Monthly Archives: November 2013

An Advisor’s Guide to Navigating Health Insurance Exchanges

By Ellen Breslow
Nov. 18, 2013

Clients shopping the exchanges will likely be confused at the variety of options and requirements they have to deal with. Help them out with this primer on how to navigate the exchanges, the information needed, how to qualify for premium subsidies, and tips for getting the best coverage for the money.

Open enrollment is upon us, and with it, the dawn of the new health insurance exchanges. As an advisor, it’s critical that you understand what is involved in gathering information on these plans, enrolling through the website, and determining your client’s eligibility for a premium tax credit. You’ve heard about how difficult the health insurance websites are to navigate and understand; here is your opportunity to add value to your client’s health care planning by assisting in the process.

State or federal?

The first component to consider is where the client lives (see the figure) and whether the exchange is state run, federally run, or run by a combination of the two. This will impact where your client goes for information and enrollment.

The 34 states or so that have defaulted to a federal government-run exchange will access information at Other exchanges will have their own websites, and most likely, additional enrollment data will be required. The standard information is the same, and as an advisor, that is where you’ll want to focus.

Source: Brookings Institution; data from the Commonwealth Fund

Client information

Although the federal government and state exchanges have a means by which your client can compare plans, it will allow comparisons between only the costs of plans. For example, after completing a generic questionnaire, will display plans under provider, metal level (bronze, etc.), and cost. However, it won’t address the differences among the plans from the assorted providers. Before you can help clients plot a course through the exchange, they should pull together the following information:

  • Dependent Social Security numbers
  • All sources of family income (if applying for premium subsidies)
  • Tax filing status and income estimate for 2014 (if applying for premium subsidies)
  • Dependent residence addresses
  • Dependent tax filing status (if applying for premium subsidies)

Remember that this questionnaire is also an application for enrollment. What’s available depends on where the applicants live. Everyone needs a Social Security number so that citizenship status can be verified. If a dependent doesn’t have a Social Security number, a reason must be provided.

Premium subsidy eligibility

One of the major benefits that the public health insurance exchanges offer is premium subsidies. To qualify for a subsidy, income sources and requirements must be met—hence, the necessity of supplying this information on the enrollment application.
Eligibility for premium subsidies depends on modified adjusted gross income (MAGI) and, for early retirees, the extent to which MAGI can be effectively managed. Here’s an easy way to understand the MAGI calculation:

  • Gross income (GI) = Salary + interest earned + income from investments + other taxable income
  • Adjusted gross income (AGI) = GI – qualified deductions
  • Modified adjusted gross income (MAGI) = AGI + Social Security + tax-exempt income + foreign earned income

The tables below will give you an idea of how premium subsidies work. Table 1 gives you an idea of what levels of MAGI fall into the federal poverty level (FPL). The subsidies are available on a sliding scale for those whose income doesn’t exceed 400% of the FPL. Premium calculations are based on silver plans.

Source: HealthPocket

Table 2 outlines the MAGI threshold for subsidies. Subsidies are a percentage of modified adjusted gross income. Premiums will not exceed this percentage of MAGI—up to 9.5% of 400% of FPL.

Source: HealthPocket

Whether your client qualifies for a subsidy or not, the application process will be the same, although there shouldn’t be any income verification requirements. Once an application is submitted, the client will be able to see all levels of plans that are available in the area where he or she resides.

Review existing plans

Although an individual may find a plan where the cost seems to be within acceptable limits, what the plan offers in the way of coverage will differ and network providers will vary from plan to plan. All metal plans will cover the essential health benefits (10 categories of coverage including preventative services); however, there may be other things to consider:

  • List the family’s prescription drugs and be certain the drug formulary covers those medicines that are taken regularly.
  • If keeping the same doctors and hospitals are a key component of your client’s coverage, check the plan carefully. Services may be covered, but the doctor or hospital may not be in the network of providers.
  • Since this is not an employer-sponsored plan, it may make more sense for adult children to purchase their own coverage, especially if they live out of state. The coverage will likely be better. An adult child who is working may also be eligible for a premium subsidy if he or she enrolls separately and considers only one income.
  • If your client is not expecting a premium subsidy, it makes sense to review claim, deductible, and premium records before deciding on which metal plan looks most attractive. Depending on what the history looks like, lower premiums and higher deductibles may look better than expected
  • You may not drop COBRA and enroll now for 2014. There is a special enrollment period available after the COBRA period ends. The exchange plans may be selected instead of COBRA.


There is a six-month enrollment window for the public health insurance exchange plans. In order to meet the January 2014 deadline and meet the individual mandate for establishing coverage, enrollment may be completed by March 31, 2014.

This article is reprinted with the permission of To learn more go to Ellen Breslow is the managing director of  She spent her 26 year career as a managing director of Citi Smith Barney’s Global Wealth Management division, most recently as the creator of the Retirement Resources Group, focusing on healthcare advisory for clients and prospects of Smith Barney and Citi Family Office.  She is a graduate of Lehigh University.

How to Set your Car’s Rear-View Mirrors to Eliminate the ‘Blind Spot’

Several years ago USAA, my automobile insurance company, sent out some instructions on how to set your car rear-view mirrors so you can eliminate the blind spots that normally occur when you are driving and another car is on one side or the other. I’m sure you’ve had it happen to you – you are cruising along and for whatever reason you want to change lanes. You check your rear-view mirror – nothing there to worry about. You check your side mirror – nothing there either.  You put on your turn signal and start to change lanes. Then it happens, a loud car horn sounds and you jump back into your lane muttering to yourself, “where the (expletive deleted) did he come from?”

That’s exactly the spot you can eliminate if your mirrors are set properly.

I got in touch with USAA to try to have them send me a copy of the instructions so I could share them with you.  No one there could find them, but a search of the Internet did bring some results. Here’s the information from the combined versions of Car and Driver Magazine and wikiHow.

It turns out that this information was first published in a paper by the Society of Automotive Engineers (SAE) in 1995.  The paper advocates adjusting the mirrors so far outward that the viewing angle of the side mirrors just overlaps that of the cabin’s rear-view mirror. This can be disorienting for drivers used to seeing the flanks of their own car in the side mirrors. But when correctly positioned, the mirrors negate a car’s blind spots. This obviates the need to glance over your shoulder to safely change lanes as well as the need for an expensive blind-spot warning system.

The only issue is getting used to the SAE-recommended mirror positions. The cabin’s rear-view mirror is used to keep an eye on what is coming up from behind, while the outside mirrors reflect the area outside the view of the inside rear-view mirror.

Here is a link to the wikiHow site to get the actual steps for how to set your mirrors:

Car and Driver says, “Those who have switched to the SAE’s approach swear by it, however, some drivers can’t adjust to not using the outside mirrors to see directly behind the car and miss being able to see their own car in the side mirrors. To them we say, “Have fun filling out those accident reports.”

Can Gold be Hazardous to Your Wealth?

If you watch any of the financial or news channels, you have certainly seen the gold and silver commercials –there’s one in every break! Their job is to scare you to death and entice you into making what could be a very poor financial decision. They come on and tell you that the world is coming to an end, and the only way to protect yourself is to buy gold or silver (depending on which one they are selling of course!)

Do you ever wonder where all the money comes from to pay for those commercials? By the time I tell you this story I will be willing to bet you can figure that out.

We can have a debate about the merits or non-merits of using precious metals in an investment portfolio. The long and short of that might come down to the simple fact that there are no good or bad investments, because just about everything you can invest in does well at times and poorly at others. But that’s not what I will be talking about today. My story deals with how you can play this game and start out with such a disadvantage you may never catch up.

A good friend and client of mine recently got a case of “gold fever.” Nothing I said could dissuade him from taking some of his hard-earned money and investing in gold. The salesman convinced him to spend his money on gold coins. The actual price tag of the coins was $33,778.  The total of the gold in those coins was approximately 15.25 ounces. He paid $2,215 per ounce.  The spot price of gold on the date was $1,391. Why did he pay over 59% more for gold than the spot market price on that day?

The answer in a nutshell is gold coins.

Normal markup for gold bullion is from 2 to 10%. If you’re around the 2 to 5% range, that wouldn’t be bad but he was at a 59%markup! What seems to get lost somewhere in the sales presentation is that when you purchase coins, you are not only buying the gold, you are paying for the numismatic value of the coins as well. Just what is numismatic value? In its simplest form it is the added value that a coin brings because of its value as a collectible or as a piece of art. So about half of that 59% was established based on how rare and how pretty the coin might be. The rest of the cost comes from the simple fact that the spread – the range between how much a dealer pays for a coin and how much it sells for – is from 17 to 33%. My friend spread on this particular order was a mere 24.94%.

So how much were those coins worth when valued approximately 2 months later? $20,630.20 — a loss of $13,148.55, or 39%!  What about the spot price of gold on the same day the coins were valued? $1,361 – down $30 from where it was when he purchased the coins – that’s about a 2% loss. The selling company provided the value for the coins when they were appraised. We have no idea what they would actually sell for in the open market. The value of gold bullion was very easy to find for the same dates on the Internet.

The moral of the story? If you decide you want to buy gold – or any precious metals – make sure you truly understand what you are buying and how much it will cost so you don’t start out so far down it would take a huge market rally just to get you back to what you paid!