Why is my association health insurance plan so expensive?

You may have already received a sizeable premium increase notice and you are confused about what options are available to you.

A frequent question that we receive is "Why is my Association Health Plan so Expensive?"

Whether you work with a local or national association, trade union or other affiliated professional organization, you need to understand the facts about the insurance policy offered to you. Many (most) plans offered to association members are not true group plans, but rather supplemental coverages, sponsored or endorsed products that may or may not offer a discount.

Insurance companies require "true group" cases to have a minimum participation percentage. Although it varies by company, most plans require at least 60-70% of their eligible employees to be included in the companies health plan. Ineligible employees may be part time, seasonal, newly hired or employees that have elected to be covered under another plan, which is often their spouses coverage. Insurance companies also usually require the employer sponsor to pay for a large percentage of the employees medical costs.

These facts are not true with an association. Members are not employees. Many individuals are self employed or independent contractors. The insurance company and association can not require these members to enroll in the plan offering, therefore the actual participation rate may be poor. With the uncertainty of the actual number of participants joining the plan, the insurance company may actuarially calculate a higher premium rate or cushion into the plan design.

An association "group" plan does not mean that the premium will be lower or cheaper for member. It merely means that a member can join the plan, usually without medical underwriting to qualify for coverage. This creates a new problem for the sponsoring insurance company. Sick people enroll in a group with an already low percentage rate among eligible participants. This factor also contributes to higher rates. Many older associations are eventually dropped from the insurance carrier for poor claims experience and lack of member participation. Others experience large annual premium increases. Healthy people find alternative less expensive coverage, creating a larger "polluted pool" of more sick people, without the benefit of receiving the premiums from the healthy population. Often healthy or younger people pay more to help offset the expenses due to the plans high claims experience.

Before you join an association sponsored plan, don't jump in without first checking the premium rates against the open market. You may be able to purchase a small group plan (possibly the same plan as offered by the association) or individual coverage for less money, better benefits and more plan options. In California and several other states, small groups with (2 -50) employees can often qualify for Guaranteed Issue coverage. Incorporated spouses that are both officers of that company may even qualify as a 2 person group. This is a popular in the Real Estate community.

Become an informed shopper and compare the pro's and con's before buying your next health care program. You no longer need to pay for benefits and features that are not important to your situation. For more information on how you and your family or small business can purchase a quality health care plan for less money, take five minutes and shop on-line for additional plan options, competitive company comparisons and premiums rates. Once a plan is selected, you may enroll on-line or download an enrollment form and mail it.

For more information about affordable health insurance options for association plans, true group and individual plan options, visit QuoteBroker

It's not too late for a 2008 Health Savings Account

Health Savings Accounts, aka HSA Plans for Individuals and Employee Groups

HSA Accounts or HSA plans allow you to save money to pay for future medical expenses on an income tax-free basis. Any individual, who has an approved High Deductible Health Plan (HDHP) and who is not covered under another disqualifying health plan, can participate in an HSA. An employer can also offer Health Savings Accounts to his employees and both the employer and employees are allowed to contribute funds to the HSA. If offered in conjunction with a qualified Flexible Spending Account (FSA) commonly referred to as a cafeteria plan, savings in FICA and FUTA taxes as well as income taxes can be achieved.

An Insurance Policy and a Special Savings Account

An Health Savings Account is really a combination of a health insurance policy meeting minimum US Treasury policy design requirements called a High Deductible Health Plan (HDHP) and a separate custodial savings account for future medical expenses called a Health Savings Account (HSA). Congress created the HSA as a way to cover your future medical expenses, and it is subject to IRS regulations and guidelines. A health insurance company or an insurance plan usually provides the qualified health insurance policy. A licensed HSA administrator and financial services company, such as a bank, usually acts as the custodian and administers the savings account portion of the HSA.

The Health Insurance Plan Must Meet Certain Design Requirements

A qualified HSA plan has a single deductible that applies to all medical expenses covered by the insurance policy whether you are insuring yourself or an entire family. This deductible must be satisfied each year before the insurance company pays on any medical claims. The single deductible for an individual must be a minimum of $1,100 and can be any deductible up to the maximum out-of-pocket limit of $5,500 (if the plan pays at the 100% level after the deductible) and the single deductible for a family must be at least $2,200 up to the maximum out-of-pocket limit of $11,200 (if the plan pays at the 100% level after the deductible) for the year 2008 Preventive care can be provided without having to meet the deductible first. The limits on maximum out-of-pocket expenses include both the deductible and any shared expenses you are obligated for. These limits are subject to annual cost-of-living adjustments determined by the IRS, which will cause these values to change over time. You can exceed the out-of-pocket limits if you go outside the provider network on a preferred provider plan. The plan still qualifies.

Yearly Savings Allowed in HSA Accounts Based on Annual Limit and Age - New for 2008

You can save up to the maximum contribution limit of $2,900 for an individual HSA and $5,800 for a family HSA regardless of the HDHP deductible for 2008. These limits are also subject to annual cost-of-living adjustments. Amounts are no longer pro-rated if you start the plan mid-year. You can now make the full year's contribution even if you start as late as December. Individuals age 55 to age 65 can contribute an additional $900 over the above limits in 2008. Affordable Health Insurance Solutions are always available at QuoteBroker Free instant quotes, comparisons and online applications. All major companies available to compete for your business.

Consult your tax advisor for further information concerning plan deductibility.

Do you have a Life Insurance policy you don't need?

The has been a growing popularity of "Life Settlements". A Life Settlement provides the insured the ability to sell his/her policy, rather than letting it lapse. The policy is usually sold for more than the cash value. The purchaser of the policy becomes the owner and pays all future premiums.

The usual Life Settlement case involves an older individual that no longer needs or can't afford to continue making payments on his life insurance policy. The average premium is greater than $35,000 annually and the death benefit is over $750,000. In many instances the original life insurance policy was bought for a business purpose and no longer needed - perhaps part of a "Buy-Sell Arrangement" or "Key Man Policy".

The process usually takes several months to complete and there is a settlement process that is followed. Your financial advisor or CPA has most likely been exposed to this market. For more information write to the author Vincent Kody.