Call Before You Pay (Janssen)

I have a secret theory that some companies send out bills without a lot of detail or add on extra charges, hoping that you'll pay them without noticing or bothering to find out what exactly you're paying.

A couple of weeks ago, a friend asked me how much we'd paid out of pocket for our daughter's birth. I told her (probably with no small degree of smugness) that it'd been completely covered by insurance.

Then, of course, THAT AFTERNOON I walked to the mailbox and pulled out a bill from the hospital for the sum of $700. My baby was eight months old! What could I possibly owe? Also, goodbye tax return.

I went home and called the hospital to ask what this $700 bill was for (you might have guessed that the bill made no mention of WHAT I might owe $700 for, just that I owed it and ought to pay it quickly before it went to collections).

They told me that $200 of it was my co-pay and $500 was my co-insurance. (I have no idea what co-insurance is). They did rush to assure me that the insurance company had already paid $15,000 for her birth, and had only bumped back this very small $700 charge. This did not make me feel better.

I felt certain that everything we'd read about the health insurance plan insisted that a birth would be completely covered and there would be no copay at all. So I called my health insurance company and asked how come they hadn't paid it.

The answer? They'd listed my delivery as being out of network. Was it? Of course not, and as soon as they looked up the hospital where she was born and my plan, it was clear that she was born right smack in the middle of the network and that I certainly did not owe $700 and they would cover it.

But if I hadn't called, I would never have known, and I also would have been $700 poorer. On Monday, I got a form from the insurance company indicating that they had increased the amount they paid and I now owed nothing.

If I wasn't already convinced that you shouldn't call about any bills you think you don't owe, I certainly am now.

Health Insurance (Janssen)

We feel fortunate to have health insurance through my husband's job. In the past, we've always done a regular coverage plan, but when we moved back to Texas, we switched to a high-deductible plan.

What this means is that instead of paying a large monthly amount to our health insurance company and then having them pay for the majority of most health care expenses, we pay a very small amount monthly to the insurance company and then the rest of the money goes into an account that we can use to pay for medical expenses.

We have a debit card attached to that account that we can use to pay for any medical expenses. Plus my husband's company put a large chunk of money into the account when we switched.

The high-deductible part means that our insurance doesn't pay for any care (except for regular preventive care like annual exams or routine checkups for children) until we've paid up to the deductible amount (which is about $6000). But we can pay for that $6000 out of the fund we pay into each month.

For us, it's worked out really well - we haven't paid any co-pays for our daughter's regular check-ups or my post-pregnancy visits and by the time we have our next baby, we anticipate there will be enough in our account to cover the entire deductible.

We spend considerably less each month on health insurance and with an infant who has to go in for check-ups and immunizations regularly, we've saved a bundle on co-pays ($30 a visit adds up fast). Plus, even if we did have to pay something out of pocket, the difference between the monthly cost of this plan and our former plans means that we would still come out ahead.

Of course, if you're about to have a baby or are currently having some expensive health problems, this might not be a good choice for you at the moment. But if you have some time to let your monthly contributions accumulate, you might consider looking into this type of coverage.

What Would You Tell a Teenager About Money? (Carole)

A few weeks ago, I was asked to speak about money to the teenaged girls in our church congregation.  Thanks to all of you and your many good comments on this blog since January, I felt like I knew what kind of information would be most interesting and helpful to these girls who are just on the cusp of adulthood.

Here's what we discussed:

1.  Getting a job and saving 50% of what you earn while in your teens.  I also shared with them examples of impressive teenagers I've known through the years and the amounts of money they've been able to save in their bank accounts by the time they graduated from high school.

2.  The cost of tuition at local and out-of-state colleges and universities.  We even took a look at the cost of elite schools like Harvard and Stanford, just so they would know.

3.  Typical salaries of standard jobs:  surgeon, fire fighter, grocery store clerk, pilot, flight attendant, lawyer, school teacher. . .  and what the monthly take-home pay (after federal taxes) would be for each of these jobs.  So. . .is a college education really worth the time and money invested for your particular profession?

4.  How much adult life costs:  housing, groceries, transportation, utilities and insurance.  True to one of my previous examples of teaching children about money, I brought in $3,000 (which is a typical take home salary if you make $50,000/year -- the average salary in Las Vegas) in cash -- in $10 bills.  Together we paid the bills of a typical family in southern Nevada.  Much to their surprise, we ran out of money, long before we ran out of bills.  This was very eye-opening to this lovely group of girls.

5.  How compound interest works.  We walked through how compound interest works in your favor if you're saving money or investing, but how it works against you if you're paying off a loan or a credit card bill.  We also discussed how the length of the loan (or investment) and the interest rate influence your payment (or return) and the total you will pay (or earn) over the lifetime of the loan (or investment).

It was a fun night, and I felt like the girls were right with me.  But I'd love to know what YOU would have said to them?  What do you wish someone had told you at their age?

Life Insurance is a Priority (Carole)

You probably hate it when a salesman calls to sell you a life insurance policy, but in reality it is some of the most important money you will ever spend.  Part of any healthy financial plan includes sufficient life insurance.

Here are the basics:

1.  Buy Term life insurance.  It's the least expensive for the best coverage --  it costs a small fraction of a Whole Life insurance plan (which also contains a lousy investment vehicle).
2.  Each wage earner should be insured for ten times what they earn in a year.
3.  If you are a stay-at-home mom (or dad) you should probably have about $500,000 in life insurance on yourself.  It costs a lot to raise children to adulthood if the primary care-giver is no longer around.  If your children are nearing adulthood, you could lower this amount a bit.  But I wouldn't.  How nice to have significant money to help your young adult children with college expenses and weddings.
4.  Buy a rider on your policy for each of your children.  I would recommend at least $10,000 each.  Our youngest son passed away from cancer when he was three.  The $5,000 policy we had on him didn't come close to covering his funeral costs -- and that was 10 years ago.  We never thought it would happen to us either.

It's difficult to even think about anyone in your immediate family dying.  But this is an uncertain world we live in and it is better to be well-prepared, just in case the unthinkable happens.  I'm 48 (today, in fact) and  already I've known dozens of friends and family members who have lost a spouse or child -- or both.  It happens every day.  You have absolutely no guarantee it won't happen to you.

Certainly a life insurance check for $500,000 or $1,000,000 (tax free, I might add) will not replace a loved one who has died, but it would certainly make your family's financial future much easier to manage.  Believe me, you'll have enough to deal with if a family member dies.  What a blessing it would be to pay off your house and invest the rest to live off of for the rest of your life.

This is a priority, and term life insurance is pretty inexpensive when you consider the incredible safety-net it provides for your loved ones.