Cheaper Health Insurance – Three Tips to Help You Find the Right Health Cover

Insurance services changes rates as the charge for treatments goes up. It’s very important for individuals to have the right cover or else you may see yourself turned away from the hospital or clinics instead of being cured or treated and could find yourself becoming seriously ill.

The government wants to fix the problem this country has with health insurance services. They want everyone to have the insurance cover that they need, unfortunately some people cannot afford it and many others think they do not need it, until they find they do need it.

This is why large companies offer cheap discounts to get into the business and even to save you a bunch of money. Here are the things to consider making sure that the health cover will be the best for you and your family and so you do not end up taking a risk with your health.

1. Do not expect to get the best quote by checking the phone directory. You may never get the best from the phone. People that are in the business know how get you to take the more expensive policies and will let you sign up for a policy at a high price or with lower cover.

2. Insurance rates are like water flowing in the river, it keeps on moving. The price keeps on changing and going higher. So if you find a cheaper health insurance with a quality provider grab the opportunity before the price goes up.

3. If you get a cheap price on your insurance don’t expect it would be the same price after one year when you will begin renewing it. This is where insurance companies make money. When people fall into the trap of thinking that because it was cheap last year it will be cheap next year, even though the price has risen.

With the country experiencing recession the best place for finding cheaper insurance is the internet. You will find different companies that offer lots of benefits or cheap prices or both.

Wills, Trusts and Durable Powers of Attorney

1. California Law

This document discusses California law only. Each state has its own laws for dealing with wills, trusts and powers of attorney.

2. Durable Power of Attorney for Finances

a. Durable powers of attorney for finances allow someone else to handle your finances for you. They come in two basic types:

i. A “springing” durable power of attorney allows your agent to handle your financial affairs (such as paying bills) if you become incapacitated.

(1) If you regain capacity, your agent loses this power – unless and until you become incapacitated again.

ii. An “immediate” durable power of attorney goes into effect immediately, regardless of whether you are incapacitated or not.

(1) This type of power of attorney stays in effect until a specified date is reached, a specified event occurs, or the person who made it revokes it.

(2) It is often used when a person is losing capacity or when the maker is going to be out of the country for an extended period of time.

b. If you don’t have a durable power of attorney for finances and you become incapacitated, often the only thing your family (or friends) can do is go to court and obtain a conservatorship. This can take months and is very expensive.

c. Frequently your spouse (or partner) is your primary agent, and then adult children or friends are the successor agents in case your primary (or subsequent) agent is unable (due to incapacity, etc.) or unwilling to act on your behalf.

d. Powers of attorney expire on the death of the principal (the person giving the power of attorney) – so they cannot be used in place of a will or trust.

3. Advanced Health Care Directive

a. In California, this used to be known as a durable power of attorney for healthcare.

b. This is designed to allow your agent to make health-care decisions for you if you are incapacitated.

c. Unlike with a power of attorney for finances, an advanced health care directive cannot be immediate; instead it must be springing. This makes sense: if the principal has capacity, he/she should be making his/her own health decisions.

d. An Advanced Health Care Directive also:

i. Allows your agent to have access to your medical records.

ii. Gives your agent priority over anyone else in making health decisions for you.

iii. Allows you to express your desire regarding life-sustaining medical treatment. For example, many people have the document state something like the following:

It is my express wish and expectation that I not receive life-prolonging medical treatment that merely delays inevitable death if the burdens of treatment outweigh the anticipated benefits.

iv. Allows you to express your desire regarding organ donations, autopsies and disposition of your remains. (This same information should be placed in the will and/or the trust, since powers of attorney expire on the death of the principal.)

4. Capacity Issues

a. Frequently springing durable powers of attorney for finances and advanced health care directives state that two physicians must certify in writing that the principal is incapacitated. Often it’s difficult to obtain this, since physicians are concerned about liability.

b. One alternative is say something like the following:

For purposes of this instrument, I shall be deemed “incapacitated” if certified in writing by any two people falling within the following categories:

My spouse, if any.

Any successor trustee to any revocable trust created by me.

Any actual or potential agent specified in this power of attorney.

Any actual or potential executor specified in my will.

The following named persons:

Any licensed physician not related by blood or marriage me nor to any beneficiaries of any trust or will created by me.

5. Unified Federal Gift and Estate Tax Credit

a. There is a Unified Credit against federal gift and estate taxes as follows (based on the net estate):

Year of Death

Unified Credit

(net estate)

2002-2003

$1,000,000

2004-2005

$1,500,000

2006-2008

$2,000,000

2009

$3,500,000

2010

Unlimited

2011

$1,000,000

b. Individual retirement accounts are counted as part of the net estate.

i. Where an irrevocable trust holds an insurance policy and is specifically prohibited from exercising any power normally conferred on the owner of a policy, the proceeds of the policy are not counted as part of the estate.

c. Life insurance proceeds are counted toward the net estate if either i) they are received by the estate or ii) they are received by other beneficiaries and the deceased had any “incidents of ownership” in the policy.

d. Note the drop in the Unified Credit between 2010 and 2011. Everyone assumes that Congress will do something about this before 2011, although at the moment some wags refer to 2010 as “throw momma from the train” year.

6. Agreements Between Spouses Regarding the Status of Property

a. Sometimes spouses, as part of estate planning, want to confirm in writing that certain property is community property or separate property.

b. Such agreements often provide that joint tenancies (which have a right of survivorship) are really community property. This creates a new income tax basis for both halves of the community property on the death of either spouse; joint tenancy assets generally receive a new basis only for the decedent’s one-half share.

i. On the other hand, with large estates (in excess of $1.5 million), joint tenancy with right of survivorship may avoid estate taxes since the property does not become part of the deceased’s estate. This, though, has to be weighed against not receiving a new basis for one-half of the property.

c. Note that since July 1, 2001, the community interest of a husband and wife may be held as community property with right of survivorship. This provides the best of both worlds.

d. As of January 1, 2005, community property law also applies to domestic partners who have registered with the California Secretary of State.

i. Registration with counties, cities or employers does not count for this purpose.

ii. Those who have already registered do not have to re-register unless one of the pair filed to terminate the registration at some point.

iii. The tax benefits of community property, though, will only apply with respect to California taxes, not federal taxes.

7. Reason to Have at Least a Will

a. If you do not have at least a will, then California law determines who receives your estate. This may not be what you want to have happen.

b. Where someone dies without a will, California will generally distribute the estate as follows:

i. If there is a surviving spouse, that spouse receives:

(1) All community property.

(2) As to the decedent’s separate property (if any):

(a) All of it if the decedent did not leave any surviving issue, parent, brother, sister, or issue of a deceased brother or sister.

(b) One half if the decedent has only one child or has one deceased child with issue.

(c) One half if the decedent leaves no issue but leaves a parent or parents – or leaves their issue or the issue of either of them.

(d) One-third if the decedent leaves more than one child, leaves one child and the issue of one or more deceased children, or leaves issue of two or more deceased children.

ii. The rest goes first to the decedent’s surviving children or, if any of them are deceased, to the children’s surviving issue.

iii. If the decedent has no surviving children or deceased children with surviving issue, the rest goes to:

(1) The decedent’s parents, if living.

(2) The decedent’s brothers and sisters (or their issue if any of them are deceased).

8. Reasons to Have a Trust

a. Normally, unless a trust has been created, an estate must be probated.

i. If, though, the gross value of the estate is $100,000 or less (without subtracting any liens, debts, deeds of trust, etc.), there are simple procedures for distributing an estate without using formal probate proceedings.

ii. In addition, all property that a surviving spouse is entitled to receive may be handled with simplified procedures.

iii. Even in these two cases, probate still may be appropriate, though, if there are strained family relations, complex investments, large or complex claims by creditors, or an interest in a good-sized business.

b. There are two problems with probate:

i. It often takes 8 to 10 months. (It can take even longer.) During that time, if the family needs money from the estate, a motion has to be brought and a court order obtained. In contrast, with a trust, there is no probate and the beneficiaries receive the money immediately.

ii. Probate is expensive. Attorneys’ fees are set as follows and are based on the gross estate, meaning that there is no subtraction for any liens, debts, deeds of trust, etc.:

(1) Four percent on the first one hundred thousand dollars ($100,000).

(2) Three percent on the next one hundred thousand dollars ($100,000).

(3) Two percent on the next eight hundred thousand dollars ($800,000).

(4) One percent on the next nine million dollars ($9,000,000).

(5) One-half of 1 percent on the next fifteen million dollars ($15,000,000).

(6) For all amounts above twenty-five million dollars ($25,000,000), a reasonable amount to be determined by the court.

For example, if your estate is a house worth $700,000, then the probate fees for the attorney will be $17,000 ($4,000 + $3,000 + $10,000) – regardless of the size of any loans against the property.

iii. The executor of a will is also entitled to statutory fees, although the executor can waive those fees if he/she wishes (and family members often do).

c. A trust can also be used for some tax planning.

d. A revocable trust can be set up to create, upon the first spouse’s death, a “marital deduction trust” (which is usually either a QTIP Trust or a Life Estate with Power of Appointment Trust) and a “credit shelter trust” (also known as a Remainder Trust, B Trust, or Bypass Trust). The advantage of doing this is that it effectively doubles the Unified Credit.

e. Complex estates (basically those where the net value of the estate is at least twice the Unified Credit for spouses and equal to the Unified Credit for singles) may also use various irrevocable trusts, certain charitable gifts, generation-skipping trusts, etc.

i. One example is an irrevocable insurance trust, where an irrevocable trust is made the beneficiary of life insurance policies.

(1) If insurance is owned by an irrevocable trust, the insured should not serve as trustee.

ii. Another example is a charitable remainder trust: donating a highly appreciated piece of real property such as a residence to a charity – and receiving a charitable donation – but retaining the right to remain there for life.

9. Revocable Trust Assets

a. For a trust to be effective, most major assets have to be transferred to the trust so that the trust owns them.

i. With real estate, this means that a deed has to be prepared transferring title to the trust, and then the deed filed with the County Recorder’s Office.

ii. With stock brokerage accounts, the brokerage company’s forms must be completed. Often the signature has to be confirmed (witnessed) by stock broker.

iii. With savings accounts, the bank’s forms must be completed.

iv. It’s usually more trouble than it’s worth to put cars (unless they are extremely valuable) or day-to-day checking accounts into the trust.

v. Personal property (jewelry, furniture, artwork, etc.) can be placed in the trust just by mentioning them correctly in the trust document(s).

vi. Title is generally transferred to the trust by designating the owner along the following lines: “John and Mary Smith, Trustees of the 2005 Smith Family Trust”.

b. Ownership of retirement accounts (IRA’s, 401(k)’s, Keogh’s) generally should not be transferred to the trust, because doing so will trigger adverse tax consequences.

10. Beneficiary Designations

a. Certain items – the proceeds of life insurance policies and survivor rights in retirement accounts – usually are not governed by the provisions of a trust or will, since they are contractual arrangements. Instead, one designates the beneficiaries by completing the forms provided when the life insurance policy is taken out or the retirement account is created.

b. Generally, you can change the beneficiaries at any time by filing out the proper forms.

i. One exception is with retirement plans. With these, you normally must make your spouse the primary beneficiary unless your spouse signs a written waiver.

c. The beneficiaries of a life insurance policy generally receive the proceeds free of federal income tax. As noted previously, though, the amount of the proceeds will count toward the net estate for purposes of the Unified Credit if the insured retained any “incidents of ownership”.

d. Basically, the only time married individuals should not name each other as primary beneficiaries on life insurance policies and retirement accounts is when their estates (including individually owned life insurance benefits) exceed the Unified Credit (or twice the Unified Credit, if they have the proper type of trust) and would trigger estate taxes. (As noted before, money that survivors receive from individual retirement accounts counts towards the net estate for purposes of the Unified Credit.)

i. An exception is when the surviving spouse – perhaps due to incapacity, ill health or lack of experience in financial matters — may not have the ability to manage the money. In that case it may be better to designate a trust as the recipient of the life insurance proceeds and survivor benefits of retirement plans.

e. While spouses who are designated as beneficiaries of retirement plans are usually eligible for a tax-free transfer to an individual retirement account or another pension plan, non-spouse beneficiaries are not.

i. When the retirement funds are not rolled over, there is income tax, since any time money comes out of a retirement account there is tax.

ii. On the other hand, retirement plan companies can now spread the retirement plan distributions over the life of the beneficiary – minimizing the income-tax impact. As a result, the tax issue here is much less of a problem than before. Contact your company for details.

f. In any case, contingent, secondary beneficiaries should be named. Otherwise the money may wind up being distributed according to the terms of the trust or will.

i. Naming minor children as beneficiaries may be a problem, since the money would likely have to be held by a court-appointed guardian. To avoid this, a trust for minors can be named as a contingent beneficiary.

ii. Another problem is that if you simply name your children as beneficiaries and one predeceases you, that child’s children will not receive any money. Again, having a trust named as a contingent beneficiary can avoid this problem.

11. Family Limited Partnerships and Family LLC’s

a. A family limited partnership or a family LLC is simply a limited partnership or LLC where all the owners are family members.

b. A transfer of ownership to a child in excess of the $11,000 per person annual gift exclusion will reduce a parent’s lifetime gift tax exemption (currently $1.5 million) that is permitted under federal estate tax laws. As a result, the value of the ownership transferred to a child is often discounted from a proportional share of the fair market value to get under the $11,000 limit.

c. There are at least two reasons to justify the discounted value:

i. There is a substantial value in being able to control a business, and the ownership transferred at any one time is relatively small.

ii. Because there generally is no public market for the interests in the business, it is often difficult to sell the interests later.

d. Discounts frequently range from 10% to 50%.

e. It is crucial that these types of discounts be documented by a supportable appraisal, in case the IRS challenges the discounted values.

12. How Often Should You Update Your Estate Documents?

a. Basically, you should consider updating your estate documents when major life events occur:

i. The births of a baby whom you want to make a beneficiary.

ii. The death of a beneficiary, agent, executor or successor trustee.

iii. Divorce.

iv. A major asset being added or transferred.

b. In addition, the Health Insurance Portability and Accountability Act (“HIPAA”) has imposed stringent privacy restrictions regarding medical records. As a result, if your advanced health care directive (or durable power of attorney for health care) does not address the HIPAA requirements, you may want to have it updated.

The foregoing article constitutes general information only and should not be relied upon as legal advice.

Major Medical Insurance: Things to Know About the Affordable Small Business Health Insurance

Seeking medical attention might get costly when you suffer from unexpected illnesses or accidents. For this reason, it is advisable to get affordable small business health insurance to cover most of your medical expenses. One form of insurance you should consider is major medical insurance. This type of health plan provides many benefits that can provide financial security when unexpected medical expenses arise.

What is major medical insurance?

Major medical health insurance falls under managed health care because it has lower premiums. This health plan covers major hospital and medical expenses over a certain deductible. This, however, does not pay for routine appointments and prescription drugs. Although the out of pocket expense you have to pay before the policy begins is large, it is one of the least expensive forms of health insurance. Within this category are different types of coverage plans:

– Preferred Provider Organization (PPOs): This type of managed care allows you to see any health care provider you want. The insurance company provides a network of physicians and hospitals you can choose for medical treatments. This provides lower costs for co-payment and deductibles if you plan to choose a doctor or provider within the network. You can also choose a specialist outside the network, though you will need to pay for additional medical costs.

– Health Maintenance Organization (HMOs: This plan is less expensive compared to the PPO. It also offers major medical insurance coverage at lower costs.
Like PPOs, the insurance provider will supply a network of health care specialists, which limits your choices. You also need to choose a primary care physician from the network who can give you a referral if you need to consult other specialists. Coverage might get costly if you do not get referrals from your physician.

– Point of Service (POS): This is a combination of the first two plans. An insurance company provides the network of health care specialists who you can seek medical treatments from. This, however, does not restrict you to the network alone, as you can still choose physicians outside of it. Your primary care physician can refer you to other specialists within and outside the network. This also offers more flexibility when choosing medical treatments.

What does major medical insurance cover?

Major medical and affordable small business health insurance provide a wide range of benefits. This may vary between policies, but several major medical coverage options might include the following benefits: hospitalization, intensive and cardiac care, physicians’ diagnostic and surgical services, x-rays and laboratory tests, hospital medical and surgical supplies, nursing services (including private duty), therapies, and durable medical equipment (DME) rental.

What to consider before choosing health coverage

Choosing the right form of coverage can be confusing, as some plans might be better and more suitable for you and your family’s needs. Think of the following questions when choosing a health plan:

– How much is the monthly premium and deductibles?

– How much is the additional cost if you choose a specialist outside the network?

– What are the benefits included?

– Do you plan to cover major medical expenses and pre-existing conditions?

– What affordable small business health insurance do doctors recommend?

Health Care and Durable