How Much Is Medical Insurance In California

The cost of health insurance in California is always a hot topic for discussion. With the recent introduction of Obamacare, there is even more talk about how much healthcare costs and what options are available to consumers. In this blog post, we will take a look at the average cost of medical insurance in California and discuss some other important factors that can affect your monthly payments.

The average cost of medical insurance premiums in the U.S. has nearly doubled over the last nine years while payouts for medical claims have barely increased, according to a study published Sunday in The Wall Street Journal.

First-year out-of-pocket expenses alone are projected to be $1,318 per person on average in 2012, up from $917 in 2006 – a 47 percent increase.

The study, conducted by consulting firm Milliman Inc., analyzed the medical insurance plans of more than 900 U.S. employers who sponsor health benefits for their workers, including Wal-Mart ( WMT ) and General Motors ( GM ).

Perhaps most alarmingly, it found that average annual premiums increased 92 percent between 2003 and 2011 to $15,073 for an employer-sponsored family health plan.

Meanwhile, the average payout for medical claims per person increased by just 41 percent during that same period, from $4,479 in 2003 to $6,690 in 2011.

The study also found that employers are increasingly passing on more of the costs of their health benefits to employees through higher premiums, deductibles, and copayments. In 2011, the average out-of-pocket expense for a family was $4,129 – more than double what it was in 2003.

In 2007, about 64 percent of covered employees had an annual deductible of at least $1,000. Fast forward to 2011, and that number has jumped to 78 percent.

According to the study, the average annual deductible for covered employees in 2011 was $2,120 – nearly double what it was in 2003.

One reason cited for all this is health care reform, which requires Americans to have medical insurance by 2014 or face penalties. Employers are trying to beat the mandate by shifting more costs to employees.

“The Affordable Care Act appears to be spurring the increase in cost-sharing,” the study says. “Employers report that they are making significant changes to employee health benefits, and many of these changes could contribute to higher cost-sharing.”

Some employers offer a health reimbursement account that allows employees to set aside pre-tax dollars for healthcare expenses.

But what if the employer doesn’t offer it? Is there a way to maximize your healthcare spending?

Employers are allowed to use “cafeteria plans” for their employees, which allow you to choose between different benefits. One choice is between using pre-tax salary dollars or after-tax money towards medical expenses. If you opt for after-tax money, you can write off your medical expenses so long as they are greater than 7.5% of adjusted gross income. This is the case even if the only benefit is offered at high-deductible health plans (HSA-eligible insurance).

Here’s an example. Let’s say you have $30,000 in adjusted gross income (AGI). The 7.5% threshold is $2,250. If you have $3,000 in qualified medical expenses, you can write that off on your taxes and save $450 (assuming a 25% tax rate).

Employers often offer both pre-tax and after-tax accounts and allow employees to switch between them. This allows you to maximize your tax savings and then switch back if you haven’t spent down the after-tax money.

Let’s say $2,500 of your $3,000 in expenses are covered by insurance before deductible so they won’t be included as part of the threshold. That leaves $500 in qualified medical expenses. If you had opted for the pre-tax account and saved $625 (25% of $2,500), you switch to after-tax and write off $500 in medical expenses.

There is a downside: Your employer will reduce your salary by the amount you set aside in an FSA or HRA, but you will get it back at the end of the year if you didn’t use it.

This can be a significant benefit for those with high medical expenses or not insured by their employer, but mainly that’s self-employed people. People who work for an employer may have more trouble maximizing this benefit since they might not have access to both accounts. However, there are workarounds.

Some employers have an opt-out clause for HSA-eligible insurance plans, meaning you can choose the after-tax option without having to worry about losing your health benefits. If your employer offers both accounts but doesn’t allow switching between them, then simply contribute the pre-tax amount into the FSA or HRA. At the end of the year, switch back to after-tax and you can claim your unused contributions. The strategy requires some playing around with but it should be possible for most people.

Compare different plans and providers before making your final decision on what type of coverage to purchase.

What kind of life insurance is right for me?

If you are trying to decide what type of life insurance would be best for you, there are several options. First, it is important to review the various types of policies and their benefits so that you can make an informed choice on which one will work best with your situation. The four main types of life insurance coverage include:

Term Life Insurance: Term life insurance is the simplest and least expensive type of life insurance. This policy provides you with a death benefit that remains level until the end of the term; then it expires. If you die during the term, your beneficiary will receive the face value of your policy.

Whole Life Insurance: This type of life insurance is permanent and provides a death benefit no matter how long you live. Most whole life policies build cash value that can be borrowed against or used to pay premiums. When the policyholder dies, the beneficiary will receive the face value of the policy plus any accrued cash value. The face value and cash value are determined at the issue date, not when premiums are paid.

Universal Life Insurance: Universal life is permanent insurance that allows you to pay higher-than-standard premiums in order to plan for larger future benefits than with traditional whole or term life coverage. For example, universal life can be used in connection with an investment account which will allow you to build a cash value faster.

Variable Life Insurance: This type of insurance works similarly to mutual funds by pooling your funds together with those of other policyholders and invests them in stocks, bonds, and money market accounts so you can potentially earn more than traditional types of insurance. Your premium payments will depend on the performance of the investments you choose, and you can transfer money in or out of your account as often as needed.

What is the difference between Term Life Insurance and Whole Life Insurance?

Term insurance generally costs less than whole life insurance because it provides coverage only during a certain time period (the term) rather than for your entire life. When you pass away during the term, your beneficiary will receive a death benefit. The face value of this type of insurance is generally lower than whole life coverage because you are not insuring your entire life. Also, there are no cash values with term insurance as compared to whole life insurance which has a cash value component that builds over time.