How I Choose a Health Plan

It’s that time of year again when employees must renew their employee benefits and health insurance is always top of mind. Your company may or may not have made any changes, but it is important to note that there are certain things that must be elected each year and are not automatic, such as Flex Spending Account (FSA) elections. FSA elections do not carry over each year and the limits usually increase slightly.

Compare plans

On to health insurance and how I look at plans for comparison. I have compared numerous plans over the years and the first thing I start with is the worst-case scenario which is comparing how much the insurance company pays vs. how much you must come out of pocket. Insurance companies and their actuaries are smart and usually when looking at the different levels of coverage offered, typically the worst-case scenarios are the same. So, if something catastrophic happens, you most likely will be coming out of pocket with same amount of dollars (premiums plus deductibles and coinsurance).

 

Transfer of risk

This makes sense because insurance is actually the transfer of risk, and we just must decide how much risk are we willing to transfer to the insurance company. If we want to transfer more of the risk, then we choose a plan with higher premiums. If we are willing to take some of that risk ourselves, then we take on a little less insurance. The goal with insurance is to NOT use it.

Now that we understand the concept of transferring the risk, look at your current situation and family set up. What is the likelihood of you using your insurance? A young, single person who doesn’t take any medications and rarely goes to the doctor probably does not want to choose the most expensive health plan. They may want to choose one with lower premiums and higher deductibles because they are not likely to use the insurance. Instead, they may want to leverage a high deductible plan with an HSA (Health Savings Account).

If you have a large family with kids playing sports or a known surgery coming up, then you may opt for the plan with the higher premiums and lower deductibles because you are likely going to utilize your insurance a lot more. You may also have access to a Flex Spending Account (FSA) where you can have some money set aside each paycheck to help with additional medical expenses throughout the year.

Evaluate your own family situation

In summary, when choosing a health plan, you should start with evaluating your own family situation, then decide how likely it is you will be utilizing your insurance. Once you understand this, then you can look at the premiums, copays and deductibles to see what makes the most sense for your family situation. Then you may be able to supplement these choices with other employee benefits that may be offered, such as HSA’s and FSA’s. If you need help reviewing your employee benefits, this is something we do here at Financial Journey. Set up a free introductory call to see how we can help!

Financial Journey LLC is a registered investment advisor offering advisory services in the states of Florida, Alabama, Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

5 Questions You Should Ask When Hiring a Financial Advisor

Finding the right Financial Advisor for the job is so important! You need someone who is trustworthy, competent, and affordable. 

Questions To Ask Yourself

Before you interview a financial advisor, you need to ask YOURSELF a few questions: 

  • What are you looking for in a financial advisor?
  • What services do you need?
  • What are you willing to pay for them?
  • How often do you want communication (frequent in-person, occasional call, or email)?

Knowing your goals and communication style will help you to quickly determine which financial advisor is the right one for you.

Questions To Ask a Financial Advisor

  1. Are You a Fiduciary?

You want your financial advisor to say yes! Fiduciaries are financial advisors who are required to:

  • Put the client’s interests first
  • Disclose important information, including their fees
  • Reveal any conflicts of interest
  1. How Do You Get Paid?

Financial advisors can make their money in several different ways:

  • Hourly
  • A fee based on a specific service
  • A percentage of the managed assets
  • A sales commission on investment products

To avoid any conflicts of interest, look for an advisor who is “fee-only.” 

  1. What Services Do You Provide?

Different advisors may only support you in certain financial areas, such as:

  • financial plans
  • managing assets
  • investment advice
  • retirement
  • insurance
  • tax planning

Before you hire a financial advisor, know what services are offered and if there are any extra costs for additional services. 

  1. What’s Your Philosophy on Investing?

A good financial advisor should fit your needs. You want someone whose investment philosophy matches yours and uses strategies that you understand. This will help you feel more secure through the ups and downs of the market. 

  1. Who Are Your Typical Clients?

You want to work with a financial advisor who has experience working with people in your situation. 

Conclusion

A good financial advisor should expect questions like these. They understand how important the relationship is between the advisor and the client and want a good fit for both parties which is why you should interview more than one. 

Your financial advisor is an important person in your life. Take your time to consider all the candidates and choose the one who’s best for you.

If you are looking for a trusted partner to help you navigate financial decisions, we are here to help. Schedule a meeting with us today to see how we can help you with your own financial journey. 

 

Financial Journey LLC is a registered investment advisor offering advisory services in the state of Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

Long Term Care Insurance

Long Term Care Insurance provides a benefit for your long-term care as you age. Long term care is the care you need when you cannot perform your activities of daily living (ADL’s). There are six ADLs associated with long term care. They are bathing, dressing, eating, transferring, toileting and continence. Usually, your long-term care insurance kicks in after you cannot perform two ADL’s or memory care issues.

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Disability Insurance

Do you need disability insurance? Would you want to protect your largest asset? If so, then I would say yes, you need disability insurance. Your largest asset during your working years is your ability to make money. According to the Council for Disability Awareness, more than one in four of today’s 20-year old’s will be out of work for at least a year due to a disability before they reach full retirement age. That is an alarming statistic.

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Life Insurance

Why do you need Life Insurance? Not everyone does need life insurance. You need to think about your current situation. For example, if you own a home with your spouse and you pass away tomorrow, would you want to make sure your spouse has enough money to not worry about the mortgage payment? What if you have kids—would you want to make sure there are some assets available for childcare while your spouse works in addition to having funds for the mortgage payment?

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