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March 17, 2016 - Understanding How Health Insurance Works
How Does Health Insurance Work? By HealthPlans
1. You have an health issue.
2. Visit your doctor.
3. Your doctors bills your insurance provider.
4. Your insurance provider reimburses your doctor.
Key Health Insurance Terms
40% of uninsured Americans don't understand key health insurance terms.
The amount you pay each year to cover eligible medical expenses before your insurance policy starts paying. After you pay your deductible, you only pay a copayment or coinsurance.
A percentage that you pay to share the cost of covered services with your insurance provider after your deductible has been paid. For example, if the co-insurance is 20%, the insurance company pays 80% of the claim and you pay 20%.
A flat fee for certain medical expenses; your insurance company pays the rest.
The amount you pay for your health plan every month to purchase health coverage.
The max amount you will pay during a year for coverage. It includes deductibles, copayments, and coinsurance. Beyond this amount, the insurance company covers 100% of eligible medical expenses for the remainder of the year.
All plans include access to : ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services including behavioral health services, prescription drugs, rehabilitative services, laboratory services, preventive and wellness services, chronic disease management, pediatric services including oral and vision care.
Your medical costs include all deductibles, co-insurances, and co-pays that do not go over your limits.
Your insurance company will be responsible for all medical costs after your limits are met.
How Much Will I Pay?
Plans are categorized into 5 levels. Your level determines how your medical bill is divided between you and your insurer.
27 million+ uninsured Americans are eligible for financial assistance.
53% of uninsured Americans don't know that financial help is available
Eligibility Takes into Consideration:
Household size and adjusted annual income range.
If your household falls into these income ranges, you might be eligible for subsidies:
Other Qualifications for Subsidy:
Legal US resident, not incarcerated, and no affordable minimum essential coverage.
Health Insurance Basic Plan Types
Most restrictive. Requires you to choose a Primary Care Physician (PCP) from their provider networks. If you go out of network, you have to pay all medical costs.
Most flexible. You need not stay in-network for health care and do not have to use a PCP. You can go out of network for care, but you will receive less coverage.
POS plans are hybrids of HMO and PPO plans. You must choose a PCP, can go out of network and still receive insurance coverage. Out-of-pocket expenses are substantially higher if you do not get referrals for non-network care.
EPO plans are hybrids of HMO and PPO plans. You must choose a PCP, can go out of network and still receive insurance coverage. Out-of-pocket expenses are substantially higher if you do not get referrals for non-network care.
Having health insurance protects you from health and financial risks:
Health insurance covers essential health benefits critical to maintaining your health and treating illness.
Health insurance protects you from high medical costs. 62% of personal bankruptcies in America are caused by medical bills.
You pay less for covered in-network health care, even before you meet your deductible.
If you have qualifying coverage, you don't have to pay any tax penalties.
You get free preventive care, like vaccines, screenings, and some check-ups, even before you meet your deductible,
Comparing health insurance plans and finding the coverage that's right for you can be a complicated and difficult process, but it doesn't have to be.
March 14, 2016 - Trump and Your Retirement
You Can’t Retire on the Trump Bump By Bloomberg
U.S. stocks keep on booming, but they may not deliver the long-term returns many hope for.
The S&P 500 has returned more than 11 percent since the election of President Trump on Nov. 8, adding a bit of renewed thrill to a bull market that’s already eight years old. Clearly, investors are feeling optimistic about the prospect for returns. But many companies that put individual investors’ money to work for the long run have been arguing for lower long-term expectations.
That’s not a judgment on Trump or his economic policies—it’s about equity valuations and fundamentals that were in place before the election. Last year, Horizon Actuarial Services LLC surveyed 35 investment advising companies about their working assumptions for returns. On average, they anticipated annual returns from U.S. large-company stocks of about 7 percent for the next decade. Not bad, but it may feel like a comedown: Since the market turned around in 2009, it’s churned out an annualized 17 percent return, according to S&P Dow Jones Indices. Since 1925, accounting for many cycles of bull and bear markets, stocks have returned about 10 percent annualized.
The so-so projections from the experts would come as news to many people saving for retirement. The giant asset manager BlackRock Inc. recently polled 1,000 participants in workplace savings plans and found that 65 percent weren’t familiar with forecasts saying stock and bond returns could be significantly lower than they’ve been in recent decades. Most said they expect future returns to mirror those of the past.
Among long-run forecasters, Rob Arnott, founder of investment adviser Research Affiliates LLC, is on the bearish side, but his process is similar to one many use. He calls it “simple arithmetic.” He assumes stock returns over long periods will consist of the dividend yield they pay, plus the growth rate of earnings and dividends, including inflation. Today S&P 500 stocks yield an average of about 1.9 percent, and the growth rate over the past century has been about 4.3 percent. That’s a mere 6.2 percent expected return. Stock returns were often higher in the past because dividend yields were higher, too. “Most people pay no attention to arithmetic, because it gives them answers they don’t want to hear,” Arnott says.
That math assumes there’s no change in investors’ basic appetite for the risk of holding stocks. If they become more confident, that could push up valuations and add another bump to returns. Is that part of what’s been happening since the election? Robert Shiller, the Yale economist and Nobel Prize winner famous for his work on the effects of market psychology, says it’s hard to tell.
“It’s a mysterious time to be predicting market psychology—it’s not like most times in history,” he says, in part because interest rates and bond yields are still unusually low, which tends to make stocks look more attractive to investors. Trump has part of the population feeling more optimistic, Shiller says, but “the market started going gangbusters under Obama and has just continued upward under Trump.”
One effect of that long rally is that stocks look relatively expensive. The average price-earnings ratio for stocks in the S&P 500 is 18.3, based on consensus estimates of 2017 earnings. That’s near the high end of the historical track record, says Fran Kinniry, a principal in the investment strategy group at Vanguard Group, which manages more than $4 trillion in assets. And when he looks at other valuation measures—such as those based on companies’ revenue or free cash flow—they’re all in the top 25 percent of historical readings.
29.6: Ratio of stock prices to the past 10 years of earnings. The average ratio over the past 100 years was 17; the high was 44, in 1999
Similarly, Shiller points to a measure he helped popularize, called the cyclically adjusted p-e ratio, or CAPE, which compares prices with the average of earnings over the past 10 years to smooth out the ups and downs of the business cycle. When the CAPE is high, Shiller has found annual returns will tend to be lower over a long period. A low CAPE augurs above-average returns.
The average CAPE ratio for U.S. stocks over the past 100 years was about 17. It stands at 29.6 now—the only times it was higher were in 1929 and around the dot-com bubble, Shiller says. Those are worrisome precedents, but he’s quick to point out that during the dot-com episode the valuation multiple climbed to above 44 in 1999.
Valuation explains about 40 percent of returns, says Vanguard’s Kinniry; the other 60 percent is unexplained—the market is just plain noisy that way. So instead of predicting a single number for future returns, Vanguard prefers to think of a probable range of outcomes. Kinniry says there’s a 25 percent or so chance that over the decade stocks will deliver the double-digit returns many investors expect. There’s the same chance of an average return of 3 percent or less. In that scenario, it will be hard for many to fund a comfortable retirement without extraordinarily diligent saving.
Bonds don’t offer an especially appealing alternative, given that 10-year U.S. Treasuries are paying just 2.5 percent. “That’s why it’s not so clear you want to exit the market,” Shiller says. “It’s not clear at all.” Even so, Kinniry and others have been advising individual investors to rebalance their portfolios to account for the big rise in equities—in other words, shift money from stocks to bonds. The strategist notes that there’s been a lot of money flowing into equities over the past three months. “What you’d want to see is cash flow be countercyclical to maintain asset allocation, to go into bonds,” Kinniry says. “But unfortunately investors buy past returns.” Even with low returns, high-quality bonds offer diversification when equities are in a bear market. Not that he’s predicting one, mind you.
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