Planning for Financial Emergencies

Periodically I see articles on various news sites that have headlines with themes about saving money, and more specifically what you need to do to be prepared for the unexpected, such as the loss of your job. Most say things along similar lines: Have at least 6 months worth of salary saved up to cover expenses, and make sure you estimate medical costs, unexpected car repairs, and other things of that nature. If  you use any sort of bill paying software, such as Quicken, a tool like that can really help to make it easy to run a report quickly and simplify some of the estimating.

I suspect a lot of people don’t even think about something that I think is critically important, and none of the articles that I’ve read have really addressed it either. How many of you know what your health insurance costs each month? I’m not talking about how much is taken out of your paycheck, I’m talking about adding that to what your employer subsidizes to get the TOTAL cost, or what you would pay if you had to get your insurance through COBRA. In case you’ve never heard that term before, COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, which was passed into law in 1986. According to information on the US Department of Labor website it “contains provisions giving certain former employees, retirees, spouses former spouses, and dependent children the right to temporary continuation of health coverage at group rates”. So basically if you got health insurance through your employer and lose your job, under certain conditions you can continue to get that insurance at those group rates. However, and here’s the kicker – your former employer will no longer subsidize or pay a portion of that insurance for you. Screen Shot 2018-11-08 at 7.25.34 AMYou’ll need to pay all of it yourself, and if you thought you were lucky because your former employer didn’t charge you a lot for health insurance when you were working , well, you might want to be sitting down when you get that information, because that same non-subsidized health insurance is really expensive!

How expensive, you ask? At my former employer, coverage for my husband and I for health, supplemental life and dental went from $320/month to $1170/month. Think about  the implications of that for a moment…so now not only do you NOT have an income, but you get to shell out an extra $1000 or more a month for insurance. For that same high-deductible plan you had before. And if you were unlucky enough to get laid off at the end of the year, or don’t find a job right away and are still unemployed after the start of the next calendar year rolls around, your deductibles and out-of-pocket costs reset, which means that you get to start all over again meeting those too. So any money you had in that lovely HSA account can be used for the insurance or medical bills, but trust me, it will go very quickly.

If you’re confused on the difference between deductible and out-of-pocket, you’re not alone! I’ll try to explain it here, and add in a good website resource as well. Your deductible is the amount you first need to pay before your insurer will start to help you with what you owe toward bills. After that, the insurer will pay part, and you’ll pay part, until you hit your out-of-pocket maximum, at which point the insurer pays all of it. Where it can get confusing is adding in family members. If you have just two people insured, you can have one meet both the deductible and their out of pocket maximum, but the other person is still paying the full amount for everything because they haven’t yet met THEIR deductible.  If you have more than two people by adding in children, then those deductibles still need to be met but at least the out-of-pocket maximums are cumulative toward the family out-of-pocket maximum. Yikes! I know that our insurer has a really nice graphic on the website showing where we were at all times with meeting deductibles and out-of-pocket maximums, and I would expect most others do as well. MoneyUnder30 has a good page on their website that can help with understanding those and other health insurance terms.

So yes, think about your monthly expenses, but educate yourself too on what your insurance will cost you if you’re not working. It’s eye-opening, and probably far more expensive than you think. Even routine annual checkups can add up when you start adding in lab tests and x-rays, since most visits are “cafeteria” type, meaning each thing done gets a charge. For those with high deductible plans, here are some AVERAGE costs that will wipe out small to medium savings:

Office visits for physicals…$180-240

Adult office visit for illness…$130-180

Child office visit for illness $115-160

Adult ER visit (visit only, doesn’t include labs, x-rays, etc) $580-700

Child ER visit (visit only, doesn’t include labs, x-rays, etc)  $510-635

Colonoscopies…$900

Mammograms…$120

Shingles vaccinations…$250

Chest xray…$370

Blood count tests…$5-15

Flu shot…$40

As you can see, start adding in labs, x-rays, etc, and it doesn’t take much before things add up. Add in a couple of sick kids, or sports injuries and physical therapy and the money is gone.

Costs may vary by region of the country, insurer, and contracts negotiated, among other things.  The prices listed above came from a couple of sources, including Blue Cross Blue Shield of Massachusetts, and CostHelper.com. You can probably find cost estimators at your insurer as well.

So besides planning for the rent or mortgage, the car payment, gas, utilities, food, clothes, the pets, school events, and all that other stuff, don’t forget to educate yourself about the true costs of ALL of your healthcare costs.

For more information on COBRA, go to the Department of Labor website.

PS, preventing illness is still a great idea and saves money! It’s flu season, and flu shots are cheap and readily available. Some county health departments will do them for free, I’m seeing Costco/CVS offering for around $20, Walgreens and Target for $40. If  insurance covers medication, your flu shot might be covered too. Don’t forget to get yours!

 

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Crossing the Great Divide

Look around next time you’re running errands, or when you next read the headlines,  pay extra close attention and you’ll probably be surprised to find an overabundance of labels. Oh I don’t mean sticky labels, or post it notes although it might be better if I did, as those could be removed. I’m talking about the kind that are written with the virtual sharpie, and create invisible divisions. Women’s issues…healthcare issues…education issues…human rights issues…gender equality issues…LGBTQ issues…pay gap issues…human trafficking issues…abuse issues. Each of these has the ability to conjure up a picture of someone in distress in our minds, producing a familiar clench in our collective bellies.

Throughout the election cycle and now into the governing cycle we’ve been inundated with stories that cross the partisan divide, educating our nation on how these great groups of electors will solve each of these problems. They’ll fight the war on hunger, on healthcare and health insurance, on education, on trade, on pay, on this, that and the other. It’s the same story told over and over and over again, and nothing really ever changes. The only thing that’s any different now than 50 or even 100 years ago, is that by virtue of the internet and social media, the megaphone has gotten larger and louder. But are the stories really any different? Or are we just more aware of them because they are now able to be placed in front of us constantly? Isn’t it time to ask ourselves, why nothing ever changes? Why is it that when the politicians get to Washington, they spend all their time playing political tug of war? Did we elect them to do that, or is there something else happening?

In theory we’ve elected these individuals that are, in theorysupposedly bright, yet they faithfully embody Enstein’s Theory of Insanity over and over again, year after year, election cycle after election cycle. (Well, not so much a theory, really. He said the definition of insanity was doing the same thing over and over again and expecting different results.) As a child, I learn very quickly if I put my hand on a hot stove, I get burned and I don’t do it again. So why do our politicians insist on fighting the identical fights year after year? Two possibilities exist. One, they aren’t bright enough to figure it out (in which case they should never have been re-elected) and two, they’re all crazy like a fox and know that if they actually solved the issues, they’d have no jobs to come back to. If we go with that first possibility, and we ARE re-electing them repeatedly, well then the problems really are our own damn faults, aren’t they, and we’re the ones living up to Einstein’s definition of insanity.  Which leaves the second option, they’re all crazy like a fox.

There is a central theme in a solution however, for all of the issues that the politicians  – whether they are local or national – are tasked to solve. Remove the labels – all of them. Not just from the issues themselves, but from the individuals trying to solve the problems too. No more making this about a man issue or a woman issue, or a Democrat or Republican. It’s not about you-me-us-them. It needs to start being about doing the right thing for people. Doing unto others as you would have them do unto you. Those last 4 words really are key. It needs to stop being about imposing our beliefs on others, but stopping and thinking about what that really means. How will you feel when someone else forces you to have THEIR beliefs imposed on you against your will? Just because they could? When you begin to think about things with that mindset, suddenly some of the decisions take on new meaning. What might reactions be if someone’s children can’t attend a charter school because a)they already filled their quota for children of minorities  or the poor or b) haven’t filled their quota for children of minorities or the poor so can’t take any more affluent children now even if you CAN donate $1 million to us, so now the Betsy DeVos’s of the world have to send their children to public school whether they like it or not. Or what if our lowest income families that can’t afford healthcare, no longer can get free contraception because of the defunding of planned parenthood, and suddenly we see an increase in birthrates in that demographic? If you’re one of those congressmen or women that have insisted on repeal and replace the ACA, before you continue down this path just stop for a moment and imagine you’re not a congressman/woman but an average hourly wage worker, your spouse can’t work, you live in an apartment and drive a beat up car. Close your eyes and picture it, life is tough, you can’t afford much for new clothes, let alone dining out, and the ACA is the only insurance you can get. Are you still so eager to push thru the plan you propose under those same conditions? What about if you’re a new single mom? Will there be an increase in funding for WIC? For Medicaid? For the stresses imposed on those families? (And to Matt Garza, here’s a newsflash: married couples shouldn’t be forced to practice abstinence just to prevent an unwanted pregnancy.) Don’t misunderstand me, I’m not saying that the ACA doesn’t need fixing, it does. But honestly, ask anyone who has ever worked in a large organization with something like this, is it easier to start over, or incrementally fix, and they’ll probably tell you to incrementally fix it so you don’t make a bigger mess of it.

The issues facing us are people issues. It’s that simple. And until politicians can learn to leave their titles at the door, get off their asses and away from Capitol Hill, really learn how real people live and the real pressures they face, and finally learn to leave the partisan bickering outside the room when they meet, they’ll never figure it out. Or, to paraphrase Donald Ogden Steward and Philip Barry who wrote The Philadelphia Story, “You’ll never be a first class politician until you’ve learned to have some regard for human frailty.”

The Three R’s

Repeal…Replace…Reform…

Not the usual three words we’ve come to think of when we hear the phrase “the three R’s, but new “R” words in the news lately about Obamacare. (Yes, I know I said once I objected to the term ‘Americans’, but if you can’t beat ’em, join ’em.) There is so much information that is hitting the media these days, much of it rather confusing and mystifying so I thought I’d take a stab at peeling back the proverbial curtain so you can see the little man behind it. Full disclosure: While I don’t  bill myself as an expert, I have worked in the healthcare for 40 years, the last 17 of it in insurance, which does make me more informed than the average bear.

What’s the difference between “The Affordable Care Act” and “Obamacare”? The simple answer, none. If you thought there was, you’re mistaken. You can’t repeal Obamacare and have the Affordable Care Act left to fall back on. If you get rid of Obamacare, you’ve gotten rid of the ACA. It really is that simple.

If they repeal Obamacare, what will I have for insurance? Assuming you applied for Obamacare because you didn’t qualify for something through an employer, or for Medicaid, Medicare or some other state based plan, probably nothing. That’s why repealing without something in place and ready to go is a problem. 

But they say that there will be access for everyone, right? So that’s good. Not so fast. There is a big difference between access and coverage. Access isn’t the same as actually having the insurance. I have access to any doctor or hospital I want to, if I can pay for it. What if I can’t pay for it? As Bernie Sanders said, “I have access to buying a $10 million home. But if I don’t have $10 million, then I can’t actually buy that home.”  So don’t be fooled when you hear the word access. It isn’t equal to insured, even though there are those that want you to think it is.

My premiums on Obamacare went up, it’s a failure. What a mess. So here is how that works. Insurance is all about risk. The bigger the risk pool, the more spread out the risk is. But it takes time for the pool to grow and get spread out, and you need to have both healthy AND sick people in the pool so that the risk is spread across everyone. In the first years of Obamacare, the most likely enrollees are the sickest, so there are likely to be more people seeing doctors and going to the hospital. That’s going to make premiums go up at first, then they’ll stabilize as other folks who aren’t as sick sign up. But you need to give it time. And have you checked out the cost of your care WITHOUT insurance? Here are some facts:

Average costs without insurance  

Emergency Room Visit $ 1,200.00
Uncomplicated Delivery $ 3300-37,000
Cesarean Section $ 8300-71,000
Daily inpatient rates in hospitals $ 1700-2300
Daily inpatient ICU rates in hospitals $ 4,000.00

So yep, go ahead and crab about how much it costs. Don’t come crying to me after you get the bill from your stay for that heart attack/car accident/fourth baby/slip on the ice and broke your leg in three places. Shit happens in life. That’s why we have insurance. 

So I heard with this new program, the premiums will be paid for with Health Savings Accounts instead of subsidies. Isn’t letting people set money aside pre-taxes better than giving them an after tax reduction? Well, I guess that depends on how you look at it. Sure the Health Savings Accounts can be a good thing, and a way to help reduce your tax burden, however it assumes a critical point: That you have enough disposable income after you pay your rent, bills, and buy food that you can afford to have your take home pay reduced. Because let’s face it, even though it’s set aside pre-tax, it will still reduce your take home pay. Maybe not in a 1:1 amount, but it will reduce it. So…this new plan takes away the subsidies from the people who needed it the most, and forces them to have a plan that can only be purchased if they have a Health Savings Account. Take the fictional Johnson family from Minneapolis. Tony and Sara make $34,000 a year, and have 2 children. Sara worked but found that all of her income was going to child care, so it wasn’t worth it and she quit to take care of their children. Tony works for a small company that doesn’t offer healthcare. Under Obamacare, they qualify for enough in subsidies that their monthly premium was $98. Now, under the proposed plan with Health Savings Accounts they’ll need to come up with $1102 a month, which is the current cost of the unsubsidized premium for their family. Does anyone seriously think that’s going to happen? Here’s a newsflash, it’s not. After taxes Tony is lucky if he takes home what $800, $900 per paycheck? And out of that has to come rent, utilities, the car payment, and food and we’re expected to believe that shaving $550 off the top of each check before taxes will reduce his tax burden enough that his paychecks will miraculously adjust enough so that he still takes home at least $800 each paycheck? It ain’t ever going to happen. And so we’ll see the number of newly uninsured skyrocket. Immediately. Because there is no flipping way that millions of people will be able to afford their unsubsidized premiums. They’ll go on Medicaid instead, paid for by your tax dollars. Look for an increase in your property taxes, sales taxes, levies and all sort of other taxes to offset those costs.

As a final note, here’s a message for all of our Congressmen/women and Senators on Capitol Hill. Stop fooling yourselves into thinking this is a Democrat or Republican issue. It’s not. It’s a people issue, and the sooner you start treating it like one, the sooner you’ll actually all stop with the craniorectal inversion and move toward real progress toward a solution.  Healthcare is so godawfully complicated it’s not going to be fixed in a single four year cycle. It will take that long to get it started, understand how your risk pools are imbalanced and how you can make positive changes. Those changes need to be incremental, and just a couple at a time, so you can measure, remeasure, perform some analysis and watch trends. As any halfway decent statistician can tell you, if you start reacting to every blip in the graph and don’t understand which part of your process is within statistical control and and what is out of control, pretty soon you’ll make such a mess of the process that everything will be out of control. Like overcorrecting a skidding car on ice. Instead, if everyone put down their swords, shook hands like adults and agreed to leave your party labels at the door when working on a solution, you might actually have a fighting chance of coming together to solve this. Follow quality improvement principles used in businesses such as PDCA and Kaizen. (This ain’t rocket science, it just requires you leave your egos outside the door. Sheesh.) Where I work we are fortunate to have developed a culture built on values that help us to become better and stronger as we work together. Some of those values are integrity, compassion and relationships and I can’t help but think that if applied as part of the process to solve this problem, maybe real change could finally begin.