There are three types of insurance that artists should have: health, liability, and property. It used to be difficult to get individual health insurance, but now there are many companies that provide individual benefits thanks to the Affordable Care Act (often called Obamacare), and the cost is often cheaper than what a small business would pay. Consider getting multiple insurance policies—such as renter’s, studio, and car insurance—with one broker in order to obtain a discount.
If you do not already have healthcare, then the government site set up specifically for healthcare coverage is the place to start. Please see further in this chapter how the Affordable Care Act affects you.
Liability Insurance
Liability insurance is a necessity if you have a studio. If visitors to your studio are injured on site, they can sue you for medical and other damages. It is always a good idea to have your studio fit for visitors, so that nothing can happen to injure a visitor while she/he is there. You may also need liability insurance if you are doing a project in a space that is not insured, such as a cafe or storefront, or a public art project that is temporary. Check with your insurance company to find out about the coverage you need. Call your local nonprofit arts organization to see if there is a local arts insurer in your area.
Property Insurance
It is also advisable to get property insurance to cover your artwork during transport and when in an exhibition. The host venue should cover the work but do not assume that they have insurance. The shipper usually covers the work in transit. There are many different types of property insurance, some cover work from wall to wall, others just cover shipping. Be clear about what you are purchasing and read the contracts thoroughly. Always check to see if the venue you are showing in is covering your artwork with insurance or not. This should be stated in any loan or exhibition agreements you sign. If not, it should be added to the agreement. This is one of the reasons why you should always sign an agreement when you loan artwork to any venue or exhibition. Often you can take a rider out on your renter’s or home owner’s insurance to cover artwork on another site.
Health Insurance
The Affordable Care Act
The Affordable Care Act has changed the face of health insurance in the United States. Signing up for healthcare plans began in October of 2013, and go into affect January 1, 2014. Here are some basic things you need to know as there have been many changes since the law has been implemented:
You can no longer be denied healthcare based on a pre-existing condition.
The U.S. Government may help you pay for health insurance if you earn less than $45,960 as an individual. Other options and amounts for families are also available.
Beginning in 2014, most Americans must have insurance or pay a penalty.
If you already have health insurance and you get to keep it, then you are probably good to go. You might want to compare your current plan with the new ones being offered to see how it matches up. Most people who have been dropped by their insurance company can find a better deal than they had before by getting new and better coverage.
Some states, like California, also have their own marketplace. In California, you may be eligible for premium assistance if your income is between the following ranges, but only if you purchase a Covered California Marketplace plan.
Household size: Income range:
1 $15,856 to $45,960
2 $21,405 to $62,040
3 $26,952 to $78,120
4 $35,326 to $94,200
5 $41,346 to $158,520
Check you state to see if it has local options for health coverage.
There are also lower costing plans for people under the age of 30, for catastrophic coverage, or for those who are exempt from the mandate due to hardship or low income.
All plans are now labeled by metal names and include Bronze, Silver, Gold, and Platinum. Each plan is detailed to provide coverage from those who are in a lower income bracket to a high income bracket.
The Penalty
The penalty is a “tax” on individuals who are not covered by medical insurance.
These figures have changed often, so please check a government website for an update.
Options
Understand which doctors you can choose to see depends on the plan you choose. A network is a series of doctors who work together to provide medical services. Plans can include a network of doctors from which you can choose, or for a higher premium, you can choose your own doctor. Do some research on which doctors will be available to you before you sign up.
Essential Health Benefits
By law, medical insurance must include the following benefits:
1. Ambulatory patient services
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance use disorder services, including behavioral health treatment
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic disease management
10. Pediatric services
Choosing The Right Policy
To get basic information on healthcare plans you are eligible for, go to www.healthcare.gov. You can sign up here for healthcare in a variety of ways, compare plans, and get information on details.
There are a number of resources for The Affordable Care Act. If you live in California, go to www.coveredca.com, and click on resources for a premium assistance calculator. Check your own state to see if there are state as well as Federal options available to you.
If you want to calculate what a possible penalty might be, visit www.artist911.com and click on Home>Resources>Calculators.
For Preventive Care Benefits, visit www.healthcare.gov and type in “prevention” in the search bar.
Only certified brokers with an insurance license can help you sign up for a healthcare plan. They might be a good option if you need someone to make things clear about your choices.
Long-Term Care: Taking Care of the Future
By Michael Grodsky
“It can never happen to me” is no way to look at the future. If you knew that your home had a two-out-of-three chance of experiencing significant damage by fire, how would you protect yourself against that risk? Your first thoughts might be about moving to a different location! But what if all residences had that risk? Your options include accept the risk and do nothing, transfer the risk by purchasing insurance, or self-fund against the risk.
Taking Care of the Body Electric
The risk we’re addressing today is the possibility of needing and paying for long-term care for you, your family, and loved ones. When it comes to your future, make sure you see the big picture. After all, life is full of surprises. I was surprised to learn that more than 70 % of us who live to “retirement” age will need long-term care at some time in our lives.
We don’t have to lose independence and control over our lives as we get older. Instead, long-term care planning is about living well as we age. Currently, 83 % of long-term care is provided in the home or community, while only 17 % is provided in a nursing home. (1) However, 40 percent of people over the age of 65 will need care in a nursing home for some period of time, and the average cost in Los Angeles is over $80,000 per year. (2) According to the nonprofit American Health Care Association (www.ahca.org), “Failure to prepare for the cost of a nursing facility stay or other long-term care is the primary cause of impoverishment among the elderly.”
Long-term Care (LTC) is not just for the elderly
Accidents and sudden illnesses can happen to anyone, regardless of age or how well you take care of your health. Forty percent of people currently receiving long-term care are adults 18 to 64 years old. (3) Long-term care insurance can help protect against these potential financially devastating events. The key is to plan early, know our options, and to take action to ensure a good future.
Medicare doesn’t cut it
Disability or health insurance do not provide long-term care, and in general neither does Medicare. In California Medi-Cal (4) will pay for long-term care, but a person’s assets generally have to be paid down to $2,000 or less in order to receive benefits. After death, Medi-Cal may recover costs of care from the estate. Steve Lopez’ article “State reaches Into grave for funds” describes one person’s discovery of this estate recovery program (Los Angeles Times, October 21, 2007).
But the California Partnership does
The California Partnership for Long-Term Care (5) is an innovative program of the California Department of Health Services in cooperation with a select number of private insurance companies. These companies have agreed to offer high quality policies that must meet stringent requirements set by the Partnership and the State of California. It can take the guesswork out of selecting a high quality policy.
The Partnership’s mission is to provide affordable, quality long-term care insurance protection, so you won’t be forced to spend everything you’ve worked for on long-term care.
A unique feature of the Partnership policies is that it protects you from having to spend down your assets, should you use up your private long-term care benefits and need to apply for Medi-Cal assistance. The asset protection feature enables you to purchase policies with coverage equal to the amount of assets you want to protect from approximately $47,000 up to your total assets-with the assurance that these assets are protected for life, no matter how extended or expensive your long-term care needs may be. Without a Partnership policy, you could only achieve lifetime asset protection by purchasing lifetime coverage... something most people cannot afford. This added protection comes only with the purchase of a Partnership policy.
The bottom line: cost and eligibility
Long-term care insurance is expensive because the costs it insures against are so high. If you purchase LTC insurance you’re covered from day one, and you’re paying a sum each month or year instead massive expenses over a short period of time. But unlike health insurance premiums that increase with a person’s age, long-term care premiums are fixed by the person’s age when they first obtain insurance. It’s never cheaper than when you’re 30 years old, and the cost of waiting exceeds the money you’d save by delaying.
The good news is that although premiums are fixed, benefits are NOT, because of a policy feature called inflation protection. For example, a $310,000 lifetime benefit might cost a 48 year-old married person $2,000 during the first year of coverage. Thirty years later at age 78, the lifetime benefit is now over $1,250,000 because of 5 percent annual compounding, but the premium is still $2,000 per year. (It is possible that future rate increases may be approved by the State of California, affecting everyone equally. Individual rate increases are not allowed.)
Regarding eligibility, there is no guarantee you will be accepted. The requirements vary based on an applicant’s age, medical history, medical follow-up, functionality, and cognitive awareness. Any change in your health increases your risk of being uninsurable. Below we’ll mention some other ways of planning for LTC expenses.
Upon whom are you counting for help if you need LTC?
Are you going to rely on friends and family? Whether they’re working or not, assisting you could be one of the most demanding situations your family and friends will ever encounter. Even if their intentions are good, will they be physically and emotionally capable of providing you with all the care you need? Could they afford the loss of income, and would you feel comfortable with the sacrifices your caregivers may have to make?
What does LTC insurance cover?
It pays for a variety of services and supports to meet health or personal care needs over an extended period of time. Most long-term care is non-skilled personal care assistance, such as help performing everyday activities like bathing, eating, dressing, and even shopping, cleaning, cooking, and paying the bills.
What if I invest the premium cost myself instead of paying for insurance?
Because costs for long-term care continue to rise each year, not only do you need to consider the costs today, but also what sum may be needed in the future. By purchasing insurance you’re covered with the maximum benefit from day one.
How much can I afford to pay?
General guidelines suggest premium costs should not exceed seven percent of income. You need adequate cash reserves and income to make sure you can afford the ongoing payments. The younger and healthier you are the better in terms of your premium cost. Long-term care insurance is not the right choice for every person.
What if I don’t need long-term care after all? Are there alternative ways of insuring the risk? Most LTC policies allow a “return of premium” rider for additional cost. Other financial products include whole life insurance policies with a long-term care rider, if you need the long-term care benefits they are available to you, but if not you can use the account value yourself or pass it on to heirs.
Are there any options for those who are not insurable due to health conditions?
Some companies have a rider that allows an uninsurable spouse to receive benefits. Others specialize in insuring higher-risk people. Lastly, there are annuity products that include long-term care benefits.
As with any insurance or financial product, there is no “one size fits all” solution. Financial suitability, needs, and circ*mstances should determine the selection of any long-term care solution.
I hope that you, your parents, and loved ones will not ever need long-term care. “It can never happen to me” can be a valid way to look at the future, as long as you have a plan for “If it happens to me.” But many people are simply unwilling to face up to the likelihood they will some day need long-term care. Fully half of those surveyed agree with the statement, “long-term care is something I won’t need until I am older, and I don’t want to think about it now.” (“Americans Fail to Act on Long Term Care Protection,” American Society on Aging, May 2003). Visit the California Partnership for long-term care website for more information.
Footnotes
1. Georgetown University Long-Term Care Financing Project, Fact Sheet Article: “Who needs long-term care?” May 2003
2. Genworth Financial 2013 Cost Of Care Survey. (https://www.genworth.com/dam/Americas/US/PDFs/Consumer/corporate/130568_032213_Cost%20of%20Care_Final_nonsecure.pdf)
3. U.S. Dept of Health and Human Services. (www.longtermcare.gov)
4. Medi-Cal (http://www.dhcs.ca.gov/services/medi-cal/Pages/default.aspx)
5. The California Partnership for Long-Term Care (http://www.rureadyca.org)
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