This unwelcome gift—in addition to the seemingly inevitable yearly rate increase that everyone gets—comes in the form of a higher premium and marks your status in having moved to another age rate band.

You’re probably aware that older people pay more for their health insurance and younger people less, and you may have already experienced such an increase.

Nevertheless, in these lean times, its not something you want to come as a surprise. “Happy birthday! Blow out the candles! Your premium just went up $100 a month!” ProtectPlus uses a range of age bands that are common in health insurance plans:

• under 30
• 30–39
• 40–49
• 50–54
• 55–60
• 60–64
• 65 and older

If you’re with another insurer, you should check to see where the bands fall on your policy. You can’t avoid getting older, of course, but if a higher premium will create a financial burden, you can switch to a less expensive plan during open enrollment (November 2 to December 31). Otherwise, you will have to live with the higher rates for your newly attained age until the next year.

Keep in mind that the rates for your spouse and dependents are dependent on your age band, so their big birthdays don’t count in terms of premiums. You can celebrate as you see fit, and not have to worry about higher rates on their birthdays.

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However, factors that may affect your decision include: the size of your firm, whether or not you have a younger spouse and/or dependent children and when you plan to retire. You may contact Seabury & Smith at 800 824-1154 to discuss your options.

1. You can’t open an HSA without subscribing to a high deductible healthcare plan (HDHP), but you can subscribe to an HDHP without opening an HSA.

2.Before deciding on an institution to act as trustee or custodian, research your investment options and the account fees.

3. As an employee, when comparing an HDHP with traditional copay plans, consider the amount your employer will contribute to your HSA.

4. Those over 65 who qualify for Medicare may not open an HSA, but there are several incentives for those in their 50s or early 60s to at least consider an HDHP/HSA option.

While,  for instance, there are limits on the amount of tax-deductible contributions that can be made to an HSA in any year, those over 55 may also make specified “catch up” contributions. Once you turn 65 and are covered by Medicare you may no longer make contributions, but you can continue to draw from your account tax-free for out-of-pocket health expenses.

In addition, you can use your account to pay Medicare premiums, deductibles, copays, and coinsurance under any part of Medicare. If you have retiree health benefits through your former employer, you can also use your account to pay for your share of retiree medical insurance premiums. You can also use your account to pay long-term care premiums, though you may not use HSA funds to purchase a “Medigap” policy.

5. California has recently extended state tax deductions to parallel federal exemptions.

This means that employee contributions to HSAs, and distributions made from these accounts to pay for medical-related expenses, are California income tax deductible. In addition,employer contributions will not be added to an employee’s California taxable income.

6. Finally, a word of caution for those who are shopping for an HDHP policy: while a policy may be attractive for its low premiums, be sure that it comes with a good preferred provider network.

If not, you can be hit with large bills for routine medical procedures, and because of the high deductibles, your out-of-pocket expenses can be very high indeed. In such instances, the advantages ofan HSA may evaporate.

If You Continue to Work Past 65

However, if you are employed at a firm with more than 20 employees, the opposite generally holds true. Since your group plan qualifies as the primary payer, and thus is billed before Medicare, you should retain your group coverage. In this circumstance, you can also delay purchasing any optional Medicare and Medigap plans until you do finally retire. If your spouse has been covered on your group plan and you continue working, then for solo practitioners with ProtectPlus, the choice is simple.

As long as you continue working, the plan allows your spouse to stay enrolled and be billed at the rate that applies to his or her own age. If you are with another carrier, your spouse may have to seek private coverage on the open market or take a HIPAA plan.

If you are employed at a firm with fewer than 20 employees and not insured by ProtectPlus, your spouse may qualify for an extension of health coverage under CalCOBRA, while if you are employed at a firm with 20 or more employees and covered by a plan other than ProtectPlus, he or she can get an extension through COBRA. ProtectPlus participants should refer to the chart on page three for continuation options.

If You Are Disabled
If you are disabled and qualify for Social Security Disability Income (SSDI), you may also be eligible for Medicare benefits. Unfortunately, the Social Security Administration doesn’t begin paying SSDI benefits until five months after your application is approved. You must then wait another 24 months before Medicare benefits begin, and these benefits may not cover some of the services you need.

In addition to replacing your lost earnings, this is another reason why long-term disability insurance is so highly recommended by financial planners and insurance professionals. If you are disabled and your spouse was previously covered under your workplace group plan, he or she may qualify for COBRA or CalCOBRA depending on the size of the firm, or might need to find a private carrier.

A HIPAA policy may be available as a last resort. The difficulty and discomfort in contemplating
these scenarios may explain why so many people fail to do adequate planning. On the other hand, a quick overview of the complexities and consequences involved can act as a spur.

Widely publicized before they were available, Health Savings Accounts (HSAs) are quickly becoming an accepted health insurance option.

We recently introduced a new HSA, Protect 2500, once you meet the plan deductible, the plan pays 100% of in-network, eligible expenses.

Consider these guidelines whether you’re interested in an HSA for yourself, an alternative plan for employees, or when consulting clients on how an HSA might serve them.

1. You can’t open an HSA without subscribing to a high deductible healthcare plan (HDHP), but you can subscribe to an HDHP without opening an HSA.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 stipulated that HSAs were created to allow individuals to pay for qualified medical expenses with pre-tax dollars in conjunction with specially designed HDHPs. Getting HDHP coverage without opening an HSA is possible. However, keep in mind that this option fails to take advantage of HSA tax benefits while exposing subscribers to the risk of paying the very high deductibles out of ordinary savings should they need expensive medical treatment.

2. Before deciding on an institution to act as trustee or custodian, research your investment options and the account fees.

HSAs are administered by insured banks and credit unions. Though not all that qualify are currently offering HSA services, any bank, credit union or any other entity that currently meets the IRS standards for being a trustee or custodian for an IRA or Archer Medical Savings Account (MSA) can be an HSA trustee or custodian. The law also allows insurance companies to be serve in this role.

The Group Insurance Trust has made access to Health Savings Accounts through Mellon Bank available to ProtectPlus HSA subscribers. Names of other institutions in California and throughout the U.S.can be found here.

3. As an employee, when comparing an HDHP with traditional copay plans, consider the amount your employer will contribute to your HSA.

Contributions made by your employer are excluded from your income and, therefore, are not currently taxable to you. Your own contributions provide an above-the-line deduction that allows you to reduce your taxable income by the amount you contribute to your HSA.