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Expanded health care subsidies stay intact under Inflation Reduction Act

Expanded health care subsidies stay intact under Inflation Reduction Act

FatCamera | E+ | Getty ImagesHouseholds that get help paying for health insurance through the public marketplace are likely to continue qualifying for more generous subsidies under a congressional bill moving closer to final approval.The Inflation Reduction Act, which cleared the Senate on Sunday, includes an extension of temporarily expanded health insurance subsidies — technically tax credits — that were put in place for 2021 and 2022. The vote was 50-50 with no Republican support. Vice President Kamala Harris cast the tie-breaking vote in favor of the legislation.Assuming the House approves the measure — which it is expected to do later this week — and President Joe Biden signs it into law, the more generous subsidies would remain available through the end of 2025.More from Personal Finance:
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Here’s a look at ‘most employable’ degrees for new graduates”Without the extension, the vast majority of the 13 million people who get subsidies … would see premium payments rise,” said Krutika Amin, associate director for the Kaiser Family Foundation’s Affordable Care Act program. “This would avert the massive premium increase [those] people would have seen otherwise.”Nearly 13 million of the 14.5 million people enrolled in private health insurance through the public marketplace — which was authorized by the Affordable Care Act of 2010 — are receiving subsidies in 2022. Some people also may qualify for help with cost-sharing such as deductibles and copays on certain plans, depending on their income.How the extension helps enrolled consumersGenerally speaking, people who get coverage this way — either through healthcare.gov or their state’s exchange — are self-employed or can’t get workplace insurance, or they don’t qualify for Medicaid or Medicare.Before the temporary changes, the aid was generally only available to households with income from 100% to 400% of the poverty level. The American Rescue Plan Act, which was signed into law in March 2021, removed — for two years — that income cap, and the amount that anyone pays for premiums is limited to 8.5% of their income as calculated by the exchange.The bill currently headed to the house would extend these modified calculations.For some enrollees, the difference is significant: Premium payments could rise by more than 50% without the extension, Amin said. For instance, a 60-year-old with income just above $50,000 would see those monthly payments jump to $900 from $400.The extension of the subsidies is one of a handful of provisions in the bill related to health care. The legislation also would allow Medicare to negotiate the price of certain drugs and would cap yearly outlays on prescription drugs under Part D to $2,000, as well as cap beneficiaries’ monthly insulin prices at $35.  .

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Surrendering a policy: When should you do it — and should you at all?

Surrendering a policy: When should you do it — and should you at all?

As the pandemic hit lives, the economy, and livelihoods, 2021-22 witnessed a sharp spike in insurance policies being surrendered ahead of their maturity. Data show that more than 2.3 crore life insurance policies were surrendered during the year — more than three times the number of policies (69.78 lakh) surrendered in 2020-21.

It is ironical that at a time when one is in desperate need of his/ her money, while surrendering a traditional policy (endowment or money back), policyholders in the majority of cases end up with a surrender value that is even lower than the premiums paid.
In case of unit-linked plans, it may result in lower returns on the capital investment. It is, therefore, very important to understand the pitfalls of surrendering, and to evaluate all options before you decide to do so.
What should you look for before surrendering your policy?
The first thing that one needs to check is the surrender value. “Often, people don’t check the surrender value, and assume that the current value of the policy is what they will get if they surrender. It is only later that they realise that what they have received is much less than the current value. So one must check the surrender value before taking the decision,” said Surya Bhatia, founder, AM Unicorn Professional.
Advisers say that policyholders must also evaluate the reason for surrendering the policy, and the various options they can explore with insurance companies. Individuals must look at the reason for surrender — whether they need the money or they think they can’t make future premium payments — and accordingly make their decision.
If one is looking to surrender the policy because they believe they can’t pay future premiums, the policyholder must reconsider.

“After you finish with the minimum period of paying premiums, you have the option to either surrender or stop paying further premiums. Very often this is referred to as paid-up status, where you stop paying the premium and the benefits of your policy reduce proportionately in line with the reduced payment period, Vishal Dhawan, founder, Plan Ahead Wealth Advisors, said.
“So,” he said, “if someone needs to control future cash flows, the individual must explore the paid-up option. Many a time, paid-up options are not looked at by people, and they think that they can either continue or surrender.”
If one is in need of money, one can consider taking a loan against the policy, if the requirement is for a temporary period.
In cases where one is looking to surrender the policy to avoid risk of asset class (volatility in equity markets) in case of Ulips, one has the option to move the money from equity underlying fund to something that is debt-oriented.
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What are the impacts of surrendering a policy?
There are several pitfalls, including losing the insurance cover linked to the policy.
The biggest impact that premature surrendering has is on the return you get out of the policy, as surrender value is much less than what you can get on maturity.
There is no standard answer as to what a surrender value can be — it depends upon the kind of policy (traditional or unit linked), years of premium paid, and term of the policy.
Financial experts say that in case of money-back, endowment, and whole life plans, individuals suffer big losses on account of surrendering the policy and can lose around 50 per cent of the premium paid.
In case of Ulips, since they can’t be surrendered till the fifth year and can only be done at the end of the sixth year, experts say that there is not much loss. However, it does impact the return for the investors because of early termination of the policy.
Another impact is on the aspect of taxation. “People often miss the fact that while the policy is tax-free at maturity, if you surrender ahead of maturity, you miss out on that as it attracts tax at the marginal tax rate applicable to the individual policyholder,” Bhatia said.
Should you surrender your policy at all?
As the drawbacks of surrendering are many, financial advisers suggest that it should be one of the last options. It is advisable that when in need of money, investors should carefully look at their entire investment corpus — mutual funds, insurance policy, fixed deposits, bonds, etc. — and after understanding the implications of giving up each of them, they should figure out which one should go first, and which should be taken up last.
“When you explore all the options and take a measured approach, you will end up taking a better decision, Dhawan said. He added that “while one can still do it with investment policies, it is crucial that one doesn’t do it with term policies”.
Bhatia said that surrendering a policy should be the last resort. “Explore other options. Only in the case of Ulip plans, if the policy is not working according to the plan, you may look to surrender — but that too to reinvest in a better performing policy or other financial instrument,” he said.

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A possible reduction for Medicare Part B premiums is still in play

A possible reduction for Medicare Part B premiums is still in play

Choreograph | iStock | Getty ImagesFor Medicare beneficiaries wondering whether their Part B premiums could be reduced, the waiting continues.More than three months after Health and Human Services Secretary Xavier Becerra ordered a reassessment of this year’s $170.10 standard monthly premium — a bigger-than-expected jump from $148.50 in 2021 — it remains uncertain when a determination will come and whether it would affect what beneficiaries pay this year.”A mid-course reduction in premiums would be unprecedented,” said Tricia Neuman, executive director of the Medicare policy program at the Kaiser Family Foundation.More from Personal Finance:
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Be sure to manage this risk as you near retirementA spokesperson for the Centers for Medicare & Medicaid Services said the agency continues to reexamine the premium and will announce further information when it’s available.About half of the larger-than-expected 2022 premium increase, set last fall, was attributed to the potential cost of covering Aduhelm — a drug that battles Alzheimer’s disease — despite actuaries not yet knowing the particulars of how it would be covered because Medicare officials were still determining that.By law, CMS is required to set each year’s Part B premium at 25% of the estimated costs that will be incurred by that part of the program. So in its calculation for 2022, the agency had to account for the possibility of broadly covering Aduhelm.Certainly the rationale for an increase that high is gone.Paul GinsburgNonresident senior fellow at the Brookings InstitutionThings have changed, however.Several weeks ago, CMS officials announced that the program will only cover Aduhelm for beneficiaries who receive it as part of a clinical trial. Additionally, the per-patient price tag that actuaries had used in their calculation last year was cut in half, effective Jan. 1, by manufacturer Biogen — to $28,000 annually from $56,000.”Certainly the rationale for an increase that high is gone,” said Paul Ginsburg, a nonresident senior fellow at the Brookings Institution and a health care policy expert.  “The question would be what’s administratively feasible.”If a premium reduction occurs, there’s also the chance it could be applied for 2023 instead of 2022. There have been year-to-year drops in the Part B premium in the past for various reasons, including legislative changes to how the premium is calculated.”If I were administering this, I’d be concerned about setting a precedent for making changes in the middle of the year,” Ginsburg said.It’s also possible that lower-than-projected spending on Aduhelm could be at least partially offset by increased costs in other areas of Part B coverage, which includes outpatient care and medical equipment. While Medicare Part D provides prescription drug coverage, some medicines are administered in a doctor’s office — as with Aduhelm, which is delivered intravenously — and therefore covered under Part B.”Even if fewer people are using Aduhelm than originally projected and at a lower price than assumed, the actuaries may be inclined to take into account other changes that could moderate that amount,” Neuman said.Roughly 6 million Americans suffer from Alzheimer’s, a degenerative neurological disease that slowly destroys memory and thinking skills, and has no known cure. It also can destroy the lives of families and friends of those with the disease.Most of these patients are age 65 or older and generally enrolled in Medicare, which covers more than 63 million individuals. In 2017, about 2 million beneficiaries used one or more of the then-available Alzheimer’s treatments covered under Part D, according to the Kaiser Family Foundation. .

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Health insurance: Should you buy a critical illness insurance policy?

Health insurance: Should you buy a critical illness insurance policy?

With medical treatment getting increasingly expensive, it is important to buy a critical illness insurance policy. The policy can be taken either as a rider with a life insurance or health insurance policy or can be purchased as a standalone policy.

Insurance companies cover around three dozen critical illnesses such as cancer, kidney failure, major organ transplant, etc. On diagnosis of any of the listed critical illnesses, the insurance company will pay the full sum insured which will cover the cost of the specific treatment. As the policyholder will suffer loss of income because of the critical illness, the pay-out will help him pay for the treatment costs, support his family financially and compensate for the loss of income immediately. On the other hand, a health insurance plan is an indemnity plan which pays the expenses (cashless or reimbursement) actually incurred.

You have to keep in mind that critical illness insurance policies have a waiting period ranging from 30 to 90 days. So, if you are already suffering from a critical illness, then you will not be able to purchase the policy. However, you can purchase the policy even if you are suffering from certain lifestyle disorders such as high blood sugar, blood pressure which increases the risk of critical ailments. Policyholders get tax benefit of up to Rs 25,000 under Section 80 D of the Income Tax Act. Insurers provide a free look period of 15 days starting from the date of receipt of the critical illness policy document.

Why buy?

If you have a family history of diseases such as cancer, coronary artery bypass, etc., or has lifestyle diseases such as diabetes, you should purchase an adequate critical illness cover at an affordable premium. The sum insured should depend on the age, income and location. Typically, critical illness treatments are long-drawn. So, the sum insured should cover the costs of hospitalisation, medicines, and support the family’s monthly expenses in case you have to stop working to recuperate. Also, long-term financial liabilities such as loans, children’s education should be factored in.

Ideally, the sum insured should be the annual income of the insured multiplied by the number of years one may need to recover. Before finalising, read the terms and conditions and the list of exclusions. Select the policy which has a high age limit of renewal to maximise the benefits.

Standalone or rider?

Ideally, one should buy it as a standalone policy as there will be a limit on the sum insured in a rider, which will be the same as the base policy. However, the premium will be higher in a standalone policy as compared with a rider. !function(f,b,e,v,n,t,s)
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Important Features of Critical Illness Health Insurance Policies

Important Features of Critical Illness Health Insurance Policies

Illness can occur to anybody at any time in their life. This can affect a person emotionally, physically, and financially as well. When someone is affected by critical diseases like cancer, heart attack, etc., one may have to pay a lump sum amount of money out of their pocket for diagnostic tests, doctor consultations, special tests and more, which can add up to pose a huge financial risk. Therefore, having a critical illness health insurance policy can safeguard one from financial burden during the time of an emergency due to life-threatening diseases. A Critical Illness Insurance Policy often covers chronic diseases like cancer, kidney failure, paralysis, organ transplant, heart attack, renal failure, stroke, etc. This Critical Illness Policy provides a lump sum coverage amount that includes extraordinary medical expenses for those critical illnesses that are covered under the insurance policy. However, it is important to keep in mind that the list of covered illnesses varies from one plan to another and to check that the specific critical illness is covered under the policy. Important features of critical health insurance:

  • Comprehensive coverage benefits: Critical Illness Health Insurance Policy generally covers 30+ chronic diseases like cancer, stroke, etc. Thus, when one is diagnosed with a life-threatening disease he/she can use the benefits provided by the health insurance cover which includes pre and post-hospitalization coverage, dialysis coverage, organ donor coverage, etc.
  • Avail lump sum amount: At the time of treatment, one can get a lump sum payment amount from the insurance company and avoid out-of-pocket payment.
  • Affordable premium: The critical illness coverage is comprehensive in nature, but the premium to be paid for this insurance policy is affordable and helps the person to avoid financial burden during health emergencies.
  • Hassle-free process: It is a simple procedure to get a critical health insurance policy and it requires minimal documents to be submitted. The company directly settles the bill with the hospital and makes the process hassle-free for the policyholder.
  • Monthly income replacement: If you are being diagnosed with a critical illness keep in mind that you can claim a part of the sum assured as a substitute for a monthly salary. This acts as a huge advantage during a time of financial burden and if there is loss of regular income due to sick leave or inability to work. 
  • Tax benefits: Under section 80D under the Income Tax Act,1961, the owner of this health insurance policy can enjoy a tax benefit of Rs.25000 if he pays the premiums regularly. If you or your parents are senior citizens then you can avail of tax deductions up to Rs.50,000 if regular premiums are being paid for the same.

Who should get critical health insurance coverage?

  • Family history with critical illness: You are at risk if your parent/family member is suffering from a chronic disease. Thus, you would be prudent to have critical illness health insurance.
  • Individuals above a specific age: If you fall under the specific age bracket (typically 40+ years), then you must have a critical health insurance cover as there is a higher risk of being diagnosed with a critical illness. 
  • Individuals with high-risk occupations: Working in an environment with high-risk factors for your health, or working in a high-pressure work environment can also likely increase your risk for health issues, warranting a critical health cover. 
  • Women: With increased incidence of cancer among women, it is prudent to check genetic risk factors and seek adequate cover in case of future need. 

Protect yourself from an unforeseen financial burden and choose a health insurance plan from Chola MS with critical health coverage that is suitable to your situation.  Disclaimer: This article is a paid publication and does not have journalistic/editorial involvement of Hindustan Times. Hindustan Times does not endorse/subscribe to the content(s) of the article/advertisement and/or view(s) expressed herein. Hindustan Times shall not in any manner, be responsible and/or liable in any manner whatsoever for all that is stated in the article and/or also with regard to the view(s), opinion(s), announcement(s), declaration(s), affirmation(s) etc., stated/featured in the same. 

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