Government Insurance 

• Life Only
• Social Security

The real name is Old Age, Survivors and Disability Insurance, or OASDI. Most Americans with earned income must participate.

Two Classifications of Insureds:

• Currently Insured – these are eligible for only a few benefits. Six out of the last thirteen quarters

• Fully Insured – these are eligible for all benefits. Forty quarters of coverage or at least one quarter for every year since turning twenty-one

Benefit levels: This depends on how much is or was paid in.  An average monthly wages are used to calculate the Primary Insurance Amount (PIA).

Note: These are not included in the calculation:

• Income that is over the Social Security limit

• The five lowest earning years

• Earnings during years in which the taxpayer was disabled

Benefits are paid as a percentage of PIA.

Benefits

Three types of benefits:

Retirement Benefits – Fully insured only.  Pays the taxpayer, maybe the spouse, dependent or disabled children following retirement.

Survivor Benefits – pays survivors meaning spouse and/or children following death during the taxpayer’s working years.

Note: The Blackout Period is the cessation of benefits when dependent children turn 18 or until the spouse reaches, retirement age and benefits start again.

Disability Benefits

The fully insured is only one covered.

Qualifications: Unable to engage in any gainful activity due to physical or mental impairment.  The disability will last for twelve months or is expected to last twelve months, or will result in death. There is a six-month waiting period after eligibility.

The Prime Directives:

• Part One: The Federal government does not tax wealth. They tax the transfer of wealth. Ownership of the money must change hands because there will be a tax impact.
• Part Two: If the money is earned, the receiver is taxed.  If the money is a gift, the giver pays tax.
• Part Three: The coming or going rule. If you were not taxed on the way in you will be taxed on the way in, the principle will not be taxed on the way out.

Some Specifics:

Life Insurance Proceeds:

• Not taxed

• Go to the beneficiary

• On the death of the insured

However, interest earned on the proceeds will be subject to tax.

Cash Value: Taxes on the growth are sheltered as long as the money is left with the company. If the policy owner takes the cash value, the growth will be taxed as ordinary income for the year in which the money was received.

Dividends: Paid by a mutual company to it’s policy owners and are not subject to tax.  However, interest earned on the dividends will be subject to tax.

Loans:  Not taxed because there is no change in ownership.

Cash value that grows too quickly will lose tax advantages.  The Tax Reform Act of 1984 virtually eliminates the Endowment policies. Under TAMRA, any policy whose cash value grows faster than a Seven Pay Whole Life becomes a Modified Endowment Contract.

Flexible and variable policies have ways in which to keep the death benefit ahead of the cash value to avoid negative tax impacts.

A Section 1035 Exchange is when one policy is exchanged for another policy. This is not taxed.

Business Uses of Life Insurance: Who will be the beneficiary? If the business is the beneficiary, no taxes on the proceeds, but the premiums are not tax deductible.  Policies in which the business is not the beneficiary the premium will be deductible as an expense.

Louisiana Medical Expense Plans

There are a number of reasons people suddenly find themselves in the market for medical expense plans and looking for affordable cheap health insurance quotes. Loss of a job is a leading issue, but even employed people are finding benefits shrinking and gone completely leaving them and their families in danger. One accident or even a minor illness can cause a financial crisis that could be avoided with an affordable health insurance policy.

What Health Insurance Options people searching for should know

Look for the most coverage they can afford. By using the provisions, possible within insurance company consumers can often tailor plans to meet their own needs. The first choice they will need to make is between managed care policies such as HMOs and PPOs where they will need to either select a primary physician or choose doctors from a group of participating members, and a traditional POS point of service plan that allows them to choose any doctor regardless of location or participation. Each level has pros and cons that will affect the cost of the policy.

Choosing deductibles that are affordable but may help lower insurance premiums. A larger deductible will make the health insurance quotes more reasonable and opening a HSA (health savings account) that will provide an income tax savings as well as give a cushion to be able to afford high deductibles.

Making sure the health insurance quotes include all of the special needs for families may have such as a need for dental, vision, and prescription costs as well as senior specific needs like Medicare Part B coverage.

High Risk Insurance

If the consumer is in a group of individuals considered a high risk for insurance because of severe disabilities or pre-existing medical conditions they may be eligible for state run programs to protect them from the exorbitant costs of health care.

Major Medical Corporations

Do not discount health insurance quotes from major medical corporations. The cost of premiums from such companies is usually less expensive because of the number of members they have enlisted in their plans. Big national companies are also more likely to have a full list of available options to choose from.

Questions for Health Care Choices

Once obtained the health insurance quotes requested and consumer has narrowed down the companies that they wish to consider here are a few questions to ask them:

• What are the limits on hospitalization, medicine, or well-care office visits.
• Are there maximum lifetime benefits?
• Do they pay for ambulance, or peripheral care?
• Do they cover medical expenses when you travel, or are on vacation?
• Can a higher deductible lower my premium?
• Is there a co-pay on office visits or emergency care?

Consumers should not put off making the important decision of medical insurance coverage. Illness and injuries happen without notice and to anyone, anywhere. They should go online, find one of the many websites that provide multiple health insurance quotes at one time so they can compare what is available to them in their area for their own needs, and be sure their family is protected.

More Helpful Information:

Louisiana Department of Health

Resources:

• Trying to Simplify the Health Insurance System for Better Coverage
• The Need for Change in The American Health Insurance and Health Care Systems
• Questions About the Language and Paperwork Involved with Health Insurance
• Dealing with Health Insurance Claims and Reimbursement Issues
• What’s Medically Necessary, and Traditional Vs. Self-Funded Health Insurance Plans

Articles:

• Dealing with Multiple Health Insurance Bills and Inaccurate Medicare Information
• Long-Term Care Issues and Gaining Health Insurance Funding to Cover Disabilities
• Where to Get Specific Information on Advocacy Groups and More

This is an optional quiz you may take to review the content of this unit.

Your answers are not submitted for credit. Only the final test of this course is submitted for credit.

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