Category Archives: Insurance

The Time to Buy is Now

I hate dealing with health insurance issues.  Everything seems so confusing.  Beyond the premiums, you have to deal with deductibles, co-pays, co-insurance, and networks.  It feels like the whole system is stacked against the little guy.  But there is one thing that is much worse than dealing with health insurance—not having health insurance.  Modern medicine is amazing.  And amazingly expensive.  So if you go without insurance you are taking a giant risk.  One bicycle accident or unhappy appendix can put you many thousands of dollars in the hole.

Because many students don’t have health insurance from another source, Penn State offers a student health insurance plan that provides great coverage.  The enrollment period stays open until September 3, so you still have a week to get signed up if you need insurance.  It’s not cheap.  Few things that are actually good are also cheap.  But we do have the flexibility to increase federal student loan eligibility to cover the cost of this important purchase.  You just need to stop by the Law School’s Financial Aid Office (in suite 105) or send me an email (sab36@psu.edu) and I’ll help you through the process.

The right time to buy health insurance is right now.  The wrong time to buy health insurance is when it’s too late and you need it.

A Moneywise Twofer–Protect Yourself

Sometimes it’s just way too hard to choose only one topic for my weekly writing adventure.  This week there are two things that both seem to need urgent attention, so the Moneywise Tip is going to be a twofer.

First up, September 4 is the last day for students to purchase the Penn State Student Health Insurance Policy (SHIP) for fall semester.  And while you are young and healthy it’s easy to think you can get away with not having insurance.  But you really shouldn’t.  One broken bone.  One bad case of the flu.  One inflamed appendix.  Any one of these can happen at any time, and without health insurance it can easily set you on the path to a lifetime of medical debt. You can read more about that here.  But know that the choice to skip insurance is a game of Russian roulette you really shouldn’t play.

And for the second topic of the day, a student came to me last week to discuss something that scared both of us.  She came in to say, “I came to give you the information you called me about this morning.”  She went on to tell me that she had received a phone call from me asking for her birthdate and Social Security number for a student job she was applying for.  One big problem:  I hadn’t called her.  The caller had used my name, but I didn’t place the call.  It was a scammer. The reality is, anyone with access to the internet would be able to figure out that she is a student at Penn State Law, and I am the Financial Aid Director at Penn State Law.  I’m actually kind of stunned that someone would do this level of research to try to run a phone phishing scam.  But it happened.  So how do you protect yourself against this kind of thing?  My rule of thumb is that I never give out personal information on a phone call that I did not initiate.  No date of birth.  No Social Security numbers.  No credit card numbers.  If I didn’t place the call, no one is getting that kind of info out of me over the phone. Period.  And thankfully, this student was smart and didn’t share that info on the phone, even though she thought it was me on the other end of the phone.  WHEW!  (Just so you know—I would never ask for that kind of info on the phone.  I would always ask for you to bring physical documentation of these things.) Scammers are still everywhere, so make sure to protect yourself!

Secure Your Own Mask First…

When you fly on an airplane there is always a safety speech before takeoff.  And the thing that has been ringing in my head since my last flight is, “Please secure your own mask before assisting others.”

airplane-air-mask

That one sentence pretty much sums up the last half of 2016 for me.  I’ve always prided myself on getting out the Moneywise Tip of the Week regularly.  And last semester I failed big time.  I know many of you noticed I was missing from my office quite often throughout the semester.  It was rough for me health-wise (and I’m very grateful for the health insurance that made that manageable!).  I was run through test after test and in and out of the hospital.  And I wasn’t writing the Moneywise Tip.  I was busy securing my own mask before I could assist others.  You simply can’t effectively help others if you are in risk of not keeping yourself going.

But I’m healthy now.  I’m running again and eating the right foods and happy to be available to help students as much as I wish I could have last semester.  Prepare yourself for a full semester of regularly scheduled Moneywise Tips!

The “secure your own mask” bit also hit close to home in a different way over the holidays.  It seems like every charity I’ve ever donated to was reaching out for an end of year contribution.  And I wanted to assist others.  But the year’s medical issues were challenging financially.  So rather than stretching myself to assist others as much as I would have liked, I smiled, politely said no, and proceeded with securing my own financial mask.  It won’t be this way every year.  And it’s ok to say no to charities if you’re not feeling particularly financially secure yourself.

I am certain that 2017 will unfold differently for me.  But it’s only because I secured my own mask first.  Now I can proceed with assisting others.

 

Buy It! And Hope You Never Use It!

What is the one thing that you should always buy with hopes of never using it?  It’s not that embarrassing pair of skinny jeans in the back of your closet.  It’s not the platform pumps that you grabbed on clearance and never wore.  It’s insurance.  Health insurance.  Car insurance.  Renter’s insurance.  All of it is important.  And you hope and pray that you never need to use it.  But if you ever do need it, you’ll be amazingly grateful that you have it.

Today I’m going to focus on health insurance.  I have a really good health insurance plan through Penn State.  I pay extra for the option of a lower deductible plan.  And I’ve never been so grateful for it as I was at the start of August.  One fateful night at the start of August I started experiencing stomach pain.  At first I thought it must have been something I ate, but my husband and I had eaten the same thing for dinner and he had no ill effect.  A couple hours later I found myself in the emergency room, and then spent the next few days in the hospital correcting the issue that had caused my great pain.  And recently I got a hospital bill for just over $1,000 for that ER visit and hospital stay (due to my deductible and co-insurance responsibility).  And that sounds like an awful lot of money.  Until I think about what that bill would have been without insurance.  Without the health insurance my bill would have been over $19,000.  Nineteen thousand dollars!!!!  I can’t even comprehend the financial mess I would be in if I had to come up with that kind of money for four unpleasant days at the hospital!

health insurance

If you don’t have health insurance…now is the time to act.  Penn State students are eligible to purchase this platinum plan offered through AetnaThe deadline to purchase for fall semester is Tuesday, September 6.  Worried that you can’t afford it?  Stop by the financial aid office.  It is possible to increase your student loan eligibility to allow for the cost of purchasing insurance.

No one ever likes to think about spending money for an insurance plan they may or may not ever use.  But the cost of not having it could be much, much greater.

Auto Insurance: Do you have what you need?

For me auto insurance has always been one of those things that I’ve had on auto-pilot.  I pay for it, hope I never need it, and I forget about it.  Until last Wednesday.  That’s the day that PA-322 emerged victorious in the battle of Prius versus snow covered roads.  And, after thankfully escaping unharmed and driving the damaged car away from the scene of the accident, that’s the night I started paying a lot closer attention to my auto insurance policy.

auto insurance

When you set up your car insurance, there are a lot of things you need to pay attention to:

  • How much is your deductible?  The lower your deductible, the more you’ll pay each year for your insurance,but the less you’ll pay in case of a claim.  I opted to keep my deductible low, so now I only have to come up with $250.  My insurance company is going to cover all of the rest of the bill to repair the car.
  • Do you need comprehensive insurance?  If you carry only the state minimum insurance, that covers only liability and possibly collision.  Collision actually would have been enough for my accident.  But on that very same snowy day a friend of mine hit a deer.  And he was not carrying comprehensive insurance.  His accident was not covered.  At all.  Comprehensive covers you against things like theft (of either the vehicle or property within), glass breakage, damage resulting from something other than a collision (such as fire or falling objects) and damage from hitting an animal.  There’s a reasonably good chance that one of these things (especially the deer situation) could happen in central Pennsylvania, so if you are not carrying comprehensive insurance, it might be worth adding it.
  • Do you need a replacement vehicle during repairs?  I do pay a little extra to cover the cost of a rental car during the time my car is being repaired.  It turns out I didn’t really need it this time, so I’m saving myself a little money (my insurance covers only 80% of rental car expense) and living as part of a one-car family until my Prius is repaired in a week or so.  (I’m grateful that my friends were willing to cart me around for a day until we sorted out the details of how to make that work!)  But if you can’t get by without your car, rental replacement is coverage you should consider.
  • How much work do you have to do up front after an accident?  I’m feeling very fortunate that my insurance company has been wonderful through this process.  They have a deal with several area auto repair shops where I can take my car without having to have an insurance person come view the car and without having to get multiple estimates.  As long as I stick with the preferred shops (and the one I would have chosen anyway was on the list!), then I just take it in and forget it.  The insurance company will accept their estimate without comparing it to others.  And the insurance company will make payment directly to the auto shop.  I just have to wait for the repairs to be complete then pay my deductible to the auto shop when the work is done.  Amazingly easy.  And that’s a really big deal.  How does it work with your insurance company?

No one ever wants to think about using their auto insurance.  But the day is likely to come when you’ll need to.  Do you have enough coverage?  Can you afford your deductible?  Will your insurance company be easy to work with after an accident?  It’s definitely better to think about these things BEFORE you find yourself losing a battle against a snowy road or a wayward deer.

Selecting a Health Insurance Plan

health-insurance

I’ve written about why having health insurance is important.  I’ve written about how health insurance works.  But with the Affordable Care Act (ACA) enrollment period open, it seemed like I should write about how to sort through the many insurance options and to select one that works for you.

Health insurance now comes in metallically labeled levels of coverage.  Bronze plans pay about 60% of expenses on average.  Silver pays at about 70%.  Gold pays at about 80%.  Platinum pays at about 90%.  And there are also Catastrophic plans that pay less than 60% of average expenses, but these are only available to people under 30 or people with a demonstrated hardship.  Frankly, I would avoid the Catastrophic plans if at all possible.  Insurance is one of those things that you pay for hoping that you never ever need to use it.  But when you do need to use it (and with health insurance, that’s often a surprise event), you want it to actually pay for some things.

If you expect to make regular doctor visits or take prescription drugs regularly, you’ll likely want a Gold or Platinum plan.  These cost more per month, but they come with a lower deductible and lower co-insurance.  More out of pocket to buy the insurance, but less out of pocket to use it.

If you are healthy and don’t expect to have many medical expenditures, a Silver or Bronze plan may work better for you.  These have lower up-front costs, but come with higher deductibles and higher co-insurance.  These work well for the healthy and the wealthy.  And they definitely work best when paired with a health savings account.

Penn State offers employees the choice of a Platinum plan and an alternate high deductible plan (which I think is Bronze, but I’m not positive).  As a middle-aged woman with several health issues requiring prescription medication and follow-up physician visits, I’ve opted for the Platinum plan.  I have to pay a lot more per month for my coverage, but in the long run it makes the most financial sense for me, as I pay less out of pocket per year overall.  This year I ended up having three unexpected minor surgeries on my hands, and I was very grateful for the Platinum coverage.  My out of pocket expense with the high deductible plan would have been several thousand dollars as opposed to the several hundred I paid with my Platinum coverage.

Penn State students also have the opportunity to purchase a Platinum plan at a group rate from Aetna.  This student insurance option costs $2,838 per year, or $236.50 per month.  If I were an uninsured student with any health issues, I would choose this option without hesitation.  It’s less expensive than most Platinum plans on the ACA Marketplace and the coverage is great.  But if I were a healthy student needing coverage, I might think about saving money by choosing a Bronze or Silver plan from the ACA Marketplace.

The answer of which plan is best will absolutely vary from person to person.  How often do you go to the doctor?  What medications do you require?  Do you have any pre-existing conditions?  Do you expect you’ll need any surgeries?  How much money do you have available month-to-month for your premiums?  How much money do you have available to cover your deductible and co-insurance?  These are all things you’ll need to take into consideration in selecting your health insurance plan.  It’s not easy.  But it is truly important!

Health Insurance: Have you bought yours yet?

health care

Health insurance has been a hot topic of conversation in the news for over a year now.  The Affordable Care Act has been enacted in full with the start of this calendar year.  Now we are all required to have health insurance or pay a penalty for not doing so.

If you have insurance through your employer, your spouse or your parents, you are all set.  Or perhaps you bought a policy in the fall that covers you for the full year.  If not, you have some decisions to make in the VERY near future.  You have a few options available to you:

You can purchase the Penn State student health insurance policy offered through Aetna.  The deadline to purchase this policy for the spring semester is January 22 (that’s WEDNESDAY!!!).

  1. You can purchase insurance through the Affordable Care Act insurance exchanges.  Through this venue, you may qualify for a tax credit that reduces your total cost, so it may actually be cheaper than the student policy (but it might not).
  2. You can do your own research and buy a private health insurance policy.
  3. You can tempt fate, pay a penalty of 1% of your income or $95, whichever is greater (up to a maximum of $285), and hope and pray that you don’t end up sick or injured.

Now let’s talk a bit more about why you should NOT choose option #3.  You should always approach health insurance assuming that you are going to experience a major illness or injury.  If you are diagnosed with cancer, will you be able to afford treatment?  If you are in a serious bicycle accident and need surgery on your arm, will you be able to pay for that?  The answer is easy.  Unless you are independently wealthy, you definitely need to have health insurance.  Otherwise, you could ruin your financial future with a huge medical debt that will haunt you for decades.

So now that we’ve established the importance of having insurance, how do you select the right policy?  There are a lot of things to consider.  What is the cost of the premium?  How much are co-payments?  How much is the deductible?  How much is your co-insurance responsibility?  How high is your out-of-pocket maximum?  Always assume you’re going to have a major illness or injury…then select the policy that gives you the best combination of these elements for your budget.  If all this jargon has left you scratching your head, take a look at this classic Moneywise Tip for a quick primer.

If you know you need to buy health insurance but are baffled as to how to pay for it, talk to your Financial Aid Director.  She can help you build it into your financial aid budget.

 

How Health Insurance Works (a classic tip from 2/25/2013)

Health insurance is complicated and confusing.  It’s one of those things that you rarely think about until you need it.  But when you need it…you had better be prepared.  Best case scenario:  you need it, you have it, and it covers everything flawlessly.  Worst case scenario:  you need it and you don’t have it, and you end up with a tremendous debt.  Typical scenario:  you need it, you have it, and you learn surprising lessons about how much you still need to pay out of pocket.

There are four basic ways that you have to pay when it comes to your healthcare:

  1. You pay the premium on your health insurance policy.
  2. You likely pay a co-payment (usually $10 or $20 on typical doctor’s office visits) on office visits and prescriptions.
  3. If you have to have medical procedures done you likely have to pay an annual deductible amount before your insurance starts covering things.
  4. After your deductible is met, your insurance likely still will not pay the full remaining bill.  They will pay a certain percentage (80% is a good example) and you are responsible for the remainder.  This remainder that you have to pay is called co-insurance.

Thankfully, there is one more health insurance term you should know about, which may be your saving grace in the case of a catastrophic illness.  Once you have reached the annual maximum designated by your insurance policy (note:  not all policies will offer an annual maximum), you will not have to pay any more out of pocket for co-insurance for the rest of that calendar year.  (You will still need to continue to pay co-payments, however.)

So, for example, assume you have a surgery done that costs $50,000.  You have a deductible of $500 and your co-insurance is 20% (the insurance pays the remaining 80%), and your annual maximum is $2,000.  For this surgery, you will have to pay the first $500.  The insurance will pay 80% of the remaining $49,500, or $39,600.  At first glance it looks like you will need to pick up the remaining $9,900.  Thankfully, your out-of-pocket annual maximum is $2,000, so you only need to pay a total of $2,500 ($500 deductible plus the $2,000 annual maximum on the co-insurance) for this adventure in medical care.

Have you looked at your health insurance policy?  Do you know how much your co-payments, deductible, co-insurance, and annual out-of-pocket maximum are?  If not, you should take a look.  This is better to know in advance rather than scrambling to find out when you are face to face with a medical emergency.

 

Renter’s Insurance (a classic tip from 9/27/2010)

Is it a good idea to regularly spend money on something you hope you never use?  If the purchase in question is insurance, the answer is yes.  Auto insurance is required by law, but many people forget that it is also important to protect your belongings.  If you own your home, you definitely think about protecting that investment, but renters should also carry insurance to protect the things inside the home.  Renter’s insurance is not terribly expensive, and could save you a bundle. This insurance will protect the contents of your apartment against fire, theft, water damage, vandalism, and a variety of other perils (learn more at http://money.msn.com/home-insurance/the-basics-of-renters-insurance-insure).

Before you buy, however, you should do a little research.  Try to evaluate the value of your possessions so you know how much coverage you need to carry.  Decide whether you need coverage for actual cash value (how much your things are worth in their current state) or replacement value (how much it would actually cost you to replace your things if they were destroyed).  Replacement value is likely the better choice.  You’ll be amazed at how quickly the value adds up.  Imagine having to repurchase just the clothes hanging in your closet.  How much money would that take?  Now add in your pots and pans and dishes.  Now add your case books and study aids and computer.  For about $200 per year you can buy enough insurance to protect these items.  Compare that against the cost of replacing even a few of your things without the help of insurance, and you’re likely going to find renter’s insurance to be worth the investment.