Insurance companies will adjust their caps, spreads, and participation rates each year and in doing so will either increase or decrease your potential rate of return.  Thus, it’s a prudent measure to speak with an experienced agent about the renewal history of any annuity provider that are considering.

Annuity Renewal History and Interest Gains

Insurance companies with a history of increasing spreads while lowering caps and participation rates in their policies should be viewed with a cautious eye.

Conversely, an annuity provider with a favorable track record of adjustments; one that consistently passes on more interest gains to their policyholders should immediately jump to the top of your list.

There are several factors that will affect the moving parts in your indexed annuity. Overall market volatility, the price of options contracts, portfolio performance of the given insurance company, and the overall state of the economy are just a few macro examples.

However, some annuity providers tend to account for these future unknowns better than others.  Even when their portfolios are under pressure, they still offer you the opportunity for better gains than many of their competitors.

Indexed Annuity Caps - Maximum and Minimum

Indexed annuity caps are simply a limit on the amount you can earn in a given time period - usually one year.  Many indexed sub-accounts work with a cap no matter the crediting strategy or index you have chosen.

Insurance companies also offer indexed sub-accounts that are uncapped and have no limit to the returns on your investment.  Uncapped sub-accounts usually have much larger spreads than those operating with a maximum cap.  Yes, both spreads and caps can conspire to increase or decrease your interest gains.

For example, your annuity provider might offer a maximum limit (or cap) of 7% you can earn in an indexed account during the first contract year.  If the cap on your earnings potential was lowered to 4% the following year, then your earnings potential has decreased significantly .

The most you could earn would now be 4% in this hypothetical example - as oppose to the 7% renewal you might have been expecting.  You the investor would justifiably be upset with such a large decrease in future earnings power.

Spreads and Fixed Indexed Annuities

Indexed annuity spreads work much like caps when they are adjusted annually.  The higher the spread, the lower the return will be.  In essence the spread comes off the top each year before any interest gains are credited to your investment principal.

If you were using an averaging index strategy and the spread for that sub-account was 2.5% for example, then only the gains above 2.5% would be credited to your invested amount at the end of a twelve month cycle.

However, if the spread increased to 5.0% upon renewal the following year, the account would need to make over 5.0% before any interest gains would be credited to your invested principal.  In this example, the spread has increased by 100% and your potential return has decreased by 2.5%.  Again, this type of increase is not favorable to you or your invested dollars.

Fixed Indexed Annuity Participation Rates

Participation rates are usually found in point-to-point indexing strategies.  The higher the participation rate, the more interest you will be credited with when the market index (S&P 500 for example) is moving up.

Let’s say that you were offered an uncapped, point-to-point account with a 60% participation rate.  If the chosen index increased by 10%, then you would receive 60% of the gain or a 6% rate of return on your money that year.  If the participation rate renewed at 30% the following year, then you would only be credited with a 3% return on your money - all other factors being equal.

When the insurance company underwriting your annuity makes such a drastic change to the participation rate, which some do, your prospects for reasonable returns are reduced dramatically - even if the overall markets are performing well.

Summary and Video Presentation

As you can see, fixed indexed annuities not only offer several crediting strategies, but they also have several moving parts such as caps, spreads, and participation rates.

While the crediting strategy you and your agent decide on will go a long way to determine your gains, the moving parts inside the chosen strategy will play just as an important role, if not more important, in determining your interest gains.

It does not matter how well your index and crediting strategy are performing if your money can’t participate in a reasonable portion of the upside.  That’s why it’s important to talk with an experienced agent about the renewal history of any insurance company you might do business with.

Request Assistance

At Hyers and Associates, we work with hundreds of indexed annuities.  We can help you choose a suitable indexed annuity account that fits your time frame and investment needs, but most importantly one that offers you the best opportunity for interest credits now and in the future.

Contact us for more information about fixed indexed annuities.

The gains from your old policy can be transferred to a new insurance policy on a tax free basis.  You can continue to defer taxes in your new policy for a desired number of years or for your lifetime.

What is a 1035 Exchange?

A 1035 tax free exchange is the I.R.S. tax code that allows for the transfer of a non-qualified annuity or life insurance policy to a new policy of equal or greater value. Capital gains and/or income taxes resulting from the growth of the old policy will be avoided and deferred when the transfer is completed properly.

There are three examples of a 1035 exchange:

Tax Free Annuity to Annuity Exchange

Transferring funds from one annuity investment to another is the most common example of a 1035 transfer. Oftentimes this is done simply to establish a new investment.

Perhaps your old annuity is yielding below average interest or you would rather exchange an aggressive and unpredictable variable annuity for one with a more conservative fixed investment account.  (View current annuity rates here)

Technically, the exchange only qualifies if you are transferring from a non-qualified annuity to another; otherwise it would be a rollover of qualified funds like an IRA or 403(b). Non qualified accounts are simply those you have already paid taxes on the invested principal, but not the gains.

In order to avoid income taxes on the accumulated gains, you can exchange your old annuity for a new one with the assistance of a licensed agent.  It is important to note that there are protocols to this procedure that must be met in order to avoid a taxable event.  Both of the insurance companies involved will have paperwork that must be filled out correctly.  It is a good idea to contact a knowledgeable agency or agent (presumably us) in order to assure that you are in compliance.

Cash Value Life Insurance 1035 Exchange

This involves the transfer of the accumulated cash value in your old life insurance policy to a new one. You are allowed to withdrawal all (or some of) the cash value in your variable, universal or whole life insurance policy and deposit the funds on a tax free basis into a new life insurance policy.

There are several policy types that allow for the transfer of your cash value, but term life insurance is not one of them.  Term life insurance has no cash value for the insured. Additionally, you cannot avoid income taxes by purchasing a term policy using the cash value from an existing whole, variable, universal, or indexed life contract.

You might consider this exchange if you wanted to establish a new single premium paid up life insurance policy. Perhaps your life insurance needs have changed and you no longer wish to pay ongoing premiums. In other cases, you might simply want to establish a new policy that is more in line with your present needs and continue to pay premiums into the new account.

Life Insurance to Annuity 1035 Transfer

If you wish, you can withdrawal the cash value from your life insurance policy and transfer it tax free to an annuity investment account.  This is the least common of the three allowable strategies.  Conversely, you may not transfer any gains from an annuity account to a life insurance policy without creating a taxable event.

Life insurance policies offer several tax advantage over annuities.  At passing, all proceeds from a life policy can be withdrawn tax free by your beneficiaries - including the gains.  And life insurance can also avoid federal estate taxes and state inheritance taxes when setup properly.

Thus, if you are unhappy with your life insurance policy for some reason, it may be wise to transfer the accumulated cash value to a single premium paid up policy rather than into an annuity account.  If you desire safety and predictability, a single premium whole or indexed life insurance contract can be a good alternative.  Both indexed and whole life will earn fixed interest and increase in value year over year based on the declared rate.

Request Assistance

In summary, there are several reasons why you might exchange an old life insurance or annuity policy for a new one. You might be seeking a higher rate of return than what your existing annuity policy offers or you may wish to establish a more conservative investment. In the case of life insurance, you may simply wish to transfer the existing cash value to a paid up policy so you can avoid ongoing premium payments.

At Hyers and Associates, we work with several highly rated insurance companies that provide very competitive life and annuity policies for our clients.  Contact us today and we will make a suitable recommendation based on your needs.

Annuity Inquiries Here
Life Insurance Inquiries Here

Plans A, B, C, D, F, G, K and L offer nearly the same benefits as before with Plan F now being the most comprehensive. Plans E, H, I, and J have been eliminated. Plans M and N have been introduced as lower priced alternatives requiring some cost sharing for the insured.

New Medicare Supplement Coverage Chart

Supplements E, H, I and J Phased Out

As of June 2010, you will no longer be able to purchase Plans J, E, H, and I. They are being phased out and will no longer be for sale by any insurance company as mandated by the Centers for Medicare and Medicaid Services. If you have enrolled in one of these four plans prior to June 1st, then you can keep it if you wish. However, all insurance companies will allow you to convert to any of the new Medicare supplements they offer - like Plan F for instance.

It may be wise to strongly consider this conversion opportunity. When your existing coverage (J for instance) is no longer offered, then there will be no new premiums coming in from future customers. This may very well translate to higher than normal renewal premiums for those who choose to keep a discontinued plan.

If you wish to convert to a new Modernized plan after your conversion opportunity has passed, then you may have to go through medical underwriting and you could be denied coverage because of poor health. This would not be an issue in California and Missouri as those states offer an open enrollment window each year. However, most other states do not provide this opportunity.

New Supplements M and N Introduced

Medicare Plans M and N will have more out of pocket expenses for the insured if claims arise. In turn, monthly premiums will be lower for these two plans as compared to some others offering more comprehensive coverage - like Plan F for example.

Plans M and N do not cover the Part B deductible or Part B excess amounts.  (Not all states allow doctors to charge for Part B excess - Ohio is one such state.)  Plan M covers 50% of the Part A deductible while Plan N pays for 100% of this amount.  Like Plan M, Plan N pays Part B Coinsurance at 100% except up to a $20 copay for office visits and $50 copay for emergency room visits.

Plans K, L, M and N most closely resemble Medicare Advantage insurance coverage.  The require more cost sharing for the insured, but they cannot be packaged with prescription Part D drug coverage. As with all Medicare supplements, Part D drug coverage must be purchased as a stand alone product. Should Congress pass health care reform that limits Medicare Advantage coverage, then Plans K, L, M and N may be suitable low cost alternatives.

Medicare Insurance Benefit Changes

When compared to supplements available prior to June 1st, there are three significant changes to the benefits offered - depending on the coverage you choose.  Preventive care not covered by Medicare and at home recovery benefits will no longer be available with the phasing out of Plans E, H, I and J. The rational behind their removal is both benefits were limited in scope, difficult to administer, and not often used by consumers.

In their stead, The CMS introduced an added Part A hospice coinsurance benefit that is a core component of all new plans. This is also a limited benefit as hospice coverage was already part of the basic benefits offered by Medicare, but it does close the small gap in coverage.

Lower Rates on New Supplements

Not all companies have been approved to offer new Medigap supplemental coverages yet in the states where they do business. However, one of the advantages associated with the Modernization Act should be lower monthly rates for those who choose a conversion plan and for those who are healthy enough to be underwritten for new insurance coverage.

When new plans are introduced they will almost always offer lower rates than their predecessors. There are a couple of factors that account for this, but the primary issue is there are no claims associated with a brand new plan. The longer a plan has been in existence, the more claims the insurance company will experience, and in turn they will increase rates for the pool of insured customers.

Contact Us

In summary, the Medicare supplement insurance changes are not dramatic in nature, but may provide an opportunity for you to change plans if you are already insured.  If you are new to Medicare coverage, then you should speak to a knowledgeable agent about your options pre and post June 2010.

Hyers and Associates, Inc. is an independent insurance agency offering affordable supplement coverage from several insurance companies.  Our agents can answer your questions and assist you with your search for suitable supplemental insurance.

Contact us today for plan information or for personal quotes.

Anthem Blue Cross Blue Shield recently introduced new coverage options with new benefit designs in order to keep prices affordable.  Our agency is proud to offer these new options at no additional cost to you.

Affordable Health Insurance Premiums

The two newest plans are named SmartSense and CoreShare.  Both offer larger coinsurance and deductible choices, but also provide comprehensive coverage once the chosen cost sharing numbers have been met.  Those who simply need to keep their health insurance premiums affordable can enjoy savings by choosing one of these two plans.

They are also appropriate if you prefer to self insure and are comfortable with higher out of pocket expenses.  The SmartSense plans offer limited doctors office visits, while the CoreShare plans do not.  However, both offer prescription drug coverage benefits to the insured.

Optional Benefits with Anthem

Maternity coverage cannot be added to either of the new plans, but dental insurance is an option.  If you wish to have maternity coverage as part of your overall insurance, then you should inform your agent as it is not automatically included like it would be with group health insurance.  Both the Premier and Lumenos HSA coverages are popular and affordable options for those who need insurance to cover a future pregnancy.

It is important to note that there are respective waiting periods that must be satisfied before child delivery takes place with any plan.  In you live in Ohio for example, there is a nine month wait to deliver.  In Indiana and Missouri, the wait is twelve months.  Additionally, you cannot already be pregnant and purchase this insurance.

Preventive Care

Anthem is known for offering robust preventive care with all of their health policies.  However, in order to lower prices during these difficult economic times, preventive care is now subject to the deductible with some plans.  It is very important to discuss this with your agent before enrolling in new coverage.

You would not want to find out later that a routine visit to the doctor was not covered and that you must pay for the entire negotiated rate.  However, some states require well child care and immunizations to be covered immediately regardless of the policy design.

View Anthem Quotes Today

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The information above is a quick summary designed to spread the word about new cost effective coverages.  A detailed description of any health insurance benefit package is necessary before purchase.  We have created an online direct portal where our clients can view and compare personal individual and family coverage in an instant.

Please feel free to contact us and we can not only walk you through your options online, but also help to make a suitable recommendation with Anthem or any of our other reputable carriers including Aetna, Assurant Health, Medical Mutual, and United Healthcare.

Both offer pros and cons depending on what features are most important to you now and going forward.  The chart below compares the advantages and disadvantages of both accounts side by side.

Offering Best Interest Rates - CD or Annuity?

We are currently in a low interest rate environment that impacts yields for both accounts. However, interest rates are likely to increase over the next few years due to inflation and Federal Reserve policy.

That being said, fixed annuities are currently offering better multi-year rates than bank deposits. This has been the case in both low and high interest rate environments spanning over the last several years.

-View Current Multi-Year Fixed Annuity Rates Here-

What Investment is Appropriate for Me?

Annuities offer more features and flexibility than CD’s, but that does not imply that they are the most appropriate investment account for your fixed income dollars.  Typically, younger consumers will purchase CD’s while those saving toward or those who are near retirement will opt for annuity accounts.

The reason is annuities are better suited for those who are age 59 or for those who do not intend to withdrawal income, principal, or interest until retirement.  Whether an annuity is funded with pre or post tax dollars, the owner can be penalized by the IRS if taking withdrawals before age 59 1/2. There would be no IRS penalties after age 59 1/2 and there are no such penalties accessed to the beneficiary of the account when the owner passes - regardless of age.

Annuities for Retirement Savings

If you have not yet reached, but wish to save toward retirement - then an annuity account can be a wise choice.  Your interest will compound through tax deferred growth each year and accumulate more quickly than a taxable bank certificate of deposit.

Once retirement has been reached, the entire balance can be converted into a lifetime stream of income for you and your family if desired.  Or you can withdrawal your interest each month and leave the principal intact for as long as you wish.  Or you can continue to allow the funds to compound on a tax-deferred basis.

Your accumulated principal and interest always belongs to you and not the insurance company.  At passing, your beneficiaries would receive the entire balance of the account as a lump sum.  Your beneficiaries can also choose to receive all funds over a set period of years in order to reduce any income taxes that might be due.

In summary, annuities offer distinct advantages that bank certificates simply do not.  By speaking with an agent and informing s/he of your priorities, you should quickly be able to determine which investment is most appropriate for you.

 Contact us today to discuss your investment needs.

It is not uncommon for estates to owe tens of thousands of dollars or more in taxes that could have been otherwise avoided with advanced planning.

Countable and Non-Countable Assets

Most assets count toward the $338K minimum - assets such as real estate located in Ohio, vehicles, bank accounts, stocks and bonds, mutual funds, business interests, annuity accounts, and even the contents of your home.

You do not need to take our word for it - I encourage you to read the answers to questions 9, 10, and 11 on Ohio’s government tax website.  There, it clearly explains the distinction between various asset classes.  It is important to note that almost all assets are counted as part of an estate’s gross value.

Life Insurance Proceeds are not Taxable

The one asset class that is exempt when calculating an estate’s value is life insurance paid to a named beneficiary.  However, if the life policy is paid to the estate for any reason, then it would be counted and therefore taxable.  It is important to regularly review existing policies for beneficiary designations.

When paid to a named beneficiary, life insurance policies can and will avoid the Ohio state inheritance tax.  With this in mind, a select few insurance companies have designed plans that can help reduce your countable estate.

Guaranteed Issue Life Insurance - 4% Growth

A common concern about life insurance is whether someone can qualify medically.  If you are in good health, then purchasing a life contract is very easy at most ages.

The good news is that a guaranteed issue policy has recently been approved for those who are in poor health or who would prefer not to be medically underwritten.  This life insurance policy requires no underwriting and can be issued up to age 99.   

It is a single premium life contract with an increasing death benefit that requires no monthly payments.  A $99,000 thousand dollar deposit purchases $100,000 in immediate death benefit.  The death benefit is guaranteed to grow by 4% each year.  After year one, the $100,000 death benefit would grow to $104,000 and would increase by 4% each year thereafter.

Advantages Over Traditional Investments

This new life insurance contract could be a very good fit for someone who is older or in below average health.  It works somewhat like a fixed annuity in that it guarantees interest, except that the death benefit is not subject to income taxes and would not be counted toward the gross estate for Ohio inheritance tax purposes.

A properly designated life policy offers distinct advantages over a certificate of deposit, annuity account, mutual fund, or brokerage account in that it avoids both income and inheritance taxes for your heirs.  And again, the death benefit increases by 4% each year which is superior to most other available fixed rate investments.

In summary, those who need to reduce their exposure to what has been deemed the “Ohio death tax” should consider a life insurance policy.  You can purchase a single premium policy that is guaranteed to increase each year.  Planning ahead will help you, your estate, and your heirs retain more of your accumulated wealth.

Contact us today to discuss your options.

Universal Group Application

The good news is Ohio recently approved a universal application that allows employers to request quotes from three of the most prominent and competitive carriers at once.  The universal application works with Aetna, Medical Mutual, and United Healthcare insurance companies.

The group size must between two and fifty employees.  The only carrier not included at this time is Anthem Blue Cross Blue Shield.  In most cases, the information provided on the applications can be used to obtain quotes from Anthem, but cannot be used for enrollment purposes.

The simplicity of this new application makes quoting small and medium sized business groups in Ohio much easier than before.  Less paperwork is needed and should the employer choose one of the three aforementioned insurance companies, then enrollment paperwork for each employee is already in hand.

Underwriting and Enrollment in Ohio

From beginning to end, underwriting and enrolling a new small group or transferring an existing small group with any carrier can take a month or more depending on the number of employees electing coverage.  Employers and their human resources staff should count on quite a bit of back and forth before everything is in place.  Thus it is always a good idea to get the process started as soon as possible.

While no one person can be denied coverage, group health insurance providers can be meticulous in their approach.  Oftentimes, they will have questions about individuals and their health conditions in order to understand any risks associated with the overall group.  Once the underwriters are satisfied with the information given, a risk factor (or tier) will be assigned to the group.  This is when your agent (presumably us) can be very valuable.

The Agent’s Role

We negotiate with each carrier in order to lower the group’s risk factor - and in many cases we are successful.  Insurance providers are trying to win your business just like you are trying to win the business of your clientele.  Negotiations are always part of this process.  We have good relationships with all of the carriers mentioned above as well as some other niche players and we will work diligently to negotiate the best premiums for our clients.

Hyers and Associates, Inc. is an independent agency serving the entire state of Ohio and beyond.  We work with Aetna, Anthem, Medical Mutual, United Healthcare and several other insurance providers and can provide a universal application to your employees for quoting and enrollment purposes.  Should you have any questions about your health insurance and/or benefit options, please contact us today.

Unfortunately, the ramifications of this agreement are one less low cost health insurance provider for the residents of Ohio.  Consumers who are in need of medical coverage might now consider Anthem, Aetna, United Healthcare, Assurant Health, or Medical Mutual.  While all of these carriers offer a wide range of plans to choose from, there is a little less competition for their services.

In-Force Premiums Could Rise

Another likely outcome of this suspension is a disproportionate increase in premiums for current policy holders.  With no new business coming in from Ohio consumers, there will be less inflow to counter any outgoing claims.  While American Community continues to offer insurance in several other states (Arizona, Illinois, Indiana, Missouri, Tennessee and elsewhere) - losing the entire Ohio market should undoubtedly affect the bottom line.

This development does not appear to be a precursor to insolvency, as was the case with TPAC, but it does raise concern for current and future policyholders.  Individual and group consumers can always research coverage with a competing carrier if they are worried about American Community as a going concern.

Finding New Health Insurance

As an independent agency offering coverage from several reputable and well rated carriers, we can help those who are in need of health insurance in Ohio and beyond.  Whether you are shopping for new coverage or looking to reduce monthly premiums by replacing an older policy - we can help.

Contact us and view your personal health insurance quotes today.

Single and Family Contribution Amounts

• Individuals owning a HSA qualified health insurance plan can deposit up to $3,050 into their account.  Those who are over age 55 can add an additional $1,000 for a total of $4,050.
• Families owning a HSA qualified plan may contribute up to $6,150 into their account.  If the primary insured is over age 55, the amount increases by $1,000 to $7,150.

HSA Requirements and Tax Advantages

In order for coverage to be HSA qualified, then the insurance must meet the minimum deductible and maximum out of pocket requirements as defined by the I.R.S.  In most cases, you will know if your health insurance can be coupled with an HSA as it will be stated in the policy or advertised when it’s purchased.

Money deposited into an HSA can be written off each year, grows tax deferred, and can be withdrawn tax free for qualified medical expenses. The I.R.S. offers a long list of what encompasses these expenses, but common examples are doctor’s visits, prescription drugs, meeting the deductible or coinsurance amount, and/or dental and vision outlays.

Deposits Always Belong to You

Get a Quote »It is important to note that unlike a flexible spending account, funds in an HSA always belong to the insured and roll over from year to year. You do not lose your deposit if you have not used it in any given year or if you cancel your insurance for any reason. Additionally, you can use any HSA savings provider you wish - including your own bank. You do not have to use the bank associated with your chosen insurance company.

If you would like to learn more about health savings accounts or if you would like to view quotes with any number of carriers, please contact us today for more information.

Medical Mutual offers competitively priced health insurance policies in many areas, but they are very popular with both individuals and employers based in northern Ohio.  In this area, they have agreements with a vast array of doctors and hospitals that can best serve their members and their families.

COSE and Ohio Farm Bureau Insurance Plans

Medical Mutual is partnered with COSE (Council of Small Enterprises) to offer plans tailored to their small group members. COSE is the small business offshoot of the Greater Cleveland Growth Association and has been working with Medical Mutual for over 30 years to provide benefits for its members. Affiliated businesses should ask their broker about COSE specific plans and prices.

Medical Mutual is also partnered with the Ohio Farm Bureau to offer expanded insurance coverage to its individual and family members. Affordable premiums, improved health, and overall wellness are just some of the goals for the over 200,000 plus members. Farm Bureau affiliated individuals and families should be sure to mention their membership to any broker when requesting quotes. There are online portals specifically designed for OFB quoting purposes.

Popular and Affordable Ohio Health Carrier

In northern Ohio, Medical Mutual is oftentimes more competitively priced than their competition - companies such as Aetna, Anthem and United Healthcare.  Individual and group consumers can enjoy reasonably priced plans as well as an extensive network of health care providers.  This is not necessarily true in all parts of Ohio so it may be best to view their network options with a broker before enrolling.

Like all reputable providers, Medical Mutual provides online enrollment for individual and families.  Employer groups will need to enroll using traditional paperwork provided by their broker, but they can manage their group online once enrollment has been completed.

Group, Family, and Individual Benefits

In the group market place, benefits such as traditional health insurance, health savings accounts, flexible spending accounts, dental, vision, life, and disability are all offered.  In this way, they can be the sole provider of benefits to both small and large groups alike.  There are several plan designs and deductibles to choose from in order to tailor the coverage to the employer’s needs.

Individual and families will also have several benefits options to choose from including; traditional health insurance, health savings accounts, prescription drug coverage and dental and vision plans.  Medicare beneficiaries can choose from Medicare supplement plans, Medicare Advantage coverage and stand alone prescription Part D coverage.

In summary, those who are in need of health insurance quotes in Ohio should consider Medical Mutual.  By speaking with an appointed broker, consumers can learn about plans that might be suitable for their situation.  If you would like to learn more about Medical Mutual and other Ohio health insurance providers, contact us today to request more information.