Archive for August 2010

Over the past 21 months, my family has participated in a wild ride with health insurance.   The experience has been enlightening, incredibly frustrating, annoying, confusing and intimidating.   Can I get an “Amen!” and a witness?!?!   In this series on health insurance, I am going to share my experience AND some helpful tips on saving money on health insurance.

Part Two High Deductible Health Plan with Health Savings Account (HSA)

I was first introduced to a high deductible health plan (HDHP) with a health savings account (HSA) when I was an employee.   My first reaction was, “My deductible is that HIGH?!!”   Upon further review, I found out that it was a terrific deal – for me as an employee as well as my employer.   Let me explain how a HDHP with a HSA works.

• High Deductible Health Plan (HDHP) According to IRS publication 969, the minimum deductible eligible for establishing an HSA is $1,200 for an individual and $2,400 for a family.   In other words, the insurance policy must require the covered individual or family to pay the deductible before the insurance company pays any health care costs (with some exceptions related to preventive care – see IRS Publication 969)
• Health Savings Account (HSA) This is a savings account that you can establish at a bank that is used solely for paying for health care expenses.   I have established my account at a local bank.   Each year, I am able to contribute an amount equal to the annual deductible of my insurance.   Here is the GREAT NEWS – whatever I contribute to my HSA is tax-deductible!   This saves me TONS of money!   Additionally, the money I have in my HSA is not a “use-it-or-lose-it” account.   If I do not use all of the money I have placed within my HSA, the money remains in my account until I actually need it.

As I have embarked onto this crusade full-time, I have had to obtain my own individual insurance policy.   HDHP with HSAs were by far the best option for my family.   We checked out the rates at eHealthInsurance and a local insurance agent.   The rates were the same, but using eHealthInsurance I was personally able to easily compare policies.

A HDHP is less costly to the insurance company because they substantially decrease their risk by forcing the consumer to shoulder the burden of the initial deductible.   For most people, this causes them to avoid running to the emergency room every single time there is a health care need.   Because the individual is going to have to pay for the entire ER visit, they become what I call a powerful person – an INFORMED and AWARE consumer!   This means that the individual will instead go to an urgent care facility which will charge less than 1/4th of the cost of an ER visit.   This is better for the individual AND the insurance company – and results in a lower premium.

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Over the past 21 months, my family has participated in a wild ride with health insurance.   The experience has been enlightening, incredibly frustrating, annoying, confusing and intimidating.   Can I get an “Amen!” and a witness?!?!   In this series on health insurance, I am going to share my experience AND some helpful tips on saving money on health insurance.

Part One Introduction

If you have been a regular reader of JosephSangl.com for awhile, you know that our family has witnessed an incredible miracle over the past year with the arrival of our son, Keaton.

He showed up after ten years of trying for a second child – including an IVF attempt.   By a miracle of God, Keaton showed up.   By the ridiculous nature of health insurance, we got to pay thousands of dollars in medical bills.

In fact, I wrote about it in my Sunday newspaper article.   I will let that article be the introduction to this series.   I know that it is a bit long, but I think it really sets up this series well.

One Man’s Wild Ride With Health Insurance – Sunday, 8/2/2010 – Anderson Independent-Mail

There have been enormous amounts of discussion, writing and conversation regarding health insurance reform.   A health care bill has now been passed through Congress and signed into law.  Call me crazy, but when 100-percent of one party is against a bill while nearly all of the opposing party is voting for a bill, it is not in the best interest of the American people.

Most Americans have a health insurance story to tell.  Today I want to tell you my wild journey with health insurance over the past 15 months.   In June 2009, I embarked full-time into this crusade to help others accomplish far more than they ever thought possible with their personal finances.   This meant that I was going to be giving up health insurance from my employer, who had an exemption from providing COBRA benefits.   This is where my problem began.   Because I would be unable to continue insurance via COBRA, I had to find new insurance immediately.   I attempted to obtain an identical individual health insurance plan which included maternity coverage.   The insurance company informed me that because I was purchasing an individual policy, I would be required to start at the beginning to obtain full maternity coverage benefits.   In other words, they would only pay 5-percent of maternity costs if a pregnancy occurred in the first year, 60-percent in the second year and 80-percent in the third year.   Only after four years of paying premiums would I be provided 100-percent coverage for maternity.

The insurance provider established this requirement even though I had maintained (and paid huge money for) full health insurance coverage with maternity benefits included for the previous thirteen years.   They established this requirement even though I had held coverage with their exact company for the previous three years!

Truth be told, my wife and I had given up on having a second child.   It had been ten years since the birth of our only child.   Instead of paying for extremely costly maternity insurance that would provide little payment toward a pregnancy, we opted out.   Guess what happened next?   Of course!   We discovered we were expecting a child just sixteen days after our new policy went into effect.

Our perfect new little boy arrived in February.   We saved substantial money by negotiating on our own with the hospital and doctors and paying within 30 days of receiving the final bills.   The fact that insurance companies would not recognize previous maternity coverage and extend 100-percent coverage from day one ultimately cost us around $7,500.

My experience has made me understand even more the need for continued health care coverage reform.   Even more, I realize how blessed my family has been to be able to pay for our medical bills.   Many people can not withstand such an unbelievably high financial penalty.

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In this series, I will be sharing some key wagon staplers – tools that I believe are essential to keeping one stapled to the wagon – because we all have the potential to fall off the wagon – these wagon staples’ will help keep you on the wagon even in your moments of weakness!

Part Five Reward Yourself For Victories!

It is extremely important to establish key milestones in your financial journey and celebrate as each goal is accomplished!   If you are in an incredible financial mess and are just getting started on your financial journey, make sure you reward yourself for the small (but extremely important) victories.   Victories when you are just getting started out include:

• Not using the credit card for an entire month
• Preparing a budget and following it for an entire month (we offer several free ones – they are located HERE!)
• Getting completely caught up on your bills – no late payments!

Of course, the celebration/reward needs to align with the goal that was accomplished.   Maybe the beginner celebrations would be going out to eat at McDonald’s and using the Dollar Menu.

As you make progress, the celebrations can be greater.   Here are some examples.

• Paid off all non-house debt! REWARD:   Use the payments you used to make for debt to fund a weekend getaway
• Hit $100,000 net worth REWARD:   Give $1,000 to a non-profit that you care about greatly
• Pay off the house! REWARD:   Throw the biggest blow-out mortgage burning party ever and then depart for a 14-day trip to Costa Rica.
• Pay cash for a new car! REWARD:   Drive the car on scenic three day trip and stay at a different Bed & Breakfast each night
• Hit $1,000,000 net worth REWARD:   Buy a ski boat and give away the same amount to a cause you care about greatly
• Pay for kid’s college in cash REWARD:   See your child start out life with ZERO debt AND go visit them regularly and take them and their friends out to eat at really nice restaurants!!!

I can go on and on and on and on … with this subject because I know that encouragement toward goals is what helps us stay on the wagon the most!

QUESTION FOR THE READERS:   What rewards have you given yourself for “staying on the financial wagon” and achieving your goals?

I hope this series has been helpful to you!   If you did not get a chance to read all of the posts, you can click the link below to read them.

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This is a continuation of The Mutual Fund Series here on JosephSangl.com.

During each part of this weekly series, we will be looking at a specific mutual fund company.

Today’s company is Dodge & Cox Funds.

Dodge and Cox Funds is a privately owned investment management company based in San Francisco, CA. The company has approximately $212.31 billion of assets under management and has prided itself with conservative investment standards. Dodge and Cox’s reputation has recently been put to the test when it increased investments in AIG, Wachovia, and Fannie Mae in 2007, only to see the stocks of all three severely drop, making 2008 one of Dodge and Cox’s worst years.

What I Like About Dodge & Cox Funds

• Stable History – Dodge and Cox was founded in the 1930s, in the midst of the Great Depression, giving the company a great reputation of strength, perseverance, and stability through tough times.
• Manager-Retention Rates – Dodge and Cox has a remarkable 97% manager-retention rate because of their focus on long-term contributions, rather than focusing on the managers’ quarterly performance. From 2003 to 2008, less than 5% of managers left the company annually.
• Excellent Stewardship – Dodge and Cox is at the top of the list when it comes to taking care of finances for investors. They have consistently shown strong customs, good boards, sound manager incentives, and organized records.
• Low Expenses and No Fees – All five mutual funds that Dodge and Cox manage are no-load funds with an expense ratio kept as low as possible.

What I Would Like To See Improved

• Minimum Investment Required – Like Fidelity, Dodge and Cox Funds have a $2,500 minimum investment required, which excludes a lot of investors.
• No Other Services Offered – Dodge and Cox is a pure and simple investment company of funds, which could be a plus in the companies eyes, but most people like to see a full service investment company that can take care and manage their IRA’s, 529’s, 401(k)’s, and ESA’s.

Dodge & Cox Mutual Funds I Own

• Dodge & Cox International Stock Fund [Ticker: DODFX]   This fund has taken a BEATING over the past two years.

Dodge & Cox Mutual Fund To Look At

• Dodge & Cox Stock Fund [Ticker: DODGX] – The object of this fund is to seek long term growth of principal and income, as well as achieving a reasonable current income. This fund has existed since January 4, 1965 with total assets of $42.7 billion and an annual fee expense ratio of 0.52%. The fund also has an average annual return of 10.63% since the inception date.

Read about other mutual fund companies

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NOTE:   Clemson student Anna Briscoe, a senior majoring in Economics with a minor in Financial Management has been so gracious to research and write the majority of this post.

In this series, I will be sharing some key wagon staplers – tools that I believe are essential to keeping one stapled to the wagon – because we all have the potential to fall off the wagon – these wagon staples’ will help keep you on the wagon even in your moments of weakness!

Part Four AUTOMATE The Important Things

Have you noticed that even though some things are important to us, we still fail to do them?   We want to exercise, but we don’t.   We want to eat healthy, but the Big Mac (McFat) looked too delicious.

Luckily, when it comes to finances, we can actually automate many things that are important to us!

For example, you all know that I love my Capital One 360 on-line savings account and I have written about it several times.   I actually have three Capital One 360 savings accounts.   One of the top reasons is the ability it provides me with to make things AUTOMATIC!

Here are key financial goals you can automate (and I have!):

• 401(K), 403(b), SIMPLE IRA, 457, or TSP contributions (automatically from paycheck)
• College 529 savings (automatically draft from bill pay account)
• Tax savings account (the taxes are going to be due – save for them!)
• Known Upcoming Non-Monthly Expenses (vacation, Christmas, new car tires, annual insurance premium, property taxes, furniture, 30-06 rifle, etc.)
• New Equipment (automatically draft from bill pay account to ensure no debt!)
• Roth IRA (automatically draft from bill pay account)

We may not be able to automatically hitch ourselves to the treadmill, but we can make sure the 401(k) and college fund are automatic.

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