After the Honeymoon: Insurance Advice for Newlyweds

 

Want to demonstrate your true love for your new spouse? Take out an insurance policy. Compared to planning your wedding and honeymoon, buying insurance may not seem very romantic but, in reality, coverage that protects you and your spouse against life’s unforeseen risks is an important part of planning your life together. The following provides an overview of the types of insurance protection you should consider.

 

Life Insurance – to do or not to do

Newlyweds with children from a previous marriage and couples with only one working spouse should seriously consider purchasing life insurance for both spouses. Young married couples who both work and have no children may not need life insurance now. However, most CPAs agree that there are advantages to purchasing life insurance early in life. Buying coverage while you’re young and healthy gives you the opportunity to “lock in” favorable rates.

 

For most newlyweds, term insurance is the best way to get adequate coverage at an affordable cost. Expect to pay more for

permanent life insurance, such as whole life, which offers an investment component in addition to the death benefit.

 

If you already have life insurance, contact your agent to have the beneficiary named on your policies changed to your new spouse.

 

Disability Insurance – better safe than sorry

As important as life insurance is, statistically, young married couples are more likely to be disabled than to die prematurely. That’s why disability insurance is so important. Disability insurance provides you with a monthly income in the event an accident, illness, or injury leaves you unable to work. You may be able to purchase long-term disability insurance from your employer.  If not, you can buy it on your own. Compare policies and select the one that meets your needs at a premium you can afford. If finances are tight, you can do reduce the cost by extending the waiting period before coverage kicks in.

 

HEALTH INSURANCE – DON’T BE WITHOUT IT

Increased health care costs make it more critical than ever for newlyweds to consolidate health insurance so they are not paying for duplicate coverage. If you and your spouse both have health insurance through your employers, compare your coverage and costs to determine which plan best fits your circumstances and finances.

 

Auto insurance – cheaper for the wedded

You’ll also want to review your auto coverage. If you each have a car registered in your own name, combining them in one policy may qualify you for a multi-car discount from the insurer. Since the policy rates for married drivers are usually lower than for single policyholders, be sure to notify your agent of your marriage.

 

Home or renter’s insurance

Couples who rent should consider obtaining renter’s insurance to cover the value of their possessions. As you and your new spouse combine households, you’ll want to drop one policy, making sure that the remaining one covers both of your possessions. A renter’s policy also includes liability coverage. Your renter’s policy should become effective as soon as you move in, particularly if you are not living together yet.

 

The main purpose of homeowner’s insurance is to protect your home and your personal property from fire, theft, and similar perils. In addition, homeowner’s insurance, like renter’s policies, provides liability coverage as well. Most lenders require homeowner’s insurance in order to get a mortgage.

 

Keep in mind that since most homeowner’s and renter’s policies have a limit on jewelry coverage, you may need to add a rider to your policy to cover expensive engagement and wedding rings.

 

SHOP AROUND FOR THE BEST COVERAGE

Assessing and addressing your insurance needs early on will help get your marriage off on the right financial footing. To get started, you should carefully review your financial situation and objectives.

Health insurance cheap?   To learn more about the accounts and to find MSA providers, check the website run by the Council for Affordable Health Insurance (www.cahi.org). Even if the bill doesn’t pass, MSA holders can continue their coverage as long as they qualify. Although the law authorizing MSAs is set to expire next year, supporters in Congress have introduced legislation to reauthorize them.

This could be a big plus for the employee or solo worker who uses few medical services over the years. The unused cash grows untaxed, and the employee can withdraw the balance tax-free at retirement. Of course, since the accounts must be replenished annually, cash in the trust account may grow to cover the gap. In the event of unexpectedly high medical expenses, the employee must dig into his own pocket to cover any gap between the insurance policy deductible and the amount in the savings account. But MSAs pose a financial risk.

(In comparison, deductibles on a traditional major-medical policy typically range from about $200 for singles to $1,000 for families.) No matter who funds the account, the money in it belongs to the employee. Not surprisingly, the second option has proved unpopular with some workers because deductibles for MSA insurance policies range from $1,550 to $2,300 for singles and $3,050 to $4,600 for families. If you have employees, you can put in the money or require them to cough up the cash. If you work by yourself, you’ll have to fund your own account.

However, up to 65% of the amount of the deductible (75% for families) must be deposited in a tax-deductible trust account to pay for medical services until the insurance kicks in. Medical savings accounts help self-employed individuals and business owners with fewer than 50 workers shave premium costs by 50% or more by purchasing coverage with a high deductible. Consider the pros and cons of medical savings accounts (MSAs). The website run by Georgetown University’s Institute for Health Care Research and Policy (www .georgetown.edu/research/ihcrp/hipaa) outlines protections for individuals and small businesses in each state.

Some state regulations, such as uniform premium rates, help keep down costs, but specifics vary according to your location. HIPAA doesn’t limit premium costs, but if you’re self-employed you can deduct 60% of the premiums on your federal income taxes without meeting the 7.5% adjusted gross income (AGI) threshold that applies to other medical expenses. Be sure to apply for coverage before your policy lapses, though, since HIPAA requires that you obtain health insurance within 63 days after your COBRA coverage expires. However, insurers can limit the number of choices they offer. HIPAA provides that individuals who have had group coverage for at least 18 months and aren’t eligible for other insurance, such as a spouse’s plan, can’t be denied insurance because of medical problems.

(For more details, see Health Benefits under COBRA, published by the Department of Labor and available on the Web at www.dol.gov/dol/pwba or by calling 800-998-7542.) Even when your COBRA coverage runs out, you can’t be refused health insurance, thanks to the federal Health Insurance Portability and Accountability Act of 1996. If you qualify for COBRA, your employer must notify you of your option to continue coverage, and you, in turn, must act within 60 days. For those over age 50 or with health problems, it’s likely a better value. You may experience sticker shock, especially if the plan is generous, but the group rate is likely to be lower than you’ll find on your own for the same coverage.

This law gives you the right to stay on your current plan so long as you pay the entire premium, plus a 2% administrative fee. As long as your employer has 20 workers or more, you’re covered by the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985. If you’re about to leave a job with health insurance to become self-employed, you can probably keep your current coverage for at least 18 months. SEE IF YOU’RE ELIGIBLE FOR COBRA.

To learn more about purchasing co-ops and to find out if there is one in your area, check the website run by the nonprofit Institute for Health Policy Solutions (www.ihps.org). Co-op rules require you to subsidize your employees, usually paying an amount equal to at least 50% of the lowest-priced plan. To join a co-op, you will have to pay a membership fee (generally $100 or less). However, explains Rick Curtis, president of the Institute for Health Policy Solutions in Washington, D.C., “the main attraction of these programs is not cost savings, but value and convenience.” Co-ops offer a menu of insurance plans with standardized benefits, making comparisons easy and allowing employers to provide their workers with a choice of options. Co-ops offer solid coverage at a decent price.

In general, purchasing co-ops serve businesses with two to 50 employees, though some admit sole practitioners or larger employers as well. JOIN A PURCHASING CO-OP. Finally, we’ve assessed a controversial small business insurance product that self-employed individuals and small business owners should approach with caution. The first one is targeted primarily to small firms; the second, to individuals launching a solo venture.

Here are two strategies that can make shopping for health insurance easier. Plus, where group purchasing is impossible, small employers find it impractical–and expensive–to offer a choice of health plans. And since coverage varies widely among plans, it’s almost impossible to comparison shop for the best value. For companies with more than 200 workers, premiums increased just 3.3% to an average of $462 for family coverage. The Kaiser study reports that premiums for firms with fewer than 10 workers jumped 8% in 1998, averaging $520 a month for family coverage.

One reason for the coverage gap may be that small businesses are often stuck with the highest prices. Roughly 65% of unincorporated solo workers and 81% of incorporated ones carry insurance, according to a 1999 study by the Kaiser Family Foundation. Self-employed individuals are somewhat more likely to buy coverage. That may be why the Employee Benefit Research Institute reports that only 54% of businesses with fewer than 200 employees offer health insurance. But for many small business owners and self-employed individuals, buying health insurance presents several hurdles.

Jost is fortunate enough to live in an area where small business owners have banded together to obtain some of the buying advantages of large employers. It’s good coverage and that gives my employees good feelings about their work,” he says. “I’m glad to do it. Jost picks up the entire cost.

The monthly premium for each employee ranges from $187 to $373, depending on the insurer, the type of plan and whether the employee needs individual or family coverage. Thanks to his membership in the Colorado Health Care Purchasing Alliance, Jost can give his small staff a choice of four insurers, each offering two health plans. “The best workers won’t settle for a job without these benefits,” insists Jost, president of American Data Group, a $1.3 million software-design firm in Denver.  To Mark Jost, it’s just good business sense to provide health insurance to his five employees.

It’s a familiar problem for businesses of almost any size: to attract and keep the best employees, you need to provide benefits. But benefits can be a headache to manage, and the cost of premiums can take a big chunk out of your bottom line. What’s a business owner to do?

Turns out, your options aren’t as limited as you might think. (more…)

How to get started on your search for an individual health insurance policy, and what to look for in your policy.

Choice and competition work in health care. Unfortunately, most of us aren't lucky enough to have access to a market driven and shaped by them. This year employer health-care costs have risen 7.7 percent, according to a Kaiser Family Foundation survey, more than twice the rate of inflation or workers' wage growth. This is lower than it's been in recent years (costs rose almost 14 percent in 2003). But health costs are still high - and likely will go even higher next year. (more...)

It may cost millions to provide government health insurance to poor children - but it's more expensive not to cover them, a new study asserts. In fact, the lack of insurance costs society an annual $2,121 more in health care costs per child, it found. Published in this month's Pediatrics journal, the research showed that cutting back on subsidized insurance programs forces poor children to bypass doctors' offices for more expensive emergency room care and leads to longer hospital stays. While the findings are based on children in California, the results apply to Utah, said Richard Butler, the Brigham Young University professor of economics who co-authored the report. "It turns out [restricting insurance coverage] is a false savings. The total cost to society increases when they're disenrolled," Butler said. Those in the health-care industry have generally known that poor, uninsured children are more likely to go to an emergency room - where they can't be turned away for lack of coverage - and that they tend to stay in hospitals longer because their conditions are worse by the time they see a doctor.

As Cover the Uninsured Week approaches, a new Commonwealth Fund report by researchers at the National Women’s Law Center finds that even women with health insurance coverage are more likely than insured men to go without needed health care because of costs. Also, a higher percentage of women than men struggle with medical bills.

The report, Women and Health Coverage: The Affordability Gap, by Elizabeth M. Patchias and Judith G. Waxman of the National Women’s Law Center finds that women are at a disadvantage because they have greater health care needs and lower incomes than men. More specifically, the report finds that 38% of women are struggling with medical bills compared with 29% of men. And, the high cost of health care services and premiums is forcing many women, even women with health insurance, to go without needed care. In fact, 33% of insured women and 68% of uninsured women don’t get the health care they need because they can’t afford it. In contrast, 23% of insured and 49% of uninsured men are avoiding care because of cost. Further, 16% of women are underinsured, meaning they have high out-of-pocket costs compared to their income, while only 9% of men are underinsured.

"Women are more likely than men to go without needed health care services because of costs, yet they still have higher out-of-pocket expenses. This disparity exists for both insured and uninsured women," said Waxman, vice president for Health and Reproductive Rights at the National Women’s Law Center. "As policymakers and advocates explore how to expand and improve health coverage, they should ensure that any proposal provides comprehensive benefits and low cost-sharing."

Other factors contribute to this gender gap in health care coverage and access: women are slightly more likely than men to purchase coverage in the individual insurance market which is often more expensive and less comprehensive than employer coverage. Women are also more likely than men to take prescription drugs.

"These findings show that comprehensive health care coverage that doesn’t require high out-of-pocket costs is vital to ensuring that women get the care they need to be healthy," said Sara Collins, assistant vice president for the Program on the Future of Health Insurance at The Commonwealth Fund. "As policymakers consider health care reform initiatives, they should consider plan designs that will result in meaningful, affordable, and equitable access to health care for everyone."