As a benefits advisor, I would like to provide you a summary of the key components of the health care reform legislation and how it may impact you or your business. I expect that given the number of years that it will take to fully rollout these reforms, there will continue to be changes to many elements of the legislation. However, for the first time in over a year, we have a much clearer view of the changes that will potentially take place. This bill will:

• Mandate that everyone must have insurance. (This is the trade off to get Health insurance companies to accept all applications. Current situation in the individual market is if you have a prescription or medical condition then health companies exclude the coverage)
• Result in more than 30 million additional people becoming insured.
• Provide for subsidized coverage for people that can’t afford it and increase the number of people that will qualify for Medicaid.
• Make cuts to Medicare Advantage Plans and change their payment formula.
• Increase taxes and fees to many individual Americans and Corporations.
• Make many changes to the way Insurance Companies do business from not allowing them to use pre-existing conditions to limiting their rates based on medical loss ratios.

Many of these elements do not phase in for many years.  Those that are most immediate and are expected to occur in 2010 are:

• Tax credits for certain small businesses.
• Elimination of pre-existing conditions and an increase in dependant coverage to age 26.
• Creation of a temporary reinsurance program to provide coverage for retirees over 55 who are not eligible for Medicare. (This has been a huge issue for clients retiring early, as most in this age group when applying for health insurance after they leave work can’t get affordable rates or get coverage with exclusions).
• The further creation of a temporary national high risk insurance pool.
• The prohibition of lifetime limits on benefit payments.
• Closing the so called “doughnut hole” by providing immediate tax credits for Medicare patients who face a gap in prescription drug coverage.

The real impact in the health insurance system won’t occur until the year 2014.  During the interim, there will be the phase-in of additional new taxes that will provide added government revenue to pay for these changes.  The four most significant changes occurring in 2014 are:

• Insurers will be required to take all applicants. (This will help most people over the course of their lifetime)
• Insurance will be mandated for all Americans.
• Tax credits to help pay premiums will start flowing to middle-class working families.  The most aid – including help with copayments and deductibles – will be made available for those individuals and families on the lower end of the income scale.
• Insurance exchanges will be created to help administer subsidies for those individuals that require them.

When fully implemented, I believe that the majority of working-age Americans and their families will continue to have employer-sponsored coverage as they do today. In addition, through mandates and other subsidies, the number of people insured can grow by more than 30 million. But the rest of the story remains to be seen on how to control the cost of medical care going foward.

It is one of the most commonly repeated myths about insurance. Renters don’t need insurance because their landlord’s policy provides coverage for the renters’ property.

Renters insurance is basically like homeowners coverage without coverage for the structure. However unlike a home an apartment can have several buildings connected. This exponentially makes your chance for a fire or water damage occur, as many other units could affect your apartment and property. For example a neighbor starts fire with a cigarette, and it spreads to your apartment.

The Stats:

192 property crimes per 1000 rented households, making a renter 40% more likely to be a victim then a home owner.

U.S. Department of Justice Bureau of Justice Statistics – 2005

Average property loss in burglary is 1000

FBI – 2004

What does Renters Insurance Protect:

Renters insurance provides coverage for your possessions and for liability if someone injured while on your premises sues you. Renters insurance also covers any of your possessions when they are away from your residence, including in your car.

In addition, renters policies provide what are called additional living expenses. If some catastrophe covered by the policy — fire, bursting pipes — makes the place you are renting uninhabitable, the policy will pay some of the costs you incur to live somewhere else while the residence is being repaired.

 The best part is renters insurance cost as low as 75 per year for a minimal policy, and with a typical policy costing about 250 per year.

NOTE: There are often savings on your auto insurance policy if the renters and auto insurance policy are with the same company. That savings can make the true cost of the policy sometimes nothing or a few dollars a month.

You’ve just had an accident. At the scene, you need to do the following:

 1. Stop the car and get help for any injured drivers or passengers. Give whatever help you can to the injured (covering them with blankets, making them comfortable), but don’t move them. You could aggravate the injury(ies). Have someone call the police or highway patrol. Tell the police how many are injured and the possible extent of the injuries (whether they appear serious or not). The police can then notify the nearest medical units if they are needed.

 2. Protect the accident scene. Try to prevent further damage to the vehicles involved be setting up flares or getting your car off the road.

 3. Give the police officers whatever information they require, including your version of what happened. Do not admit you were at fault, either to the police or the other driver(s). Just give the facts as you see them. Ask the investigating officer how you can get a copy of the police report. You might need the report when you submit your claim to the insurance company. Stay at the accident scene until the police have left. (If it’s a minor accident, the police may not make a report. In fact, they may not even come to the scene if there are no injuries or serious damage to any of the vehicles involved). The officer plays a big role in documenting the accident and reports the facts from both sides and witnesses. Getting all this information is important because stories often change as time goes on. NOTE: If one party of the accident is ticketed by the officer then it’s almost certain that person will be at fault.

 4. If the officers refuse to come, you will want to see if you can find any witnesses and take pictures with a camera phone. This is also important in a parking lot accident, as there are no rules governing. By collecting this information you are protecting yourself from someone changing their story after the fact. Which in my personal experience the story will change about 50% of the time within 1-2 days. If it’s a hit from behind there isn’t much a changed story can do to change fault.

  5. Write down the names and addresses of all drivers and passengers involved in the accident, as well as the license number, make, model and year of each car. Make a note of the driver’s license number(s) and insurance information of the other driver(s). Write down the names and addresses of as many witnesses as possible. You can take pictures to help you document as well.

 6. Call your insurance agent or the local claim representative for your insurance company to report the claim. Actually, it’s a good idea to call your insurance agent in addition to the claim representative. If your agent is involved, it could help speed the claim process. You should also tell your agent if you are not satisfied with how your claim is being handled.

 7. Ask your agent or insurance company representative how to proceed and what forms or documents you will need to support your claim. Your insurer may require you to fill out a “proof of loss” form, as well as supply documents pertaining to your claim such as medical and auto repair bills, and a copy of the police report.

 8. Keep records of any expenses you have as a result of the accident, including any related to a temporary inability to work or perform basic household functions. Your policy may allow you to be reimbursed for such things as medical and hospital expenses, and lost wages.

 9. If you are not satisfied with how your insurer is handling/has handled your claim, make your feelings known to the company and to your agent.

      Ask an insurance agent, a mortgage broker, and a realtor “How much insurance should I have on my new home” and I will guarantee you will get three different answers.  The mortgage broker might say the loan amount, the realtor might say the market value, and the insurance agent, if he or she is doing their job correctly will say the replacement cost of the home.  So who’s correct?  In short, it has to be the replacement value. Homeowners want enough coverage to rebuild their home if a catastrophe happens.  Let’s take a look at how an insurance company comes up with this number.

      Insurance companies use a computerized “replacement cost worksheet” using historical data of building costs in a given area. This data is compiled by independent companies who do actual surveys of building costs and provide it to insurance companies and others in the construction business. One of the best known companies providing this information is Marshall & Swift. By plugging in the square footage, number of baths, style of the home, and the home’s other amenities into the worksheet a replacement value is determined.  The worksheet also considers the extra cost of rebuilding a home like demolition cost, debris removal, architectural plans, and even environmental costs.  The replacement value may be more or less than the home’s market value. In a depressed home market, this value could be more than what a home sold for. The replacement value could also be more than the sales price in a distress sale.  In a hot real estate market, the value could be, and usually is, less than what the home sold for.  The replacement value will also be less than the market value when a sale involves a large amount of acreage.  This causes a dilemma in that the mortgage company or bank wants the insurance to be equal or greater than the loan amount and the buyer doesn’t want to insure more than the replacement cost.  Many states have enacted laws stating lenders cannot force insurance above the replacement cost of a home due to this problem.  Keep in mind that the replacement cost worksheet works well in determining the correct amount of insurance for the average home in the average community.  High valued homes with a lot of customization present a different set of challenges.

Why do Insurance Companies Insist on Insuring at Replacement Cost?

      First and foremost, insurance companies and their agents want clients to have adequate insurance in the event of a catastrophe.  No one wins when a fire destroys a home and there is not enough insurance to rebuild what a family has worked long and hard to accumulate.  Insuring to replacement cost also ensures that the insurance company is collecting enough premium to set aside the reserves that are needed to pay its clients claims when they do happen.

      I hope this sheds a little light on the difference between the market value and that mysterious number insurers use call “Replacement Value”

You absolutely have insurance issues to consider when renting out your home. As you might have guessed, rental property owners have some unique insurance needs. A standard homeowners policy isn’t appropriate for rental property, because:

 (1) you don’t need to insure the contents of the house, unless you provide furnished accommodations;

(2) you need to be more concerned about liability issues; and

(3) you need to protect yourself against the loss of rental income.

 A good rental property policy should provide the following, however the best proactive protection you can do is rent to people with good credit scores, and offer to repair the small things before they become large issues.

Broad coverage for the physical structure of the house:

• Coverage for other structures located on the property (garages, sheds, etc.)–this coverage is often limited to 10 percent of the coverage for the house but usually can be increased if needed
• Coverage for your property left on the premises (appliances, maintenance equipment, etc.)  Many policies designed for rental properties give a minimal amount of coverage.  Check to make sure it is enough
• Coverage for loss of use, if you lose rental income as a result of a covered loss.  Many mortgage companies are now requiring that this coverage be included before providing a loan on a rental property.  Without this coverage you will have to reach into your pocket to pay the continuing mortgage payments.