Those of us with U.S. citizenship can pick up the newspaper on any given day and are almost guaranteed to find at least one story about the significant percentage of our country’s population who can’t afford health insurance coverage.  Those ugly statistics are likely to become even more hideous as unemployment numbers continue their upward march.

With mortgage disasters, credit freezes, down-in-the-dirt consumer confidence and increased joblessness as we meander through recession, it seems like a flat-out stupid time to even think about buying health insurance for our dogs and cats, right?  It sure seemed that way to me.

Remember that seen from the Frank Capra movie, Mr. Deeds Goes to Town?  Just in case you’re not a big 1930s film buff, there’s a scene were a poor farmer crashes a ooh-la-la party hosted by the film’s protagonist.  The farmer chastises the host, saying, “I just wanted to see what a man looked like that could spend thousands of dollars on a party when people around him were hungry!”

There’s something about pet insurance that feels the same way to many of us…  ”I just want to see what a man looked like that could spend money on pet insurance when his neighbors don’t have health coverage!”  Or something like that.

If you can get over any guilt you might have about being better off than some other people, pet insurance isn’t quite that offensive.  It can actually make sense.

Liz Pulliam Westin at MSN’s Money page once thought pet insurance was a complete waste of time.  She seems to have changed her tune.  Although she still thinks most folks would be better off saving the money they’d spend on premiums, she also notest that pet medical expenses are increasing as new techniques and procedures are making their way into the veterinary world.  She concludes:

But if you’re the type of person who would do anything to save your pet, including spend thousands of dollars on medical care, pet insurance might be a preferable alternative to going into debt.

The U.S. seems to be a little behind the curve when it comes to taking out health parties on behalf of Snowball and Fido.  According to one source, over 12% of British pets have insurance, while less than 1% of U.S. pets are covered.  When you consider the love many people have for their animals, that’s pretty shocking.  

But don’t assume that the Brits have it all right.  Although pet health insurance can keep a person who may not have a nest egg set aside to pay for a cat’s emergency room bill from running up a massive Visa bill, health insurance for the furries isn’t always a great deal.  If you thought Blue Cross and Blue Shield was reluctant to pay out, imagine how excited an outfit that insures dogs is going to be to cut checks to cover Mr. Fuzzybottom’s cancer treatment bill.  You’re gonna have a co-pay and a deductible.  There will be policy limits.  It might be for a cute littze fuzzy buddy, but it’s still insurance.

What’s the bottom line?  Should you be purchasing insurance for your health?  There are worse ways to spend your money, but for most people it probably will make more sense to develop a savings account created exclusively for the purpose of handling pet medical expenses.  In other cases, however, having a good policy can be a huge benefit.  I recommend reading these conversations for a little extra input on the topic.

In other words, it’s not as crazy as it might sound.  Depending upon the policy, your pet and your financial condition, you might want to invest in some insurance.  At the very least you can’t dismiss the idea as utter silliness.

Here’s a riddle for you…

What product is often compared to insurance by experts even though other experts make a point of saying it shouldn’t be confused with insurance?

What product’s market is said to be worth seventy trillion (yes, trillion with a “t”) dollars even though no one knows how much the product is actually worth?

What product’s market has been completely devoid of regulation even though experts had been cautioning that its crash was impending–and that said crash would have massive repercussions?

Give up?  The answer is the credit default swap.

If you’re like me and virtually everyone else in the world, you may have heard this term once or twice in passing over the past several years only to see it in the headlines almost every day for the last several months.

And, if you’re like me, you could probably use a hand making sense of the discussion surrounding credit default swaps.  Let’s see if we can break down this complicated financial instrument so it all make a little more sense…

Defining a credit default swap isn’t that tough.  Lil’ ol’ Wikipedia actually does a good job of laying it out:

A credit default swap (CDS) is a credit derivative contract between two counterparties. The buyer makes periodic payments (premium leg) to the seller, and in return receives a payoff (protection or default leg) if an underlying financial instrument defaults CDS contracts have been mistakenly compared with insurance, because the buyer pays a premium and, in return, receives a sum of money if a specified event occurs. However, there are a number of differences between CDS and insurance; the buyer of a CDS does not need to own the underlying security; in fact the buyer does not even have to suffer a loss from the default event.

That gives you an idea of what a “CDS” is, but it doesn’t really explain why they exist.  We can turn to Investopedia (that’s two “pedias” in one post, kids!) for a little context:

The buyer of a credit swap receives credit protection, whereas the seller of the swap guarantees the credit worthiness of the product. By doing this, the risk of default is transferred from the holder of the fixed income security to the seller of the swap.

Which brings us to a more pragmatic consideration.  Who, specifically, has been using credit default swaps and why have they been doing it?  Time Magazine explains it rather nicely, even though it does tread on the wrong side of the Wikipedia definition’s admonition against making a comparison with insurance:

Credit default swaps are insurance-like contracts that promise to cover losses on certain securities in the event of a default. They typically apply to municipal bonds, corporate debt and mortgage securities and are sold by banks, hedge funds and others. The buyer of the credit default insurance pays premiums over a period of time in return for peace of mind, knowing that losses will be covered if a default happens. It’s supposed to work similarly to someone taking out home insurance to protect against losses from fire and theft.

Now that might not seem like the biggest deal in the world when you consider the scope of the overall economy, but it actually is one of the biggest things out there.  The CDS market was a seventy trillion dollar business.  And almost 40% of it is in the hands of major financial institutions.

So, why is that a bad thing?  Sure, there’s a lot of money in the CDS market.  That, in and of itself, isn’t a problem.  What’s the problem?

There are several.

First, a lack of regulation/oversight/rule-making/whatever led to a very serious problem in the credit default swap biz.  Namely, people started trading these instruments back and forth with no one really bothering to consider whether the people taking on the risks associated with the swaps actually had the means to make good on them in the event of a default.  That wasn’t a well-known problem until…

Second, (you guessed it)  defaults started happening.  You can blame that on the subprime mortgage crisis or any of the other potential explanations for our journey into the land of recession.  The fact of the matter, however, is that defaults started springing up and the folks who were supposed to be able to cover the associated costs have been coming up short.

Third, these defaults and the failure of credit default swaps is giving banks a good reason to reconsider some of the bond lending and other investments they were willing to make earlier.  All of that talk about a credit freeze is starting to make sense, isn’t it?  As the aforementioned Time article noted, ” this could impact everyone from mortgage-seekers to municipalities that need money to fix roads and build schools.”

Fourth, there’s this even bigger problem of a potential domino effect.  You see, all of that crazed CDS trading, in hindsight, seems a little divorced from reality.  Consider that one expert explained that those who own default swaps don’t even know what they’re worth.  No one does.  No one has any good idea to figure that out, either. That led him to ask a very important question:

How does a global financial system work when you don’t know how to value assets?

The answer is scary because a global finance system may not be able to work at all under those circumstances.  Remember, we’re talking about seventy trillion in investments.  Thus, one columnist stated:

It could take years of litigation to figure out who owes whom what. The fear is that once the system starts failing, there will be “cascading defaults” and because the CDS market is so huge, its failure threatens the whole global economy.

I know this post is a little heavy on the doom and gloom.  It’s worth noting that not everyone shares the perspective that the CDS market’s unraveling will lead to all of us living like Man and Boy in The Road.  Whether they believe that letting the market run its course or appropriate interventions can stop the “cascade”, there are people from all economic and political persuasions who do see a way out.

Let’s hope one of them is right.

And that we follow his or her advice.

Being a smart insurance consumer is a great way to improve your bottom line.  You can save a great deal of money by shopping for the most competitive rates for coverage that meets your needs.

When you find a new carrier who offers a better deal than your existing insurance provider, you’ll need to cancel your existing policy.  The cancellation procedure and requirements may vary based upon where you are and with whom you’re doing business, but in many cases you’ll need to send a letter expressing your desire to cancel.

While that task might be easy for some folks, others could really use an insurance sample cancellation letter template to help guide their efforts.  The simple model letter in this post covers all of critical insurance cancellation bases:

It provides the company with accurate contact information. That’s important because some situations may call for additional follow-up to effectuate the cancellation.  Additionally, you’ll want to recover any portion of your already-paid premiums due to you, so it pays to make sure the insurance company knows exactly where to send the check!

It clearly expresses your desire to cancel. You want to lay it out in black and white.  This insurance sample cancellation letter is unambiguous and straightforward.

It demands confirmation. You can’t fire off a letter and then simply assume that the insurance company will do the right thing.  Mistakes happen, papers do get lost, etc.  This model insists that the insurer verifies policy cancellation.

It contains necessary information. The model letter identifies the policy and your policy number.  Again, you want to be certain that you’ve provided all necessary information to guarantee a timely cancellation of an unnecessary policy.

Here’s the model cancellation letter:

DATE

Cancellation Department

Name of Insurance Company

Mailing Address for Insurance Company

Re: POLICY CANCELLATION

Your Name

Your Policy Number

Please cancel the above-referenced insurance policy effective immediately.  I do not want to maintain this policy.  You are no longer authorized to bill me or to access my bank accounts for payments associated with this policy.

Send written confirmation of the cancellation to the address below as soon as possible.  Please use that address to send a refund of the unused portion of my already-paid premium, as well.

Thank you for resolving this matter quickly.

Sincerely,

Your Name

//Your Signature//

Your Mailing Address

Your Phone Number

Please consider the following when writing a letter requesting policy cancellation:

• Sign it and use ink. Add your handwritten signature to the letter and do it ink.  Better safe than sorry.

• Keep a copy. Make a photocopy for your own records, just in case things get confused.

• Don’t neglect the date. The date is important.  Don’t leave it out.

• Reasons for cancelling? You’re generally under no obligation to explain why you want to kill the policy.  However, you may want to explain your rationale briefly if (a) you feel a need to explain why you’re taking your business elsewhere or (b) you want to open the door for the company to pitch you on some alternative policy or to offer you a lower rate after the cancellation.

• Make sure you want to cancel. Getting out of a bad policy or shifting to a new carrier with better coverage and/or lower rates can be a smart move.  Getting out of a policy you really do need in order to free up a little extra cash, on the other hand, isn’t.  If you’re cancel a policy, do so for the right reasons.

• Don’t just stop paying. It’s true that the insurance company will cancel a policy if you don’t pay the premiums.  However, this may result in unwanted bills and/or negative information on your credit report.  Additionally, ceasing payments won’t give you a chance to recover money that might be due back to you.

• Know the requirements. Different policies, jurisdictions, and other factors may create additional cancellation requirements.  Be certain you know what you need to do to get out of your policy correctly.

Yesterday, we touched on a few of the reasons why you should probably be carrying long-term disability insurance.  If you aren’t either maintaining or shopping for a policy, I invite you to revisit the justifications for disability coverage.

Now let’s look at a few factors to consider when shopping for disability insurance.  This isn’t a comprehensive shopping guide, it’s just a few key considerations to ponder when making an insurance buy.

SECURING “OWN OCC” COVERAGE. Disability insurance comes in a few different forms.  Some policies will provide benefits only when you’re completely unable to work.  If you can perform any occupation, you won’t get benefits.  This is known as “any occ” coverage.  Others will pay when you’re unable to maintain your current occupation.  This is an “own occ” policy and it’s usually the best option for anyone making a decent wage or engaged in a professional occupation.

“Own occ” coverage is costlier than “any occ” options, but for a very good reason.  Let’s say you’re a right-handed heart surgeon and you get into a car accident that leaves your right hand mangled.  An “any occ” policy won’t help you out because you could go back into the workforce in a variety of non-surgical jobs.  An “own occ” policy, on the other hand, will continue to pay as long as you’re under a physician’s care.

If total “own occ” insurance is cost-prohibitive for you, there is an alternative.  You can purchase a hybrid policy that will perform initially as “own occ” before transitioning into “any occ”.  This approach, outlined by Eric Schurenberg, splits ”the definition…paying benefits under own-occ rules for the first one to five years of a disability and under any-occ rules thereafter.”

Also note that there is a fine line distinction between “true own occ” and “modified own occ” coverage.  I’m an advocate of “true own occ” policies.

HANDLING ELIMINATION PERIODS. An elimination period is the length of time that will pass following the onset of one’s inability to work and the beginning of disability payments.  At first glance, you might think that the best idea is to keep your elimination period to a minimum.  After all, the idea of getting benefits quickly in the case of a disabling condition is obviously attractive.  However, it may make sense to adopt a longer elimination period.

That’s because lengthening your elimination period is one of the easiest ways to decrease the premium cost of disability insurance.  Disability insurance is beneficial, but it can be relatively expensive.  This one area where you have some control over cost.

If you have relatively substantial resources and/or emergency funds, consider whether it might make sense to rely on these for awhile before benefits begin.  If that is possible, you can lengthen your elimination period and save money on long-term disability insurance.

PROVIDER AND POLICY QUALITY. Although I’m sure there are a few million insurance agents out there who’d disagree with me, there are times when all you really need is a cheap insurance policy.  In some circumstances, you can compromise quality for the sake of price.  I believe that renter’s insurance mandated as a term in a lease is a perfect example.  You may not really need the coverage, so it makes sense to buy the required minimum as inexpensively as possible.

Long-term disability insurance, however, is not an area in which it makes sense to skimp on quality.  You can expect to pay between 1% and 4% of your income for a good policy.  That might seem high, but when you look at the disastrous consequences that can come from inadequate coverage and the likelihood of actually using the policy, it’s really a decent bargain.

That’s only true, however, if you can actually get your benefits and enough of them.  That means that you’ll need to shop for a quality policy from a reputable provider.  Do your homework.  Some companies seem hellbent on finding ways to disapprove claims and others are known to offer questionable customer service.  This is not a time to skip the fine print or to roll the dice in order to save a few bucks every month.

Take your time.  Do your research.  Ask questions.  Read the policy.  Long term disability insurance is an investment that you should take just as seriously as you would if you were putting 1% to 3% of your income into a stock purchase.

Are you carrying long term disability insurance?

You should be.  Assuming that you actually need your income to make ends meet–or will need your income at some point in the future–you should have long-term disability insurance.  Disability insurance will replace up to 80% of your income if you’re incapicitated and unable to work for an extended period.

Although people tout its virtues and put it on their must-have lists of insurance products, a startling number of people don’t maintain coverage.  That’s a massive blunder.

Let’s look at a handful of reasons why you should be carrying a good long-term disability insurance policy.

Government policies are a joke. The Social Security Disability Insurance program is not going to take care of your needs.  First, it can take an insanely long time to secure an approval.  I’ve personally witnessed the process taking well over two years from a claim’s opening to successful resolution.  Second, the benefit levels are inadequate.  The caps are set very, very low.  The money might be handy, but it certainly isn’t close to an income replacement.  Third, the benefits are very restrictive.  Although requirements shift with age and work history, they’re always fairly strict.  If you’re capable of making money and decide to try your hand in the labor force in any serious capacity, you can expect to screw up your SSDI eligibility.

You might actually need it. The numbers are staggering.  A twenty year old worker has a 30% chance of becoming disabled prior to age 65.  It’s shocking how many people find themselves unable to work for an extended period due to an accident or medical condition.  You might feel bulletproof today, but there are millions of people out there who’d be happy to remind you that circumstances can change dramatically overnight.  You’re fairly likely to need disability insurance before retirement.  Hopefully, of course, you won’t need it.  However, the chance is high enough to justify the insurance expenditure.

Income shortfalls create serious nastiness. When someone loses the capacity to continue his or her job, and doesn’t have a way to replace the income for the duration of their limitation, all hell breaks lose.  Foreclosures and mortgage delinquencies often arise after illness makes it impossible for someone to work.  Credit cards get maxxed and/or remain unpaid as the income gap continues for months.  Most of us simply aren’t equipped to deal with a substantial period during which we aren’t cashing a regular paycheck.  The best hedge against the disasters that can emerge with illness or accident?  Long-term disability insurance.

Don’t just take my word for it.  Ask Stephen Pollon.  Yes, that Stephen Pollon.  The former Senior VP at Westminister Bank and the best-selling personal finance author is another strong proponent for long-term disability insurance.  Check out this excerpt from an interview with BankRate’s Jay McDonald:

Most people view insurance strictly as an expenditure. But you’re a big proponent of insurance, right?

Yes, I am a proponent of insurance, but special products. For example, for most people, their most important financial possession is their stream of income, meaning their job. Now wouldn’t it be nice if there was insurance to cover that? And there is — disability insurance. Disability insurance saved my life. When I was 48, I came down with tuberculosis and the insurance company started delivering to me $3,000 a month, which was a lot of money then, and it came tax-free…

If you do your homework on this one, you’re bound to agree with the idea that long-term disability insurance makes sense.  There’s no question we should all have it.  The only real issues involve how to get the best products at the best prices.  We’ll look into that tomorrow!

We’ve all heard that medical costs are the number one cause of bankruptcy in the United States.  Based on that simple and well-evidenced fact, many people believe that the best protection against a bankruptcy filing is to acquire health insurance.  If you’re insured, the reasoning goes, you’ll be protected against massive medical bills, which should create a firewall between you and a bankruptcy filing.

That argument makes a great deal of sense at face value and there’s no doubt that having coverage will decrease your risk exposure.  However, if you dig a little deeper, you’ll find that having health insurance won’t necessarily provide adequate protection.  Researchers have uncovered an absolutely shocking fact:  Most of the people who filed medically-related bankruptcies actually had insurance in place!

Undoubtedly, the presence of insurance helps many people from running up truly catastrophic debt levels, but the combined weight of the costs and impacts associated with a serious medical condition often outstrip the value of the insurance.

Job losses, inadequate savings, uncovered expenses, co-payments and other out-of-pocket costs can still push even a relatively well-insured person into financial insolvency.  Don’t get me wrong, health insurance is a good idea and a must-have.  It’s necessary if you want to protect yourself from calamity.  In and of itself, however, it is not sufficient to do the job alone.

So, if health coverage isn’t enough to protect you from illness-related bankruptcy, what else do you need to maintain financial solvency in the face of medical challenges?  Here are a few things that can make a difference.

Quality Health Insurance.  Insurance policies come in all different shapes and sizes.  Having “health insurance” is fine, but what you really need is “good health insurance”.  Evaluate your policy carefully and make sure you have the kind of coverage you need to protect yourself and your assets as much as possible.

Disability Insurance.  If you experience a serious medical problem, it may effect your ability to continue working.  You need to have a way to fill in the gap in income during your recovery.  If your medical situation happens to be chronic, you’ll need a long-term way of taking the sting out of being unable to work.  Consider disability insurance options that can take the place of your paycheck, to at least a large extent, in a worst case scenario.  You cannot reasonably rely on Social Security Disability Insurance to serve this function.  The SSDI application and approval processes are time-consuming and benefits are generally inadequate.

Savings and Investment.  If illness or an emergency medical situation strikes, you are going to need cash.  You’ll need it to cover elements of the medical situation and you’ll need it to help replace lost income.  If you aren’t saving and don’t have resources from which you can draw during a period of crisis, you’re at greater risk.  Make it a priority to build your emergency fund and make sure you have sufficient liquidity in your investments to handle a crisis.

Focus on Prevention.  There are many medical crises that you can’t avoid.  However, many of the illnesses and diseases that put people in dire financial straits are avoidable.  You can prevent an increased likelihood of many debilitating medical conditions by improving your habits and lifestyle.  Smoking?  Quit.  Overweight?  Begin work on healthy eating and exercise.  There a million and one examples.  If you’re doing the right thing for your health, you can decrease your risk of illness.  Those decisions may also put money back into your pocket by lowering health insurance premiums.

When we hear that people file for bankruptcies due to medical problems, we only get part of the story.  The truth is that insurance doesn’t offer absolute protection and that many of those who find themselves in insolvency had their problems exacerbated because they lacked optimal coverage, savings, paycheck replacement plans and may have put themselves at greater risk of illness in the first place.

The idea of going “belly up” due to illness is frightening, but there are things you can do to keep yourself from going straight from the hospital into bankruptcy court.

You can often cut your monthly expenses without changing your lifestyle one iota.  Sure, making changes in your behavior is often the best way to curb costs, but there are ways to reduce your cost of living without altering your habits at all.

The only expense involved is a little time and analysis.  You’ll need to do a little research, yank out your monthly bills, jot down some phone/account numbers, and make a few calls.  That’s it.

It’s all about getting a better deal on the things for which you’re already paying.  You might look at these as fixed expenses as you plan your spending, but they’re not necessarily fixed.  In fact, they’re often quite flexible.

You can get a better deal from your existing service providers just by asking.  Trust me, these folks aren’t going to call you to tell you that you can save money.  You must ask.  It helps if you have an idea of potential alternatives when you make the request, too.  When companies find out that you’re shopping around for the best possible bargain, they’re often willing to cut a deal to keep your business.

If you’re willing to do a little homework and to make a few phone calls, you can cut your bills considerably.  Here are a few prime examples of how to save money without changing your lifestyle by making a simple phone call:

Cell phone providers.  Call your cellular telephone provider and tell them that you’re looking for a way to cut your bill.  You might discover that they have a plan that better suits your needs than the one you’re currently using.  If your contract is almost up, the fact that you could opt to take your business elsewhere might also qualify you for some discounting.

Insurance agents. You don’t want to reduce your coverage below what you need, but you do want to get the best possible deal on the policies you’re carrying.  Call your agent and ask them what you can do to reduce your bill.  Your agent makes a living based on commissions and he or she won’t be seeing a commission if you decide to move to a different company or agent.  It’s often possible to tweak your coverage in a way that provides adequate protection at a lower cost.  If you’ve been claim-free for several months, you may also qualify for rate deals.

Cable companies. Do you remember what you were paying for cable television when you first signed up?  If you’re like most people, it was considerably less than what you’re paying now.  Cable companies are always offering great deals to new sign-ups.  Call your cable company and find out what you can do to lower your bill.  It might involve dropping a few channels that you don’t even watch.  It could be a matter of bundling your Internet or other services with your cable.  I once discovered that mentioning a competitor’s deal and alluding to the fact that I might consider a switch suddenly “qualified” me for a better deal.

Credit card companies. Are you paying your bills regularly?  If so, give your credit card companies a ring and ask about getting the interest rate knocked down a peg or two.  It sounds ridiculous, but sometimes you really can score a better deal just by asking.  Are you having a tough time getting those payments to them in a timely fashion?  Call them.  Sometimes, they’re willing to flex a little bit to get you in a position where you’re more likely to keep the money coming their way.

You shouldn’t be overpaying for anything.  Cutting your bills and expenses is a great way to develop greater leverage as you pay down existing debts and avoid future ones.  When you decrease your costs, you increase the availability of funds for smart investment.

Nonetheless, if you’re like most people you probably are spending more than you should.  One way to correct that deficiency is to pick up the phone and to ask for a better deal.

I purchased my first home 9 years ago.  It was an exciting and scary time for me and my family.  I had always dreamed of owning my own home.  Most people think of it as a great financial investment.  While that is true, I never thought of it as an investment in the monetary sense of the term. I viewed it as an investment in improving the quality of life for my family.

At the time, my son was 5 years old… and while living in an apartment was ok… it was time for him to have his own yard so he could run around and play with the dogs.  It was time for me to have my own patch of grass so I could experiment with gardening.  It was time for the DH to have his own space… a little outdoor workshop so he could channel his inner Bob Vila.

You know a place to call our own… a home with the white picket fence so I can raise my 2.5 kids and a dog. Well I don’t really have a white picket fence… it is more like black wrought iron.  I don’t have 2.5 kids… I have 2. And I don’t have a dog… I have a poodle and a terror (also known as a Jack Russell Terrier).

Anyway you get the point… the all American dream!

But buying a home is a big decision.  There are so many things you need to consider.  Which subdivision?  How many square feet?  How many bedrooms?  Which school district?  And so on… and in addition to making those choices, there is also a lot you must learn.

Buying a home exposes you to a world of other little issues that you never had to worry about before… adjustable rate mortgages… fixed rate mortgages… interest only mortgage… and other fancy mortgage loan products, PMI, home warranties, property taxes, homeowner’s insurance, home maintenance, neighborhood associations… this list could extend for pages, I will stop here because you get the idea.

However, of all the issues, I think the biggest one that you should understand before you sign on the dotted line is: How much house can you afford?

They say that your mortgage loan should be no more than three times your annual household income.  So if your household income is $60,000… then your mortgage loan should be in the $180,000 range. But depending on your part of the country… $180,000 can equate to merely a shack (California) or a mini mansion (Mississippi).

But even this 3 times your income rule is relative.  If you have a low interest rate… 3 times your income may be fine… but if you have a high interest rate or get one of these questionable mortgage loans… 3 times your income many not be enough when payments begin to balloon.

Besides the mortgage payment, you’ve also got to take into account the other expenses of owning a home.  A safe estimate is that other expenses will run about the same as another mortgage payment.

Utilities such as electricity, gas, water… $400 a month

Lawn maintenance… $75 a week

Those communication services we can’t do without, phone, high speed internet, cable/satellite… $200 a month

Property taxes… take a pick… this can range anywhere from $1,000 to $8,000 or more per year depending on your state and country laws and the value of your home.

Regular maintenance… cleaning air ducts, shampooing carpet, power washing the exterior to remove mildew, applying fertilizers, spraying for insects, weatherproofing outdoor furniture… and on and on.

And of course… you’ve got your occasional emergencies… plumbing backs up, air conditioner goes out, Hurricane Gustav blows half the shingles off the roof but you’ve got to meet a $5,000 deductible before the homeowner’s insurance kicks in (this is the little emergency I recently encountered).

Then you’ve got the one time expenses… furniture, appliances, and curtains… don’t forget about the curtains.  Some people may not realize how expensive it can be to put up window treatments in every window of a house.

Use a good online calculator to figure how much house you can afford, but don’t forget to consider all the other expenses that come with home ownership.  That will help you understand how much house you can really afford.

Recently, I purchased a new term life insurance policy.  I sat with my insurance guy for about 35 minutes.  For five of those minutes give me several different quotes.  And I spent the other 30 minutes filling out paper work, signing here, and initialing there.  Seriously, I must have signed or initialed over a hundred times.

I know I am one of those who stress the importance of reading the fine print, but when you are actually in the situation… that can be hard to do.  This is usually how it goes…

The insurance guy says… this paper gives us permission to do yada, yada, yada… sign here… we sign. This paper says I’ve advised you of blah, blah, blah… initial there… we initial.  Most times we just take with they say, without reading it for ourselves, and sign next to the X. 

My insurance guy quickly brushed over the forms… explaining page after page of single spaced, 6 point font disclosures in only one or two sentences.  As I recall it… one of those forms I signed gave the insurance company to permission to check out my medical history.  Because I just signed where he pointed, I don’t know how they planned to get my medical history.  It is very likely I signed a form authorizing them access to my “health credit report”.

Yes, health credit report… did ya’ll even know that those existed?  I didn’t.  I learned about it today when I read the Washington Post.  Apparently this is a new resource available to health and life insurance companies. 

There are two health information companies, Ingenix and Millian, which collects the prescription records of 200 million of us.  With our permission (signature on one of those forms we don’t read), health and life insurance companies can have access to our prescription history.  And they can use the information in those files to deny coverage. 

Didn’t they have access to this anyway?

No, not really.  Before the advent of these prescription databases, they would get information from the doctors you listed in your application.  But want if you forgot to mention that in addition to your primary care doctor… you also see a neurologist once or twice a year to get a script for a medicine that manages your minor nervous disorder.  Well, unless your primary care doctor has notes about this in his records, the insurance company may never know.

Yes, the insurance companies may collect samples of your blood and urine samples… but they can’t check it for everything.  They mainly test for the biggies… HIV, cancer, diabetes… your blood, urine and the records from your primary doctor may never give hint to your nervous disorder.

Well… now that they have access to your prescription records… that fact that you have been taking Tegretol everyday for the past three years is a huge flashing red light.  Tegretol has been used to treat all kinds of ailments ranging from damage caused by carpal tunnel to schizophrenia. 

Because of many medications have variety of uses, the insurance company can assume that you have all kinds of health problems… which may or may not be true.  And based on those assumptions they may charge a higher premium or even limit or deny coverage.

Another issue with this health report… what if something in it is untrue? The FTC says that these reports are to be treating like any other report that falls under the Fair Credit Reporting Act.  If you are denied coverage based on the report, the insurance company will have to let you know that this is why you were denied.  And Ingenix or Millian is required to give you a copy of the report.

But even though the FTC issued this order, these health information companies are scarcely regulated.  There is some legislation floating around in Congress that’ll give the feds more control in regulating these companies.  But as of now, the control is very limited.

And regulation about the uses of prescription history is important.  Sparse control leaves the door open for all kinds of people getting their hands on your personal information.  The information could be sold to marketing companies, purchased by potential employers to deny you a job or it just may happen to fall into the hands of your political rival. Ummm… (Could you image if the McCain camp got a hold of Obama’s prescription history?  That would make for an interesting smear ad.)

And about this Inegenix… do we really want them to be the gatekeeper of our prescription history?  For one, they are owned by United Health Care, which is a top health insurer.  It is kind of hard to provide an independent view when your parent company is an insurance company.

And secondly, their questionable practices have been the center of much unrest.  The company was sued by the state of New York for alleged inaccuracy.  And now, there are some folks in Connecticut that hope to bring a class act suit against the company for similar reasons. 

But aside from all that, I do not like this idea of a health credit report.  It just gives insurance companies more ammunition to deny us.  It’s like having insider information.  When Martha Stewart did that, she got hauled off to the pen.  But when insurance companies do it… it’s ok?

I know I was a bit harsh on Obama’s quasi universal health insurance plan.  But now that the insurance companies have this little trick in their bag… Obama’s health care plan is looking a lot more attractive.

In Iowa, a part time postal employee broke his hand. How did he do it? He hit a trailer in a fit of rage. His reward… winning an $8,000 worker’s compensation suit. While the judge agreed that the employee’s behavior was “inappropriate”, he ruled in the plaintiff’s favor because he did not “intend to injure himself”.

In Australia, a truck driver was convicted of worker’s compensation fraud. His story… I can’t work because of a back injury. He was evaluated by doctors and deemed unable to work. He won his claim, sat home and began collecting his insurance checks until he was well enough to return to work. Shortly after returning to work, he filed another claim… citing his shoulders as the problem this time. And for a second time, he was awarded the claim. However, the truck driver was recently convicted of insurance fraud. Apparently while his back and shoulders were too damaged to allow him to work for one company, they were not so damaged that he could not work doing the same thing for a different company.

These are just a couple of the most recent incidences of frivolous and fraudulent workmans compensation claims. It is estimated that 10% of the claims are fraudulent and even more are frivolous. But I am left to wonder why is workman’s comp abuse so rampant?

Well first… what is workers’ compensation? Set forth by state and federal laws, workers’ compensation offers protection to employees for work related injuries (or death) that renders the employee unable to work. If an employee is unable to work, then his livelihood is dramatically reduced. Therefore, under workman’s comp laws, an injured employee can receive medical benefits, a pre-formulated cash benefit to replace lost wages, and other benefits. This protects the workers income. But it also protects the employer from potential litigation that might have resulted from the injury. Businesses are required to purchase worker’s compensation insurance, although the particulars varies from state to state.

So what about this abuse of worker’s comp?

Well, it is three fold? Employees lie, employers lie and medical providers lie… all in an attempt to defraud the system.

Employees lie. They exaggerate, make up or even intentionally cause their injuries. In some cases, they hold another job while receiving workman comp benefits… which in most cases is illegal.

Employers lie… this is usually in an attempt to circumvent paying the appropriate amount of workman comp insurance premium. They sometimes pay employees under the table. Or they may lie about the occupational group an employee belongs to. For example, instead of rightfully classifying an employee as a brick mason, an employer might classify the employee in the less risky class of secretaries.

Medical providers lie. They may do deceitful things such as billing for services that were never rendered, billing for a more expensive treatment when a less expensive treatment was performed. They may sometimes perform unnecessary treatments. There are even cases in which doctors were in cahoots with patients and even gave them kickbacks.

Why should we care? Because workers’ comp abuse affects us all. One estimate states that in Massachusetts alone, the cost of this type of fraud exceeds $400 million. And consequently, this cost is shoved to the rest of us in the form of higher premiums.

So what can we do about it… well first and foremost, we should not participate in these schemes. Secondly we can report others who do. Finally call your legislators and ask them what they are doing to address the issue. It is a small step, but if every one takes the small step eventually, it can create leaps towards solving the problem.