available for total disability? for partial disability? for residual disability? only after total disability?

 

 4.  Are full benefits paid, whether or not you are able to work for loss of sight? speech? hearing? use of limbs?

 

 5.  The maximum benefit will replace what percentage of income:

 

 6.  Is the policy non-cancelable, guaranteed renewable, or conditionally renewable?

 

 7.  How long must I be disabled before premiums are waived?

 

 8.  Is there an option to buy additional coverage, without evidence of medical insurability, at a later date?

 

 9.  Does the policy offer an inflation adjustment feature: If so: what is the rate of inflation? is there a maximum?

 

A Final Word

 

Insurance policies are legal contracts. Read and compare the policies you are considering before you buy one, and make sure you understand all of the provisions. Marketing or sales literature is no substitute for the actual policy. Read the policy itself before you buy.

 

Ask for the insurance company’s ratings. The A.M. Best Company, Standard& Poor’s Corporation, and Moody’s all rate insurance companies after analyzing their financial records.

 

Ask for a summary of each policy’s benefits for an outline of coverage. Good agents and good insurance companies want you to know what you are buying.

 

Don’t be afraid to ask your insurance agent to explain anything that is unclear. If you are not satisfied with an agent’s answers, ask for someone to contact in the company itself.

 

And bear in mind: Even after you buy a policy, if you find that it doesn’t meet your needs, you generally have 10 to 30 days (this varies by company and state) to return the policy and get your money back.

 

Finally, you should know that every state has a department of insurance that regulates insurers and assists consumers. If you need more information, or if you want to register a complaint, check the government listings in your local phone book for your state’s department of insurance.

 

 

Long term care insurance, also known as LTC insurance, is typically not what most Americans consider to be a needed type of insurance. Unfortunately though, this type of thinking has strained the finances of a lot of families who unexpectedly have to care for loved ones in their better years.

 

If your insurance agent suggests long term care insurance for your insurance portfolio, you should consider the coverage. Deciding to purchase long term care insurance, whether through an insurance agent or an online insurance quote, is a good decision if you don't want to take the chance of putting your loved ones finances in a strain because they would need to take care of you in your later years.

 

This guide will help you decide if long term care insurance is a good fit for you and it will educate you on how to choose and shop for long term care insurance. So, if you are thinking about purchasing a long term care insurance policy through your local insurance agent or would like to get an online insurance quote, this guide will steer you in the right direction to find the best long term care insurance policy for you. Let's get started:

 

What Kind of Long Term Care Insurance Coverage Do You Need?

 

Good question! First, you need to understand how long term care insurance works. Considering Long Term Care Insurance is a great article that will let you know how long term care insurance works and give you the info you need to decide if you should consider long term care insurance. If after reading the article you have decided that long term care insurance is something you would like to consider you next will need to research what company you would like to obtain a quote from.

 

Choosing a Long Term Care Insurance Company

 

When you are ready to select your long term care insurance provider, besides just looking for the best insurance premium, you will want to take some time to research what insurance company you want to go with by learning about their financial strength. Another important aspect of choosing your insurance provider is knowing if and how they will use your credit score to determine your rate. Take the time to research different companies and then make a list of the providers you are interested in contacting for an insurance quote. If you are looking into a local insurance company or deciding to get an online insurance quote, here are some tools to help you research different long term care insurance companies:

 

Making the Call

 

Now that you have decided that long term care insurance is something you might want to have and you have the insurance companies that you would like to check into, it is time to make the call to get your quote. You can contact a local agent from your list of insurance companies or look online to obtain an online insurance quote. Whichever route you choose, there are some things to look for when talking to an insurance company about a long term care insurance policy. There are ways to reduce your premium costs and choices in policy types. Here are some resources:

 

Understanding Your Long Term Care Insurance Policy

 

Now that you have your insurance policy, do you understand what it means? There are some things you need to do in order to get the most out of your long term care insurance policy. Here are some steps to take to understand your insurance policy better…

 

1. Read your insurance policy.

2. Get help with understanding your insurance policy.

3. Find out what the time frame is that you have to review your policy.

4. Keep all receipts and transactions between you and the agent.

5. Document all vocal and written statements between you and your agent.

 

If You Need to Use Your Long Term Care Insurance

 

It should be a fairly simple process to use your long term care insurance if needed. The best thing you can do is to keep your policy in a place that family members can find easily so the insurance company can be contacted easily. Once the insurance company is contacted they will take you through the steps for you to receive your long term care benefits if needed. Sometimes, problems do occur and if you feel the insurance company is treating you unfairly and not covering the expenses you feel they should be then first try to settle the matter with the insurance company. If that fails, you can contact your state insurance commissioner and file a complaint. Find out more at Filing a Complaint With Your State Insurance Commissioner.