Your Guide To Medicare Part F

September 29, 2013 by Leave a Comment

One of the most expensive supplements to Medicare is the Medicare supplement plan part F. Although it is expensive, it is also extremely popular because it gives the insured the most coverage. The following article addresses how this coverage can help you get the medical treatment you need and more. Continue reading to learn everything you need to know about this supplemental plan.

The reason most people choose a supplemental plan to their Medicare is to ensure that they can receive the necessary treatment they need at a price they can afford. Supplemental plans cover the gaps in coverage; thus, many people refer to this coverage as Medigap.

Medicare Supplemental Part F may have deductibles of up to $2,000 making it one of the most expensive. However, once you have met your deductible, this insurance begins picking up where Medicare drops off.

Medicare supplement plan F offers co-insurance for Part A and B of Medicare. This insurance covers the co-insurance of Medicare Part B; however, it doesn’t cover preventive physician visits. Medigap covers up to three units of blood per year and up to 365 days in the hospital. Additionally, you should know that Medicare Plan F covers you when you are traveling out of the country. It will cover travel emergencies that arise while traveling abroad, making it perfect for the active senior.

Many insurance companies offer supplemental insurance policies for Medicare; therefore, it is important that you shop around. When comparing policies, don’t concentrate solely on the price of the coverage. Instead, look at the coverage offered along with the price. If you get the insurance and then decide that you cannot afford it, you may not be able to get the coverage again. With this type of supplemental policies, you must qualify for the coverage if you let the policy lapse.

As you can see there are several things to consider when shopping for Medicare supplemental policies. Compare prices through different insurance policies, along with deductibles and coverages before deciding on a supplemental insurance policy. When it comes to insurance, it is always better to have too much insurance than not enough insurance.

Filed Under: Health Insurance, Insurance

Life Insurance: A Decision For You And Your Family

September 24, 2013 by Leave a Comment

A very effective and loving method of caring for your family is to buy a life insurance policy that will be in effect when your pass. Many people feel that this focusing on the morbid,and death is not something that we should be thinking about, but the purchase of life insurance allows us to be very proactive in a positive way by caring for those whom we love. Without the proper life insurance, a family can be left destitute at a time when they are already grieving enough. The following lists some important points to assist you when planning for this important financial decision.

When you are planning for the amount of life insurance to purchase, you should remember to include the amount of coverage you should have for both cash needs, and recurring needs, or income. You will be calculating costs for mortgage payoffs, final expenses, educational expenses, car payoffs, and emergencies. For income, it is a safe policy to calculate for about 70% of current income because you will not be paying taxes on the life insurance income, if it is set up properly. If you want a good estimate of how all of this works out, a short way of doing this would be to take your current salary and multiply it by 8, and you will be pretty close to a figure that will make sense.

Be sure that you ask the right questions when visiting with your life insurance agent. Find out if you are buying term life insurance, if it is convertible or not, and which of the best life insurance companies he works with. Term runs out eventually, but you may want to continue some or all of the coverage later. Convertibility guarantees that possibility. Find out if you can cancel the policy, and if so what are the ramifications. Are there any exclusions?

Find out all you can about permanent life insurance. It is the kind that creates a cash value in the policy. Compare the growth in the policy with other investments. Perhaps that could be a way to help save for college or even retirement. In any case, learn all you can and stay within a budget amount that you can afford, and you will be better able to keep it in force. Be glad that you have taken this step, for if something were to happen, your family will be able to stay in their own financial world.

Filed Under: Insurance, Life Insurance

Understanding Your Credit Score

April 5, 2013 by Leave a Comment

An individual’s credit score is one of the most misunderstood things I have ever found in personal finance, yet it is one of the most vital things to understand to stay in good financial health. Believe it or not, many people think that things like income and paying your utilities on time impact your credit score. They do not. Here are 5 things that do impact your credit.

1)    Payment history. This accounts for 35% of your credit score. It has a bigger impact than any other single factor. If you pay your creditors on time, this will have a big impact on your score. If you do not, you are likely to see your credit score plummet. If you do have any late payments, the best thing to do is stay current. The longer you pay on time, the older those late or missed payments become and the less impactful they will be on your credit.

2)    Debt. Your debt makes up 30% of your score. Nearly the same as your payment history. Some debt is okay, but too much can hurt you. Credit card debt is especially impactful. High credit card balances, maxed out credit cards, and too many accounts with balances can all drive your score downward.

3)    Length of credit history. This accounts for 15% of your score. It takes a look at your track record of having credit accounts and managing them well. The longer you have had credit, the better. Recently opened accounts or little to no history can have a negative effect on your score. The only thing that can fix this is time.

4)    New credit. This makes up 10% of your score. Every time you put in an application for a new credit account, an inquiry will post to your credit report showing your activity. Excessive shopping for credit and too many inquiries on your credit report in too short of a time period will hurt your score. Inquiries stay on your credit report for 2 years, but only those in the last 12 months are counted towards your credit score.

5)    Credit mix. The type of credit you have makes up the final 10% of your score. Having a healthy mix of credit cards, auto loans, and mortgages will help your score. Having too many or only one type of account can actually hurt you in this category. Diversity is beneficial.

These are the primary factors impacting your credit score.

Filed Under: Credit

Medicare And Medicare Supplemental Insurance

January 30, 2013 by Leave a Comment

If you know even a little bit about insurance, you realize that insurance carriers set their pricing based on the perceived risk of who or what they are insuring. The higher the chances that the beneficiary will need to make a claim, the higher the insurance premium is going to be set at. Logically then, it only makes sense that insurance companies would want to charge a higher premium to seniors for health insurance. After all, are we not more likely to need healthcare services at a higher frequency in our senior years than in our younger days? This is where the idea of Medicare came from. It was created to help senior citizens in the United States acquire health insurance at a reasonable price. Without it, many seniors would be unable to afford health insurance.

Although Medicare does help alleviate much of the health care costs seniors would face, it does not provide comprehensive coverage. There are many areas where coverage is not provided. These are called “gaps”. To further assist seniors, the government also created Medicare supplemental insurance, also widely known as Medigap insurance.

Medicare is administered and issued by the government, while Medigap plans are overseen by state governments, but issued by private insurers. Today, every state except for Minnesota, Wisconsin, and Massachusetts mandates that insurance carriers can provide any combination of 10 standardized plans. That is they can offer one, two, or all of the plans if they choose to. The 10 standardized plans offer the same coverage from state to state. An individual who purchases one of the available California Medicare supplements is going to have the exact same health coverage as someone purchasing the same Florida Medicare supplement.

Because all of the plans are standardized, it is one of the rare cases in the insurance business where a consumer can actually compare apples to apples when they receive quotes from different carriers. The only decision a consumer has to make is based on price and the carrier’s reputation for service.

The states of Minnesota, Wisconsin, and Massachusetts have elected to standardize their own versions of the Medigap plans. They are similar, but not exactly the same as the 10 plans standardized across the rest of the United States.

The cost of the plans will be based on the age, gender, overall health, and location of the consumer purchasing the coverage. Seniors just turning 65 or signing up for Medicare Part B for the first time can enter into a plan during the Open Enrollment. For these 6 months, individuals have the opportunity to enroll in a Medicare supplemental insurance plan without any type of health screening. This means that even if an individual has a serious health condition or has a lifestyle that normally would cause an insurance provider to raise their monthly premium to extend health coverage, the individual is going to pay the same premium amount for coverage that a perfectly healthy person would be charged. A smoker, for example, is going to find it beneficial to enroll during this time. If they do not, they may face paying a much higher premium or not being extended coverage at all. Insurance providers must offer supplemental insurance coverage and cannot reject anyone for their health conditions during Open Enrollment.

With the 10 plans available to combine with Traditional Medicare coverage, a person can have just a few of their coverage gaps covered or nearly all of them covered and not have to worry about out-of-pocket expenses for health care.

Filed Under: Health Insurance

Overdraft Protection, but Protecting Who?

January 16, 2013 by Leave a Comment

Question:

Dear Bill,

I recently opened a new checking account. When I did so the banker asked me, actually strongly encouraged me, to sign up for what they called “overdraft protection”. The way he described it was that if I was out to eat and did not realize that there was not enough money in my bank account to cover the mean, by default, my debit card would be declined. However, if I opted into the overdraft protection, the bank would allow the purchase to go through, and I would be charged a $35 fee.

As I declined the service, I pointed out to him that would also mean if I bought a $2 pack of gum at a convenience score with less than $2 in my account, that $2 pack of gum is now $37.

He seemed rather shocked, and even annoyed, that I pointed out the absurdity of this “service”. He continually argued that the bank was offering it as a favor to me and other customers.

Am I missing something here? Is this something I should have looked at harder?

Sincerely,

Thanks, But No Thanks

Answer:

Dear Thanks, But No Thanks,

In my opinion, you made a good decision. In the wake of the financial fallout a few years ago, new legislation was passed in 2010 that changed how overdrafts were handled. Before this new legislation, almost all banks enrolled customers into “overdraft protection” automatically. They would allow customers to spend more money than what was in their accounts. Each transaction in the negative would be charged a fee ranging from $24-40 at most institutions.

Your example of the $2 pack of chewing gum, while it may seem humorous, was all too real. When I worked for one of the major banks, we saw customers all the time with not just one such transaction, but many such transactions. Racking up $250 or more in overdraft fees in just a few days was quite common. Now add in there the number of student age customers that had no idea how to balance their checking account and rarely kept track of their balance, and you can just imagine how much money banks were making off of these fees.

To sweeten the pot for themselves, many banks also would post debits daily in order from largest to highest. The way they justified this was by saying that larger payments were probably more important things such as a mortgage, rent, or car payment, so it was more important that those things got paid instead of rejected. In reality what it did was allow the banks to collect even more in fees.

Imagine a customer with a balance of $1275. Over the weekend, their mortgage payment ($975), a purchase at the grocery store ($165), a little shopping for some clothes ($125), a fill up at the gas station ($43), dinner with friends ($29), a movie afterwards ($13), and a stop by the local coffee shop on the way to work ($8) all come through the account. Under the system of posting from highest to lowest and assuming their bank charges $35 per overdraft, they were looking at $140 in overdraft fees. If they posted from lowest to highest, there would be one overdraft, at $35.

After the new legislation, customers opening new accounts are not enrolled into overdraft protection by default. A customer has to request the service, and even sign a form saying in writing that they were requesting it. The order in which items are posted to an account and what can be charged an overdraft fee were also regulated.

Bankers will use that story about being at a restaurant and your card is rejected (even if you balance your account regularly, everyone can make a mistake from time to time) and you have no other method to pay the bill. Sure this can be embarrassing, but the reality is that they are just trying to get you to opt in because this was a huge loss of revenue for banking institutions. They are trying to recoup as much of it as they can. There are better, and cheaper solutions.

One option is to have a second account in which you keep a small balance of $50-100 that links to your primary account just for such a situation. You can also open a credit card to use just for emergencies. Even at some of the ridiculous interest rates that some credit cards charge, this is a far cheaper option than allowing the bank to overdraw your account.

I see no reason for anyone to opt into this service. It is simply a money grab by banks.

Filed Under: Banking
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