Class 3:
Higher Middle Class Incomes, and Assets from about $50,000 to $10,000,000. |
This is the class Suze Orman wants you to get well up into, as it generally makes you more secure and gives you more freedom. (However, you shouldn't necessarily feel bad if you can't make it, as it may be life circumstances beyond your control, or too late to control, that will prevent you from getting here.)
In this class, you have some possibility of not being able to get care at all, but your main fear is probably being wiped out financially, or nearly wiped out,
if you don't have insurance coverage, or don't have adequate insurance coverage of a pre-existing condition.
With employer-provided insurance, there can be pre-existing-condition issues, which depend partly on state laws. I haven't put any by-state comments on pre-existing conditions for employer-provided insurance the table, but my links should be adequate for you to find answers to pre-existing condition concerns.
What I provide links for, and have also added comments on (last column), is the case of
if you lose your employer-based coverage, or don't have it, and thus must rely on the "individual" insurance system. It may be that a pre-existing condition you have when you need individual insurance or new individual insurance keeps you from getting it, or gives you insurance that doesn't cover pre-existing conditions, or gives you insurance that cost $25,000 a year or $50,000 a year, or $100,000 a year or more.
Since hospital bills can easily be well over $20,000 a day (especially with the cost-shifting from the costs associated with the poor, uninsured, and uninsured), you worry, correctly, about getting financially wiped out.
With individual insurance, basically you have to expect, and it is fair, that if you don't continuously maintain some form of health insurance, then you shouldn't be able to get it if you have a serious (=high expected medical costs) pre-existing condition. This is because you may be freeloading on the system, just picking up insurance when you get sick, and not paying for other sick people when you are not sick. (That expectation certainly is how it is in just about every state.) However, even so, there is a problem in most states that even if you have continuously and responsibly maintained health insurance, if you have a pre-existing condition, you can really get stuck under certain circumstances -- either with high rates or no coverage or limited coverage (like a $35,000 maximum insurance-payout for your medical bills in PA) and get wiped out. All of this is because the legislators and regulators in the states in question have done a poor job. (As an aside: to my knowledge, the problem exists nowhere in any other industrialized country in the world.)
These are the basics about how state regulations deal with pre-existing conditions for individual insurance: In a few (about 5) states, which are community rated or modified community rated, you always can get coverage which covers pre-existing conditions, and pay the same as everyone else, whether they or you have pre-existing conditions or not, provided you have prior responsibly maintained continuous comprehensive medical coverage (i.e. in the interpretation of these rules, you have not tried to freeload). The rates are higher in these states for people without pre-existing conditions than they otherwise would be, but the good thing is, you really have no long-term worries of getting stuck if you do get sick (and then have a pre-existing condition). As long as you have that continuous prior coverage, the insurer won't even waste their own time asking about your pre-existing conditions. And, if you do wind up with a pre-existing condition, you don't wind up with higher health insurance premiums -- even as you lose your job insurance, change insurers, etc. In these states, thus, the insurance is good, sound, full insurance. [NOTE: "community-rated" means all people who have responsibly continuously maintained any form of full comprehensive coverage are accepted by, charged the same rate, and pre-existing conditions are not excluded, for any insurer they apply to (in a given community, i.e. geographical area). "Modified community rating" is the same thing, except the insurer's rate is allowed to increase for higher age groups, and possibly sex.]
In the remaining roughly 45 states, individual insurers will ask you about pre-existing conditions, and reject you or exclude your pre-existing conditions or charge you more if you have serious enough ones.
[ASIDE: It's actually not that all insurers want to be mean to people with pre-existing conditions in these 45 states -- in these states, because there is no law forcing all insurers to give it to all applicants with continuous prior coverage as in community rated states, then if any "more moral" company issued insurance at the same premium to people with and without serious pre-existing conditions, then all the pre-existing-conditions people who can't get insurance elsewhere will flock to that "more moral" insurance company, prices for its policies will have to get really high to pay for the sick policy holders, and then the healthy people (who can get cheaper insurance elsewhere), will avoid that "moral" company, its rates will get even higher, in fact so high that no one can afford its insurance, and at will go bankrupt.]
Anyway, it works out in all of these 45 states, when you have individual insurance, the people in your policy's risk-sharing pool who remain very healthy tend to get "cherry-picked" out of your pool by being sold cheaper policies by other insurers. For this and for other economic mechanismic reasons, even if you do responsibly continuously maintain health insurance coverage, if you do get sick and wind up with a pre-existing condition, and not have employer-provided insurance, your insurance premiums have a strong tendency to rise in the long term (at far beyond the rate due to just your aging and medical inflation). So in an important sense, the health insurance you do have when you have it is really not that good -- kind of a "partial" or "short-to-moderate-term" insurance. [Exception: Under the Federal HIPAA = Kennedy Kassebaum law, if you have 18 months of prior coverage, the most recent of which is from an employer (you are "HIPAA-eligible"), they can't reject you or exclude pre-existing conditions, but they can charge you whatever they want to or need to to cover your high expected medical bills plus a profit, so basically this won't help you if you're very sick -- they can charge you $500,000 a year. Exception to the exception: The individual insurers don't have to give a policy to HIPAA-eligibles if the state's high risk pool or insurer of last resort (see 2 paragraphs below) accepts and does not exclude pre-existing conditions for HIPAA eligibles. Generally, in the 45 pre-existing-condition-screened states, you are better off if the state has chosen the exception to the exception, and lets you get the high-risk-pool/insurer-of-last resort, because the rates usually won't be more than $25,000 a year. ]
Note that another risk in the 45 pre-existing-condition-screened-system states is that an individual insurer may accept you, and later not pay your claims because they found some evidence on a record somewhere that you didn't, or even forgot to, tell them about a pre-existing condition. The records they tend to use are all of your medical records, prior insurance claims, and the cross-insurer database of pre-existing conditions. One can imagine that there is nothing stopping them from using information about your health conditions detectable from internet self-help and medical site posts. Perhaps if a lot of money is involved, and a court case, one may guess they might reference the Google 1.5 year record of your searches via subpoena to back up their case.) Insurer claim denial based on "unreported" pre-existing conditions seems to be happening quite a bit these days. ( Here is one well-publicized example. There are many others. Certain health insurance companies have finding evidence of a pre-existing condition, after big medical claims come in, as a primary m.o.) You may also be interested in this USA Today article on how far insurers will go to find pre-existing conditions. (It should come as no surprise: without the correct regulation, there are simply massive amounts of money at risk if an insurer is not effective at giving health insurance to only very healthy people. It actually is possible that the insurance company in question is one where employees were sympathetic, and gave insurance to some people who were in imperfect health, and now the company has to scramble to avoid bankruptcy, or else to avoid the fearsome reprisals of the stockholders when they see their profits are not as high as they would like.)
At any rate, the precise details of what happens in the 45 pre-existing-condition-screening states, if you have responsibly continuously maintained health insurance, but have a pre-existing condition when you need individual insurance, varies state by state. (That is, they always have a tendency to get pretty high on you due to your sickness in these 45 states, but how bad off your sickness can make you financially varies state-by-state.) In many of the 45 prexisting-condition screening states (about 40 of them), realizing that many fully responsible people risk getting financially wiped out have set up a relief mechanism that may help out in certain or all cases (most of the 40 states: only certain cases). The relief mechanisms are either high-risk-pool-plans and insurer-of-last-resort-plans. If you have a pre-existing condition, in certain cases these subsidized plans will enroll you. You will pay more or much more than people without pre-existing conditions (for people in their early 60s, rates run from $10,000 per person per year to about $25,000 per person per year). So basically, in these states, even if you are a responsible citizen, and constantly hold health insurance, you were kind of insured, partly insured, whatever -- if you get very sick while you have health insurance, you still might wind up paying $50,000 or $200,000 extra for insurance before you reach 65. But, though this required a lot of rainy-day money, your pre-existing condition medical bills may have been $800,000 or 1,400,000, so it did pay to have the "partial" insurance. (Remember, in most of the 40 states, they cover only certain cases. Your partial insurance kicks in only in certain cases.)
However, the really big problem in many of these 45 pre-existing-condition-screening states for people with savings, and who responsibly maintain health insurance continuously, is that certain of the 45 pre-existing-condition-screened states (about 12) have no high-risk-pool or insurer of last resort, and in a good portion of the remaining 40, there are humongous cases where the high-risk-pool or insurer of last resort will not cover you, either at all, or for a period of time, despite your having continuously prior maintained coverage. (I.e. certain specific cases, such as your prior insurance is individual, and many others.) There are also cases where the high-risk-pool or insurer or last resort policy pays out a laughingly small annual (e.g. $35,000) or lifetime ($500,000) maximum in medical bills. It is this particular case that I have marked in red "DANGER--ALL" or "Danger--moving in" in my last column, because you could easily lose say $600,000 from a month's uncovered hospitalization bills.
(I count 23 of 51 states+DC have a definite DANGER-ALL, meaning the danger is for both residents and people moving into the state, while a total of 36 of 51 have either the danger for all or just moving in, i.e. 36 of 51 have a problem for people moving in. There are a handful of other states where I have "??" attached to the danger, which I did not count here, but where I was worried about a possible problem, and suggested you check with the state's insurance department.)
You will note that quite a few states have "Danger--moving in", where the danger is particularly to some people with pre-existing conditions, who have responsibly maintained full prior coverage in another state, but can't move in. It's kind of a shame, because, well, if you get pretty sick, you might want to move back home to be with your family, siblings, etc., who will provide comfort and perhaps care for you, but you can't. Actually, you can't really blame the state that you can't move into for it, as there really is a mechanismic problem due to insurer-cherry-picking, where a state that does let people move in from states that allow cherry picking gets freeloaded on with the sick of these other states. My own caution is that due to this, certain states that do not have say a 1 year residency requirement to avoid pre-existing-conditions checks on insurance perhaps should add one, and may soon do so, thus making it impossible for people with pre-existing condtions to get insurance if they move in from a cherry-picking state, or perhaps from any other state.
Therefore, you should consider making sure the health insurance laws in the state you are in now are safe for residents, and that you are otherwise happy and well-employed in that state, and plan to stay in that state at least until you hit age 65.
NOTE: In going through and evaluating danger situations, I have placed a warning on a state's high risk pool when the lifetime limit of annual coverage is under $1,000,000. You might
NOTE: If you are in a situation where losing your assets looks unavoidable, you can investigate these possibilities. (They depend on laws which I have not investigated, so you have to investigate them yourself.)
A)Possibly, a legal asset transfer will allow you to get Medicaid without losing all of your assets. The last time I investigated this was some years back, in regards to nursing home care, not medical care. At the time, there were ways to transfer assets without defrauding that would allow a person to keep half of their assets. You can investigate this in your state. I have no idea if asset transfers would protect, or ever have protected one in the case of Medicaid medical care.
B)Also, at one point retirement assets, such as IRAs and 401Ks, had some protection from bankruptcy. I do not know if this is still the case, with the new federal bankruptcy restrictions. I do believe that retirement assets do count towards Medicaid assets, so you can not get Medicaid with substantial retirement assets (but you should verify). At any rate, if retirement assets make you ineligible for Medicaid, but are protected from debtors, and if you can sacrifice your non-retirement assets, then you can try just showing up the emergency room, where I think they will treat you, but then when they come for your assets, just say "I have only retirement assets and then they are protected".
Again, since I really don't know any legal details relating to the viability of these strategies, by all means check with a lawyer before using them.
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