• PPO – (Preferred Provider Organization). PPO insurance plans work within a network of healthcare providers who have negotiated discount contracts with health insurance carriers.
• HMO - (Health Maintenance Organization) – Are typically prepaid health benefit programs in which you pay a monthly premium in return for managed coverage. If you join an HMO, you will need to select a Primary Care Physician, who will be responsible for coordinating your healthcare and making any referrals to specialists that your require. You also will need to use physicians, hospitals and clinics who are members of your HMO health plan.
• POS – (Point of Service) – POS insurance plans combine the features of a HMO and a PPO. These plan designs allow you to decide whether or not you will use an in-network provider or an out-of-net-work provider.

A Health Savings Account (H S A) is a special savings account that allows you to save tax free dollars to pay for specific qualified medical expenses. A HSA combines a high deductible insurance plan with a savings account. The Insurance protects individuals from expensive medical bills, while the Savings Account helps pay the deductible, provides for tax-deductible deposits, tax-deferred growth, and tax-free disbursements for medical care.

• Affordability – You should be able to lower your health insurance premium by switching to a health insurance with a higher deductible.
• Control – You make decisions on how much money to place in your account, whether to save the account for future expenses or pay current medical expenses, and you also decide which medical expenses to pay from the account.
• Flexibility – You may use the funds in your account to pay for current medical expenses or save the money in your account for future use such as: medical expenses after retirement, out of pocket expenses when covered by Medicare, Long-term care expenses, and health insurance or medical expenses if unemployed.
• Ownership – Funds remain in the account from year to year, just like an IRA. There is no “use it or lose it” rules.
• Portability - You can keep your account if you change jobs, change medical coverage, become unemployed, move to another state, or change your marital status.
• Savings – You can save the money in your account for future medical expenses and grow your account through investment earnings.
• Security – Your high deductible insurance and H S A protect you against high or unexpected medical bills.
• Tax Savings – Provides you triple tax savings: 1) tax deductions when you contribute to your accounts, 2) tax-free earnings through investment, 3) and tax free withdrawals for qualified medical expenses.

Under a health reimbursement arrangement, or HRA, an employer reimburses covered employees for specified health and accident expenses. These reimbursements come directly from corporate funds rather than from a third party insurer.

An HRA is used as a substitute for health insurance or as a supplement to provide payments for medical expenses not covered under the company's health insurance plan (such as dental expenses); or to pay for medical expenses in excess of the limits in the company's health insurance plan. The tax objective of the plan is to provide tax-free benefits to the covered employees and obtain a corresponding employer tax deduction for the benefits paid.

• Maximum annual reimbursement
• Who pays for expenses first
• Type of expenses to be covered
• Whether unused funds can be rolled over and any cap on accumulation

• Employer funded
• Consumer decision tools
  
  
Included in most plans:
• Reimbursement for a wide range of expenses
• Balances may be carried over year to year
• First dollar benefits

A flexible spending account (FSA) allows you to set aside money on a pre-tax basis, lowering your taxable income. You can then use that money to cover health care and dependent care expenses. An FSA will not directly lower or control your health care costs, but using an FSA will put more money in your pocket to pay for those costs.

Flexible spending accounts are funded by salary reductions, commonly referred to as “contributions.” You choose the amount you wish to “contribute” each year. This amount is also called your annual election. Your payroll deduction is calculated by dividing your annual election by the number of paychecks you receive in a year. You must make separate elections for your health care flexible spending account and your dependent care flexible spending account.

No, but most medical expenses not reimbursed by insurance can be reimbursed from your health care flexible spending account. Please note that while the IRS requires expenses be “paid” within the tax year (calendar year) to be deductible, expenses must be “incurred” during the plan year in order to be eligible for reimbursement from a flexible spending account. IRS rules regarding deductions when filing income tax are different.

The amount you can save depends upon your tax bracket and the amount of your election. If, for example, your combined federal and state income tax rate is 22%, you will save approximately $22 in taxes per $100 of annual election.

Flexible Spending Accounts are subject to IRS Section 125 rules and regulations. Under current law, an employer is prohibited from refunding or carrying over an individual's flexible spending account balance from one plan year to the next.

Despite the similar name and purpose, “Healthcare Reimbursement Accounts” (HRA's) are not the same thing as “Health Care Flexible Spending Accounts” and are not subject to Section 125 of the Internal Revenue Code. One major difference is that Healthcare Reimbursement Accounts are funded with employer contributions while flexible spending accounts are funded with employee contributions (salary reductions). The Healthcare Reimbursement Account is an integral feature of many “defined contribution” medical plans, a type of self-funded plan we are currently investigating.

Stand Alone Plans offer prescription/drug coverage detached from a health insurance plan. An employer may elect a stand alone drug card because their health insurance plan does not offer prescription coverage.  Another employer group may elect a stand alone drug card from their health insurance to save money. Not only do stand alone plans aim to control costs for your company, but they are also know from their flexibility in allowing employers to “carve out” a plan out to fit their employees needs. They offer flexibility with deductibles and co-pays.

Plans providing dental benefits tend to focus on preventative care, by paying for routine services such as cleaning, ex-rays, and oral examinations. More extensive dental care may be provided on a cost-sharing basis with the insured paying apportion or percentage of the costs.

Plans providing vision benefits generally do so through a network of providers and help plan for services such as vision exams, prescription lenses and frames, contact lenses and corrective eye surgery.

Group life insurance, as its name implies, provides insurance for a group, (typically but not necessarily 10 or more employees) under a master contract between the insurer and the employer. Group insurance is almost always issued as yearly renewable term insurance. This means that the coverage expires at the end of each year but is renewed automatically without a medical examination and without further evidence of insurability. The premium rate per $1,000 of protection increases from year to year. Death benefits are paid upon the insured's death from any cause.

• Helps to satisfy an employer's moral obligation to the dependents of employees.
• Contributes to employee morale and productivity.
• Provides a before-tax benefit to employees that they otherwise would have to pay for with personal after-tax dollars.
• Is expected in most firms as part of the employee benefit package. Its absence would put an employer at a competitive disadvantage in hiring and retaining employees.
• Costs less for the employee than an individual policy, even though the plan may be contributory. From the employee's perspective, group life insurance (especially with respect to the first $50,000) is a bargain since, in most cases; the employer pays all or most of the premium.
• Provides insurance for those who otherwise might be uninsurable and provides insurance at standard rates for those who might be insurable only at an increased premium.
• Enables terminated employees, through the conversion privilege, to convert to individual policies without submitting evidence of insurability.

Long term disability insurance is an employer-sponsored program to provide disability income to employees who are disabled (unable to work) beyond a period specified in the plan, usually six months. Such plans are designed to supplement the Social Security disability coverage available to almost all employees. Disability income under an employer plan usually continues for the duration of the disability, or until death. The plan is usually funded through an insurance contract, particularly for smaller employers.

• PPO – (Preferred Provider Organization). PPO insurance plans work within a network of healthcare providers who have negotiated discount contracts with health insurance carriers.
• HMO - (Health Maintenance Organization) – Are typically prepaid health benefit programs in which you pay a monthly premium in return for managed coverage. If you join an HMO, you will need to select a Primary Care Physician, who will be responsible for coordinating your healthcare and making any referrals to specialists that your require. You also will need to use physicians, hospitals and clinics who are members of your HMO health plan.
• POS – (Point of Service) – POS insurance plans combine the features of a HMO and a PPO. These plan designs allow you to decide whether or not you will use an in-network provider or an out-of-net-work provider.

• Insure that your debts are paid
• Supplement your retirement income
• Insure your spouse's retirement
• Protect your estate
• Protect your business
• Provide survivor income
• Attract and retain employees (group side)

• Pay final expenses
• Replace all or a portion of your income
• Keep your family in their home
• Establish a college education fund
• Cover financial emergencies

How Much Life Insurance Is Enough?

This question is best answered through an analysis of your family and financial situation, as well as your financial goals and objectives.

• Term Life Insurance: Provides temporary protection for the term of the policy. If the insured dies within the term period, the insurance company pays the death benefit.
  
  If the insured survives the term period, the coverage terminates.
• Cash Value Life Insurance: Provides lifetime protection as long as the policy is kept in force. The insurance company pays the death benefit regardless of when death occurs, so long as the policy is kept in force. The policy accumulates cash values that can be used during the insured's lifetime, (withdrawals and loans will reduce the policy's death benefit and cash value available for use).

• level death benefit
• increasing premiums, if renewed
• no cash values
• may have policy dividends
• renewable, subject to medical qualifications
• best suited for level temporary needs

• decreasing death benefit
• level premium
• no cash values
• may have policy dividends
• best suited for decreasing needs that ultimately disappear

• Low initial premium
• Well suited to shorter-term, temporary needs
• Most plans can be renewed, if you are medically qualified

• Premiums in future years may become prohibitively expensive
• Insurance protection may cease before death
• Does not build any cash values

• Whole Life Insurance: The policy owner pays a fixed, level premium and cash values accumulate at a guaranteed rate of return. The insurance company promises to pay a guaranteed death benefit.
• Universal Life Insurance: The policy owner can increase or decrease premium payments and select from a level or increasing death benefit. Cash value accumulations reflect current interest rates.
• Variable Life Insurance: The policy owner pays a fixed, level premium and selects from a variety of investment options for cash value accumulations. There is generally a minimum guaranteed death benefit and the potential for higher death benefits, depending on the performance of the investment options selected. There is no minimum guaranteed cash value. Instead, the cash value available depends on the performance of the investment options selected.
• Variable Universal Life Insurance: The policy owner can increase or decrease premium payments and select from a variety of investment options for cash value accumulations. If a minimum premium payment schedule is maintained, there may be a minimum guaranteed death benefit. Cash values are not guaranteed. Instead, the cash value available, as well as the potential for a higher death benefit, depends on the performance of the investment options selected.

With disability income insurance, you are purchasing a stream of income to be delivered to you by an insurance company in the event you become disabled. The policy features and benefits should be coordinated with your needs and premium-paying ability. As you evaluate disability income policy features and benefits, remember that the choices you make will impact the premiums you pay and the benefits you are entitled to receive.

• Benefit Amount: What is the monthly disability income benefit?
• Waiting Period: For how long must you be disabled before the benefit begins? Common waiting periods are 60, 90, 180 or 365 consecutive days of disability.
• Benefit Period: For how long will benefits be paid? Common benefit periods are one year, two years, five years and to age 65.
• Definition of Total Disability: What definition of total disability must be met for benefits to be payable? The definition of total disability can range from the inability to perform your own occupation to the inability to work in any reasonable occupation based on your education, training, and experience. This is an important policy provision to evaluate.
• Partial Disability Benefit: Will the policy provide benefits for partial disability following a period of total disability? If so, how much and for how long? What requirements must be met?
• Rehabilitation Benefits: Does the policy pay any of the expenses of a rehabilitation program during a period of disability?
• Waiver of Premium: Will policy premiums be waived during a disability?
• Renewability: Is the policy guaranteed renewable? Under what conditions can premiums be increased?
• Other Benefits to Consider:
  • Additional Purchase Option – Right to purchase additional disability income protection without evidence of insurability.
  • Social Security Rider – Coordinates with an expected Social Security disability benefit.
  • Cost of Living Rider – In the event of disability, increases the disability benefit each year to compensate for increases in the cost of living.

What is Long-Term Care? It provides assistance to those who are unable to perform the Activities of Daily Living (ADLs), which for healthy individuals is done independently on a daily basis. Long Term Care Insurance is designed to help cover the costs of a long-term chronic health condition stemming from a stroke or Alzheimer's disease, etc.

At what age should you consider purchasing Long Term Care insurance? It is simply the best decision to purchase it when you are younger and healthier, as it will be less expensive and you will be less likely to be turned down for coverage due to health concerns.