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  • Avatar ahnathan 
    Participant
    Status: Resident
    Posts: 30
    Joined: 09/30/2018
    Earnest refinancing bonus

    So I have mentioned before that I am starting my first job in 10 months. I recently talked to HR to get more information on the 401k plan, health insurance plans and insurance benefits to better plan things out. I wanted to get everyone’s opinion on the insurance offerings since I am still a little confused on the insurance stuff.

    So #1: The high deductible health plan that allows for an HSA saves about $4500/year in premiums vs the high premium plan. We are a healthy family of 4, I will likely elect for this plan and try to max out an HSA but that is a topic for another day.

    #2: Optional Accidental Death and Dismemberment (jeez) Insurance: I can cover myself up to 500k for $3.23 per pay check. This seems narrow (what is accidental death? vs intentional death?). Is this akin to a life insurance policy?

    #3: Short term disability — My work pays the cost of this. It is a 9 month benefit that pays 100% salary for a period of months then down to 50% salary for the remaining months. The ration of 100%/50% increases with years of service. Obviously this is free so sure, whatever..

    #4: Long term disability — Benefits begin after 9 months of disability. There are 3 options. The first is 50% of base pay up to $13,333 max for 0.258c per $100 covered monthly payroll. The second is 60% to max $16,000 for 0.409c, the last is 66.6% to $17,787 max for 0.722c. The premium is paid post-tax distributed as non-taxable income until age 65. The disability is “own occupation.”

    #5: Term Life 50K GVUL 3½ x pay less term life benefit – $700,000 maximum Paid by Employer

    Can purchase additional Life up to a maximum of 5 time’s annual salary up to maximum of 3M.

     

    I am most interested in gathering opinions on #4 and #5. Is that long-term disability coverage acceptable and at an acceptable rate? And for #5, I still don’t really grasp the concept of GVUL and term life insurance. I need to continue to read up on it. Just wanted to see what the board thought on first glance.

     

    Thanks in advance

    #155875 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3059
    Joined: 09/18/2018

    First, insurance is based on your needs now and in the future.
    5. Group Variable Universal Life Insurance (GVUL). Portable, permanent coverage that builds cash value to augment retirement savings.
    The employer provides this. When you leave, the question is going to be continuing this on your own or the best way to cash it out. So, you have up to $700k coverage. Do you need more?
    4. LT DI
    The terms of the Group plan may be more restrictive and not be portable. How much you need depends on you earnings (eligibility) and what you personally need now and in the future. A personal policy has age, state, your occupation, and rider options. You will be able to tailor it for future flexibility you wish for now and in the future. Discount rates may be available as well. This can be coordinated with your employer coverage as well.

    Larry Keller provided great service. For “free” use him or one of the other independent agents WCI has a list.
    Your choices and your situation is the only way to get pricing. Now is the time explore your options and develop your DI plan. Way too much detail to share on a forum. Did I mention it’s free? A good agent like Larry Keller can educate and greatly help develop your strategy as well as get you prices.

    #155944 Reply
    Scott at MD Financial Services Scott at MD Financial Services 
    Participant
    Status: Website Sponsor, Insurance Agent, Small Business Owner
    Posts: 444
    Joined: 01/14/2016

    #2 the accident insurance is exactly that, you have to die or be dismembered by accident.  In addition you have die ‘on time’ meaning an accident typically has to lead to your death in a certain amount of time otherwise you might have died of another cause.

    #3  I like free so that seems good, the question is at the point the benefit drops from 100% down are you ok on cash flow to pay bills?  If yes then great, if no then buy some augmentation coverage.

    #4 Read that policy because where you state it is ‘own occupation’ that is probably the definition of the occupation but not the definition of disability.  In today’s time there really are no group disability policies that have a definition of disability that states “if you can’t do your medical specialty that you were doing at the time of claim then we are going to pay you 100% of your benefit regardless of any post disability income”.  The other issue that you need to be mindful of is that even though the amount of coverage goes up, do you have the ability to be eligible for that coverage which will be based on your income?

    #5 typically term is the best solution for the life coverage and if you are healthy then it is less expensive to buy it on your own away from the employer since the employer plans are grouped across everyone in the company and thus it is one static rate for all regardless of health status.  In short the healthy subsidize the unhealthy.

    S. Scott Nelson-Archer, CLU, ChFC with M. D. Financial Services, Inc.
    Direct Phone 713-966-3932, Email [email protected]

    #155978 Reply
    Avatar ahnathan 
    Participant
    Status: Resident
    Posts: 30
    Joined: 09/30/2018

    So, as the date of starting work approaches I am revisiting this and dug up my previous post.

     

    #1: We were a healthy family of 4. We are now a healthy family of 4.5. So I will likely not be doing a high deductible health plan to start as I think the out of pocket for even a healthy delivery with a plan out of pocket max of $12,900 is a bad idea.

    #5: I will be pursuing individual term life insurance on top of the free $700,000 policy that comes with work in lieu of participating in the GVUL plan based on recommendations.

     

    As for #4, I was hoping to revisit based on Scott’s post above the definitions provided. Again the policy allows me to cover up to $16,000/month (up to 60% of my gross salary for $0.409 per $100 of coverage or $47 per bi-weekly pay check) in post-tax dollars for own occupation or “Regular Occupation” coverage. But based on Scott’s input I requested and received the policy documents as I did not really understand the “definition of the occupation” vs the “definition of disability” etc.

     

    Below are the definitions from the policy documents and at least from my reading, this seems like pretty good disability coverage. It provides adequate coverage ($17k in post-tax dollars) for what sounds like own occupation disability and kicks in after a 9 month elimination period during which I will collect short term disability. The downsides are that it is a) not portable and b) the short term disability covers only 50% of my salary for 6 of the 9 months (which is still enough to pay my bills) for the first year.

     

    From the documents:

    Regular Occupation, if you are a Physician, means the general or sub-specialty in which you are practicing
    immediately prior to the first date your Period of Disability commences for which there is a specialty or subspecialty recognized by the American Board of Medical Specialties. If the sub-specialty in which you are practicing is not recognized by the American Board of Medical Specialties, you will be considered practicing in the general specialty category.

    Disability and Disabled means that you are Totally Disabled or Partially Disabled. If a particular occupation requires a license, you will not be considered Disabled solely because you are unable to obtain a license or continue to qualify for a license.

    Partial Disability and Partially Disabled means during the Elimination Period and the next 24 months you:

    · are unable to perform the material and substantial duties of your Regular Occupation on a Full-time Basis;
    and
    · have Disability Earnings of less than 99% of your Indexed Total Monthly Earnings.
    The Disability must be the material and substantial factor in causing the earnings loss.
    After 24 months of receiving Total and Partial Disability benefits combined, Partial Disability and Partially Disabled
    means you:
    · are unable to perform the material and substantial duties of your Regular Occupation on a Full-time Basis;
    and
    · have Disability Earnings of less than 80% of your Indexed Total Monthly Earnings.
    The Disability must be the material and substantial factor in causing the earnings loss.

    A Partial Disability must be caused by an Accident or Sickness and must commence while you are insured under
    the Policy.

    Total Disability and Totally Disabled means you are unable to perform the material and substantial duties of
    your Regular Occupation.

    Total Disability must be caused by an Accident or Sickness and must commence while you are insured under the
    Policy.

     

    Would love any thoughts or opinions

    #221333 Reply
    Avatar tylerjw12 
    Participant
    Status: Spouse
    Posts: 23
    Joined: 05/23/2016

    Some deliveries won’t even cost you the $4,500 in premium differential alone. And you will still have a deductible and coinsurance to meet on the traditional plan.

    The LTD plan terms seem good to me. I would get as much info on it as possible and try to get a quote from an independent broker. Compare the two and see which one wins out.

    #221354 Reply
    Avatar ahnathan 
    Participant
    Status: Resident
    Posts: 30
    Joined: 09/30/2018

    That gives me something to chew on. I put in an email to the benefits department to discuss some of the language between the plans and I may call the hospital to get a quote on delivery etc. The premium difference is right at $4,000. The only issue I have is that with a previous c-section my wife is a VBAC patient so there is certainly a chance she will have c-section which I envision is more costly. I will look into it though. The deductible on the premium plan is $0 though, so my understanding is that aside from a $250 one time maternity fee the rest of her care would be covered. My thought was to enroll in the premium plan for the first election period and then shift to the high-deductible plan at the next opportunity.

    #221356 Reply
    Scott at MD Financial Services Scott at MD Financial Services 
    Participant
    Status: Website Sponsor, Insurance Agent, Small Business Owner
    Posts: 444
    Joined: 01/14/2016

    So, as the date of starting work approaches I am revisiting this and dug up my previous post.

     

    #1: We were a healthy family of 4. We are now a healthy family of 4.5. So I will likely not be doing a high deductible health plan to start as I think the out of pocket for even a healthy delivery with a plan out of pocket max of $12,900 is a bad idea.

    #5: I will be pursuing individual term life insurance on top of the free $700,000 policy that comes with work in lieu of participating in the GVUL plan based on recommendations.

     

    As for #4, I was hoping to revisit based on Scott’s post above the definitions provided. Again the policy allows me to cover up to $16,000/month (up to 60% of my gross salary for $0.409 per $100 of coverage or $47 per bi-weekly pay check) in post-tax dollars for own occupation or “Regular Occupation” coverage. But based on Scott’s input I requested and received the policy documents as I did not really understand the “definition of the occupation” vs the “definition of disability” etc.

     

    Below are the definitions from the policy documents and at least from my reading, this seems like pretty good disability coverage. It provides adequate coverage ($17k in post-tax dollars) for what sounds like own occupation disability and kicks in after a 9 month elimination period during which I will collect short term disability. The downsides are that it is a) not portable and b) the short term disability covers only 50% of my salary for 6 of the 9 months (which is still enough to pay my bills) for the first year.

     

    From the documents:

    Regular Occupation, if you are a Physician, means the general or sub-specialty in which you are practicing
    immediately prior to the first date your Period of Disability commences for which there is a specialty or subspecialty recognized by the American Board of Medical Specialties. If the sub-specialty in which you are practicing is not recognized by the American Board of Medical Specialties, you will be considered practicing in the general specialty category.

    Disability and Disabled means that you are Totally Disabled or Partially Disabled. If a particular occupation requires a license, you will not be considered Disabled solely because you are unable to obtain a license or continue to qualify for a license.

    Partial Disability and Partially Disabled means during the Elimination Period and the next 24 months you:

    · are unable to perform the material and substantial duties of your Regular Occupation on a Full-time Basis;
    and
    · have Disability Earnings of less than 99% of your Indexed Total Monthly Earnings.
    The Disability must be the material and substantial factor in causing the earnings loss.
    After 24 months of receiving Total and Partial Disability benefits combined, Partial Disability and Partially Disabled
    means you:
    · are unable to perform the material and substantial duties of your Regular Occupation on a Full-time Basis;
    and
    · have Disability Earnings of less than 80% of your Indexed Total Monthly Earnings.
    The Disability must be the material and substantial factor in causing the earnings loss.

    A Partial Disability must be caused by an Accident or Sickness and must commence while you are insured under
    the Policy.

    Total Disability and Totally Disabled means you are unable to perform the material and substantial duties of
    your Regular Occupation.

    Total Disability must be caused by an Accident or Sickness and must commence while you are insured under the
    Policy.

     

    Would love any thoughts or opinions

    Click to expand…

    This is a pretty standard group policy that is own occupation and not engaged as it is known in the industry.  If you can’t do your specialty then benefits are payable, if you choose to work in any occupation then benefits will be reduced or taken away depending on the income you are earning.  Certainly not a true own occupation or own specialty policy.

    As for the term life be sure to check the cost per $100k of benefit your employer has vs. what you can buy in the open market, typically group term is 2x the cost vs. buying it yourself.

    If we can help further let me know.

    S. Scott Nelson-Archer, CLU, ChFC with M. D. Financial Services, Inc.
    Direct Phone 713-966-3932, Email [email protected]

    #221357 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3059
    Joined: 09/18/2018

    Healthcare Insurance:
    When is she due? You have 6 months remains in 2019.
    A new plan year starts 1/1/20 , including deductibles. Seems like costs for 2019 and 2020 might be different.
    Hope everything goes well.

    #221363 Reply
    Avatar ahnathan 
    Participant
    Status: Resident
    Posts: 30
    Joined: 09/30/2018

    This is a good point. She is due in October and I do not start work until Aug 1st. I could elect into the premium plan and pay the premiums for only 5 months and then come January I can change over to the HD plan without an issue. That would cost me an extra $1500 in premium payments but I would certainly save that over the cost of birth etc.

    #221412 Reply
    Avatar nephron 
    Participant
    Status: Physician
    Posts: 227
    Joined: 05/09/2019

    I would consider keeping the minimal group life/disability insurance and purchasing a separate individual term life and disability insurance policy for yourself.   Group policies are sometimes more expensive then individual policies when you add the employer/employee contributions and look at the amount of coverage you have because the insurance co agrees to insure all people in the group.   People frequently change jobs, particularly in the beginning of your career, and should you develop a diagnosis that would make you un-insurable (diabetes, cancer, etc), you will be unable to obtain any new coverage other then whatever your new group may be offering which may be non-existent.  You will probably be able to get your lowest rate for an individual policy at your current age rather then waiting a few years as well.  Finally, I think that depending on your employer group policy is a risk-  you can become ill, want to cut back, move close to family, but not meet the criteria for disabled.  You can be laid off due to your illness and qualify for the disability but then have no life insurance coverage should you subsequently die.   I would take advantage of whatever your employer subsidizes, but shop around for other other coverage beyond that, particularly life insurance.

    #221414 Reply
    Avatar CECRNA 
    Participant
    Status: Advanced Practice Provider
    Posts: 44
    Joined: 02/03/2019

    With your wife being a previous c/section, there’s a high probability of failed VBAC with subsequent repeat c/section. An average c/section is over 15k +/- anesthesia fees. Stick with a traditional health plan for the rest of 2019 and transition to HD plan Jan 2020. It’ll be a win/win situation for you.

    Goodluck!

    #221425 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3059
    Joined: 09/18/2018

    Your annual elections will be in November. Great timing! You will be 30-60 days with the new addition and Mom.
    By that time, you are a really good sense if you have potential issues for the family plan,
    Family planning, insurance planning, sheer genius!
    Happy 2020!
    Why are you asking advice? You are obviously the expert. Geeez.

    #221509 Reply

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