Insurance World

1. Health Savings Accounts (HSA)

This is a strategy where the employer buys a health plan with a large deductible. Typically, these are groups that are coming from a plan with a very low deductible. Since the higher deductible plans are usually much less money, the money saved is used to put into the employee’s “Health Savings Account.” The money in this account is used by the employee to pay qualified medical expenses. If it’s not used, the money rolls over to the next year. The money belongs to the employee, even if they leave the company.

2. Health Reimbursement Arrangements (HRA)

This is very similar to the HSA above but a portion of the qualified medical expenses not covered by the insurance is “pledged” by the employer, that is, the employer only spends the money, if there is a portion of the bill not paid by the insurance. This would be more favorable to the employer since on an HSA the money goes to the employee, whether there are claims or not. The problem with HRAs is that there are very few carriers that offer them right now.

3. Medical Reimbursement Accounts

This is very similar to HRAs above and extremely flexible. It’s otherwise known as partial self-funding. Employer buys a larger deductible and if the employee uses up that deductible, the employer pays all or a portion of it, depending on how a pre-arranged agreement is written. This goes for other expenses not paid by the insurance. The idea is that the employer self insures the typically smaller expenses with their own cash, (presumably, the savings in premium dollars from going to a higher deductible.) The downside to this is that many carriers prohibit the use of this strategy with their plans. It can be very effective but make sure you use an experienced third party administrator as there may be some legal and tax documentation required. Otherwise known as Section 105.

4. Kaiser.

More and more groups are moving to Kaiser. It is typically, benefit for benefit, less money than just about every other plan. Kaiser is spending billions on the future and their quality control is promising.

5. Offering Blue Cross and Kaiser side by side. Blue Cross has a new program where only five employees need to enroll with Blue Cross. The rest can be with Kaiser. This is a ground breaking opportunity in flexibility.

6. Blue Cross Elect. Blue Cross has a portfolio called Elect with 16 plans in it comprised of HMOs, PPOs, and an EPO plan. Each of these plans is priced from low premiums up to a much higher premium.

The beauty of this program is that Blue Cross allows the employer to “define” how much premium they are willing to pay towards an employee’s cost. For example, Blue Cross offers a $10, $20, $25, $30, $35, and a $40 copay PPO plan. The $10 plan is the most expensive of this group.

After viewing all of the premiums for the various plans, the employer can establish, arbitrarily, which plan they are willing to pay, say the employee only premium for. In this case, let’s say it’s the $25 copay plan. The employee can buy the $25 copay plan and it doesn’t cost them anything. However, if they want the more expensive $10 copay plan, the employer would payroll deduct the difference in premium costs.

Let’s say they have dependents they want to cover but the employer only wants to pay for the employee only. The employee could take the lesser expensive $40 copay plan, and use a little bit of the savings to help them with the costs of adding their dependents.

This has been a highly successful program because it gives the employees a greater number of choices, helping the employees be more definitive in their costs and needs, and at the same time, allows the employer to more efficiently define their costs.

This information is time sensitive and can change at anytime. If you have a question or need more information, please contact me at mail@thestrategyguide.com. –Todd Rich

Todd Rich is an expert on California Small Group Health Insurance Plans and has written four books on the subject. To learn more about Todd and his books, please visit www.TheStrategyGuide.com/ezines

Buying insurance has become a necessity in today’s world. But a good insurance policy doesn’t come cheap. The premiums you pay will increase as you extend the duration of the policy. Hence whole life policies are more expensive than term insurance. This is because a whole life policy covers you for the entire life while a term insurance policy will offer cover only for the term decided while signing up for the policy. A term insurance policy is a cheaper and simpler way to insure your partner’s and your family’s financial future if you die. Here are some useful tips on buying the cheapest term insurance policy.

Why should I buy life insurance?

You should buy term life insurance if you have a mortgage or dependants. In the unfortunate event of death, the insurance will pay off the mortgage, thus providing shelter to your family, who in other circumstances would have been left homeless.

What should the term of my term life insurance be?

The duration of your term insurance should equate the duration of the mortgage. This ensures that if you die, it will clear off your debts so that your family has a roof over its head.

Why should I buy term insurance?

With plenty of insurance policies flooding the market, it becomes confusing for a layman to find out the right policy meeting your needs. Besides, buying complex policies will force you to pay higher premium. Term insurance is a simple and cheap policy that pays a certain amount entirely on your death. As there is no investment factor included in the policy, you do not get anything if you are alive when the policy expires. This means the insurer cannot charge you heavily for this policy, making it the cheapest policy in the market.

How should I buy a term insurance?

Due to progress made in medical science, the quality of our life has increased. This has brought down the cost of insurance premium by 40%. If you are paying the premium at the old rate, negotiate with your insurer or look around for a new one. Get quotes from various insurers before committing yourself. This is because there is a vast amount of difference between various policies. Though you can buy a policy from a physical entity like bank or an insurance broker, internet offers the fastest and simplest way to get the insurance. You can get online quote instantly and understand the premium you will have to pay. Quotes are just an estimation of the premium you will pay. The actual premium will be decided once you have submitted the application form. Insurer will consider various factors like height, weight, age, sex, smoking, presence of diseases and other factors before deciding the premium. If you are unhappy with the premium, you can terminate the policy.