Information

Estate Planning: 
What is it and why do we do it? 
     You spend your entire life creating wealth. The more wealth you create the more unhappy the people you leave behind will be without the proper estate planning. Estate planning allows you to decide while you are alive how your assets will be distributed. It also allows you to protect your heirs from unanticipated devastating expenses ranging from debts to taxes to administrative fees. Court and probate records show 75% of all estates do not have the necessary cash to pay for these expenses. Heirs are forced to quickly liquidate assets such as homes and businesses to pay these expenses, often at a fraction of their real value. If people didn't care about taking care of loved ones after they're gone, no one would bother completing an estate plan.

Our discussion will explore:

Wills

Executors

Probate

Estate Taxes

Trusts

Life Insurance

The material presented on our web site may contain concepts that have legal, accounting and tax implications. It is not intended to provide legal, accounting or tax advice, you may wish to consult a competent attorney, tax advisor, or accountant.
Wills
     Everyone who is concerned how their assets will be divided should at the very least have a current and valid will.

The will should:

Provide a description of your assets.

Provide for the distribution of your assets to your heirs.

Name an executor.

Name a guardian for your children.

Wills are simple to create. Though you should always have it done by a qualified attorney, many courts have accepted simple handwritten wills drawn up without any legal counsel. Some states even accept oral wills.

Wills may be simple, but after death, they become a public document once they are entered into court. They instruct the court of your wishes. A will can be contested and it is up to the court to decide validity. Legal counsel may help you avoid many of the pitfalls associated with wills, especially in the area of contestability.

After death, wills must be brought before the courts. This process is called probate. This process could take from 9 months to 2 years or longer, and could cost 2% and sometimes up to 5% of the entire estate.

If the value of an individual's assets are high enough to be subject to estate taxes, wills do not help with estate taxes.

Executor
     In most instances, when a person dies owning property of any real value, it is necessary to appoint someone to administer the estate. That someone could be an individual close to the deceased, a bank or trust. That individual who acts for, or "stands in the shoes of," the deceased is called the personal representative. If the personal representative is named in a will and the will is accepted as valid that person is known as the executor.

To carry out the administration of the estate, the executor is responsible for:

Contacting the funeral director, cemetery and clergy to make burial and funeral arrangements.

Notifying relatives, friends, employer, post office, insurance agents, civic organizations, veteran organizations, newspapers, attorney and accountant.

Collecting all documents and important information related to the deceased:

1. 
Will 7. 
Insurance Policies 13. 
Veteran Discharge Papers 
2. 
Death Certificate 9. 
Bank Accounts 14.
Disability Claims 
3. 
Birth Certificate 9.
Deeds  15.
Unpaid Bills 
4.
Marriage Certificate 10. 
Leases  16.
Property Tax Bills 
5.
Socical Security Number 11.
Car Titles 17.
Credit Card Information 
6.
Citizenship Papers 12.
Income Tax Returns

Depending on the value and complexities of the estate, hire lawyers, accountants, appraisers and if there is a business involved the necessary people to keep it going.

Filing the necessary tax returns and paying the appropriate estate, federal and state income taxes and paying all debts and expenses.

Distribute assets in accordance with the will.

Probate
     Probate is a legal process where your executor goes before a court and:

Identifies the property in the estate.

Has the assets appraised.

Pays all debts and taxes.

Proves the will is valid.

Distributes the assets according to the will

The pitfalls of probate: 
Time consuming. It could get bogged down in the busy courts and take a year or two, while your heirs wait.

Costly. If the estate consist of non-cash assets such as real property, art, coins, or long term bonds they will need to be sold to pay for probate costs. That involves appraisal fees, additional delays and selling property you intended for your heirs. Plus, often that property is sold below market value.

Multiple probate. If property is in more than one state, each state requires separate probate proceedings.

Can probate be avoided? 
Probate is not necessary if all of a person's assets will pass automatically under joint ownership.

Probate may not be necessary if the only asset is life insurance payable to a beneficiary.

Probate is not necessary for assets that have a beneficiary designation such as IRA's, and employee benefits such as pension plans or profit sharing plans.

Assets placed in a trust usually do not have to be probated because the assets are payable to named beneficiaries.

Estate Taxes
     The federal estate tax, initially adopted by Congress in 1916, is tax on the right to transfer property at death. The Tax Reform Act of 1976 revised the federal estate tax to be a tax based on the value of all property and rights to property possessed by a decedent at his death or transferred by him by gift during his lifetime.

Exclusions:

Unlimited Martial Deduction: Property transferred at death from one spouse to another is excluded from estate taxes.

Annual Exclusion: An individual can gift any number of other individuals $11,000 each year without incurring a transfer tax.

Unified (Lifetime) Credit: Each person is allowed lifetime credit. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA 2001), signed into law by President Bush on June 7, 2001, repeals the estate tax for one year. Under the new law, the federal estate tax continues, but with increasing unified credits and decreasing top estate tax rates, until 2010 when it is repealed only for one year. Without future Congessional action, the 2001 federal estate tax rules will be reinstated in 2011, but with a $1 million exemption equivalent.

Estate & Gift Taxes 
For Deaths/Gifts Occuring in 2005 
If Taxable Estate Is:   Of the
Amount > 
Over But Not > The Tax Is: 
$0 $10,000 $0 + 18% $0 
10,000 20,000 1,800 + 20% 10,000 
20,000 40,000 3,800 + 22% 20,000 
40,000 60,000 8,200 + 24% 40,000 
60,000 80,000 13,000 + 22% 60,000 
80,000 100,000 18,200 + 28% 80,000 
100,000 150,000 23,800 + 30% 100,000 
150,000 250,000 38,800 + 32% 150,000 
250,000 500,000 70,800 + 34% 250,000 
500,000 750,000 155,800 + 37% 500,000 
750,000 1,000,000 248,300 + 39% 750,000 
1,000,000 1,250,000 345,800 + 41% 1,000,000 
1,250,000 1,500,000 448,300 + 43% 1,250,000 
1,500,000 2,000,000 555,800 + 45% 1,500,000 
2,000,000 –– 780% + 47% 2,000,000 
Subtract applicable credit below from calculated tax 
  Exclusion Amount Applicable Credit 
2002-2003 1,000,000 345,800 
2004-2005 1,500,000 555,800 
2006-2008 2,000,000 780,800 
2009 3,500,000 1,455,800 
2010 Estate tax repealed; gift tax remains 
2011 1,000,000 345,800 
Annual Gift Tax Exclusion: $11,000 ($11,000 in 2002)

Trusts
     A trust is the holding of property and the equitable management of that property by one person (a trustee) for another person (a beneficiary). The person who transfers property into a trust is called a grantor. A Living Trust is called a Living Trust simply because it is created while you are alive. In most Living Trusts the grantors (Husband and Wife) are also the trustees.

Almost anything can be placed in a trust: bank accounts, stocks, bonds, real estate, personal property, and life insurance. Once the trust is established, assets can be placed into the trust by simply changing the name or title of the asset. If constructed properly the grantor can still maintain full control of the assets.

Living Trusts avoid probate. Because a trust is recognized as a separate legal entity, distributions are made by a Trustee to named beneficiaries without any court involvement.

Keeps the details of the estate private.

Gives the grantors (Husband and Wife) full control of their assets while they are alive and competent.

Allows assets to be distributed quickly upon death.

A Living Trust arranges for a successor trustee to manage the assets should the Grantor trustee become incapacitated.

A Living Trust is difficult to contest.

A Living Trust with "A-B Provisions" effectively doubles the standard estate tax deduction for married couples.

Life Insurance
     Life Insurance can provide much needed cash to pay for fees and taxes and also allow for an easier distribution of all assets.

Life insurance proceeds at death are passed to the beneficiary income tax free.

Life insurance proceeds at death add to the value of the estate and therefore are subject to estate taxes. This can be avoided by having someone other than the insured own the insurance policy. This can be accomplished in two ways:

1. The children of the insured can own the policy.

2. An irrevocable life insurance trust can be created and funded by life insurance. The trust is irrevocable because the insured (Grantor) cannot have any rights or powers over the trust and no incidence of ownership over the life insurance policy.

Dan Wilcox Insurance

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38452 Oakleigh Lane
Prairieville, La. 70769
225-673-4435

Charitable Remainder Trusts
(CRT)

In 1969 Congress created a new type of trust that helped charities and not-for-profit organizations generate more revenue for their causes. In addition to being an excellent vehicle to make a charitable gift or bequest, a charitable remainder trust is an effective estate planning and income tax reduction tool. This vehicle allows taxpayers to reduce estate taxes, eliminate capital gains, claim an income tax deduction, and benefit charities instead of the IRS.

A charitable remainder trust is established with irrevocable contributions of cash, marketable securities, closely held stock or real estate. The parties to the trust are the Donor, the Trustee, the Beneficiaries (also called the Recipients, and the Charitable Remainder Beneficiaries (Charity or Charities). The Donor contributes assets to the trust. The assets are typically sold and the proceeds reinvested by the Trustee. The Trustee makes payments for life or for a term (not exceeding 20 years) to the Beneficiaries according to the terms of the trust. At the termination of the lifetime interest (death of all primary beneficiaries) or the designated term the Trustee distributes the remaining trust assets to the Charitable Remainder Beneficiaries.

Donor: 
     At the creation of the charitable remainder trust, the donor receives an income tax deduction for the present value of the future gift (the “charitable remainder”) the charity will receive when the trust terminates. That value is calculated based on actuarial tables, taking into account the value of the property transferred to the trust, interest rates, the age of each beneficiary, or the term of the trust if it is for a specific number of years. If he or she cannot use the entire deduction that year, it may be used over the next five years.

Trust: 
Once the assets are inside the charitable remainder trust, there are no taxes from the sale of the assets transferred to the trust. Therefore, transferring appreciated assets to a charitable remainder trust, which in turn sells them and re-invests the proceeds in income-producing property, provides the trust the full value of appreciated assets without capital gains. The assets are removed from the gross estate of the donor and the recipient receives an income for life or for a specific term.

Trustee: 
While the charitable remainder trust is an irrevocable trust, the donor under certain conditions can be the trustee as well as the beneficiary of the charitable remainder trust. As trustee he or she has control over the administration of the trust and investment of trust assets. That individual can name successor trustees or alternate trustees and can retain the right to change designation of trustee at any time.

Beneficiaries: 
At the establishment of the charitable remainder trust, the donor can name his or her self, a spouse, and/or others as beneficiaries. Those named primary beneficiaries will immediately receive the lifetime income. Those named contingent beneficiaries will receive payments only after the death of all primary beneficiaries. Once the trust is established, the designation of beneficiaries may not be changed. All beneficiaries must be living and named when the trust is established.

Lifetime Income Payments: 
The charitable remainder trust is structured in one of two ways:

The CRT Annuity Trust. This trust pays the income beneficiary an annual fixed dollar amount equal to a percentage (not less than five percent), selected by the donor, of the initial value of the assets transferred into the trust. 
The CRT Unitrust. This is the variable payment method. This trust pays a fixed percentage (not less than five percent) of the fair market value of the trust’s assets valued annually or the amount of the trust income whichever is lower. Variable payments allow the beneficiaries to share in the growth of trust assets and are usually preferred. Also, with a CRT Unitrust, additional contributions can be made after the trust is established. CRT Annuity trust requires a separate trust for each contribution. 
Payment Term: 
In most cases, payments from a charitable remainder trust are made for the lives of the beneficiaries. However, you can also specify that payments be made for a fixed term of up to 20 years. An example for the use of this option could be to offset the cost of tuition (usually four to eight years) for a child or grandchild. Once the trust is established the payment term may not be changed.

Charitable Remainder Beneficiaries: 
When the trust is established, the donor can retain the right to change the designation of the charitable remainder beneficiaries at any time. At the death of the beneficiaries or the end of the fixed term, the remaining assets in the charitable remainder trust will go the charitable organizations (Charitable Remainder Beneficiaries). The donor can specify how he or she wants the charity to use the money. For example, he or she can specify the money be used as an endowment with only the income from the assets be used by the organization. He or she can also specify for what charitable purpose the donation is to be used.

Frequently Asked Question: 
What about my heirs? If the charity gets the asset my heirs get nothing? Answer: To insure the children’s inheritance stays in tact, some of the monthly income generated by the CRT can be used to purchase life insurance on the donor’s life. When the donor dies, the policy replaces the approximate value that was given to the charitable trust. The life insurance is purchased by an irrevocable life insurance trust to avoid incidence of ownership avoiding the death benefit being included in the donor’s estate.

The following is an example how a CRT works, the figures are illustrative and not exact:

John Hamilton and his wife, Joan, own an apartment building they bought for $200,000, 20 years ago. If they sold the building today for its market value of $1,000,000 they would have to pay approximately $160,000 in capital gains tax. They could conservatively earn 8% or approximately $67,000 per year in income on the remaining amount. When they die, because of all the other assets they own, their estate will be in the 55% estate income tax bracket. Their children would receive approximately $360,000 in inheritance on that asset. They decided to establish a charitable remainder trust. They donated the building to charity. The building was sold for $1,000,000. Their family income was approximately $400,000 annually. They were able to carry the income tax deduction earned by donating the building to charity for three years and saved approximately $100,000 in income taxes. Their income from the building at 8% is $80,000.  John and Joan are 60 years old and purchased a 2nd to die life insurance policy with an annual premium of $10,000.

Analysis: John & Joan were able to donate $1,000,000 to their favorite charity. They received a $100,000 savings on their income taxes by donating the building to charity. They earned more money in annual income on the asset and were able to pass on $1,000,000 to their children estate and income tax free.

Dan Wilcox Insurance

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38452 Oakleigh Lane
Prairieville, La. 70769
225-673-4435

Health Insurance  
  Why Do You Need Health Insurance?
Evolution
Types of Insurance Fee-for-Service (Indemnity Plan)
          Health Maintenance Organizations (HMOs)
          Preferred Provider Organizations (PPOs)
          Point-of-Service (POS)
Where Do People Get Health Insurance Coverage?
          Group Insurance
          Individual Insurance
          Medicare
          Medicaid 
 
Why Do You Need Health Insurance?
     Today, health care costs are high, and getting higher. Who will pay your bills if you have a serious accident or a major illness? You buy health insurance for the same reason you buy other kinds of insurance, to protect yourself financially. With health insurance, you protect yourself and your family in case you need medical care that could be very expensive. You can't predict what your medical bills will be. In a good year, your costs may be low. But if you become ill, your bills could be very high. If you have insurance, many of your costs are covered by a third-party payer, not by you. A third-party payer can be an insurance company or, in some cases, it can be your employer.

Evolution
     Health care in America is changing rapidly. Twenty-five years ago, most people in the United States had indemnity insurance coverage. A person with indemnity insurance could go to any doctor, hospital, or other provider (which would bill for each service given), and the insurance and the patient would each pay part of the bill.

But today, more than half of all Americans who have health insurance are enrolled in some kind of managed care plan, an organized way of both providing services and paying for them. Different types of managed care plans work differently and include preferred provider organizations (PPOs), health maintenance organizations (HMOs), and point-of-service (POS) plans.

You've probably heard these terms before. But what do they mean, and what are the differences between them? And what do these differences mean to you?

Types of Insurance
Fee-for-Service (Indemnity Plan) 
     This is the traditional kind of health care policy. Insurance companies pay fees for the services provided to the insured people covered by the policy. This type of health insurance offers the most choices of doctors and hospitals. You can choose any doctor you wish and change doctors any time. You can go to any hospital in any part of the country.

With fee-for-service, the insurer only pays for part of your doctor and hospital bills. This is what you pay:

A monthly fee, called a premium.

A certain amount of money each year, known as the deductible, before the insurance payments begin. In a typical plan, the deductible might be $250 for each person in your family, with a family deductible of $500 when at least two people in the family have reached the individual deductible. The deductible requirement applies each year of the policy. Also, not all health expenses you have count toward your deductible. Only those covered by the policy do. You need to check the insurance policy to find out which ones are covered.

After you have paid your deductible amount for the year, you share the bill with the insurance company. For example, you might pay 20 percent while the insurer pays 80 percent. Your portion is called coinsurance.

To receive payment for fee-for-service claims, you may have to fill out forms and send them to your insurer. Sometimes your doctor's office will do this for you. You also need to keep receipts for drugs and other medical costs. You are responsible for keeping track of your medical expenses.

There are limits as to how much an insurance company will pay for your claim if both you and your spouse file for it under two different group insurance plans. A coordination of benefit clause usually limits benefits under two plans to no more than 100 percent of the claim.

Most fee-for-service plans have a "cap," the most you will have to pay for medical bills in any one year. You reach the cap when your out-of-pocket expenses (for your deductible and your coinsurance) total a certain amount. It may be as low as $1,000 or as high as $5,000. Then the insurance company pays the full amount in excess of the cap for the items your policy says it will cover. The cap does not include what you pay for your monthly premium.

Some services are limited or not covered at all. You need to check on preventive health care coverage such as immunizations and well-child care.

There are two kinds of fee-for-service coverage: basic and major medical. Basic protection pays toward the costs of a hospital room and care while you are in the hospital. It covers some hospital services and supplies, such as x-rays and prescribed medicine. Basic coverage also pays toward the cost of surgery, whether it is performed in or out of the hospital, and for some doctor visits. Major medical insurance takes over where your basic coverage leaves off. It covers the cost of long, high-cost illnesses or injuries.

Some policies combine basic and major medical coverage into one plan. This is sometimes called a "comprehensive plan." Check your policy to make sure you have both kinds of protection.

What Is a "Customary" Fee? 
     Most insurance plans will pay only what they call a reasonable and customary fee for a particular service. If your doctor charges $1,000 for a hernia repair while most doctors in your area charge only $600, you will be billed for the $400 difference. This is in addition to the deductible and coinsurance you would be expected to pay. To avoid this additional cost, ask your doctor to accept your insurance company's payment as full payment. Or shop around to find a doctor who will. Otherwise you will have to pay the rest yourself.

Questions to Ask About Fee-for-Service (Indemnity) Insurance 
How much is the monthly premium? What will your total cost be each year? There are individual rates and family rates.

What does the policy cover? Does it cover prescription drugs, out-of-hospital care, or home care? Are there limits on the amount or the number of days the company will pay for these services? The best plans cover a broad range of services.

Are you currently being treated for a medical condition that may not be covered under your new plan? Are there limitations or a waiting period involved in the coverage?

What is the deductible? Often, you can lower your monthly health insurance premium by buying a policy with a higher yearly deductible amount.

What is the coinsurance rate? What percent of your bills for allowable services will you have to pay?

What is the maximum you would pay out of pocket per year? How much would it cost you directly before the insurance company would pay everything else?

Is there a lifetime maximum cap the insurer will pay? The cap is an amount after which the insurance company won't pay anymore. This is important to know if you or someone in your family has an illness that requires expensive treatments.

Health Maintenance Organizations (HMOs) 
     Health maintenance organizations are prepaid health plans. As an HMO member, you pay a monthly premium. In exchange, the HMO provides comprehensive care for you and your family, including doctors' visits, hospital stays, emergency care, surgery, lab tests, x-rays, and therapy.

The HMO arranges for this care either directly in its own group practice and/or through doctors and other health care professionals under contract. Usually, your choices of doctors and hospitals are limited to those that have agreements with the HMO to provide care. However, exceptions are made in emergencies or when medically necessary.

There may be a small co-payment for each office visit, such as $5 for a doctor's visit or $25 for hospital emergency room treatment. Your total medical costs will likely be lower and more predictable in an HMO than with fee-for-service insurance.

Because HMOs receive a fixed fee for your covered medical care, it is in their interest to make sure you get basic health care for problems before they become serious. HMOs typically provide preventive care, such as office visits, immunizations, well-baby checkups, mammograms, and physicals. The range of services covered vary in HMOs, so it is important to compare available plans. Some services, such as outpatient mental health care, often are provided only on a limited basis.

Many people like HMOs because they do not require claim forms for office visits or hospital stays. Instead, members present a card, like a credit card, at the doctor's office or hospital. However, in an HMO you may have to wait longer for an appointment than you would with a fee-for-service plan.

In some HMOs, doctors are salaried and they all have offices in an HMO building at one or more locations in your community as part of a prepaid group practice. In others, independent groups of doctors contract with the HMO to take care of patients. These are called individual practice associations (IPAs) and they are made up of private physicians in private offices who agree to care for HMO members. You select a doctor from a list of participating physicians that make up the IPA network. If you are thinking of switching into an IPA-type of HMO, ask your doctor if he or she participates in the plan.

In almost all HMOs, you either are assigned or you choose one doctor to serve as your primary care doctor. This doctor monitors your health and provides most of your medical care, referring you to specialists and other health care professionals as needed. You usually cannot see a specialist without a referral from your primary care doctor who is expected to manage the care you receive. This is one way that HMOs can limit your choice.

Before choosing an HMO, it is a good idea to talk to people you know who are enrolled in it. Ask them how they like the services and care given.

Questions to Ask About an HMO 
Are there many doctors to choose from? Do you select from a list of contract physicians or from the available staff of a group practice? Which doctors are accepting new patients? How hard is it to change doctors if you decide you want someone else? How are referrals to specialists handled?

Is it easy to get appointments? How far in advance must routine visits be scheduled? What arrangements does the HMO have for handling emergency care?

Does the HMO offer the services I want? What preventive services are provided? Are there limits on medical tests, surgery, mental health care, home care, or other support offered? What if you need a special service not provided by the HMO?

What is the service area of the HMO? Where are the facilities located in your community that serve HMO members? How convenient to your home and workplace are the doctors, hospitals, and emergency care centers that make up the HMO network? What happens if you or a family member are out of town and need medical treatment?

What will the HMO plan cost? What is the yearly total for monthly fees? In addition, are there copayments for office visits, emergency care, prescribed drugs, or other services? How much?

Preferred Provider Organizations (PPOs) 
     The preferred provider organization is a combination of traditional fee-for-service and an HMO. Like an HMO, there are a limited number of doctors and hospitals to choose from. When you use those providers (sometimes called "preferred" providers, other times called "network" providers), most of your medical bills are covered.

When you go to doctors in the PPO, you present a card and do not have to fill out forms. Usually there is a small copayment for each visit. For some services, you may have to pay a deductible and coinsurance.

As with an HMO, a PPO requires that you choose a primary care doctor to monitor your health care. Most PPOs cover preventive care. This usually includes visits to the doctor, well-baby care, immunizations, and mammograms.

In a PPO, you can use doctors who are not part of the plan and still receive some coverage. At these times, you will pay a larger portion of the bill yourself (and also fill out the claims forms). Some people like this option because even if their doctor is not a part of the network, it means they don't have to change doctors to join a PPO.

Questions to Ask About a PPO 
Are there many doctors to choose from? Who are the doctors in the PPO network? Where are they located? Which ones are accepting new patients? How are referrals to specialists handled?

What hospitals are available through the PPO? Where is the nearest hospital in the PPO network? What arrangements does the PPO have for handling emergency care?

What services are covered? What preventive services are offered? Are there limits on medical tests, out-of-hospital care, mental health care, prescription drugs, or other services that are important to you?

What will the PPO plan cost? How much is the premium? Is there a per-visit cost for seeing PPO doctors or other types of co-payments for services? What is the difference in cost between using doctors in the PPO network and those outside it? What is the deductible and coinsurance rate for care outside of the PPO? Is there a limit to the maximum you would pay out of pocket?

Point-of-Service (POS) Plan 
     Many HMOs offer plan members the option to self direct care, as one would under an indemnity or PPO plan, rather than get referrals from primary care physicians. An HMO with this opt-out provision is known as a point-of-service (POS) plan. How the plan functions (i.e., like an HMO or like an indemnity plan) depends on whether individual plan members use their primary care physician or self direct their care at the "point of service."

To illustrate this point, this is how these plans typically work. When medical care is needed, the individual plan member essentially has up to two or three choices, depending on the particular health plan. The plan member can choose to go through his or her primary care physician, in which case services will be covered under HMO guidelines (i.e., usually a co-payment will be required). Alternatively, the plan member can access care through a PPO provider and the services will be covered under in-network PPO rules (i.e., usually a co-payment and coinsurance will be required). Lastly, if the plan member chooses to obtain services from a provider outside of the HMO and PPO networks, the services will be reimbursed according to out-of-network rules (i.e., usually a co-payment and higher coinsurance charge will be required). Because people who belong to POS plans are responsible for deciding how to access care within the various options, it is important that they understand the financial implications of these choices.

Where Do People Get Health Insurance Coverage?
Group Insurance 
     Most Americans get health insurance through their jobs or are covered because a family member has insurance at work. This is called group insurance. Group insurance is generally the least expensive kind. In many cases, the employer pays part or all of the cost.

Some employers offer only one health insurance plan. Some offer a choice of plans: a fee-for-service plan, a health maintenance organization (HMO), or a preferred provider organization (PPO), for example. Employers with 25 or more workers are required by Federal law to offer employees the chance to enroll in an HMO.

What happens if you or your family member leaves the job? You will lose your employer- supported group coverage. It may be possible to keep the same policy, but you will have to pay for it yourself. This will certainly cost you more than group coverage for the same, or less, protection.

A Federal law makes it possible for most people to continue their group health coverage for a period of time. Called COBRA (for the Consolidated Omnibus Budget Reconciliation Act of 1985), the law requires that if you work for a business of 20 or more employees and leave your job or are laid off, you can continue to get health coverage for at least 18 months. You will be charged a higher premium than when you were working.

You also will be able to get insurance under COBRA if your spouse was covered but now you are widowed or divorced. If you were covered under your parents' group plan while you were in school, you also can continue in the plan for up to 18 months under COBRA until you find a job that offers you your own health insurance.

Not all employers offer health insurance. You might find this to be the case with your job, especially if you work for a small business or work part-time. If your employer does not offer health insurance, you might be able to get group insurance through membership in a labor union, professional association, club, or other organization. Many organizations offer health insurance plans to members.

Individual Insurance 
     If your employer does not offer group insurance, or if the insurance offered is very limited, you can buy an individual policy. You can get fee-for-service, HMO, or PPO protection. But you should compare your options and shop carefully because coverage and costs vary from company to company. Individual plans may not offer benefits as broad as those in group plans.

If you get a non-cancelable policy (also called a guaranteed renewable policy), then you will receive individual insurance under that policy as long as you keep paying the monthly premium. The insurance company can raise the cost, but cannot cancel your coverage. Many companies now offer a conditionally renewable policy. This means that the insurance company can cancel all policies like yours, not just yours. This protects you from being singled out. But it doesn't protect you from losing coverage.

Before you buy any health insurance policy, make sure you know what it will pay for...and what it won't. To find out about individual health insurance plans, you can call insurance companies, HMOs, and PPOs in your community, or speak to your insurance agent.

Tips when shopping for individual insurance:

Shop carefully. Policies differ widely in coverage and cost. Contact different insurance companies, or ask your agent to show you policies from several insurers so you can compare them.

Make sure the policy protects you from large medical costs.

Read and understand the policy. Make sure it provides the kind of coverage that's right for you. You don't want unpleasant surprises when you're sick or in the hospital.

Check to see that the policy states: the date that the policy will begin paying (some have a waiting period before coverage begins), and what is covered or excluded from coverage.

Make sure there is a "free look" clause. Most companies give you at least 10 days to look over your policy after you receive it. If you decide it is not for you, you can return it and have your premium refunded.

Beware of single disease insurance policies. There are some polices that offer protection for only one disease, such as cancer. If you already have health insurance, your regular plan probably already provides all the coverage you need. Check to see what protection you have before buying any more insurance.

Medicare 
     Medicare is the Federal health insurance program for Americans age 65 and older and for certain disabled Americans. If you are eligible for Social Security or Railroad Retirement benefits and are age 65, you and your spouse automatically qualify for Medicare.

Medicare has two parts: hospital insurance, known as Part A, and supplementary medical insurance, known as Part B, which provides payments for doctors and related services and supplies ordered by the doctor. If you are eligible for Medicare, Part A is free, but you must pay a premium for Part B.

Medicare will pay for many of your health care expenses, but not all of them. In particular, Medicare does not cover most nursing home care, long-term care services in the home, or prescription drugs. There are also special rules on when Medicare pays your bills that apply if you have employer group health insurance coverage through your own job or the employment of a spouse.

Medicare usually operates on a fee-for-service basis. HMOs and similar forms of prepaid health care plans are now available to Medicare enrollees in some locations.

The best source of information on the Medicare program is the Medicare Handbook. This booklet explains how the Medicare program works and what your benefits are. To order a free copy, write to: Health Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD 21244-1850. You also can contact your local Social Security office for information.

Some people who are covered by Medicare buy private insurance, called "Medigap" policies, to pay the medical bills that Medicare doesn't cover. Some Medigap policies cover Medicare's deductibles; most pay the coinsurance amount. Some also pay for health services not covered by Medicare. There are 10 standard plans from which you can choose. (Some States may have fewer than 10.) If you buy a Medigap policy, make sure you do not purchase more than one.

You need to shop carefully before deciding on the best policy to fit your needs. You may get another booklet, Guide to Health Insurance for People with Medicare, to help you in making the right choice. To order a free copy, write to: Health Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD 21244-1850.

Another good source of information on the same topic is The Consumer's Guide to Medicare Supplement Insurance. To order a free copy, write to: Health Insurance Association of America, 555 13th St., N.W., Suite 600 East, Washington, D.C. 20004.

Medicaid 
Medicaid provides health care coverage for some low-income people who cannot afford it. This includes people who are eligible because they are aged, blind, or disabled or certain people in families with dependent children. Medicaid is a Federal program that is operated by the States, and each State decides who is eligible and the scope of health services offered.

General information on the Medicaid program is given in the Medicaid Fact Sheet. For a free copy, write to: Health Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD 21244-1850. For specifics on Medicaid eligibility and the health services offered, contact your State Medicaid Program Office.

Dan Wilcox Insurance

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38452 Oakleigh Lane
Prairieville, La. 70769
225-673-4435

Disability Insurance 
Protects your most valuable asset and your ability to earn an income. 
Each year 12% of the adult population suffer a long term disability.

1 out of every 7 workers will suffer a five-year or longer disability before reaching age 65.

At age 32 your chances of suffering a three-month or longer disability is 6 times more likely than death.

At age 35 your chances of suffering a three-month or longer disability is 50%.

At age 45 your chances of suffering a three-month or longer disability is 44%.

On average 7 out of 10 claims for Social Security disability benefits are refused the first time requested.

Statistics were obtained from Commissioner's Disability Tables and the Senate Finance Committee. Disability insurance pays cash benefits to the policyholder in the event the insured is unable to work due to sickness or injury. That cash benefit ranges from 50% to 70% of income. The insurance company will not pay more than 70% of income because there must be an incentive to return to work.

If you pay the premium the benefits are normally received free from income tax, if the premiums are paid by an employer, the benefits are taxable as ordinary income.

A disability policy is composed of various elements: 
Elimination Period - It is the period of time the insured must wait after becoming disabled to receive benefits. Typical waiting periods are 30, 60, 90,120,180, and 360 days. The longer the elimination period the less expensive the policy.

Benefit Period - It is the period of time the benefits will be paid following the elimination period. The benefit period could be from 2 years to age 65 to lifetime. The longer the benefit period the more expensive the policy.

The Amount of Benefit - The larger the pay-out the more expensive the policy. The benefit will not normally exceed 70% of income.

Residual Benefit - Percentage of benefit paid if you return to work and are still partially disabled and cannot return to work full time or cannot earn your full income.

Own-Occupation - Pays a benefit if you are unable to return to your present occupation but can work doing something else. For example, a doctor who is a surgeon, cannot return to surgery but can teach. This is the most expensive type of disability policy.

Reasonable or Any Occupation - Pays a benefit while disabled, but stops when you are able to return to work at a job that matches your education and experience. This policy is less expensive than an Own-Occupation policy.

Occupation - Occupation is a factor used in determining rates. For example, a doctor's rate would be much lower than a blue-collar worker.

Guaranteed Renewable - Guaranteed Renewable policies cannot be cancelled by the insurance company even if a change in the insured's circumstances would make him or her a greater risk. Plus, the insurance company cannot make any changes to the provisions of the policy, or add restrictions. When purchasing an individual disability policy it should be Guaranteed Renewable.

Non-Cancelable - Guarantees future premiums will not be increased. When purchasing an individual policy it should be Non-Cancelable.

Presumptive Disability - Presumptive disability means that you are considered total disabled and eligible for benefits for the loss of sight in both eyes or the loss of two limbs. The better contracts also presume total disability for the loss of hearing in both ears, loss of the power of speech, or the loss of the use of two limbs.

Other Benefits that can be added to an individual disability policy, but could also increase the cost: 
Protection Against Inflation - A benefit that can be added that offers a cost-of-living adjustment for inflation during a long-term claim.

Automatic Increase Rider - Automatically increases monthly benefits for a specified period of time. A typical increase is 5% compound.

Future Increase Options - Allows the insured to purchase additional benefit amounts without proof of insurability.

Capital Sum Benefit - Pays the insured a lump sum benefit up to 12 times the monthly benefit if the insured loses the sight of one eye with no possibility of recovery or has a hand or foot severed. This benefit is paid in addition to the other benefits.

Rehabilitation Benefit - To help a disabled insured return to work, this benefit will pay some of the expenses incurred when the insured enrolls in an approved rehabilitation center. This benefit is paid in addition to the other benefits.

Transplant & Cosmetic Surgery Benefit - Under this benefit, any disability arising from donating a transplant organ, improving your appearance or correcting a disfigurement will be covered by the policy.

Types of Coverage 
Social Security 
Social Security does not just provide for retirement income but disability income as well. However, more than 70% of the applicants who apply, fail to get coverage the first time they apply. You can get an estimate of what your benefit might be by going to the Social Security web site.

In 1992, the average monthly payment for a disabled worker was $642; the average monthly payment for a family of a disabled worker was $1093.

Eligibility is based on being unable to perform any gainful employment.

You are eligible for benefits after you have been disabled for 5 months and if the disability is expected to last 12 months.

85% of Social Security disability payments are subject to federal income tax if your income exceeds $34,000 individually or $44,000 jointly.

Workers Compensation 
Most employers are required to provide this coverage. The amount and duration varies by state. Workers Compensation only pays if the disability occurs on the job, and usually lasts for only a few years and the payments are low.
Individual Policies

For individual policies, the applicant needs to qualify and go through an underwriting process, similar to the process required for life insurance. The applicant could be subject to a higher premium or even be declined based on his or her occupation, medical history, or lifestyle. Individual policies are usually purchased by high income professionals because of the cost.

Group Policies 
Some states require employers to carry group disability insurance anywhere from 26 to 52 weeks.

Group Long Term Disability (LTD) 
Group LTD is carried by almost half of mid-size to large employers and provides long term benefits for at least 5 years covering about 60% of salary. The premium is usually very low, does not require proof of insurability, and often is fully paid by the employer. If you would like to get a Disability Insurance Quote, click here.

Dan Wilcox Insurance

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38452 Oakleigh Lane
Prairieville, La. 70769
225-673-4435

Medicare Supplement
The Medicare Program
Medicare is a health insurance program for:

People age 65 or older. 
People under age 65 with certain disabilities. 
People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant).

Medicare Has Two Parts
Part A - Hospital Insurance.

Most people pay for Part A through their payroll taxes when they are working.

Part B - Medical Insurance.

Most people pay monthly for Part B.

Medicare Health Plans
Today's Medicare is about choice. Your health plan choices include:

The Original Medicare Plan 
Medicare + Choice Plans, including: 
Medicare Managed Care Plans 
Medicare Private Fee-for-Service Plans 
Medicare Preferred Provider Organization Plans 
Medicare + Choice Plans are available in many areas.

The Medicare health plan that you choose affects many things like cost, benefits (some have extra benefits like prescription drugs), doctor choice, convenience, and quality.

What is Medicare Part A?
     Medicare Part A (Hospital Insurance) helps cover your inpatient care in hospitals, including critical access hospitals, and skilled nursing facilities (not custodial or long-term care). It also helps cover hospice care and some home health care. You must meet certain conditions.

Cost 
     Most people don't have to make a monthly payment, called a premium, for Part A. This is because they or a spouse paid Medicare taxes while they were working.

If you (or your spouse) didn't pay Medicare taxes while you worked and you are age 65 or older, you may be able to buy Part A*. If you aren't sure if you have Part A, look on your red, white, and blue Medicare card (see sample card below). If you have Part A, "Hospital (Part A)" is printed on the lower left corner of your card. You can also call the Social Security Administration at 1-800-772-1213 or visit your local Social Security office for more information about buying Part A.

Medicare Part A Helps Cover Your Medically Necessary:
Hospital Stays
Semiprivate room, meals, general nursing, and other hospital services and supplies. This includes inpatient care you get in critical access hospitals and mental health care. This doesn't include private duty nursing, or a television or telephone in your room. It also doesn't include a private room, unless medically necessary. Inpatient mental health care in a psychiatric facility is limited to 190 days in a lifetime.

Skilled Nursing Facility Care
Semiprivate room, meals, skilled nursing and rehabilitative services, and other services and supplies (after a related 3-day inpatient hospital stay).

Home Health Care
Part-time or intermittent skilled nursing care and home health aide services, physical therapy, occupational therapy, speech-language therapy, medical social services, durable medical equipment (such as wheelchairs, hospital beds, oxygen, and walkers), medical supplies, and other services.

Hospice Care
For people with a terminal illness, includes drugs for symptom control and pain relief, medical and support services from a Medicare-approved hospice, and other services not otherwise covered by Medicare. Hospice care is usually given in your home. However, Medicare covers some short-term hospital and inpatient respite care (care given to a hospice patient so that the usual caregiver can rest).

Blood
Pints of blood you get at a hospital or skilled nursing facility during a covered stay.

What is Medicare Part B?
     Medicare Part B (Medical Insurance) helps cover your doctors' services and outpatient hospital care. It also covers some other medical services that Part A doesn't cover, such as some of the services of physical and occupational therapists, and some home health care. Part B helps pay for these covered services and supplies when they are medically necessary.

Cost 
     You pay the Medicare Part B premium each month* ($66.60 in 2004). In some cases, this amount may be higher if you didn't sign up for Part B when you first became eligible. The cost of Part B may go up 10% for each 12-month period that you could have had Part B but didn't sign up for it, except in special cases. You will have to pay this extra amount as long as you have Part B.

Medicare Part B Helps Cover Your Medically Necessary:
Medical and Other Services
Doctors' services (not routine physical exams), outpatient medical and surgical services and supplies, diagnostic tests, ambulatory surgery center facility y fees for approved procedures, and durable medical equipment (such as wheelchairs, hospital beds, oxygen, and walkers). Also covers second surgical opinions, outpatient mental health care, and outpatient occupational and physical therapy including speech-language therapy. (These services are also covered for long-term nursing home residents.).

Clinical Laboratory Services
Blood tests, urinalysis, some screening tests, and more.

Outpatient Hospital Services
Hospital services and supplies received as an outpatient as part of a doctor's care.

Blood
Pints of blood you get as an outpatient or as part of a Part B covered service.

What is the Original Medicare Plan?
     The Original Medicare Plan is a "fee-for-service" plan. This means you are usually charged a fee for each health care ser vice or supply you get. This plan, managed by the Federal Government, is available nationwide. If you are in the Original Medicare Plan, you use your red, white, and blue Medicare card when you get health care. If you are happy getting your health care this way, you don't have to change. You will stay in the Original Medicare Plan unless you choose to join a Medicare + Choice Plan.

Your costs in the Original Medicare Plan
What you pay out-of-pocket depends on: 
Whether you have Part A and Part B 
Whether your doctor or supplier agrees to accept "assignment" 
How often you need health care 
What type of health care you need 
Whether you choose to get services or supplies not covered by Medicare. In this case, you would pay for these services yourself. 
Whether you have other insurance

Medigap Policies
     A Medigap policy is a health insurance policy sold by private insurance companies to fill "gaps" in Original Medicare Plan coverage. Medigap policies must follow federal and state laws. These laws protect you. The front of the Medigap policy must clearly identify it as "Medicare Supplement Insurance."

A Medigap policy must be one of ten standardized policies so you can compare them easily. Each policy has a different set of benefits. Two of the standardized policies may have a high deductible option. In addition, any standardized policy may be sold as a "Medicare SELECT" policy.

Dan Wilcox Insurance

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597 Foxwood Lane | LaPlace, LA 70068 
Phone 985-652-3800 
 
Medicare Part A (2004)
Part A is Hospital Insurance and covers cost associated with confinement in a hospital or skilled nursing facility.

When you are
hospitalized for: Medicare Covers You Pay 
1-60 Days Most confinement costs after the required Medicare Deductible $876 Part A Deductible 
61-90 Days All eligible expenses, after the patient pays a per-day copayment. $219/Day
Co-payment
as much as:
$6,570
 
91-150 Days All eligible expenses, after patient pays per-day copayment.
(These Are Liftetime Reserve Days Which may never be used again.) $438/Day
COPAYMENT
as much as:
$26,280
 
151 days or more Nothing You Pay All Cost
 
Skilled Nursing Confinement:
When you are hospitalized for at least 3 days and enter a Medicare Approved skilled nursing facility within 30 days after a hospital discharge and are receiving skilled nursing care.  All eligible expenses for the first 20 days; then all eligible expenses, (if you qualify), for days 21-100, after patient pays a per day copayment. After 20 days
$109.50/Day
COPAYMENT
as much as:
$8,760

Dan Wilcox Insurance

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597 Foxwood Lane | LaPlace, LA 70068 
Phone 985-652-3800 
Medicare Part B (2004)
Part B is Medical Insurance and covers physicians services, outpatient care, test, and supplies.

On Expenses
incurred for: Medicare Covers You Pay $100 Annual Part B Deductible PLUS 
Medical Expenses:
Physicians services, impatient, outpatient medical/surgical services, physical/speech therapy, diagnostic test. 80% of approved amount 20% of approved amount 
Clinical Laboratory Services
Blood Test, Urinalysis Generally 100% of approved amount Nothing for Services 
Home Health Care
Part-time or intermittent skilled care, home health aide services, durable medical supplies and other services. 100% of approved amount; 80% of approved amount for durable medical equipment Nothing for Services; 20% of approved amount for durable medical equipment 
Outpatient Hospital Treatment
Services for the diagnosis or treatment of an illness or injury Medicare payment to hospital based on hospital cost 20% of Billed Amount 
Blood After first 3 pints of blood, 80% of approved amount First 3 pints plus 20% of approved amount for additional pints 
On all Medicare-covered expenses, a doctor or other health care provider may agree to accept Medicare "assignment." This means the patient will not be required to pay any expense in excess of Medicare's "approved" charge. The patient pays only 20% of the "approved" charge not paid by Medicare.

Physicians who do not accept assignment of a Medicare claim are limited as to the amount they can charge for covered services. In 2004, the most amount a physician can charge for services covered by Medicare is 115% of the fee schedule amount for nonparticipating physicians.

Dan Wilcox Insurance

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38452 Oakleigh Lane
Prairieville, La. 70769
225-673-4435