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This year has been a rough one for health insurance companies of all sizes. With the recent news of Aetna withdrawing from most of its Obamacare exchanges, many Americans are beginning to worry about their shrinking options, skyrocketing premiums, and where they’ll even find services.

Scarily enough, Aetna is not alone in its decision, and joins two other insurers in withdrawing from the program. What does this mean for Americans and their healthcare, and what does it mean for the marketplace?

What’s Happening?

No matter which side of the political spectrum you favor, healthcare has been a tinder pile of a topic over the last few years. With the implementation of the Affordable Care Act (ACA) – better known as Obamacare – in 2014, the United States became the last remaining developed country to institute universal healthcare. Previously, we were the lone wolf: 32 out of 33 developed nations had already adopted such programs.

Of course, as we have come to understand, “universal healthcare” does not mean free healthcare for many. The United States opted to implement an insurance mandate system, meaning that its citizens are required to either obtain private coverage, qualify for an exemption, obtain State Health coverage, or pay a tax (penalty) for not carrying health insurance. Depending on your income level and the marketplace options available to your area, this could potentially turn into an expensive venture for your family.

One of the selling points of the more comprehensive version of Obamacare that passed, at least in the eyes of the insurance companies, was that the mandate would force more healthy Americans to buy policies. The idea being that the average American would want (and need) to avoid paying the high penalty taxes for their family. This is especially true since the tax is increasing every single year.

In turn, this padding of healthy customers’ premiums (and their policies that would, ideally, go largely unused) would help the insurance companies offset costs… costs involved with providing care for the older and sickly customers that flocked to them for new coverage.

Unfortunately for the insurance giants, this doesn’t seem to be happening.

Why Isn’t It Working?

For many Americans, the reality is disturbingly ironic: paying the government fine for forgoing coverage is actually cheaper than, well, paying for coverage. The only caveat to their practice (and it’s a scary one)? It’s imperative that they stay healthy.

This is, of course, the exact opposite of the intent behind the penalty, and has brought the insurance companies’ fears to the table. They are now losing money in a system that should have guaranteed success. And many of them are pulling out in response.

Their scales are being tipped by the influx of “sickness care.” With decreased memberships from healthy families, insurance companies like Aetna, UnitedHealthcare, and Humana are now scrambling to find balance.

In fact, Aetna lost $430 million just in the first half of 2016 alone. This prompted them to announce last week that they will drop almost 70 percent of the counties in which they have previously offered coverage, beginning in 2017. Whereas they sold policies in 778 counties (within 15 states) this year, they will offer coverage in a mere 242 counties (in only four states) next year.

Of Course, They’re Not Alone…

Aetna is in good company following their pullout. They join giants Humana and UnitedHealthcare Group – the nation’s largest health insurer – who have both already withdrawn from the ACA in some capacity. More are likely to follow, too. In 2014, only 30% of insurers turned a profit in their individual divisions, which dropped to around 25% for 2015.

In April, UnitedHealthcare announced that it will drastically downsize participation for 2017. They are decreasing coverage from 34 states and nearly 800,000 people, to a measly three states. (Seeing as they lost almost $1 billion on Obamacare in 2015 and 2016, the move isn’t too surprising.) Humana has also decided to withdraw from nearly 1,200 counties throughout eight different states.

All three of these companies have cited a financial hemorrhage as their reason for pulling out. Too many young and healthy Americans are choosing the penalty tax over paying premiums. This means that insurers just don’t have enough padding to continue on the same path.

Add to it that many Americans who were previously uninsured – due to preexisting conditions, inability to afford plans, or lack of motivation to navigate coverage – are elderly, sick, or just taking full advantage of having healthcare for the first time in a while. They have flocked to their new in-network providers, requiring care for coughs and cancers alike. This sudden cost has shocked the system, it seems.

Even Blue Cross Blue Shield is thinking about jumping ship. The company has already said that it would consider withdrawing from Obamacare, dependent on future marketplace trends. One of its plans, Highmark, lost more than $773 million in its first two years with the exchange system. Their CEO deemed kind of loss “unsustainable.” And BCBS of Minnesota has already dropped individual plans.

In fact, a Blue Cross Blue Shield Association report studied new Obamacare enrollees – the first investigation of its kind – and the results were alarming. It found that new ACA members have considerably higher rates of serious illnesses like hypertention, HIV, diabetes, and Hepatitis. Most of these are lifelong illnesses, with medical care and costs following them over many decades.

This study also found that Obamacare members’ costs of care were 22% higher than those Americans in employer-based health plans. They had more ER visits, more prescriptions, and more inpatient hospital care.

Regardless of the ‘why’ involved, the fact remains:  the insurance giants just can’t plug holes fast enough to keep their fiscal ship from sinking.

How Does This Affect Americans?

You might be saying, “Well, I already have coverage. How does this affect me?” Maybe you’re not yet covered, but plan to just go with whichever remaining company offers service in your area. Okay, great.

Except, you’ll likely suffer the aftershocks, too.

For the counties retaining coverage from these three companies, your premiums are likely to increase in response. Sure, Humana, UnitedHealthcare, and Aetna have chosen to pull out of their least lucrative counties. That doesn’t mean that they aren’t still losing more money than they’d like on the bottom line.

If your coverage has been eliminated by one of these withdrawals, you’re guaranteed to feel the effects. You will, of course, need to find a new plan. This may or may not cost more than you have already been paying. You might be forced to change doctors, hospitals, and treatment facilities, too. Your new plan may not cover the providers with whom you’ve already established care.

For counties losing insurers, you’ve just been robbed of one more bargaining chip. Less providers in your area means less competition, and less incentive to decrease premiums. If you’re one of the unlucky areas that will be reduced to just one or two providers, you’ll likely see a noticeable jump in premiums. In fact, more than 650 counties across the country will experience this. Or, like Pinal County in Arizona, you could be left with NO providers. A state-mandated monopoly is rarely beneficial for the consumer: “Take it or leave it.”

In fact, many insurers were already planning to raise their rates by double-digit percentages in 2017. This is sure to put a pinch on everyone’s wallet. Even Anthem Inc., the second largest insurer in the country (behind UnitedHealthcare, of course), announced that it plans to implement “substantial premium increases” next year in order to offset its ACA losses – as high as 30 percent!

What the Future Holds

It will be interesting to see how Obamacare plays out over the coming years. A lot will depend on whether the government can work with the insurers to fix a system that is limping along. An influx of sick enrollees combined with less-than-desirable participation from healthy families has created a sinkhole for insurance companies.

The only companies happily in the black are those with very strict guidelines, higher premiums, and limited care provisions. The rest are bleeding out, it would seem. If something isn’t done quickly to help the system, it is sure to crack under the pressure.

Premiums will surely rise in 2017, and possibly beyond, as will the penalty tax. Whether or not healthy Americans will choose to enroll and balance the system, or opt out of its chaotic current state, is yet to be determined.

As for me, I’m going to go ahead and book some checkups now. Who knows what 2017 will bring…


New baby? No doubt this new arrival has turned every aspect of your life upside down in the best possible way. Now is the time to make sure your financial house is in order. Here’s a 10-step account and financial checklist to lay the groundwork for your little one’s successful future.

New account checklist for new babies

1. Apply for a Social Security number for the baby: An SSI number is the linchpin to open a bank account in your child’s name, purchase savings bonds, obtain medical coverage and access government benefits.

2. Review your life insurance: If you don’t have life insurance, you should get coverage as soon as possible. If you already have a life insurance policy, check to make sure it’s adequate to cover the needs of the new addition to the family.

3. Pick a guardian: Choose a family member or close friend who is willing and financially able to care for your child, should you or the other parent pass away or become incapacitated before your child turns 18.

4. Set up powers of attorney: Put in writing your legal power of attorney, which sets out who will be responsible for your financial and personal affairs should you be unable to make those decisions for yourself. You also should set up a health care power of attorney that makes your wishes known in the event you become seriously ill and are unable to participate in decisions about your care.

5. Write your will: It’s not just wealthy people who need a will. Every parent should create a document spelling out how his or her estate should be handled. The will may also include or reference legal guardianship and powers of attorney.

6. Open a savings account in the baby’s name: Choose a no-fee, no-minimum balance, online savings account. You can link the savings account to your checking for automatic withdrawals.

7. Set up an emergency fund: You should put aside money from each paycheck into a savings account with the goal of having sufficient funds to cover living expenses for six months.

8. Review your work benefits: Confirm how much paid (and unpaid) maternity leave is offered through the birth mom’s employer, and whether paid leave is available for the other parent. Determine how you will obtain health benefits for the baby, either through an employer or government plan. Consult with your human resources office on flexible spending accounts and other benefits that may apply to your situation as a new parent.

9. Check in with Uncle Sam: You can claim a tax credit of $1,000 for your new baby and take an annual tax deduction of $3,950 for each dependent child. You can also receive tax credits if you adopt a child and/or if you pay for child care. You should review your withholding status, which could mean that more take-home money is available to increase your emergency fund every month, for instance. Single parents may be able to claim head-of-household status.

10. Start saving for college: Set up a 529 savings account, which generally is not subject to federal and state taxes if used to pay for college tuition. (If the funds are used for other purposes, earnings may be subject to a 10 percent federal tax penalty.) Details on fees and other aspects of the 529 plans vary by state, so do your research.


A week ago today I was in Phoenix. I had been there for a few days, and I had been planning to spend a month with my girlfriend away from the cold New Jersey weather. It wasn’t a vacation. We each needed to continue working, but figured we might as well do so where the weather was nice.

Early in the morning, I got a frantic call from my apartment complex’s superintendent. “Where are you?”

Groggily, I stated I was out of town and asked what was going on. “We have a major problem.” The sprinkler line in my apartment building froze and burst, dumping cold water, ceiling debris, and insulation into my kitchen. The unit below me was in worse condition, and their basement’s ceiling collapsed.

I ensured the super was aware that I recognized the seriousness, and with some trouble (a different story), I got on a flight back to New Jersey that got me to the apartment later that night. After hanging up with the super, I did two things.

First, I called my insurance company to let them know about the situation. Second, because I knew I probably wouldn’t be able to see the apartment myself until late in the evening, I asked a friend to stop by and assess the damage, taking some photographs. Thankfully, he was available and able to help out.

The insurance company requested that the apartment maintenance staff not remove anything, and I relayed that message to the super, but I didn’t expect them to comply as safety was their primary concern.

By the time I landed and a car dropped me off at my apartment, it was twelve hours after the initial call. The damage in the kitchen was very bad. The carpets throughout my unit were soaked. All in all, however, much of my personal property was fine. The neighbors downstairs were not as lucky.

The landlord determined the best way to deal with the mess would be for me to move all of my belongings out of my apartment so they could begin the repairs immediately. I asked for and received recommendations for moving companies and by the end of the week had a storage facility located, a moving company booked, and the insurance company agreeing to pick up the bills.

The pack-out and move-out lasted several hours yesterday as the temperature plummeted from thirty degrees to zero. But now I’m still waiting for communication with the landlord to determine when the work will start, how long it will take, and how they intend on discounting my rent for the period of time during which my apartment building is uninhabitable.

The damage to my items is generally isolated in the kitchen and the dining room, and my dining room is relatively empty because I converted it to a photography studio.

Liberty Mutual, the insurance company that covers my automobile insurance, renter’s insurance, and umbrella insurance, offered me two options. I could receive a check to cover the depreciated value of my damaged items, with a later reimbursement once I replace those items, or I could use Liberty Mutual’s service for replacing those items, where a company that partners with the insurer seeks out replacements for each of the items and sends it directly to any location I want, thereby avoiding issuing a check to me.

I chose option number one, as my current living situation might not require immediate replacement of everything and I plan spending time away from my apartment.

The insurance company also offered to pay for a hotel, but one of my friends offered up some space in his home. Liberty Mutual will also pay for living expenses, like food, that are above and beyond what I would be spending normally, while I’m out of my apartment.

Communication with Liberty Mutual has been a little difficult, but part of the problem is that the similar problems have occurred in homes across the Northeast region of the United States, and insurance companies are busy dealing with a large number of claims. In my apartment complex alone, a day or two after my incident, there was another burst pipe that flooded a different building. There is obviously insufficient protection during cold weather.

My landlord also hasn’t been very communicative. The super has been nice, but all I know about the repairs is that they expect it to take a week. I think the repairs, including fixing any water damage, replacing the carpets and wood floors, ceilings, walls, and kitchen appliances might need more like a month.

Renter’s insurance is inexpensive, but I’m thankful to have it. I would really love for this incident to be over so I can get back to Phoenix — and get back to life, to work, and to warm weather. After last year’s winter in New Jersey, my plan was to avoid as much of it as possible. And on one of the coldest days, I was brought back, and I’ve been too busy taking care of the emergency to be able to write some articles for Consumerism Commentary.

I can’t complain too much. As I’ve mentioned, with friends, insurance, money available for emergencies, and perhaps some luck, this incident hasn’t been nearly as bad as it could have been. I do feel bad for my neighbors who experienced much more damage and disruption in their lives.

One observation this event has allowed me to make pertains to my accumulation of stuff. Over the past decade, I’ve lived in just two apartments. Prior to that, in the six years after graduating college with a bachelor’s degree, I lived in at least seven different places. While moving around, there was never a big opportunity to settle in and accumulate stuff. That has changed over the past decade.

There’s a lot of items I could get rid of, things I don’t necessarily need in order to live a happy life. But I don’t subscribe completely to the idea of minimalism. Just because all I need to live are a few items, that doesn’t mean that I should limit my life to the bare necessities.

Keep in mind that my living needs are different than many readers. I am an unmarried individual without children. I have no family to support. Thankfully, no one is affected by the flooding in my apartment other than me (and my neighbor downstairs). If my family were displaced by an event like this, the situation would be very different.

With good insurance coverage and a landlord that doesn’t try to weasel out of responsibilities (at least so far), I can be confident that I can return to a great place to live.


This is a guest article by Sara Stanich, a Certified Financial Planner (CFP®) practitioner and Certified Divorce Financial Analyst (CDFA™) based in New York City. Sara is one of four financial experts participating in Consumerism Commentary’s Naked With Cash series. She blogs about financial planning topics at Cultivating Wealth.

In this article, Sara addresses high deductible health plans (HDHPs). I have always had HMO or PPO health insurance, so this article covers new territory for me.

Do you have a new health insurance plan this year? Is it a high deductible plan with a health savings account?

If so, you are not alone. The HDHP market has been growing. According to the National Center for Health Statistics, 30.3% of group health care plan participants were enrolled in a high-deductible plan during the first quarter of 2013, up from 17.1% in 2008.

But not everyone understands how these plans work. So, let’s review the basics.

A high deductible health plan is a health insurance plan with lower premiums and a higher deductible than traditional plans. This means that while your monthly cost for the insurance (the premium) may be lower than with a traditional plan, you will probably spend more out of pocket (your deductible) before your insurance starts to partially cover the cost. Preventive care such as physicals and immunizations may be 100% covered.

At some point (the out of pocket limit), your insurance will cover 100% of your cost. You must check your own policy for the exact amounts that apply for your or your family.

A Health Savings Account (HSA) is a tax-advantaged account that’s paired with a high-deductible health plan (HDHP). This allows you to set aside money for healthcare expenses that are not covered by your plan. This is good news, because contributions are made with pre-tax dollars, so spending on health care may be done with pre-tax dollars, and contributions reduce your taxable income, which may in turn reduce your taxes. (The contribution limit for 2014 is $3,300 for individual and $6,550 for family coverage).

What I think is more interesting than the basic rules, is how this structure may be affecting our decisions surrounding healthcare. The high deductible puts more financial responsibility on the consumer. What is the result?

My story

Recently, I had some pretty bad neck pain. This happens to me from time to time and is probably related to stress or lifting something heavy (like a squirmy kid). After trying ice, a heating pad, and lots of ibuprofen, I decided to break down and call a chiropractor. Actually, I called two.

So I called a chiropractor I had been to before to make an appointment. I know I have a High Deductible Health Plan, and I was pretty sure I would need to pay 100% of the cost out of pocket.

So I asked, “How much will it cost?”

They said I should give them my insurance information, and that they would call the insurance company and let me know. Well, OK.

She called back. I was right; the insurance company will not pay any of the cost.

  • My quote for a consultation and a chiropractic adjustment: $848.00.
  • As a former patient, they could offer me a 50% courtesy discount, so $424.00.

Although I actually have the money in my HSA, this number gave me pause. Maybe my neck wasn’t so bad after all?

I thanked her for looking into it, but said I would try something else. On the way home, I got a 15 minute massage from one of those storefront places for $20, and my neck did feel better.

Fast forward one week. Between long car rides over the holidays and crouching over a laptop on the couch, my neck is worse and the pain is radiating to my shoulder.

I decided to call another chiropractor from my “past.”

They said, “Come on over!”

I said, “Can you tell me roughly what this will cost? I know my insurance has a high deductible and I will be paying out of pocket.”

The answer was evasive as always. “We have a sliding scale. Just come in and we’ll figure it out with the insurance company.”

I didn’t like that answer, but frankly I was so sick of this pain I was ready to just hand over my wallet. So I went, and my back made lots of loud popping noises from many angles. Aaahhhhh… much better.

The price? $75.

I was certainly happy with that number, but what the heck? I had been quoted over ten times as much for essentially the same service. In the same city. On the same street!

I also wondered if they gave me a bargain price because “poor me” had cheapo health insurance. (I can pay; I just don’t want to overpay.) I wasn’t about to argue, and I feel $75 is probably a pretty fair price for 20 minutes of someone’s time.

Lessons learned. Use these tips if you have a new health plan!

  • Understand how your health insurance works. If I hadn’t known and the first chiropractor hadn’t provided an estimate, I could have been presented with a surprise bill of $824.00.
  • Ask questions. Judging by the surprised reaction to my questions, not many of us ask how much it will cost. That makes sense; if I had a $20 copay for everything, would I have even asked about the cost?
  • Shop around. Prices may vary considerably. If you can (and it isn’t a medical emergency), check with two or three options. I went from $848 to $75 for similar service. You may be surprised at what you find.

I am curious about how the expansion of these plans will change the industry. Will pricing become more transparent and competitive? In the meantime, it pays to shop around!

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Sara Stanich and not necessarily those of RJFS or Raymond James. You should discuss any tax matters with the appropriate professional.

Photo: Flickr/planetc1


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