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What Are Ancillary Benefits?

Transcript:

What's up Internet? My name's Ian Bloom. Welcome to Nerd Finance! I'm your resident financial life planner and huge nerd!

In today's episode, we are going to be doing our final open enrollment video of this month. The reason I think that's important is that if you are watching this video, but you haven't watched the previous three just know that you'll get a lot more out of anything if you watch the prequels. This video is going to be addressing a couple of ancillary benefits, or extra benefits, that I see available for purchase at employers.

The first benefit that I'm going to address is critical care, or medical benefit, insurance that is not health insurance. These ancillary policies are usually an indemnity policy, which means that they pay out if the policy is ever triggered, regardless whether you need the money or not. They usually come associated with a duck.

So, the reason I'm not a huge fan of these policies is that I kinda view them as "dragon-burning-down-your-house" insurance. They are super, super-specific and they are really good for that specific group of people. If you live in Helgen and you have already had a dragon burn down your house once I could totally see why you would want "dragon-burning-down-your-house" insurance, right? But, if you are not one fo those people, who lives in the mythical town of Helgen, then I'm not really sure why you would want this policy because we really don't have dragons burning down our house in America...yet. Given that, I'm not really a huge fan of critical care policies. They don't trigger as often as you would want, so for a lot of people they are just extra dollars tacked onto their paycheck expenses.

The second benefit that I'm going to address on this video is legal insurance. Legal insurance I'm a little bit bigger of a fan of. Usually, this is a benefit where you can pay $10 or $20 a month for access to a network of attorneys that will do certain actions for you (included in that fee.) They will do some other actions at a discounted rate.

What I mean by this is, if you get a speeding ticket or you need to get your wills done, those sorts of things are usually covered by this legal insurance. On the flip side, if you get sued in a very complicated lawsuit involving a "dragon-burning-down-your-house", well suing a dragon is usually not covered.

The reason that I'm a fan of these benefits is typically you can utilize them to your advantage with a little bit of careful planning. Do you need to get your estate planning done or updated? Well, this is a really good purchase for that year because that package of representation usually costs $1,000 or $2,000. So why not have this sort of insurance?

Finally, the last benefit that I'm going to address as an ancillary benefit (though you usually cannot make any changes to it) is the parental leave policy. The reason I thought taking a moment to talk about this would be worthwhile is that the landscape of parental leave is changing drastically. A lot of the modern tech companies are super interested in looking good an providing great leave to parents. And thankfully, that is changing in our communities.

Evaluating this before or after you join the company is important because if you're going to go through having a child any time soon you want to know what the financial landscape of that looks like. How much time can you spend with the child? So keep in mind that being aware of this policy, even though you may not be able to make any changes to it during open enrollment, is super important.

I hope this video was helpful to you. It was just discussing a couple of the benefits that I see as worth discussing, since they come up pretty often. If you have any questions, feel free to reach out. Have a wonderful day!

Disability Insurance and Bear Wrestling

Transcript:

What's up Internet? My name is Ian Bloom. Welcome to Nerd Finance. I'm your resident financial life planner and huge nerd!

In today's episode, we are going to be covering disability insurance. To start off, let me paint you a picture here. You are a champion bear wrestler. In fact, you're probably the only bear wrestler...but, you are a part of the bear Wrestling Federation and you get injured in a tragic bear wrestling accident. Who's surprised? I'm not sure, but the two types of disability insurance start to play in here. Where do they cover you?

Short term disability covers you while you're basically getting better from your injuries. So, it starts seven days in and usually lasts about 90 days. It's gonna cover you for one hundred percent of that huge bear wrestling salary that you get, which is awesome! Now, after that 90-day period, long term disability is going to kick in.

So you're healing from your wounds, but maybe you shouldn't step back into the ring with another bear just yet. Who would ask you to do that when you don't have full range of motion in your leg? Well, long term disability is going to cover you for about 60% of your salary and it's going to cover you until you're healed. Now that being said, it will cap out at your retirement age, but for the most part you shouldn't expect to not get back in the ring and wrestle bears. Because if you could, why wouldn't you?

Those are the basics of long and short term disability, but these come into play in a couple of different ways. First off, you should know that if your employer is paying the tax on that disability benefit. If they are, you will have to pay tax on the income when you receive it from the benefit. So, should something happen to you and you be receiving some money from your disability insurance, that is fully taxable income. On the offhand that you either own your own disability insurance or have the ability at your employer to pay tax on your disability benefit, you will then receive the benefits tax-free. So, if this is an option at your employer I often caution clients to please make sure to do it. Even though it represents a slightly greater expense today, it may represent a much bigger benefit should something happen to you. And let's be real if you got injured wrestling bears, you're going to want all the money that you can get, because you have to support that bear wrestler lifestyle.

In any case, I hope this video was at least somewhat silly and helpful for you. Thanks for watching! Have a wonderful day!

Making Health Insurance Decisions

Transcript

What's up Internet? My name's Ian Bloom. Welcome to Nerd Finance! I'm your resident financial life planner and huge nerd.

In today's episode we are going to be covering health insurance. Before I dive in, I wanted to let you know that last year we recorded very detailed videos on each of the different types of health insurance plans and today is just going to be a recap of that. So, if you have questions about a specific type of plan like a high deductible health plan, those videos are available elsewhere on the channel. So make sure to give them a watch.

Making health insurance decisions in open enrollment in general is a lot like creating your character in Skyrim: As it turns out there are a lot of different decisions to be made and a lot of little variables you have to understand in order to get the perfect thing, but most likely you're just going to hit the confirm button and move on. So, let's take things off autopilot a little bit and talk about the different types of plans that are available.

The first is a high-deductible health plan. High-deductible health plans are always paired with an HSA and are called HD HP's. HSA stands for health savings account. HSAs are paired with a high-deductible health plan similar to how Ash Ketchum always has Pikachu on his shoulder, because as it turns out they're way better together. High-deductible health plans start off with this big deductible that really isn't that attractive, however even though they have this big deductible you are able to save the money that you need to cover that deductible in the health savings account and that money can be saved pre-tax, and will be taken out tax-free as long as you spend it on medical care. So, it's a really powerful savings tool. Here's the trick, in general, high-deductible health plans have much lower premiums than the other policies that are available. So, as a result, the money that you're saving is usually money that you would have spent on the premiums anyway. It can be used for future years, or for other things than medical care with a penalty, so you get to save your own money and spend it on what you want.

Preferred provider organizations are just what they sound like. There's an in-network group of doctors and hospitals that you can see with maybe 70 or 80% of your expenses covered. Whereas there are out-of-network groups of doctors and hospitals that you can see where you might get covered for 30 40 or 50% of your costs. Keep that in mind when you're on a PPO plan. It means that you have an in-network group that you should be seeing more often if you want to be cost-efficient.

Point-of-service plans are very very similar to PPOs in the sense that they start with a P, and in general they have in-network providers that you want to be seeing. However, the back end of a POS plan is a little bit different than the back end of a PPO plan. Instead of just having agreements with the doctors in general, they have specific rates that they will pay up to any particular doctor, regardless of what that doctor or provider charges for their care. So, instead of having it be 70% or 80% of the benefit you may have 100% of your care covered by what they pay out, or you may have 50% covered by what they pay out depending on the procedure and where you go.

Finally, we'll deal with HMOs, health maintenance organizations. Health maintenance organizations are relatively new because they came about as a result of large urban centers becoming popular. You see, HMOs will only operate typically within a geographic area where they have negotiated care with all of the medical providers in the specific category, in that area. For instance, in my area, Duke is a big hospital and medical facility owner so if Duke were to have an HMO it would say that my coverage covers 90% of costs at Duke hospitals. It's kind of like pre-paying for your medical care. HMOs do tend to have a pretty high premium, but because they're limited to geographic areas if you're in that area your care might be 100% covered. As a result, it can be pretty helpful to have one of these if you live near an urban area. Unfortunately, it does mean that rural viewers will not really have access to good HMOs. You know places like Boston, New York, LA, Raleigh, I guess...will have good HMO coverage.

That was a ton of information. As you can see popping up throughout the video, I do have A Gamer's Guide to Health Insurance linked in the description if you want to recap of some of these basic things, plus a couple little stats on how the plans size up next to each other. You can also go watch the individualized videos I talked about at the beginning of this video which dive deeper into each type of health insurance. Finally, I hope that you enjoyed the content and that it was helpful for you and I got in just enough nerdiness with the Skyrim and Pokemon jokes. I hope you have a wonderful day thanks so much for watching!

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