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Old 09-27-2013, 08:04 AM   #61
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I hate to mention it but it is sort of like permanent (aka whole) life insurance where you pay more than term rates when you are young to have the right to pay less than term rates when you are older.

The rub is, with whole life your right to buy for less when you are older is contractually guaranteed, whereas with health insurance it isn't.
I have only two data points on whole life. In my personal policy that I dropped years age, the premium was level but when young more of the payment went into "savings" because the insurance part increased with age. In my FIL's policy which he purchased at 65 (who knows why) also had increasing insurance cost with age but it did eventually flat-lined at the premium amount. I can't remember what his age had to be but he died at 89 without reaching it. So, reaching the level insurance cost that equals the premium would agree with your point but it's not applicable to most people.

I don't know if "modern" WL policies are level insurance. You could be right with more recent practices. I would think that would make buying WL even less attractive. When I bought (suckered in) WL, the big selling point was showing how fast the cash balance grew. Unfortunately, their projections weren't even close to the actual growth in the cash balance.
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Old 09-27-2013, 08:08 AM   #62
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What you leave out is that in most cases, in addition to using insurers to administer their claims, these mega-corps also buy stop-loss insurance from an insurance company to protect them from excessive claims.
good point. Self insured does not mean no underwriting.

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My guess is that there is less granularity of premiums in the group insurance market because it would introduce a degree of complexity that the megas haven't seen as necessary given the degree that the companies subsidize the cost.
The complexity does add unneeded cost. In addition, the law does not allow insurers to exclude or deny coverage to members of large groups, except under limited circumstances. No such prohibition exists in the individual marketplace. Narrowly defined insurance segments allow insurers to exclude with little constraint.
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Old 09-27-2013, 08:21 AM   #63
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I have only two data points on whole life. In my personal policy that I dropped years age, the premium was level but when young more of the payment went into "savings" because the insurance part increased with age. In my FIL's policy which he purchased at 65 (who knows why) also had increasing insurance cost with age but it did eventually flat-lined at the premium amount. I can't remember what his age had to be but he died at 89 without reaching it. So, reaching the level insurance cost that equals the premium would agree with your point but it's not applicable to most people.

I don't know if "modern" WL policies are level insurance. You could be right with more recent practices. I would think that would make buying WL even less attractive. When I bought (suckered in) WL, the big selling point was showing how fast the cash balance grew. Unfortunately, their projections weren't even close to the actual growth in the cash balance.
I'm not sure what you had/bought (and am not sure that you know) but in any event, by definition whole life is where the policyholder pays a fixed premium for life (or in some cases up to a certain age, like in life paid up at age x) in exchange for $y paid to designated beneficiaries in the event the insured dies. An important feature is that as long as the policyholder pays the premium, the insurer is obligated to provide the coverage.

If the premium of your policy increased as you aged, it probably wasn't whole life insurance (at least not as typically defined). Since the cost of claims for a group of insureds increase with age, the fixed premium is designed to smooth out the cost which was attractive for people who needed insurance for a long period of time (hence the notion of "permanent" life insurance).
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Old 09-27-2013, 09:00 AM   #64
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If the premium of your policy increased as you aged, it probably wasn't whole life insurance (at least not as typically defined). Since the cost of claims for a group of insureds increase with age, the fixed premium is designed to smooth out the cost which was attractive for people who needed insurance for a long period of time (hence the notion of "permanent" life insurance).
I probably wasn't clear. In neither case did the premium increase with age. They were constant. The WL policies had two parts. The premium was divided into an amount that went into the cash balance that drew interest and a payment for the insurance.

Over time, the amount that was diverted to pay for the insurance increased. The amount put into the cash balance was reduced. The premium never changed. In my FIL's case at some age over 90, all of the premium would go into insurance and nothing would be added to the cash balance.
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Old 09-27-2013, 09:24 AM   #65
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WL policies don't usually have two parts. It sounds like perhaps you had a WL policy and the "cash balance" was dividends that were held on deposit at interest (which is a common dividend option) and that at some point the policy was changed so that you no longer paid for the premium but the premiums were funded from current dividends with the excess of the dividend over the premium continuing to be held on deposit.

I suspect that the reason that the amount put into the deposit account declined has nothing to do with the cost of insurance or the age of the insured, but more to do with declining dividends given the decline in interest rates and that more of the dividend is needed to pay the premium.
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Old 09-27-2013, 10:37 AM   #66
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Why do any of us pay our property taxes? In my case I would have a tax lien put against my property and it would eventually be sold on the steps of the county court house. I don't think many people get joy out of paying taxes hence the strong penalties against paying them. Anyone who thinks that our society would happily pay all their taxes if no penalties existed is seriously delusional. Just look at all the tax cheats and frauds that are discovered when serious penalties do exit.
So you pay your property taxes because it is your own best interest to do so.
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Old 09-27-2013, 10:50 AM   #67
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So you pay your property taxes because it is your own best interest to do so.
Yes so don't confuse it with some overwhelming desire not felt by the majority of taxpayers to somehow meet their "social contract."

If taxes were made optional, I doubt much would be collected. More would probably be collected if people could direct what their money supported but there would never be close to enough to do all that is currently done with tax money. I don't think everyone thinks everything done by the government is in their own best interest to financially support. Hence, the negative consequences applied by our taxing entities. Avaiding those are typically in our own best interest.

Based on your comments, I assume you double pay your tax bills to show what a good citizen you are. My compliments if you do.
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Old 09-27-2013, 11:14 AM   #68
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It's an interesting question for a full timer. I understand a policy that is nationwide but what state would you buy it in if you have no state of residence? (since the plans are state based) I know some folks who full time that have a stick house and some that do not.
I thought that even RV'ers had to have a State of residence when they filed their taxes.

Do the ACA plans not include PPO plans? I still have retiree group insurance from my previous employer in Louisiana and have to choose a more expensive PPO plan as we don't reside in Louisiana.
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Old 09-27-2013, 11:15 AM   #69
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Based on your comments, I assume you double pay your tax bills to show what a good citizen you are. My compliments if you do.
Sorry but I totally missed your point somewhere in there.

My point was that I pay my property taxes because it is in my best interest to do so, even though I don't have any kids in the public school system.

If I was 26 I would still get health insurance at the current exchange rates, at least a catastrophic or bronze plan, because it would be in my best interest to do so, regardless of how those rates are calculated related to age.

I pay income taxes even when GE may pay zero income taxes, not because I think that's fair, but because it is in my best interest to pay my income taxes.
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Old 09-27-2013, 11:34 AM   #70
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If someone under 30 refused to buy insurance and they pay the penalty, the incurred serious medical bills, couldn't they enroll next year?

Of course, they might still have a big bill to pay but going foward, they'd be covered?

Or say they don't pay for 10-20 years and decide to enroll in their mid 30s or early 40s.

Is there anything in the law to discourage free riding for a decade or two?

Of course, they take the risk that they come down with a serious illness which drains their finances or by not physical exams or tests, they develop some condition which might have been caught earlier.

There are some people under 40 who think they'll never see Social Security or Medicare benefits that are being drawn out of their paychecks, so there's already some level of generational resentment.

Now, it's going to be beat on their heads that they have to buy health insurance to make it affordable for older people.
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Old 09-27-2013, 11:37 AM   #71
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Sorry but I totally missed your point somewhere in there.

My point was that I pay my property taxes because it is in my best interest to do so, even though I don't have any kids in the public school system.

If I was 26 I would still get health insurance at the current exchange rates, at least a catastrophic or bronze plan, because it would be in my best interest to do so, regardless of how those rates are calculated related to age.

I pay income taxes even when GE may pay zero income taxes, not because I think that's fair, but because it is in my best interest to pay my income taxes.
My point is that the government's power to inflict pain on me makes paying my taxes in my best interest.

I keep getting the impression that you believe that paying your taxes makes the world a happier place and that is what you consider your best interest. Your world would be even happier if you paid twice the required taxes.

I think it's a good idea to have catastrophic health insurance no matter what your age. Unfortunately, many people won't. Some will make finacial decisions and some will just not bother.
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Old 09-27-2013, 11:50 AM   #72
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I keep getting the impression that you believe that paying your taxes makes the world a happier place and that is what you consider your best interest. Your world would be even happier if you paid twice the required taxes.
I am not sure what I posted for you to come to that conclusion. I pay my taxes so I don't get in legal trouble or have my assets seized. That is what I mean by my best interest to do so.

I am fine with paying zero taxes, as long as I can do so legally. Actually we spend a lot of time with turbo tax trying to arrange our MAGI to find the optimal tax / health care subsidy / financial aid point for 2014.
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Old 09-27-2013, 11:57 AM   #73
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I am not sure what I posted for you to come to that conclusion. I pay my taxes so I don't get in legal trouble or have my assets seized. That is what I mean by my best interest to do so.

I am fine with paying zero taxes, as long as I can do so legally. Actually we spend a lot of time with turbo tax trying to arrange our MAGI to find the optimal tax / health care subsidy / financial aid point for 2014.
So, we're saying the same thing. We're in heated agreement. Damn, why can't the rest of the world get in line?
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Old 09-27-2013, 12:14 PM   #74
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Here's what I don't understand:

Does anyone believe that someone making $30K or $40K or $50K a year can come up with $3-4-5K for HC?? These are people who struggle to make the food bill every week, can't qualify for Medicare and will have to get a plan on their own..

HC here in MA is about $10-12K for a bronze family plan...
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Old 09-27-2013, 12:33 PM   #75
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It seems that the new normal is that health insurance will cost you 10+% of your income if you don't work for an employer who more heavily subsidizes the coverage.
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Old 09-27-2013, 12:40 PM   #76
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It seems that the new normal is that health insurance will cost you 10+% of your income if you don't work for an employer who more heavily subsidizes the coverage.
Regretfully, the new normal is much higher. The average cost of group healthcare is already >20% of the median household income. See here http://kaiserfamilyfoundation.files....nce-091112.pdf
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Old 09-27-2013, 12:46 PM   #77
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Here's what I don't understand:

Does anyone believe that someone making $30K or $40K or $50K a year can come up with $3-4-5K for HC?? These are people who struggle to make the food bill every week, can't qualify for Medicare and will have to get a plan on their own..

HC here in MA is about $10-12K for a bronze family plan...
Our Bronze plan premiums for my family in California at $30K MAGI would be zero (Medicaid) and at $40K they would be $4 a month.

Is MA really that different in cost? If so it would pay to move just based on the health insurance costs alone.
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Old 09-27-2013, 12:53 PM   #78
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+1 In Vermont in 2014, a family of 3 with income of $50k could get silver level health insurance for $291/month (after $880 subsidy) so their net cost is ~7% of their gross income.

A single with the same income would pay $417/month (after $0 subsidy) or ~10% of his/her income.
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Old 09-27-2013, 01:06 PM   #79
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Regretfully, the new normal is much higher. The average cost of group healthcare is already >20% of the median household income. See here http://kaiserfamilyfoundation.files....nce-091112.pdf
We all have our biases based on our personal experiences, and I can see mine. I find myself complaining about health insurance costs because I never see those people that are consuming the dollars. I base my view on costs based on what I and my friends and family consume which is very little. I just have to realize until cost controls are a focus and not cost shifting, it is what it is, and I guess I should just be happy I have good health.
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Old 09-27-2013, 01:37 PM   #80
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Our Bronze plan premiums for my family in California at $30K MAGI would be zero (Medicaid) and at $40K they would be $4 a month.

Is MA really that different in cost? If so it would pay to move just based on the health insurance costs alone.
Well, there's lots of reasons to move from MA, but I stay for the mild winters, low taxes, nice people, courteous drivers and balanced political structure.

As far as I can see, the cheapest bronze plan here in MA is $929 a month for a normal working family making over $47K. To my point, I just don't see how people at that income level, even subsidized, can find another $350 an extra month for HC
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