Frequently Asked Questions -
Reynolds Financial Services
The 2 Most Frequently Asked ACA Questions
#1 Most Frequently Asked ACA Question:
Why do the new health plans
have High Deductibles/Max Out-of-pocket (i.e. $6,750/$6,850)?
Deductible/Max Out-of-pocket is relevant when an
accident or illness occurs. $6,750 Deductible
doesn't mean that you'll have to pay $6,750 before your coverage
begins. All 4 levels (including Bronze & Catastrophic
levels) provide for a once a year Preventative Services Exam at no
cost before meeting the deductible. Also, there are plan
choices that allow for Dr. visits (after the Preventative
Services Exam) with a copay per visit, without meeting
the upfront deductible. The Annual Preventative Services Exam
includes the following
(check your policy for specifics):
pressure, diabetes, cholesterol, and depression screenings
Mammograms and colorectal cancer screenings
well-baby and well-child visits up to age 21
cancer screening for men
vaccinations against diseases such as measles, chicken pox and
All the new plans sold on all 4 levels provide
Essential Health Benefits (listed below),
which includes the once a year Preventative Services Exam.
If an accident or illness occurs, having health coverage vs. not
having it can drastically limit or "CAP" your Out-of-pocket expenses
"DOWN to $6,850 Maximum" (from a
possible outrageous bill i.e. $50,000+ or bankruptcy for not having
coverage). A doctor might be needed to fix an unforseen
circumstance and one small emergency room visit can cost $3 - 5,000+
& Prescription Medication is expensive. The Deductible/Max Out-of-pocket is reduced for those who
qualify for the
(If you're concerned about a High Deductible/Max Out-of-pocket,
Ask about our GAP plans that work by paying you cash in addition to other
coverage; we have several GAP plans to choose from).
#2 Most Frequently Asked ACA Question:
am I being forced to get health coverage? I like to choose
whether I get coverage.
All U.S. citizens are required by law to have health insurance and anyone
choosing not to obtain coverage will pay
Annual Tax Penalty in 2016.
Preventative Services is the key to early detection from life
threatening situations that lead to bankruptcy or death.
Example: With health
coverage, you can get any health concern checked out right away, but
without coverage, there's tendency to wait. Not having health
insurance is the leading cause of bankruptcy and the new law
saves lives and prevents bankruptcies.
believe the good outweighs the bad with the ACA...
Life Insurance - what's the best
choice for you?
TERM LIFE, UNIVERSAL LIFE (UL), WHOLE
LIFE, or EQUITY INDEXED UNIVERSAL LIFE (EIUL/IUL) INSURANCE (Home,
Income, Debt, Family).
Term Life insurance
can be used to protect your family for specific reasons during
limited time periods (i.e. 5yrs, 10yrs, 15yrs, 20yrs, 25yrs, 30yrs);
a Term Life policy is usually renewable up to age 65 or 70 and will end at some point if not converted into a permanent life
policy. If death happens during the period of a Term Life
policy "in force", it protects your home, salary, debt, or it leaves
money with your loved ones. Term Life premiums can either rise with
time, or coverage is reduced (or cancelled) at certain ages and/or
with health problems. A Term Life policy cannot accumulate
cash value where the Whole Life, UL, and EIUL/IUL each have the
ability to accumulate cash value. Because a Term Life policy is the
lowest price policy, it offers the highest face amounts.
The UL policy
is not a guaranteed for life policy
unless it includes a no lapse rider or it's a
"GUL"(Guaranteed UL) policy. A no lapse rider guarantees
your coverage will last for a certain time period (i.e. 10yrs,
20yrs, 30yrs) or up to a certain age (i.e. up to age 90, 95, 100).
A GUL policy guarantees that your death benefit remains as long as
the target premium is paid, even if the policy has no cash value.
Without a no lapse rider, a UL policy lasts only as long as the cash
value in the policy.
The Whole Life policy
is a guaranteed for life policy. Once a Whole Life policy
begins, your coverage cannot be reduced (or cancelled) and the
premium remains the same throughout the life of the policy.
EIUL or IUL policy
is also a Permanent Life policy (your coverage cannot be
cancelled or reduced by the insurance company) with investment qualities that offers an
alternative to fixed and low-yielding savings vehicles like a CD
(CD's today only offer about .25% interest) or
Savings Account (Banks today only offer about 1% interest).
--Click Here for your Term Life/UL Quote--
WHOLE LIFE INSURANCE (Burial/Final
Term Life and UL policies each serves their
purpose as does Whole Life. A Whole Life policy (Burial/Final Expense) is a permanent policy that serves the primary purpose of protecting
your family by providing a basic death benefit for Funeral Expenses,
although it can also serve the same purposes as mentioned above with
Term Life and UL. The cash value in a Whole Life is essentially
a savings feature where money can be borrowed from the policies cash
the future for part or all of it's cash.
Whenever premiums are paid into a Whole
Life policy, a portion goes into the death benefit while another
portion goes into the cash value account. As the name implies,
"Whole Life" remains in effect for the entire lifetime until death
(coverage lasting up to age i.e. 100 or 121), assuming
all premiums are paid. Whole Life/Burial/Final Expense claims
are paid immediately upon death to the family usually within 48
hours (without always needing the death certificate upfront), Tax Free
money paid directly to the primary
beneficiary (or beneficiaries).
What are the advantages of a Whole Life/Burial/Final Expense
Policy (Contract with an Insurance Company) vs. a Pre-need
(Contract with a Funeral Home)?
VIDEO: Whole Life Insurance vs. Pre-need
In a Whole Life policy, you choose your primary beneficiary (a
family member); alternatively, a Pre-need's beneficiary is the
funeral home. At death, a Whole Life policy leaves money with
your family vs. "putting it in the ground".
Funeral homes claim that your coverage is "locked in"
and "guaranteed for life", but a funeral home can
actually change the
parameters of a Pre-need contract in the future as funeral costs
rise. On the other hand, a Whole Life policy is a
"guaranteed for life" contract permanently established
by an insurance
company. Once your Whole Life policy begins "in force", your
premium cannot increase and your coverage amount cannot
decrease (regardless of age or health changes in the future), assuming all premiums are paid.
In many cases (depending on age and health), a person will pay
less for a Whole Life policy vs. a Pre-need
Quote: a 60 year old person could be paying
$50/month for 15,000 coverage in a Whole Life policy vs.
$120/month for 7,000 coverage in a Pre-need contract.
CLICK HERE for our Sample Whole Life Rates Flyer
--Contact Us for your Whole Life Quote--
The "EIUL" or "IUL" Policy
Today, the CD (Certificate of Deposit) only offers about .25%
interest and a BANK (Savings Account) only offer about 1%
interest; the IUL can help solve such low-yielding savings vehicles.
IUL policy can be used as part of a Retirement Plan because it accumulates cash by
(i) Up to 17% interest Cap Rate & 100%
Participation Rate tied to one or more indices; the
opportunity to achieve a Tax Free Growth Investment.
(ii) No risk; No possibility of loss of
principle during the downturns of the market.
of funds; Easy access to your Tax Free Savings, before and after
VIDEOS about the "IUL"
--Contact Us for your IUL Quote--
Healthcare Reform - the ACA "Obamacare"
Care Act has several broad objectives
expand health insurance coverage
prevent economic catastrophe and
increase protection to health care consumers.
The law focuses on disease prevention and on keeping people
It aims to improve the entire health care system.
It has several goals to make the health care system more
efficient and cost effective.
Health Insurance Terms
Coinsurance - A
percentage of your medical and drug costs that you pay out of
Copay - The
fixed dollar amount you pay when you receive medical services or
have a prescription refilled.
The amount you pay for medical services or prescriptions before your
plan pays for your benefits. All ACA health plans include 100%
Preventative Services without meeting the upfront deductible;
(for the healthy) deductibles become relevant if there's an accident or
Health Insurance plans: The higher
the deductible, the lower the monthly premium (and vice-versa); the
highest monthly premium should typically have the lowest out of
Also called a "drug list," the list the drugs your plan covers.
It's often divided into sections - or tiers (Generic > Specialty) - based on the amount
your plan will pay for the drugs in that group.
Network - A
group of healthcare providers who are contracted to provide medical
services at discounted rates. The providers include doctors,
hospitals, and other healthcare professionals and facilities.
Maximum out-of-pocket (or Out-of-pocket Maximum)
- The most you could pay toward covered expenses (during the 12
month period while part of your health plan) including deductibles, copays, and coinsurance.
Premium - Your
monthly bill or payment.
A QUALIFIED HEALTH PLAN (QHP)
is a health plan that meets the requirements of the law and includes
all the 10 Essential Health Benefits (EHB).
Private health insurance companies who have cancelled some polices
(only about 5%)
due to Limited Benefit Insurance; the policy does not have
all the EHB's. attempting to replace these old policies with the new
one's that cover the EHB's and avoid the
Annual Tax Penalty.
10 Essential Health Benefits (EHB) of a QHP:
1. Ambulatory patient services, 2. Emergency services, 3. Maternity
and newborn care, 4. Pediatric services including dental and vision
services, 5. Rehabilitative/habilitative services and devices, 6.
Mental health/service use disorder services including behavioral
health treatment, 7. Preventative/wellness services and chronic
disease management, 8. Hospitalization, 9. Prescription drugs, 10.
3 Types of coverage plans, HMO, EPO, PPO.
An HMO (Health Maintenance Organization) usually requires you to
select a primary care physician (PCP) who will connect and refer you
to other healthcare providers or specialists within the network; HMO
plans normally require you to select a PCP and have the lowest out
of pocket costs.
An EPO (Exclusive Provider Organization) gives you access to any
in-network doctor, specialist or hospital so that you can manage
your healthcare without a referral from your PCP.
A PPO (Preferred Provider Organization) offers you the freedom to
receive care from the provider of your choice, whether in-or
out-of-network. However, you will save more money by choosing
healthcare providers within the network.
You Select a PCP
Your PCP Refers Specialist
Out of Network Coverage
EPO vs PPO; see that an EPO has no coverage outside of the
The bottom line? HMO's help keep healthcare costs down by
building a strong relationship with your PCP who will connect you to
others when necessary. EPO's are an affordable option if you
want direct access to healthcare providers within the network.
PPO's may cost more, but allow you to use your preferred
provider either in- or out- of network. You select the plan
that's best for you and your family.
Healthcare options today:
Gold, Silver, Bronze, or Basic/Catastrophic(for those
under age 30);
Bronze and Catastrophic plans are designed with the lowest monthly
premium, but typically have the highest deductibles, coinsurance,
and/or copays. Gold plans generally have the highest
monthly premium, but have the lowest out-of-pocket costs when
healthcare services are received. To pick the right plan,
consider copays, deductibles, coinsurance, and maximum
out-of-pocket. The differences in these amounts determine the
monthly premium you'll pay for the plan.
Lower deductibles with lower out-of-pocket maximums have a higher
premium; Higher deductibles with higher out of pocket costs have a
The New GAP Plan
(pdf of benefits) works well
in addition to a high deductible plan by saving money without
sacrificing the major medical plans
*Agent Contracting for the New GAP Plan.
"On Exchange" vs. "Off Exchange"
If you don't qualify for financial help (or subsidy), you can choose
the best plan for yourself "Off Exchange"
--Choose your ACA Health Plan--
Retirement Income Planning
Annuities are unique
products. They are primarily savings and investment vehicles,
designed to hold the owners funds for a certain time and to then
convert those funds into a stream of income that can extend as long
as the owner desires. This process is called annuitization.
Annuities are defined in terms of when they are scheduled to
annuitize (immediate or deferred) and how the products funds are
invested and how they grow (fixed, indexed, or variable). As they
have evolved over the years, today's annuity products have become
sophisticated retirement planning products that can be used for
long-term asset accumulation and lifelong asset distribution (for
The purpose of an annuity is to accumulate funds on a tax deferred
basis for the long-term and/or provide a source of income guaranteed
payable for a specific period, typically lifetime. They are
designed to provide for the tax-deferred accumulation of funds for
use during and individuals life and secondly to provide benefits at
An Annuity can help make the most out of savings and create a secure
vs. Qualified Plans.
Annuities can be used to fund a qualified plan such as a Traditional
IRA, SEP, or 403(b) plan. If you don't need (i) a death
benefit, (ii) a means to generate a guaranteed lifelong income
stream, (iii) or a variety of options for income payout, there's no
need to use an annuity to fund a qualified plan. You can purchase a
mutual fund instead. The individual who owns an individual
nonqualified annuity may make premium deposits of any amount he or
she wishes while an individual who owns a qualified annuity is
limited in the amount of premium deposits based on contribution
limits that apply to the qualified plan the contract supports.
Those who can participate in a 401(k) plan should maximize employer
contributions before contributing to any individual qualified
Most annuities impose surrender charges (administrative charges,
maintenance fees, tax penalties, etc) if withdrawals are taken or if
the contract is terminated within a specified number of years after
issue. For this reason, deferred annuities are fairly illiquid
products for the first seven to ten years after purchase, though
most contracts offer provisions for some free withdrawals during
Penalties on Withdrawals before age 59 1/2
If a withdrawal is taken before the owner's age 59 1/2, it is
subject to a 10% penalty in addition to taxation. Exceptions
to the 10% penalty are death, disability, or Annuitization; the way
to avoid the 10 percent penalty is to take the distribution in a
series of substantially equal payments over the owner's
life expectancy. Annuity principle is not subject to taxation, but
interest earnings is subject to taxation. Amounts used to fund
the annuity, the owners premium deposits, are the contract's
Section 1035 provides that certain exchanges of these types of
contracts are not
taxable. They include the following:
the exchange of a life insurance policy for another life
the exchange of a life insurance policy for an annuity;
the exchange of an endowment policy for an annuity;
the exchange of an annuity for another annuity;
the exchange of a life insurance policy for a qualified
long-term care contract;
the exchange of an annuity for a qualified long-term care
the exchange of a qualified long-term care contract for another
qualified long-term care contract.
The ability to make 1035 exchanges is one of the most important tax
benefits that annuities offer. The
U.S. Tax Court found in favor of partial exchanges, the IRS released
Revenue Ruling 2003-51, stating that partial annuity exchanges would
be considered tax-free exchanges.
The IRS was slow to define how it would treat the issue of partial
withdrawals following an exchange. After several interim
announcements in the form of private letter rulings, the IRS set the
record straight twice with the release of two Revenue Procedures:
Rev. Proc. 2008-24 and Rev. Proc. 2011-38.
Rollovers and the Taxation of Qualified Annuities...
The movement of qualified money from one plan to another can be
accomplished through a rollover. A qualified rollover enables funds
to be transferred tax free from one qualified account to another
qualified account, where they will retain their tax-deferred status
and will continue to grow until they are withdrawn. The plan of
choice for the rollover of most funds is an IRA and for many
retirees, an annuity may be an appropriate vehicle to fund the
rollover IRA assets.
Additional features have been added to annuities over the past few
years that offer, through riders (Guaranteed Living Benefits), ways
to enhance and guarantee the product's values or to provide
additional benefits, such as funds for long-term care.
Roth IRA (vs. the Traditional IRA)
earnings are not subject to taxation at all as long as the owner
maintains the account for the required number of years. Roth
IRA's can be funded with annuities.
Which one is more suitable for your Retirement Income Plan....an
"Annuity" or the "EIUL" Policy?
Determination is based on your investment objectives and needs in
light of your risk tolerance (low, moderate, aggressive), financial
holdings, investment experience, income, and time horizon.
substantial income and a high level of liquid assets relative to
debts would be suitable for an Annuity. On the other hand, a
person with limited income, modest assets, and substantial debt
would be more suitable for an Equity Indexed Universal Life Policy (EIUL).
purchase of an Annuity or EIUL policy is often a complicated and
confusing process for consumers of all ages. There's not yet
Insurance Product (Annuity, EIUL, Life, Health, Dental, etc.) that
can offer consumers only advantages without any disadvantages.
Instead, each product provides a combination of advantages and
disadvantages that can weigh more or less heavily on a consumer
depending on his or her situation.
--Contact Us for your Annuity Quote--