The NYT Times Haggler just helped a reader who made two small claims on his homeowner’s insurance for (1) a fallen ceiling fan and (2) a stolen bike. Not only did State Farm deny both claims, but they subsequently refused to renew his insurance the next year! This is a unique circumstance, and I’ve heard of co-workers with similar problems. But of course the power of daylight again helped this lucky reader:

After the Haggler’s interactions with State Farm, Mr. Joseph sent an email to the Haggler with the subject line “It worked!” A representative at the company had contacted him and, in conversation, was much more forthcoming than Ms. Risinger. Mr. Joseph learned that in New York City, the average for homeowners is one claim every 38 years.

“Two in two years,” Mr. Joseph recalled this rep telling him, “that makes us concerned.” But after digging deeper into Mr. Joseph’s claims, the company decided that it wanted to keep him as a customer.

You should never make a claim for such small things like a stolen bike or broken appliance (especially if apparently it’s not even covered). Every claim you make will be recorded in an insurance database forever. As a result, if you’re not going to make a $500 or $1,000 claim, then why would you set your deductible to $250 or $500? Set it to $2,500 or higher if you can swing it. I’ve been inching ours up over the years, and I believe it is now $10,000 and even higher for natural disaster insurance. Enjoy the lower premiums, but remember to stock up your emergency fund in return. I used to have a special rider for my wife’s engagement ring, but cancelled that as soon as the value become “non-catastrophic” for our finances.

And we’ve all learned a valuable lesson: Homeowner’s insurance is for disasters. Which means that if you’re lucky, you’ll spend money on it for years and years and never get a dime back.

Exactly. Insurance is not an investment, a maintenance plan, or a replacement for properly securing your property. Insurance is there to protect you from something truly catastrophic happening, like your entire house burning down and them putting you up in a residential hotel for months while they rebuild it (which happened to our friends).

Bottom line: If you have homeowner’s insurance, you should set your deductible as high as you can tolerate. It should be a painful number. Take your premium savings and put it towards your cash reserves.

I have a couple of accounts at Fidelity Investments (solo 401k and taxable brokerage), and recently they sent me letter about a new service. FidSafe is a website that stores digital copies of documents for free and is open to the public, no relationship with Fidelity required. (It is technically from Fidelity Labs, owned by Fidelity Investments.) I signed up for an account and took it for a spin.

Sign-up Process
You are only required to provide a name, e-mail, and birthdate (18+ only). It is highly recommended to provide a mobile phone number as well because they support two-factor authentication, and you can choose to have it activated for every login attempt or only on unfamiliar devices.

Security
In addition to the two-step login authentication mentioned above, FidSafe states that all files are encrypted both in-transfer and while stored on their servers. You can also upload files that you encrypted yourself, although that will make them more difficult to share with others. FidSafe employee access to your personal data or documents is also restricted.

Finally, they have something called an “Identicon” that helps confirm that you are viewing a legitimate e-mail or web page from FidSafe. Similar to what some banks have when you log in. You can choose from a limited selection of patterns and colors:

Storage Limits
FidSafe users will each get 5 GB of storage space without charge. You can see your storage status under “Settings [Gear Icon] > General”. Individual files are limited to 200 MB in size. Files shared with you by others do not count against your storage consumption.

File Types
Their site states that files of any type can be uploaded. I uploaded various test files of PDF, PNG, JPG, DOCX (Word Documents), and XLSX (Excel Spreadsheets) formats and they all worked fine and were able to be shown by their in-browser viewing tool. As for what files to store, they provide a suggestion list in their FidSafe Fundamentals Kits here.

User Interface and Design
Here is a screenshot of the main dashboard. The user interface is clean, mobile-friendly, and relatively intuitive. They offer a brief walkthrough tour, and I found it easy to get started right away. (It really shouldn’t be that complicated in any case…)

Sharing Documents With Others
You can either choose to share specific personal documents with other users all the time, or designate someone to have access to all your documents only upon death. In both cases, the person you are sharing with must be invited through via e-mail and sign up for their own FidSafe login and password (and provide name, e-mail, birthdate).

For immediate sharing, your designated “Contact” can only view the specific documents you share with them. You can choose to give them view-only access or add the ability to download.

Here are some details on the “Share Upon Death” feature:

To sign-up for the service, under “Settings” you will provide the last 4 digits of your SSN and a designee (one of your existing FidSafe contacts). Upon notification of your death, FidSafe verifies your death certificate and shares your FidSafe content (only documents and notes; passwords are not shared) in the designee’s FidSafe account. Any time after signing up for this service, you can change the designee or unsubscribe to the service.

[…] When FidSafe is notified of your death (by family member, attorney, etc.), FidSafe collects the notifier’s contact information (first name, last name, email address, phone number) and decedent’s information (first name, last name, email address used for FidSafe registration). FidSafe will also need a copy of decedent’s certified death certificate mailed to the following address – Fidelity Labs FidSafe Support, 245 Summer Street V3A, Boston, MA 02210. If the death certificate is verified, FidSafe will share decedent content in designee’s FidSafe account.

Support
Call 800-453-3332 or e-mail support@fidsafe.com

Conclusions: The Good

• Having a secure, central place where you store your family’s important documents can be quite useful for estate planning and other needs. There may be an emergency (fire, natural disaster, medical) or you might just be applying for a mortgage or a new passport.
• Providing online access can make things much easier if important people live far apart.
• There are numerous start-ups out there now that try to combine digital storage and estate planning, but FidSafe is backed by an established, reputable company (that may have a lot of your personal information already).
• All available security mechanisms appear to be supported, including two-factor authentication and file encryption. I’m not sure what additional measures could be added.
• Did I mention it’s free?! Other places can charge $75 a year.

Conclusions: The Concerns

• The fact that this is a free feature can also be seen as a negative because what happens if Fidelity feels a need to “reorganize” or “streamline” their operations and discontinue the service. It probably isn’t a huge expense but it surely costs something to support. This is the type of service you’d want to be around indefinitely.
• If you choose to share sensitive documents with other people, then you are depending on them to keep your information secure. If you share your file with someone who uses the same password everywhere or downloads the file onto their home computer (or even prints it out), then that can become the weakest link. Making things view-only is a partial solution.
• FidSafe is digital-only, so original documents still need to be stored securely (although you can note their locations in FidSafe). You should also consider an offsite, physical backup of any computer files in someone else’s safe or a bank deposit box. (This Forbes article says high-quality optical discs may be more reliable for long-term storage than flash drives and hard drives.)

In order to extend her maternity leave, my wife is taking an unpaid leave-of-absence from her job. Since this means we will lose her employer-paid health insurance and our child has an issue that requires regular doctor visits at this time, we knew that we would have to sign up for COBRA benefits. Our employer-paid coverage ended 9/30. Somehow due to an administrative mishap, we did not get the paperwork until the third week of October, by which we already had four different (expensive!) doctor visits.

I have written before about the ability to get retroactive COBRA benefits, so I knew that we would be okay:

You have 60 days after you lose your benefits to elect to pay for COBRA coverage. However, even if you enroll on Day 60, your coverage is retroactive to Day 1. Of course, you’ll have to pay the retroactive premiums for that period. Thus, you could technically waive your COBRA coverage initially, and then wait to see if you incur any medical bills.

Her employer uses the big benefit provider Conexis to manage their COBRA administration. We were able to make our COBRA plan elections online and even paid the premiums online via electronic bank transfer. The process was much smoother than I thought it would be; some parts of the healthcare industry are just so archaic.

Our coverage was retroactive to 10/1, and all of our healthcare providers had to resubmit their claims. One thing that I didn’t expect what that we had to get new insurance card and insurance numbers for everyone in the family. I was also surprised that we were able to pick and choose amongst our original workplace options (Dependent coverage, HMO, PPO, etc.) I thought that COBRA meant we would just continue on with our exact same plan as before. Just wanted to share our story in case anyone was wondering how it worked.

By now, we’ve all read things about the Patient Protection and Affordable Care Act (PPACA), also known as Obamacare. One concern is the PPACA’s impact on early retirees, or really anyone who wants to buy their own non-employer health insurance? The PPACA is eliminating many high-deductible health plans which many such folks previously used due to their low premiums. But at the same time, many others who didn’t pass the medical screening were faced with astronomical premiums if you could get coverage at all. Could the PPACA actually improve the overall affordability of comprehensive health care?

I’m not going to claim I completely understand everything about the PPACA and I certainly won’t cover it all here, I can only try to provide concise a few examples with sources.

What do I get? First, let’s recap some basics about the insurance you can buy on the new exchanges. You can no longer be denied insurance due to your health history, minimum coverage levels were set for all plans, and certain preventative care services are now free without copays. Taken from the PPACA Wikipedia page:

Guaranteed issue prohibits insurers from denying coverage to individuals due to pre-existing conditions, and a partial community rating requires insurers to offer the same premium price to all applicants of the same age and geographical location without regard to gender or most pre-existing conditions (excluding tobacco use). […]

Under the law’s authorization, Secretary of Health Kathleen Sebelius issued a set of defined “essential health benefits”[22] that all new insurance plans have to include. […] Among the essential health benefits, preventive care, childhood immunizations and adult vaccinations, and medical screenings are covered by an insurance plan’s premiums, and cannot be subject to any co-payments, co-insurance, or deductibles.

Am I eligible for a subsidy? Subsidies for healthcare premiums are determined by your income relative to the Federal Poverty Level (FPL). Here are the 2014 FPLs by household size, as calculated by the Department of Health and Human Services (for 48 contiguous states, higher in Alaska and Hawaii).

 
Your household’s modified adjusted gross income (MAGI) must be below 400% FPL in order to receive a subsidy. As long as you are below 400% FPL, your health insurance premiums cannot exceed 9.5% of your income. Modified takes your AGI (Line 4 on a Form 1040EZ, Line 21 on a Form 1040A, or Line 37 on a Form 1040.) and adds back in certain deductions like non-taxable Social Security income, foreign income, and tax-exempt interest.

You may be surprised that a family of four could have an MAGI of $95,000 and still be eligible for a subsidy.

How much will it cost for a couple with no kids? Let’s assume a couple, both age 40, California resident, and $60,000 MAGI. This is under 400% FPL so they get a subsidy. California’s exchange website is CoveredCA.com. Here are results for a middle-of-the-road Silver plan for the couple with $60,000 income:

Let’s pick the cheapest Blue Cross Blue Shield option:

The total quoted was $354 a month, or $177 per person, per month after subsidies.

If they made $95,000 a year, then they would have no subsidy and be quoted just the flat $340 per month, per person.

How much will it cost for a family of four? Let’s try 2 adults, both 40 years old, and 2 dependents under 18. They live in California and make $60,000 MAGI a year. Here are results for a Silver plan for the family with $60,000 income:

Let’s pick the cheapest Blue Cross Blue Shield option:

The total quoted was $354 a month after $326 a month in subsidies. I was somewhat surprised to see that the kids would be covered by Medi-Cal, which is commonly considered a welfare program for low-income families.

Here are results for a Silver plan for the family with $95,000 income:

Let’s pick the cheapest Blue Cross Blue Shield option:

The total quoted was $676 a month after $342 of subsidy. Most of the difference between the $60,000 income figures was due to the fact that I would have to pay for dependent coverage.

Recap. The primary takeaway is that you should try and get some actual quotes, as you may be surprised by your findings. While you can play around with the California website pretty easily, note that other states may offer a much more frustrating experience at their exchange. Alternatively, you can try a comparison site like eHealthInsurance.com which also has ACA-compliant individual plans. I tried various ages up to the 60s (before Medicare kicks in at 65) and the numbers didn’t rise significantly. If I was a retired couple under 65 and on a budget, I would consider paying under $200 a month per person to be “affordable”. Even if you aren’t retired, these numbers may allow many people to pursue self-employment when otherwise they would be scared to lose employer-linked group health insurance.

The secondary takeaway is that the subsidy is significant, and it may take some planning to qualify for it upon early retirement. If you miss the income cutoff by even a small amount, you end up paying thousands more in premiums. Qualification also looks at your most recent tax return, which may not reflect your current income. If you are transitioning to early retirement, you likely had a high savings rate which means your past income might be high while your income needs in retirement could be much lower. I need to do more research on if you can get the subsidy retroactively in this type of situation.

Update: I wrote an additional post about Affordable Care Act out-of-pocket cost subsidies.

Like many other folks, I have the majority of my health insurance premiums paid by my employer. I appreciate this and value it as part of my “total compensation” (a fact that they keep reminding me about).

My employer and health insurance provider recently teamed up to offer us a “Wellness program”. These used to be rewards-based programs where you earned points for activities like watching health-education videos, tracking your weight, creating a food journal, etc. You could then redeem those points towards gift cards and such. The idea was to encourage healthy behaviors like eating better and regular exercise with little pushes (“carrots”).

But instead of the “carrot”, it appears they may be switching to the “stick”.

Starting this year, if I don’t complete an in-person health exam, 30-minute online survey, and telephone coaching session annually, then the employer contribution towards my health insurance premiums will be cut by around 40%. For example, if my employer used to contribute $800 a month towards health insurance and I don’t jump through all the hurdles, my out-of-pocket costs will increase by $320 a month. This program is managed by a for-profit publicly-traded corporation called Healthways (ticker HWAY).

Healthways, Inc. provides well-being improvement solutions that help people improve their physical, emotional and social well-being, thereby improving their health and productivity and reducing their health-related costs.

I’m a skeptical person, so this basically translates to “Healthways makes money by making people cost less to insure.” They can do this in two ways:

• Decrease health insurance claims by improving employee health through cost-effective strategies.
• Decrease employer-paid premiums by increasing the employee-paid portion for lazy or forgetful employees.

I really don’t know how much these mandated tasks will improve worker health. I suppose some people who never see a doctor on their own may find out they have hypertension or high cholesterol. I know my wife and I pretty much went through the motions (took about 4 hours altogether including travel time) in order to prevent that huge premium hike. It was a financial no-brainer. On the other hand, I would love to see what percentage of workers fail to complete all the tasks by the deadline and how much extra money that brings in.

Open enrollment for “Obamacare” will start October 1, 2013 for coverage that will start January 1, 2014. Find your state’s exchange website at Healthcare.gov. Plans will be broken down into four tiers: Bronze, Gold, Silver, and Platinum. People 30 and under will also have a catastrophic coverage-only option. While the cost of these plans will not be based on any pre-existing conditions, they will depend on factors like age, tobacco use, and geographic location.

Based on approved insurance plans in 48 states, the average individual premium will be $328 monthly for the cheapest Silver option and $249 for the cheapest Bronze option. This is before any tax credits. Subsidies will be provided to households with annual income up to 400% of the federal poverty level (FPL) (~$88,000 for a family of four). Individuals and families earning less than 250% of FPL (~$27,000 for an individual and ~$55,000 for a family of four) are also eligible for additional cost-sharing credits.

You can get a rough estimate of your tax credits by using this Kaiser Family Foundation calculator. Once 10/1 rolls around, check the official exchange website instead. Any subsidies are paid directly to the insurer, and you only have to pay the difference.

The Department of Health and Human Services released a report with premium estimates for the 36 states with federally-supported exchanges (data as of 9/18/13).

For example, in Texas, an average 27-year-old with income of $25,000 could pay $145 per month for the second lowest cost silver plan, $133 for the lowest cost silver plan, and $83 for the lowest cost bronze plan after tax credits. For a family of four in Texas with income of $50,000, they could pay $282 per month for the second lowest cost silver plan, $239 for the lowest silver plan, and $57 per month for the lowest bronze plan after tax credits.

HuffPost condenses the tables into a nice map: