Shop wisely when looking for health insurance
By Lekan Oguntoyinbo
With the adoption and implementation of the Affordable Care Act, which goes into effect in January, many farmers will at least evaluateeir current coverage. In doing so, experts suggest a few tips to help ensure farmers have adequate coverage and a policy that suits their business needs.
Do a Needs Assessment. Do you visit the doctor often? Do you have a variety of health needs? Are
you expecting a child soon? Do you have plans for major surgery in the coming months? The answers to such questions will determine how much you should spend on health insurance premiums.
"It really comes down to how you use insurance," says Susan Combs, a New York-based insurance broker whose area of expertise includes food and agriculture. If you’re young, single and in excellent health, then having a less expensive health care plan might work better for you, she says.
Additionally, farmers should consider the age range of their employees when shopping for insurance for them, says Bill Conn, chief of staff at Agri-Services Agency, an agricultural insurance company that’s owned by a dairy cooperative and based out of East Syracuse, N.Y. Conn says offering an insurance package with a high deductible might be suitable if most employees are younger. For older employees, he says a low deductible might be best. Farmers who employ individuals across an age range should consider working with a broker or an agent to explore options.
Seek Professional Counsel. After taking stock of what you need, get guidance from a financial professional who will ask you the right questions and guide you in making your decision. A great place to start is your farmers’ association, cooperative, Farm Bureau or a university’s Extension service.
"My best advice for farmers who are trying to wrestle with the key decisions related to health insurance is to find a good adviser to help walk them through the process," says Keith Dickinson, a farm business consultant with Farm Credit East, ACA, an agricultural financial services company. "They should find an adviser with an attitude of finding the best solution for the customer’s issues and not one who is looking to maximize a commission."
Insurance brokers can also be great resources because they can easily check out a variety of carriers and assist you in selecting a policy that best fits your needs. One caveat: Brokers often make a commission off the policy, so consider visiting with multiple brokers so you can comparison shop.
Research. Check out the health insurance carrier before signing on. Make sure the company processes claims promptly and offers good service. To track down this information, look to your state insurance chief. Each state maintains an insurance commissioner’s office. Some offices keep detailed information about carriers licensed to write insurance on their sites. Access your state office’s site at www.naic.org. Combs also recommends visiting www.ambest.com. "This site can bring up any carrier, tell you how financially solvent they are and how quickly the rates are paid," Combs says.
Offset a High Deductible. Many farmers choose high-deductible plans because they are more affordable, but pairing it with a health savings account (HSA) can save money in the long run.
"Contributions are tax deductible, and withdrawals for qualified medical expenses are tax free," Dickinson says. "The second benefit is that growth in the account is tax free, similar to that in a Roth IRA. The only limitation is that future growth must be spent on health care needs."
However, HSA contributions are subject to an annual limit. In 2013, the limit for a family contribution is $6,250, with a catch-up provision of an extra $1,000 for those 55 and older, Dickinson explains.