How Long Can Your Human Asset Keep Paying Dividends?
When Time magazine’s cover declares “Jobs are the new assets,” you know there’s been a re-awakening to the value of human capital. A brief overview of why human capital is so important in individual financial programs, and what you can do to enhance and protect what is arguably your most important asset.

The Logic of a Longevity Annuity
Who would buy a financial product that won’t pay penny for 25 years and if the account holders don’t live that long, they lose their entire investment? Sounds like a very bad investment. But it’s also a very interesting insurance idea that allows individuals to spend down their wealth in retirement – and not go broke. (Oh, and there might even be a better way to accomplish the same thing.)

Non-Cancelable and Guaranteed Renewable: Contract Language You Need
When you consider disability insurance, several clauses in the contract determine who really has control over the long-term value of the coverage. Find out why “non-can” can make all the difference.

FINANCIAL LITERACY QUESTION: How much is a TRILLION?
(You’ve got to see it to believe it!)

Complete PDF HERE.

A look at how psychological biases sometimes get in the way of preparing for change, and how changes 30 years in the making may shape your financial future. (Comes complete with recommended principles of action!)

The IRA: A Case Study in Present-Event Bias

An example of what happens when economic changes cause a rethinking of government regulations.

Long-Term Care Insurance Continues to Change – 

Is Now the Time to Buy?

As long-term care insurance goes through several changes, what should consumers do about meeting this financial challenge? Some news and views for right now.

FINANCIAL LITERACY QUESTION: How many Americans get to retire on their own terms?2009-mar1

On the front page of its Business section, the Washington Post (1/25, F1, Haynes) reported, “A growing number of workers in 2009 will pay more for health benefits — and in some cases receive less coverage — as their employers grapple with the financial fallout of rising medical expenses and diminished revenue and profits, recent surveys of human resource officials show.” According to the Corporate Executive Board, “30 percent of the employers” surveyed “said they expected to raise deductibles an average of 14 percent in 2009,” while “Mercer, a global benefits consulting firm,” discovered that of the “nearly 2,000 large corporations” surveyed, “44 percent planned to increase employee-paid portion of premiums in 2009.” Additionally, in order to “cut costs, employers increasingly are introducing high-deductible health savings accounts (HSA) and focusing on wellness programs,” the Post noted. The article went on to discuss specific examples of employers that are increasing employee premiums or adding the option of HSAs in 2009.

As your friendly neighborhood Health Insurance Professional, I’ll offer my sage advice on this: Raise the deductible first. It makes a lot more sense to shift RISK to the employee (within reason) than it does to shift PREMIUM to the employee, and if the employees are properly educated on their options, then they will prefer to MAYBE spend an extra few hundred or couple of thousand dollars a year, then to DEFINITELY have that much or more additionally taken out of their paycheck.

The Post article, as is common with press regarding the Private Health Care System in the U.S., displays an utterly unrealistic view of that system (I know…really shocking). This, for instance:

Carter, a technical editor for a District consulting firm and mother of twin boys and a girl, is facing steep increases in out-of-pocket expenses for health coverage this year. What she shells out for premiums and co-pays more than offsets any fuel savings. Her employer picks up 50 percent of the coverage for her family, up from 33 percent a few years ago. But because insurance costs have soared, she says she’s actually paying $200 a month more in premiums.

Her co-pays also have risen to $30 from $20. That extra $10 adds up, Carter of Bowie says, with “accident prone” teenagers in and out of the emergency room: Her 19-year-old track star son suffered a lacerated liver, broken rib and concussion when he slipped and fell on wet pavement. Her 16-year-old cheerleader daughter who is asthmatic is in physical therapy three days a week for a dislocated knee. Carter and her other son contribute to the costs with visits to the doctor for serious flare-ups of asthma.

So the companies are paying a higher percentage of the premiums than they were (very rare) but its a “sucker-punch” to expect policy-holders to pay an extra $10/doctor visit.  The truth is, the company is likely not raising copays ENOUGH, which is one of the reasons why costs keep going up.  If Ms. Carter actually had an in-network DEDUCTIBLE (which from this it doesn’t look like she does) the company AND her would fork out a LOT less money monthly for her coverage.

Here Locally in Loudoun County, the School Board has the option (and it looks like it’ll happen) to increase copays on prescriptions from a 5/20/40 to a 5/25/45 tiered system.  How much is that going to save Loudoun Taxpayers (to say nothing about how much it’ll save out of School employees’ checks every month)?  Over $1,000,000.

An extra $5 per prescription MAYBE saves roughly $10/employee/month DEFINITELY.

If your employees (or your employer) are NOT educated on these phenomena, then feel free to shoot me a note at wdporter@gcfin.com, and I’ll be happy to help.

_______
Butch Porter
Goose Creek Financial
Loudoun Health Insurance Professional

And since I’m not qualified to make recommendations on health or mental health, please take this post as an informational piece and not a position piece.  That being said, I’m hoping my medical professional colleagues have some opinions on the issue, so here goes.

This article comes via a friend of mine who is a post-doc in NeuroScience at Baylor University.  The abstract of the article is as follows:

What is attention-deficit hyperactivity disorder (ADHD)? Why are so many children being diagnosed with ADHD and prescribed medication? Are stimulant drugs an effective and safe treatment strategy? This article explores the current state of scientific research into ADHD and the key social and ethical concerns that are emerging from the sharp rise in the number of diagnoses and the use of stimulant drug treatments in children. collaborations among scientists, social scientists and ethicists are likely to be the most promising route to understanding what ADHD is and what stimulant drugs do.

The article goes on to explore such issues as: the validity of diagnoses, alternative treatments, ethics of medicating children, etc.  A couple of excerpts I found interesting:

Diagnoses of psychiatric disorders are controversialbecause they are based on clinical assessment of behavioural symptoms: there are no laboratory tests to determine no unequivocally whether a subject has the disorder. In the case of ADHD, this problem is exacerbated by the fact that ADHD symptoms are difficult to distinguish from normal childhood behaviours. As long as there is no clear and indisputable scientific rationale for the growing rates of ADHD diagnosis and treatment in children4, the validity of ADHD diagnosis will continue to come under social and ethical scrutiny.

and:

In the future, better diagnoses and more comprehensive understanding of ADHD aetiology are likely to have a positive impact on treatments for ADHD. At this time, however, the state of scientific understanding is not sufficient to overcome the problem of over-diagnosis of ADHD and overuse of stimulant drug treatments. In this context, it is necessary to evaluate the ethics of medicating children for ADHD.

Safety is a paramount ethical issue in psychotropic drug treatments for children with ADHD. children are not small adults; nevertheless, most of the psychotropic drugs that are prescribed to children have only been tested on adults. Although stimulants have been used to treat childhood behavioural problems since the 1930s, there have been few systematic longitudinal scientific studies of the long-term effects of stimulant drug use in children. Moreover, an increasing number of children are taking not just a single psychotropic drug, but a combination of these drugs. The fact that there are no safety data available for drug cocktails does not dissuade parents and clinicians from using these drugs off-label in children, in increasing quantities and in ever younger populations of children. The FDA has attempted to resolve this problem by providing 6-month patent extensions to drug companies that conduct follow-up studies in children. However, the pharmaceutical industry selectively reveals psychotropic drug trial results and has concealed unfavourable safety data. These are compelling reasons why careful, systematic follow-up of children taking psychotropic drugs is essential.

The main reason I post this is, of course, that a fairly sizable number of my clients and/or their children are taking or have taken medications for ADHD and it’s important that we all have as much information as conceivable.  Plus, since I have a kid of my own, I’m always thinking of what it’s going to be like a few years down the road when I get that note from the principal:  “Your kid is fricking crazy, put him in an institution for Pete’s sake!”

_________

Butch Porter
Goose Creek Financial
Loudoun County’s best source for Health Insurance Expertise
703-651-3705

It is easy to understand why, this time of year, many are struck with a case of the winter blues. We leave for work before the sun comes up and head home in the dark barely glimpsing daylight. As the days get shorter and colder many find themselves dealing with sadness, increased appetite and excessive sleeping. What they may be experiencing is more than a case of the winter blues, but rather seasonal affected disorder, or SAD. Many of my clients suffer from this disorder and often they just expect it is a part of the season that will pass, but there are treatments that can alleviate or lessen the symptoms.

SAD is a mood disorder associated with depression and related to seasonal variations of light. SAD has been linked to melatonin, a sleep-related hormone secreted by the brain’s pineal gland. This hormone, which can cause symptoms of depression, is produced at increased levels in the dark. So, as the days become shorter, these effects are felt by an estimated 6% of Americans. Eighty percent of those who suffer from SAD are estimated to be women, though the reasons for increased depression in women are not yet understood.

According to the National Institute for Mental Health, SAD symptoms include: Regularly occurring symptoms of depression (e.g., excessive eating and sleeping and weight gain) during the fall or winter months; full remission from depression occur in the spring and summer months as well as a craving for sugary and/or starchy foods. Just as sunlight affects the seasonal activities of animals, such as reproductive cycles and hibernation, SAD may be an effect of seasonal light variations in humans. As seasons change, there is a shift in our “internal clocks” or circadian rhythm, due partly to these changes in sunlight patterns. This can cause our biological clocks to be out of “step” with our daily schedules. The most difficult months for SAD sufferers are January and February.

Phototherapy or bright light therapy has been shown to suppress the brain’s secretion of melatonin. Although, there have been no research findings to definitively link this therapy with an antidepressant effect, many people respond to the treatment. The device most often used today is a bank of white fluorescent lights on a metal reflector and a shield with a plastic screen. For mild symptoms, spending time outdoors or arranging homes and workplaces during the day to receive more sunlight may be helpful. One study found that an hour’s walk in winter sunlight was as effective as two and a half hours under bright light. If phototherapy doesn’t work, an antidepressant medication may prove effective in reducing or eliminating SAD symptoms, but there may be unwanted side effects to consider with medication.

If you or someone you know struggles with depression this time of year, you should contact your physician or a mental health professional to accurately determine A diagnosis and treatment. Keeping an accurate log of your mood, energy, eating and sleeping habits over time will be helpful for determining whether any changes are in fact seasonal. Although you may be tempted to boost your exposure to light around the home, consultation with a medical professional will be important because the intensity, frequency, and duration of light treatments may vary from individual to individual. Additionally, a professional may recommend other forms of treatment in addition to light therapy.

Remember that small things like a walk on a sunny winter day can be a boost both physical and mentally. And spring is only a few months away!

Data indicate cost disparities among women, men for individual insurance policies.

The New York Times (10/30, A23, Pear) reports, “Striking new evidence has emerged of a widespread gap in the cost of health insurance, as women pay much more than men of the same age for individual insurance policies providing identical coverage, according to new data from insurance companies and online brokers.” Price quotes and rate tables indicate that “the disparities are evident in premiums charged by major insurers like Humana, UnitedHealth, Aetna, and Anthem.” And, although “in job-based coverage, civil rights laws prohibit sex discrimination,” the “individual insurance market is notoriously unstable.” While “some insurance executives expressed surprise at the size and prevalence of the disparities,” others, such as women’s advocacy groups, “have raised concerns about the differences, and members of Congress have begun to question the justification for them.” Still, citing more use of healthcare services among women, “especially in the childbearing years,” insurance companies “say they have a sound reason for charging different premiums.”

This, like a myriad of things that comes out of the New York Times, is INSANE.  What’s missing is three simple facts:

1) Women use the doctor more…period.  To not take that into account from an actuarial standpoint would be completely and utterly insane.  It’s not a civil rights issue that women use the doctor more.

2) Maternity is typically automatic with Group Health Insurance, it’s rarely an option.  The last I checked, men are not getting pregnant…at least as far as I know.

3)  Women pay less for Life, Long Term Disability, Long-Term Care insurance, Car Insurance…and Men special interest groups, the last time I checked, weren’t lobbying Congress to equalize that playing field.

_________

Butch Porter
Goose Creek Financial
Loudoun County’s best source for Health Insurance Expertise
703-651-3705

Researchers estimate that there are between 8-25 attempted suicides for each teen suicide death and that four out of five teens who attempt suicide have given clear warnings.  There are many behavioral indicators that can help parents or friends recognize the threat of suicide in a loved one. Since mental and substance-related disorders so frequently accompany suicidal behavior, many of the cues to be looked for are symptoms associated with such disorders as depression, bipolar disorder anxiety disorders, alcohol and drug use, disruptive behavior disorders, borderline personality disorder, and schizophrenia.

Some common symptoms of these disorders include:

• Extreme personality changes
• Loss of interest in activities that used to be enjoyable
• Significant loss or gain in appetite
• Difficulty falling asleep or wanting to sleep all day
• Fatigue or loss of energy
• Feelings of worthlessness or guilt
• Withdrawal from family and friends
• Neglect of personal appearance or hygiene
• Sadness, irritability, or indifference
• Extreme anxiety or panic
• Self-destructive behavior (drinking alcohol, taking drugs, or cutting, for example)
• Poor school performance
• Difficulty concentrating

Tragically, many of these signs go unrecognized and while suffering from one of these symptoms certainly does not necessarily mean that one is suicidal, it’s always best to communicate openly with a loved one who has one or more of these behaviors, especially if they are unusual for that person.

There are also some more obvious signs of the potential for committing suicide. Putting one’s affairs in order, such as giving or throwing away favorite belongings, is a strong clue. And it can’t be stressed more strongly that any talk of death or suicide should be taken seriously and paid close attention to. It is a sad fact that while many of those who commit suicide talked about it beforehand, only 33 percent to 50 percent were identified by their doctors as having a mental illness at the time of their death and only 15 percent of suicide victims were in treatment at the time of their death, according to the National Institute for Mental Health.  Approximately one-third of teens who die by suicide have made a previous suicide attempt, so a history of suicide attempts is a cause for careful monitoring of behavior.

If you or is someone you know exhibits any of the warning signs of suicide, get help right away.  Talk to someone you trust as soon as you can, such as a parent, teacher, school counselor, or therapist.  If you are uncomfortable talking about your feelings with someone you know, call a suicide crisis line (such as 1-800-SUICIDE or 1-800-999-9999) or 911.  These toll-free lines are staffed 24 hours a day, 7 days a week by trained professionals who offer confidential support to help you work through tough situations.  Counselors and therapists can also provide emotional support and can help teens build their own coping skills for dealing with problems.  Ashburn Psychological Services has a highly trained team of psychiatrists and psychologists to assist you should you be concerned about your teen’s social, emotional or behavioral functioning.

Mr. Jacoby is very explicit in explaining the history of the problem:

During World War II, federal wage controls barred employers from raising their workers’ salaries, but said nothing about fringe benefits. So firms competing for employees at government-restricted wages began offering medical insurance to sweeten employment offers. Even sweeter was that employers could deduct those benefits as business expenses, yet employees didn’t have to report them as taxable income. For a while the IRS resisted that interpretation, but Congress eventually enshrined the tax-exempt status of employer-based medical insurance in law.

Result: a radical shift in the way Americans paid for medical care. With health benefits tax-free if they were employer-supplied, tens of millions of Americans were soon signing up for medical insurance through work. As tax rates rose, so did the incentive to keep expanding health benefits. No longer was medical insurance reserved for major expenditures like surgery or hospitalization. Americans who would never think of using auto insurance to cover tune-ups and oil changes grew accustomed to having their medical insurer pay for yearly physicals, prescriptions, and other routine expenses.

Now, I actually don’t agree with the part of McCain’s proposal that taxes employer-based coverage.  I’m more interested in parity (making sure that individuals get the same tax cut), than I am a punitive approach.  But it at least cuts at the core of the problem: the individual has been left out of the process for far too long.  It’s actually just a little too harsh.

I preferred the plan that President Bush proposed in a State of the Union address a few years ago (seems like so long ago), and that was a tax-credit (and a pretty sizable one, if I recall) for those participating in Consumer-Driven (High-Deductible) Health Plans.  That would have accomplished a lot as far as getting more control of costs back in the hands of the consumer without giving a Democratic contender ammunition to call the Republican contender a tax-hiker.

(Mirrored on logipundit.com)

_________

Butch Porter
Goose Creek Financial
Loudoun County’s best source for Health Insurance Expertise
703-651-3705

NAHU (National Association of Health Underwriters) sent me a good summary this morning, so I’ll give you some excerpts:

Modern Healthcare (10/2, DoBias) explains that the Senate measure “includes the already agreed upon mental-health parity language that passed the Senate as part of a tax-extenders package and the House as a stand-alone bill.” According to MedPage Today (10/2, Walker), an earlier mental health parity bill, passed by the House in March, “was dead on arrival in the Senate because of language that would have required insurance companies to give equal coverage to all mental illnesses outlined in the DSM [Diagnostic and Statistical Manual of Mental Disorders]. This was a far-reaching stipulation that made some conservatives squeamish,” according to Peter Newbould of the American Psychological Association’s Practice Organization. The new mental health parity language, included in the rescue plan, “removes any mention of the DSM.”

[...]

Meanwhile, the New York Times (10/1, A28) editorializes, “The bill is endorsed by President Bush, business groups, insurance companies, the medical community and mental health advocates. … But it requires a final shove because the measure is snarled in a broader legislative struggle over how to pay for tax revenues that would be reduced by this measure and others. Is there a statesman who can push this worthy parity legislation through to final passage before adjournment?

I’m not a mental health expert and I don’t even play one on TV, but “Mental Health Parity” is not something that I have always been an ardent supporter of.  It would be good for me, insurance companies, medical professionals, medical health advocates, etc.  I’m just not 100% sure that it’s good for patients.  This is most likely because I don’t believe that “medicine” is always the best approach to mental health problems, but if I talk any further I will begin to effectively display my ignorance on the matter.  I’m hoping to get some input from our “Behavioral Medicine” specialist.  If and when I do, I’ll post again or have him do so.

_________

Butch Porter
Goose Creek Financial
Loudoun County’s best source for Health Insurance Expertise
703-651-3705