While the title of this article may sound fairly straightforward there is actually quite a bit of misconception floating around when it comes to comparing individual health insurance vs. group health insurance. Let’s take a look at some of the differences between the two major types of health insurance coverage in the United States and see if maybe you can pick up a few things that will help you understand what the best way to find affordable health insurance coverage really is for your specific situation.

Defining the Two Types of Coverage

I will certainly not take it for granted that everyone reading this article already understands what the terms “individual health insurance” and “group health insurance” mean. Here are the official yet unofficial definitions of the two direct from me:

Individual Health Insurance – This type of coverage is purchased on the private market by a single person for themselves or their families. This coverage can cover more than one person (i.e. the entire immediate family) and is not “just for one person” as some people commonly mistake the “individual” in “individual health insurance” to mean.

Group Health Insurance – This type of coverage is designed specifically for companies to buy for their employees. These plans can be purchased on the open market just like individual coverage (by the employer and not the employee) or they can be a self insured plan set up by the company (typically seen with larger companies) or a combination of the two (i.e. self insured up to a certain limit and then 3rd party catastrophic coverage kicks in for any very large bills incurred by employees).

Now that you understand the basic definitions of group health and individual health then lets take a look at some of the important differences between the two.

Important Differences Between the Two

Once you read through this list of some of the key differences between group and individual health insurance coverage then you will likely be light years ahead of the average health insurance shopper. As the owner of an independent health insurance agency in Florida I can’t tell you how many times our agents have seen the “light bulb go on” while explaining/teaching clients some of these important distinctions:

1. Cost – Individual health insurance is MUCH cheaper than group health insurance is almost every state in the US. When I say MUCH cheaper I really mean that because typically the cost of an individual health insurance plan will run about half of the cost of a similar group health insurance plan (this is even when you compare plans from the exact same company for almost exactly the same amount of coverage). See difference #2 “Underwriting” below to understand why individual health is so much cheaper than group health.
2. Underwriting – With a group health plan every single person that applies for coverage is accepted onto the plan (assuming you are an eligible employee of the group) – no one is denied coverage because of pre-existing conditions (previous/current health issues). Most group plans will not always cover your pre existing conditions right away as there is typically a waiting period before they are covered IF you have not maintained continuous health insurance coverage. But as long as you have done the responsible thing and never had a lapse in coverage then you will automatically be approved for coverage as soon as you apply for a group health plan and you will have all of your pre existing conditions covered right away. Contrast all of this to the underwriting for an individual health insurance plan and unless one qualifies for a guaranteed issue health plan because of the Federal HIPAA laws, then companies offering individual health insurance get to pick and choose who they will approve for coverage (this is true in most states – guaranteed issue states like New Jersey are extremely expensive because if the insurance company is required to approve everyone for coverage no matter what health issues they have, then who wouldn’t want to just go without insurance until they develop a major illness?).
3. Maternity – Maternity coverage is included automatically in almost every group plan, while maternity coverage is by default not included with an individual plan (although most insurance companies offer maternity coverage to be added onto their individual health insurance plans as an extra benefit that you can obtain by paying higher premiums).

If you have a firm grasp on the 3 key differences above then you have a great foundation for starting to make some smart decisions when finding health insurance (decisions that will most likely save you a nice sum of money). Here are some strategies that you can use to put your new found health insurance knowledge into action.

Find Cheap AND Comprehensive Coverage

Before we jump into some strategies I just have to interject that now is an appropriate time to very quickly mention that just because I said the word “cheap” in the same sentence as “health insurance” that does NOT mean that I am advocating going out and buying one of those $29.99/month discount health cards that you see advertised on TV at 3 in the morning.

If you want real coverage when you develop a major illness then you need to purchase real health insurance and not just a discount card. Even if you can get a great discount of say, 50% off of all medical procedures (highly unlikely), you can still stress your finances if you develop cancer or some other very expensive illness. Whether you have to pay the full cost of $300,000 or the discounted price of $150,000, you have just needlessly put your family and your financial future at risk (keep in mind that many large medical bills are recurring monthly charges for ongoing chemo treatments, medications, etc. and you can very quickly fall behind even if you think that you have the funds to self insure).

If you are unsure of where to start then work with a trusted independent health insurance agent (”independent” meaning that they are not tied to just one insurance company but can work with many companies and help you find the best plan from any number of different companies). Stick with the large and well known insurance companies and not fly by night infomercial companies because chances are if you have never heard of the insurance company before, then maybe your Doctor hasn’t either. Do your homework online and read reviews of United Healthcare, reviews of Blue Cross Blue Shield, reviews of Aetna, and other health insurance providers so that you can work with your independent insurance agent to find not only a cheap plan, but a cheap plan from a trusted company that offers comprehensive major medical health insurance coverage.

Strategies for Finding Cheap Health Insurance

Now is the time to put your new health insurance knowledge to work saving you some money. Granted, everyone’s situation is different and options and laws vary from state to state (health insurance is regulated on the state level rather than the federal level), so use these strategies as general guidelines rather than hard and fast rules. Overall this is a decision making framework that everyone in the US can use to find the best health insurance:

1. If you are offered group health insurance through your employer and the employer is paying all or most of your premiums, then chances are you should sign up for the group plan because it’s basically free money at that point. You are unlikely to find an individual health insurance plan that is less than 1/3 of the cost of the group plan.
2. If you are offered group health and your employer is paying your premiums but is not willing to pay the premiums for your spouse or children, then as long as your family is relatively healthy you should almost always opt for a group plan for you and an individual plan purchased on the private market for your spouse and children. Often, you can even find similar individual health insurance coverage from the same insurance company for your spouse and kids as what you have, that way you will know for sure that your family Doctor’s and hospitals all accept your insurance.
3. If you have major health issues (cancer, recent heart attack, many expensive prescriptions, etc.) and you have the opportunity to get group health insurance then you should take the group health insurance coverage because even if you are approved for an individual health insurance plan (unlikely because of your major health issues), you will likely get those major pre existing conditions excluded from coverage (or sometimes they will drastically increase your premiums in order to still cover those conditions).
4. If you are perfectly healthy and your employer is not willing to chip in much at all towards your group health plan then you almost always will save money (often a substantial sum of money) if you compare individual health insurance benefits out on the open market.
5. If you have major health issues and you currently have health insurance but are concerned that your current coverage might not last (because you are leaving your job or your COBRA coverage is set to run out soon or any other number or reasons) then you should ask a knowledgeable agent or financial planner about the HIPAA health insurance laws. HIPAA laws offer very specific protections to people who have done the responsible thing and maintained health insurance coverage but through no fault of their own have lost coverage and are unable to get coverage. In these circumstances the HIPAA laws require insurance companies to offer an individual health insurance plan on a guaranteed issue basis that covers all pre existing conditions from day one. The HIPAA laws are not often talked about and are not even known by most agents. But to do a full write up of how HIPAA can help health insurance shoppers is a topic for another article on a different day.

Now that you understand the differences between individual health insurance and group health insurance and you are equipped with 5 strategies for saving some of your hard earned money when buying health insurance, it is time to put your knowledge into action. Just like it is very important to shop around and put into action the various ways to lower your auto insurance rates it is also the same with with health insurance. Be sure to do your homework and compare quotes from many different health insurance providers to find the plan that will best meet your needs. What additional strategies do YOU have for finding a cheap health insurance plan?

About the Author: Joel Ohman is a Certified Financial Planner and President of 360 Quote LLC.  He is a serial entrepreneur and is currently spearheading several successful consumer comparison websites including Credit Card Chaser and Health Insurance Providers.

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Related Articles:

1. What is COBRA Insurance?
2. Shopping for Individual Health Insurance
3. What You Need to Know About Open Enrollment: Health Insurance Options

Gift cards are a multi-billion dollar business and one of the most popular gifts for Christmas, birthdays, and other events. It’s easy to see why – some people are notoriously difficult to shop for, and others prefer to do their own shopping. But not all gift cards are created equally.

What to look for when giving gift cards this holiday season

Before making your purchase, you should realize there are pros and cons to giving gift cards: They are convenient and easier to ship than gifts, but they are also impersonal and may come with unpleasant surprises like fees, inactivity costs, and expiration dates. Here are some things to look for before buying gift cards:

Look out for fees! Read the fine print before purchasing gift cards because some of them come with an automatic monthly or annual fee. Some cards may not begin charging fees until a certain amount of time has passed. The fee and time limits vary, but it’s not unusual to hear about a 2% monthly fee, or a flat rate fee of several dollars per month. These fees are more common with third party gift cards and are less common with gift cards for a specific store.

Avoid gift cards with expiration dates! Again, read the fine print before purchasing gift cards and be sure to look for expiration dates. Many store gift cards don’t have expiration dates, nor do other cards like those from American Express.

Where can the card be used? Many gift cards can only be used at certain stores, while other gift cards can be used anywhere. You should also check whether or not store gift cards can be used online as well as in the store because some store cards can only be used in stores. I ran into this problem before and had to wait almost a year before I could use the card because the item I wanted to purchase was only available online. It was frustrating!

What to do with unwanted gift cards

Send them to me. Just kidding! There is a huge secondary market for gift cards and you can buy, sell, and trade gift cards at a discount. You may take a small hit on the face value of the card, but at least you won’t have to worry about not being able to use it. You can read more about buying and selling gift cards.

Which gift cards are the best to purchase or give as gifts?

You want to make sure you get the most out of your gift cards, so the most important thing you want to consider is whether or not the recipient will use the gift card. If you are confident they will use it, then shop for a gift card to their favorite local or online store. Just be sure they will have access to use it. Some of the most popular gift cards include Amazon.com, The iTunes Store, The Apple Store, and Best Buy. You can also go with a non-store branded gift card, such as one that bears the MasterCard, Visa, or American Express logo. These cards can be used at virtually any location that accepts these credit card brands.

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Related Articles:

1. Pros and Cons of Giving Gift Cards This Holiday Season
2. Save Money with Discounted Gift Cards
3. Be Careful Which Gift Cards You Buy!

People are lazy by nature. I know, I’m guilty of it myself. It’s too easy to set up a process, get it running smoothly, and forget about it. Unfortunately, leaving things in a state of inertia can cost us money. But the good news is that there are probably dozens of things you can do in a few minutes that will benefit your bottom line.

Save and earn thousands with these tips

These tips are broad in nature, and can help you save or earn thousands of dollars over the course of a lifetime, or even over the course of a few years. Not every one of these tips may apply to your specific situation, but chances are you can apply one or more of these tips.

Money management and budgeting

The first step to organized finances is knowing and understanding where your money is coming from and where it is going. The next step is being proactive and managing your money instead of letting it manage you. Using a budget will help you control your spending and give you a better idea of where your money leaks are. Plug the leaks and control your spending and you can save thousands over the course of your lifetime. Where to start: Popular money management programs include Quicken, Mint, and a host of free online money management tools.

Paying and earning interest

Compound interest is one of the most powerful forces in the universe – which is why you want it working for you, and not against you! If you have debt, try this short exercise to see how much interest you are paying each month: Grab a recent copy of your bills, write down much you borrowed, your monthly payment, and how much you pay toward the principle and how much goes toward interest. The result may shock you!

Reduce the amount of interest you pay. Hopefully that exercise above helped you realize how much money you are giving away each month, and how much more money you could direct toward your personal goals. There are several ways you can reduce the amount of interest you pay, including a do it yourself debt consolidation plan, transferring the balance to 0% credit cards, applying for a lower interest loan, and increasing your monthly payments.

Increase the amount of interest you earn. If you are using a local bank for your savings account, you are probably earning less interest than you could with an online bank. Look for a bank that offers higher interest rates, no fees, and other features. You can also check out alternatives to high yield savings accounts for additional ways to earn more interest.

Not investing

Unless you are already wealthy you will need to save and invest for your retirement or other large expenses. Even if you are independently wealthy you should invest to grow your money. If you work for a company that offers a 401k plan, then you should be contributing at least the minimum to get the company match. Why pass up free money?

If your company doesn’t offer a company match, then there are other ways you can invest for retirement with a  tax deferred retirement plan. One of the most popular ways to invest is with a Traditional or Roth IRA, which both offer tax benefits. I’m a huge believer in the Roth, and if you think it may be for you, then I recommend reading about how to open a Roth and where to open a Roth for more information.

Paying too much for insurance

I’ve been guilty of this in the past. Its too easy to set up your insurance once and forget about it. But insurance rates can change and it’s a good idea to get new rate quotes any time you experience a major life event such as getting married, having children, moving, etc. It’s easy to get an online insurance quote – just visit a site like Geico or AllState, type in a few numbers and receive your quote. Here are some additional tips for saving money on car insurance rates, and saving money on homeowners insurance rates.

Improve your credit score

Your credit score itself doesn’t make you wealthy or poor, but it can have a huge impact on the interest rates your are able to get when you apply for a loan. Take a few minutes to learn how your credit score is figured, then look at how you can improve your credit score. A higher credit score can save you thousands of dollars over the course of a long term loan.

Just a few minutes work can make a huge impact

None of these tips take long to implement. At most you are looking at 15-30 minutes of your time to potentially save or earn thousands of dollars. That is a small investment of time can pay off for years.

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Related Articles:

1. How to do a 0% Balance Transfer
2. How NOT to Become a Millionaire
3. Why College Students Should Get a Credit Card NOW

I am always looking for new writers to expand the boundaries here at Cash Money Life. Additional writers help extend the conversation and add other viewpoints to this website, which is great for everyone!

Benefits of writing for Cash Money Life

Writing for Cash Money Life is a great opportunity to share your experience with a large readership and gain experience and feedback about your writing. If you are a blogger or writer, this is a great way to build your professional portfolio and/or drive traffic to your website.

Writing opportunities

I am interested in publishing articles by guest authors as well as adding a paid writing position or two for approximately one article per week. The paid articles would be on a freelance basis and would not indicate employment by Cash Money Life. Please contact me for more information including article requirements and payment details.

Guest post guidelines for Cash Money Life

Guest Posts do not receive payment but are a great way to gain experience and exposure for your website, or to build your portfolio. Please use these guidelines:

• Articles should be well-written, must be original, and should not have been previously published elsewhere.
• Articles should be related to personal finance, career, or small business topics. Please e-mail me with proposed topics if in doubt.
• Please include a short author bio with a link back to your website and RSS feed if applicable.
• Feel free to add a reasonable number of links back to your own web site within the content, but please do not use this as an opportunity to stuff the article full of keywords.
• I retain full editorial and approval rights, including removing and/or substituting links.
• No affiliate links.
• Feel free to send image recommendations with the article. Please only include images that allow for derivatives unless you own the image (Flicker is a great source of images that allow for derivatives under the Creative Commons License).
• Guest posts can be republished on your site after a minimum of 3 months have passed.
• Please send articles in html or in a Word document (html preferred).

If you are a writer and would like to submit an article for consideration, please send me a message via my contact form. I look forward to working with you!

What is the difference between the paid articles and guest articles? Ownership. Paid submissions become the property of this website; guest articles may be republished by the author after a minimum of 3 months has passed. Anyone can apply for either position at any time.

Recommended personal finance and career articles

• Why We’re Not Buying Life Insurance (Yet). My wife and I skipped life insurance when we were newlyweds. We were both professionals and had no real need for it. But our situation changed when we had our first child.
• How to Sue Debt Collectors. Great information if you have been abused by debt collectors who do not follow the law.
• Why Are There Homeless Veterans In America? An op ed piece from Financial Samurai. And one there is no clear answer to.
• How Much Does Your Debt Cost? Probably a lot more than you think it does!
• What Business Should I Start? Follow your passions when starting a business.
• One Year After Getting Laid Off – My Annual Passive Income Report. An entrepreneur shares his story about striking out on his own.
• Interview Your Interviewer. Great tips for your next interview.
• 2009 Roth IRA Contribution Limits. You still have until April of 2010 to contribute, but planning now is a great idea!
• ABCs of Investing had a great stocking stuffer idea – a short beginner investing book.
• Amusing Ticker Symbols. Some amusing stock ticker symbols such as MOO, PBJ, and more.
• Open Enrollment Window Ends Soon. An important reminder for those of you who need to make health insurance elections.

This week’s carnivals:

• Carnival of Money Stories – My Money Flaws Edition @ Gather Little by Little.
• Festival Of Frugality #203 – American Flag Edition @ Domestic Cents.
• Baby Boomers Blog Carnival Thirteenth Edition @ Baby Boomers U.S.
• Carnival of Financial Planning @ My Trader’s Journal.

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As you have probably noticed, interest rates have plummeted over the last two years. Not long ago it was easy to find saving account interest rates in the 4-5% range, and CD rates slightly higher than that. Right now the best savings accounts are offering interest rates just under 2%, which is a far cry from what many people were used to. To take the place of the high rates that were so commonplace a year ago, many banks are now offering high interest checking accounts – some with interest rates more than double or triple what the best online savings accounts offer.

High yield checking accounts

High yield checking accounts are becoming more popular in banks across the nation, particularly the smaller regional banks that are vying for more customers and larger deposits. The biggest advantage these checking accounts offer is the high yield interest, but many of them offer other advantages such as free ATM withdrawals, no fees, and automatic bill pay.

How good are the interest rates? Rates vary of course, but a bank in our local area is currently offering a high yield savings account in the 4.5% range, which is over 3 times the interest rate that ING Direct savings account offers. While this seems like it would fall under the “sounds too good to be true” test, it is true – if you meet the conditions. And the terms and conditions are the biggest downfall to these types of accounts. Let’s look at some general requirements.

Common high yield checking account requirements

Banks are able to offer these high interest rates because these accounts are profitable for them when you meet the following criteria:

• You live in the local area.
• You sign up for direct deposit or automatic bill pay (or both).
• You make a minimum of 10-12 debit card transactions per month.
• You elect to receive electronic statements instead of paper statements.
• Limit of $25,000 at highest interest rate (common limit, some banks may vary).

It’s important to meet these requirements because the bank will reduce your interest rate to the standard checking account interest rate in any month you don’t meet the requirements, usually down to 0.5% or lower. Again, this is a general representation, so be sure to read the fine print before opening an account.

Pros and cons of high yield checking accounts

Pros. A 4.5% interest rate is a stellar interest rate in this economy. Your funds will be guaranteed by the FDIC and the entire amount of your deposit, up to the limit, should be eligible for the high interest rates. Many banks also offer ATM fee reimbursements with a high yield checking account, which can save you money. (more on how to save money on ATM transactions).

Cons. Most high yield checking accounts have a long list of requirements which usually ends with a clause that states the terms can change at any time, or that they are only available to customers for a limited time. Making 10 or more debit card transactions per month can be a nuisance that many people would prefer to avoid and the $25,000 limit may also turn people off because it can be a hassle to switch your deposits from bank to bank. Finally, one slip up and you lose the higher interest rates and other benefits, potentially including the ATM fee reimbursements that you made under the impression they would be reimbursed.

How do banks make money from high yield checking accounts?

When you look at the terms and conditions you will notice a few requirements that are in the bank’s best interest – including electronic statements, automatic bill pay, direct deposit, and multiple debt card transactions. Banks spend a lot of money processing paper statements; electronic statements are a huge cost savings for them. They also spend a lot of money processing checks that are both deposited with them and are drawn against their accounts. Automatic deposit and bill pay substantially reduces the number of checks they process each year.

Banks receive a fee when you use your debit card and debit card use reduces the number of checks people write. You will also notice there is a limit on the amount of money on which they will pay the higher interest rates. That is because these accounts are only profitable up to a certain point, which is reflected in the limits.

Most importantly, the banks know how much it costs to find and retain new customers, and these deals work great to bring in new customers and create loyalty to their bank. Current customers are much more likely to use their current bank for loans, mortgages, IRAs, and other financial products that can be profitable for the banks.

Are high yield checking accounts worth it?

The answer is – it depends. From a mathematical standpoint, yes, higher interest rates are good. But the added hassles may not be worth it on a time/maintenance level. I personally haven’t opened one because I am happy with my current bank and I can’t be bothered by making a minimum of  10 debit card transactions per month and making sure I swipe the card as a credit card. I don’t have the patience to keep track of how many transactions I have made, and I don’t want to get in the habit of running to the gas station or Wal-Mart to make a series of transactions at the end of the month to ensure I continue to meet the account requirements.

On the other hand, the interest rates are very nice and I certainly understand why many people are attracted to these accounts. It’s not really that much work to maintain compliance – it’s just more than I am willing to do on a regular basis.

What are your thoughts? Do you have a high yield checking account, and is it worth it to you?

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Related Articles:

1. Looking for New Checking Account? 4.25% at Charles Schwab
2. Alternatives to High Yield Savings Accounts
3. The Best Online High Yield Savings Accounts

If your company is one of the many companies currently going through annual open enrollment period, then you have probably read the term “eligible life events” or “qualifying life events” a couple dozen times by now. It’s important to know and understand which life events qualify, because many people only have one chance per year to elect their health benefits unless they have a qualifying life event, which gives them an opportunity to change their benefits elections.

Why do qualifying life events matter?

Most companies negotiate group health insurance costs once per year, and it’s more cost efficient for both the insurance company and the employer to keep a relatively steady number of people in the plan they elect at the beginning of the year. Insurance companies agree to lock in rates for the year in exchange for keeping people from switching plans at will. However, it wouldn’t be fair for the insurance companies not to allow people to change plans when they have a major life event that changes their needs. So there is a built in clause that allows people to change their health care coverage when they experience certain qualifying life events.

What are qualifying life events?

As mentioned above, qualifying life events are major events in your life that qualify you to change your health care coverage outside of the open enrollment period. Major life events include:

• Marriage, civil union, divorce, annulment, legal separation.
• Birth, adoption, taking in a foster child, or becoming a legal guardian.
• Change in spouse’s work status.
• Death of spouse or dependent.
• Change in status of dependent’s eligibility (e.g. change of student status or becoming too old for coverage).
• Possibly more, depending on plan.

These are common qualifying life events, so be sure to read the fine print in your benefits enrollment package. Also keep in mind that you usually only have 30 days from the date of the qualifying life event in which to make a change in your health insurance plan. Insurance companies or your Human Resources department may also require proof of the qualifying life event, so be ready to fax a copy of a birth or marriage certificate, death certificate, adoption papers, etc. Specifics vary from plan to plan, so be sure to read your plan thoroughly before electing your benefits plan.

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Related Articles:

1. What is COBRA Insurance?
2. What You Need to Know About Open Enrollment: Health Insurance Options
3. Shopping for Individual Health Insurance

Open Enrollment is currently in season for thousands of employees. For most people, this is the only time of the year when they can make benefits elections for their health, dental, vision, and other company sponsored insurance plans. Most companies only give a two week window to make changes, so let’s take a look at the most common health insurance coverage options available to most employees.

Open enrollment health insurance options

There are several types of medical insurance, and we will cover the most common types – keep in mind that your company may offer variations, combinations, or something completely different than these listed here. This is general information only, and you should examine your policy options closely before making a decision on which health plan option to choose.

Fee for service health care plans

Fee for Service health care plans are the most flexible healthcare insurance plans available, as you can visit any doctor at any time, without a referral required by the insurance company. You do not need to worry about in or out of network providers and you can visit any hospital in the country. You also pay for this flexibility.

You are required to pay a health insurance deductible out of pocket before the insurance company will begin paying for any of your medical bills. Once you reach your deductible you pay coinsurance, which is when you share the health care costs with your insurance company, usually by a set percentage of the total bill. Some fee for service plans place a cap on the amount of out of pocket expenses you can incur within the course of a year. For example, in addition to your monthly premiums you may have a $500 deductible, and a $5,000 annual cap on your insurance. Be sure to read the plan thoroughly because there are often restrictions regarding which types of medical care are covered in this type of health insurance plan.

Pros and cons of fee for service health care plans:

• Pros: Freedom to choose health care provider, Cap on annual expenses.
• Cons: Restrictions on some plans, cost may be more than an HMO or PPO.

Health Maintenance Organization – HMO

With HMOs, health insurance companies negotiate fixed rates for health care with a select group of medical care specialists. Health care is limited to in-network health care providers who are a part of your HMO plan. To receive care, you are required to select a Primary Care Physician (PCP), usually a general care practitioner, who is your central point of contact for all medical care, including appointments, specialist referrals, and other medical care. You will need to visit your PCP for all medical inquiries or to get a referral to a specialist. You run the risk of paying out of pocket for using an out of network medical professional unless it is an emergency or your plan specifically gives permission. While there are limitations to HMO plans, they are often a low cost health insurance option because of the low rates the health insurance companies are able to negotiate.

Pros and cons of HMOs:

• Pros: Lower premiums and deductibles, and higher coverage rates.
• Cons: Required to select a PCP, must get specialist referrals, and are restricted to in-network health care providers.

Preferred Provider Prganization – PPO

Preferred Provider Organizations are generally a little more expensive than HMOs, but they offer more flexibility. PPOs have negotiated rates with their networks, but you are free to go out side the network for healthcare coverage, though you may have to pay more for it. Primary Care Physicians are not required and you can visit a specialist without a referral.

Pros and cons of PPOs:

• Pros: PCP is not required, referrals are not required for specialists, and out of network providers are covered.
• Cons: Premiums and deductibles are often higher than HMOs, percentage of coverage may vary.

Health Savings Accounts and High Deductible Health Insurance Plans

Health Savings Accounts (HSA) are gaining in popularity among both employers and employees – employers because they save money on group health insurance costs, and employees because they have more choice on how they use their medical coverage and they can save the money they don’t use in any given year and roll it over to the next year. HSAs are a tax-favored savings account that is combined with a high-deductible health insurance plan.

Contributions to your Health Savings Account are considered an “above the line” tax deduction and are considered a f ederal income tax deduction, regardless of whether or not you itemize your deductions. Some states also allow tax deductions for HSA contributions.

Pros and cons of HSAs and High-deductible plans:

• Pros: Low monthly payment, money grows in a tax-deferred savings account until withdrawn for health care needs. This may be a good plan for healthy individuals with few medical care needs.
• Cons: High deductibles and co-pays. limited coverage in some cases.

Other Health Savings Plans. There are several health savings plans available, including HSAs, Health Reimbursement Accounts (HRAs), and Flexible Spending Accounts (FSAs). You can read more to determine which Health Savings Plan is the best for your needs.

Terminology is important!

When comparing health insurance plans, it’s important to understand what you are getting. For example, “in-network” and “preferred providers” are often interchangeable. Co-pays are when you make a payment at the time of service, often a set rate that is clearly negotiated as part of you plan. Co-insurance is when you pay a percentage of the bill, usually in the 10-30% range. There is a HUGE difference in the meanings of co-pay and co-insurance when you are dealing with a major medical procedure!

Be sure to read your health coverage plan thoroughly, and call your Human Resources department or insurance company if you have any questions or if there is anything you are unsure of. Remember, cheap health insurance isn’t always the best health insurance. But with some research, you should be able to find affordable health insurance that meets your needs.

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Related Articles:

1. Shopping for Individual Health Insurance
2. What is COBRA Insurance?
3. Individual Health Insurance vs. Group Health Insurance

Warren Buffett recently announced that the Class B shares of Berkshire Hathaway are going through a 50 to 1 stock split, which is the first time he has split Berkshire stock – something he has claimed for years he wouldn’t do. Buffett has stated multiple times that he prefers not to split stocks because the higher prices make it less likely that day traders will cause major price fluctuations. He changed his mind this week though, after Berkshire’s acquisition railroad company Burlington Northern Santa Fe for a mix of cash and stock. Splitting the stock was a byproduct of the deal and was done for tax reasons.

What is a stock split?

A stock split is just what it sounds like – the stock is split into multiple parts. It actually doesn’t change the overall value of the stock, just the number of shares. For example, if you have a $100 stock and the company does a 2 to 1 stock split, then the original share is now two shares valued at $50 each, which still equals $100. But in the case of  the BRK.B stock, it is a $3,425 stock (Friday’s closing price) being split into 50 shares, valued at $68.50 each. (As an interesting note, the Class A share of Berkshire trades for over $100,000).

This shouldn’t change the overall value of the shares, but it will make it much easier for the average investor to purchase shares of the Berkshire B stock, as not everyone can come up with $3,400 to purchase one share. But when the stock splits on Tuesday, people will be able to pick up shares for less than $100, which makes it easier for the average investor to purchase shares.*

*Partial share investing. Some online brokers, including ShareBuilder and a few others, offer investors the opportunity to purchase partial shares of stock, so in the case of BRKB, one could have already been making purchases of partial shares before the stock split. However, not all brokerages offer this.

Recommended financial and career articles:

• Flipping a coin to divide a billion dollar empire. Not all business deals involve teams of lawyers and years to accomplish.
• Never Call In Sick On Friday, Slacker!. An interesting take on a common problem. Be sure to read the comments.
• My Store-Brand vs. Name-Brand Blind Taste-Test Experiment. Great article. My wife and I purchase a mix of name brand and generic products depending on the item, taste, value, etc.
• Be Your Own Part-Time Boss: The Pros & Cons. Great article for entrepreneurs.
• Great News! I Just “Fired” Myself! (Who’s Next?). Another great article for entrepreneurs. It is important to know when to outsource business tasks.
• Your Estate Planning Checklist. Essential reading.
• When Money Doesn’t Matter. You cannot place a price on life, and this article is an very good read about doing what it takes to save a life.
• Living Paycheck to Paycheck Could Cost you Your Life.
• Blockbuster employee stabs himself to avoid getting fired. Desperation as unemployment hits 10%.

This week’s carnivals:

• The Best of the Best in Money and Personal Finance #8 @ LenPenzo.com.
• Carnival of Debt Reduction @ Mighty Bargain Hunter.
• Carnival of Personal Finance #229: candy edition @ the centsible life.
• The Best of Money Carnival #23 @ Provident Planning.
• Carnival of Money Stories @ Christian Personal Finance.
• Carnival of Money Hackers #89 – My Favourite Coffee Edition @ The Financial Blogger.
• Financial Planning and Personal Investment Articles this Week @ The Skilled Investor.

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2. Carnival of Personal Finance, #104 at Getting Green
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Auto insurance is one of those necessary expenses in life that many people don’t pay much attention to. Once you purchase your auto insurance policy inertia sets in and it is easier to simply renew your policy every 6-12 months than it is to shop for better insurance rates. But you may be able to save 30% or more on your annual bill by shopping for cheaper car insurance rates, making it well worth the effort.

How to shop for affordable auto insurance

The first thing you need to do is grab a copy of your current car insurance policy and write down your coverage and rates. Next, get car insurance rate quotes from other automobile insurance companies. You can call or visit an independent insurance agent, visit individual websites, and check online comparison sites for multiple auto insurance quotes. Be sure to check the major companies as well as some of the smaller companies – you never know which company will have the best rates until you get a quote. It’s also a good idea to read customer reviews to make sure you are going with a reputable company – the cheapest car insurance doesn’t do you any good if you can’t file a claim.

Be sure to double check your current insurance policy when making comparisons between auto insurance companies to ensure you are comparing apples to apples because a small difference in the language of the policy can have a big influence on the price.

Get multiple auto insurance quotes

Ideally you want to compare 3-5 car insurance quotes before deciding to switch companies. The following list is a good place to start. Some of these websites in this list are insurance companies and a few are insurance aggregators that will give you multiple quotes from various auto insurance companies. There may be some overlap if you get quotes from more than one aggregator, but you will need multiple quotes to do a car insurance comparison anyway.

• Geico.
• AllState.
• Esurance.
• InsWeb.
• Fast Policy Quotes.
• InsureMe.
• 21st Century Insurance.
• EInsurance.

Get new quotes for major life events. Your insurance rates may drop when you turn age 25, get married, move to another city or state, have a shorter commute, change jobs (certain occupations may qualify for discounts), or for other major life events. It is always a good idea to get a new car insurance quote for any of these events.

How to lower your auto insurance premiums

Mitigate your risk profile

Your insurance rates are often based on the perceived risk you pose. Factors such as your age, marital status, how many miles you drive, where you live, your credit score, driving record, claims history, auto insurance coverage history, occupation, and other factors can affect your auto insurance rates.

Increase your deductible and drop unnecessary coverage.

Raising your deductible can save you up to 30% on your auto insurance premiums. Increase your deductible to $500 or $1,000 if you can afford that much for repairs. With an older car, drop collision and comprehensive coverage when the car is worth less than 10 times what you pay for the insurance (check Kelly Blue Book for used vehicle values). You can also consider dropping comprehensive coverage if you have fully paid any outstanding loans or if you can afford repairs if you are at fault.

Maintain a good driving record.

One ticket or accident may not increase your auto insurance payment, but then again, it may. Your best bet is not to find out! Drive defensively and observe traffic laws to avoid traffic tickets and possible increases to your insurance premiums. Defensive driving is not only safer, but you will probably save money on gas and maintenance costs as well. Win-win situation.

Pay your premium up front.

Many companies offer a discount on your auto insurance premiums if you are willing to pay your entire premium in advance instead of paying each month. Be sure to ask your company if they offer this type of auto insurance discount – you could save up to 10% or more.

Get good grades.

Many auto insurance companies offer discounts of 10-15% for students who maintain good grades. These discounts are often available for high school and college students. Check with your insurance agency for more details.

Join an association or club.

Many large associations and clubs are able to negotiate group discounts for auto insurance. Examples include AARP, Costco, AAA, military organizations, trade groups, unions, and more.

The type of vehicle affects insurance rates.

Vehicles with higher safety ratings, lower maintenance costs, or lower purchase prices may be cheaper to insure than expensive vehicles or those with low safety ratings. Ask about discounts for day time running lights, multiple airbags, anti-lock breaks, and other safety features. It’s a good idea to get an auto insurance quote when shopping for new cars so you have an idea of how much it will cost to insure your new vehicle.

Combine insurance policies under one roof

Some insurance companies will give you a multi-line discount when you have multiple insurance policies through their company. This can include a multiple car discount, but also for combining other insurance policies such as your homeowner’s insurance policy, renter’s insurance, etc.

Other discounts to ask about:

Defensive driving discounts, low annual mileage discounts, no accidents or moving violations, policy renewal discounts, etc.

Car insurance may be a requirement, but that doesn’t mean you should pay too much

You now have the information you need to search for lower auto insurance rates. Take the time to run some quotes and you may save yorself a couple hundred dollars per year – money that can certainly be put to better use.

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Related Articles:

1. How to Save Money on Your Homeowner’s Insurance Rates
2. Hurricane Season – Time to Review Your Flood Insurance Policy
3. Individual Health Insurance vs. Group Health Insurance

Sometimes less is more. In the world of money and finances, more is usually more. But when it comes to administration and bookkeeping, less is certainly more. These tips can help you automate and streamline your finances – reducing the time needed to stay on top of things and giving you more time to do the things that are important to you.

10 Steps to Declutter and Simplify Your Finances

Handle your mail more efficiently

The average person receives 560 pieces of junk mail each year, or about 1.5 per day. A great way to minimize the clutter is to stop junk mail and opt out of pre-screened credit offers, leaving you with the more important pieces of mail to deal with. From there set up a system that works for you. Some people find it easier to do batch processing, where they go through a week’s worth of bills and correspondence at one time, and others prefer to deal with it immediately. Experiment to find which method is best for you.

Do Not Call List.

You can also opt out of annoying phone calls by signing up for the Do Not Call List. This won’t stop phone calls from companies you currently deal with or charities, but it should stop unsolicited phone calls from mortgage brokers and debt consolidation companies.

Handle e-mail more efficiently

Use your personal e-mail account for personal items and a dedicated e-mail account for finances and official household business. My wife and I set up a dedicated e-mail account through GMail for our finances, insurance, and online shopping accounts. We don’t use it for anything else, including communication with family and friends. Be sure to opt out of store e-mails and coupon offers as most of these are just clutter that you won’t read anyway. The result is a clean inbox with actionable items.

Go paperless

Opt to receive electronic statements, which has multiple benefits, including less mail to process and a lower environmental impact. Some companies will also waive fees if you go paperless, including Vanguard and Zecco Trading. If you prefer paper statements, then get an all in one printer so you can scan the document for your records. Then shred it; reducing clutter at home.

Use Automatic Bill pay

Most online savings accounts offer free bill pay as part of their service, and it has become very common through most brick and mortar banks as well. Set up as many bills on auto pay as possible, reducing the amount of mail you send and receive, and reducing the time you spend worrying about paying bills. You can also link some payments to your credit card each month so you can take advantage of rewards points or cash back. Only use this method if you are certain you can and will pay your bill in full each month.

Automate your investments

Just like paying bills, it is easier to invest when you don’t have to sit down and write a check or initiate an electronic funds transfer each month. Set your basic asset allocation and make automatic payments for your investments. This can often be done through work via 401k contributions or a payroll deduction. You can also do automatic transfers through many brokerages, investment houses, or other financial institutions. Some discount brokerages, such as ShareBuilder, offer discounts on automatic stock trades vs. real time stock trades. Be sure to go over your asset allocation every so often to maintain a balance with your investments.

Use personal finance software

Managing money is much easier when you know how much is coming and going, and where it is coming from and what you are spending it on. There are many great financial management tools including You Need a Budget, Quicken, Quicken Online, and a host of free online money management tools.

Consolidate financial accounts

It’s not uncommon for people to have several bank accounts, but most people can get by with a local bank and an online bank for better interest rates. Many people also have multiple retirement accounts because they change jobs often. Depending on your needs, it may be a good idea to consolidate these accounts. Find a bank with high interest interest rates and nice features and park your money there. If you have an old 401k plan you can roll it into an IRA. IRAs can also be transferred to one brokerage account for easier tracking. Here is a list of the best places to open an IRA.

Reduce the number of credit cards you carry

The average American carries between 4 and 6 credit cards. Access to easy credit can be convenient, but it can cause problems for some people. Reducing the number of credit cards you keep can reduce the amount of mail you receive and make it easier to manage your money. Just keep in mind that canceling a credit card can affect your credit score, so you should probably leave the oldest card open and make sure canceling any credit cards won’t make your credit utilization too high (amount of credit used vs. amount of available credit). Here are more tips about the affects of canceling a credit card.

Consolidate debt

This won’t apply to everyone, but it may be a lifesaver for some. If you are making multiple credit card and other payments each month, then you might consider reducing the number of bills you receive and need to pay each month. One way to do this is by consolidating your debt. Don’t worry, you don’t need to pay a company thousands of dollars for this because you can consolidate your debt on your own. An easy way to consolidate your credit card debt is through a 0% balance transfer, which allows you to transfer your credit card balances to a new credit card at a 0% interest rate. There is usually a fee involved to do this, but it usually maxes out around 3-5%, which is much lower than the average credit card interest rate, which hovers around 20%. This tip can simplify your bill paying and save you money.

Simplify and automate to save time and money

Simplifying and automating your finances only takes a small amount of time and effort to set up and maintain and it can save you time and money by reducing clutter and wasted energy. It’s a win-win situation.

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Related Articles:

1. 7 Critical Steps For Simplifying Your Finances
2. How Much Can You Save By Doing a Balance Transfer?
3. Online Bill Pay – Cheaper, Faster, Greener, More Secure