Can your insurance company drug test you?

Insurance companies have the right to require drug tests for health insurance and life insurance policies, but not all of them ask for these tests. It is common to have blood work and urine samples tested for illegal and prescription drugs and alcohol. Any sign of abuse could lead to higher premiums or even the refusal of coverage.

Group or Individual Policy

In most cases, those joining a group policy through an employer are not subjected to drug testing or a physical exam. With the number of people being covered, insurance companies adjust the group’s premiums to account for many risk factors, including recreational drug use. The chances of insurance companies requiring drug tests increase greatly if a person is applying for an individual private policy. There is a good chance if a test is not required, a higher premium is charged to mitigate the risk.

Legal Ramifications

Doctors often schedule appointments at applicants’ homes within a couple days of applying for the policy so applicants do not have time to get the drugs or alcohol out of their systems. People often worry they will be turned into the police as a result of failing a drug test. Drug test results are regarded as private, and in most cases, it is illegal for insurance companies to release the results to a third party. Insurance companies are not interested in your legal affairs, and more importantly, do not like being sued themselves.

There is little argument that those who use drugs, even recreationally, are at a higher risk for illness and disease than those who do not use them. Insurance companies are taking every step possible to keep their customers as low risk as possible. Some believe it is an invasion of privacy to be subjected to drug tests. Customers are free to purchase their insurance from companies that do not require drug tests, but they have to be prepared to pay extra for that protection of privacy.

Is Selling Life Insurance the Right Career For You?

Those who have a knack for selling life insurance – and the perseverance to grind through the tough early years – can make a lot of money and retire with a high degree of financial stability. However, the burnout rate for life insurance sales agents is high. More than 90% of new agents quit the business within the first year. The rate increases to greater than 95% when extended to five years.

Why Life Insurance Agents Quit

Several factors cause the majority of life insurance agents to leave the business. The most common is they simply cannot make a living. The vast majority of life insurance sales jobs are straight commission. That means no base salary – not even minimum wage – and no benefits. Employers get away with this by classifying their sales reps not as employees but as independent contractors. As such, putting in a full week’s work does not guarantee a full week’s pay, or any pay at all. You could work in excess of 40 hours, but if you do not make any sales, you get no paycheck that week.

Something else many agents cannot handle is the grind of the job. Finding prospects is difficult. A lot of insurance companies recruit new agents with the promise of abundant leads, but once they’re on the job, these agents find that the leads are nowhere near as plentiful as the company painted. Agents who are given leads by their employers almost always earn lower commissions in exchange. Company leads have a reputation for being difficult. When new agents quit, which is often in the life insurance business, their managers often redistribute the leads they were assigned to the next batch of new hires. By the time you get your first stack of company leads, they may have been called by a half-dozen ex-agents already.

Compared to most products and services, life insurance is a hard sell. Consider what happens when a prospect visits a car lot. First, he parks the old heap he desperately wants to replace. Next, after a cursory introduction from the salesperson, he climbs behind the wheel of a new car, takes in the new car smell, and admires all the gadgets and features his present vehicle does not have. He starts it up and drives it around the block, making mental notes of the quiet, comfortable ride and superb handling. All the while, the salesperson conducts psychological judo from the passenger seat, ensuring the prospect that for a low monthly payment, he can be done with his old car and upgrade to this superior driving experience in minutes.

Similar scenarios play out daily at timeshare resorts, boat dealerships and high-end electronics stores. The presence of an enticing product the customer can see, touch and smell makes the salesperson’s job much easier and often leads to an impulse purchase by the customer. Life insurance, by contrast, offers no such instant gratification. In fact, it provides no gratification or benefit whatsoever until the prospect is dead. As a result, creating urgency in a prospect’s mind is fraught with difficulty and requires a unique skill set from the sales agent.

Despite the challenges of selling life insurance, it is possible to build a successful career in the industry and make a lot of money. However, life insurance sales is not for everyone, as evidenced by the field’s high turnover rate. It takes a special type of person to succeed in this career. Life insurance is a career you should consider only if you have a certain group of traits.

Willingness to Take Risk

Relying on a life insurance sales job to make a living is, by its nature, risky. At most jobs, you are paid either an hourly wage or annual salary. You know the exact amount of your paycheck before you receive it and can budget accordingly. Life insurance sales, which is almost always strictly commission-based, offers no such guarantees. You could have a stellar week and make several thousand dollars, or you could work a full week and sell nothing, therefore making zero dollars.

Before considering a career selling life insurance, you have to be okay with a fluctuating paycheck and even the possibility of going a week or two without one. This job is not for anyone who needs to be guaranteed a full week’s pay for a full week’s work.

Thick Skin

Even the best salespeople in the world hear the word “no” much more than they hear “yes.” Rejection is a huge part of the job, and you must embrace it if you are to be successful. For a typical life insurance agent, a large part of prospecting involves cold calling, door knocking and calling leads that have already been contacted by other agents. Many of these leads hang up the phone or shut the door in your face before you can even begin your pitch. If rejection gets under your skin or wears you down, life insurance sales is not the right career for you.

Patience

As a successful life insurance agent, you can make a lot of money down the road. In addition to the immediate commission you earn from selling a policy, you get paid renewal commissions on that policy for as long as it is in force. A whole life policy purchased by a 30-year-old who lives to be 90 and keeps the policy his entire life pays you commissions for 60 years.

Many life insurance agents who have been in the business 20 years or more have enough renewal commissions built up to make an excellent living without ever having to sell a new policy. However, reaching this level takes years of tireless work. A first-year agent, by contrast, usually works a lot of hours for very little pay. A particularly bad or unlucky week in the field means an anemic or even nonexistent paycheck, despite the fact you may have worked 60 hours or more.

Life insurance agents, to be successful, must accept short-term pain in exchange for long-term gain. For those without the patience to do this, a different career is recommended.

How to Shop for Health insurance

If you’ve never shopped for health insurance on your own – or not since before the Affordable Care Act (ACA) went into effect – because you’ve always been covered under your parents’ plan, a spouse’s plan or through your employer, it’s hard to know where to start. How do you get good coverage at an affordable price? What pitfalls do you need to look out for? It’s a complicated subject, but we’ll get you started. This broad overview provides the steps you should take to shop for health insurance if you’re in the market for an individual or family plan and if you’re under age 65. (Learn about health care coverage for seniors in Medicare 101: Do You Need All 4 Parts?)

4 Steps to Purchasing Health Insurance

These steps can help guide you to the best coverage for you (and your family, if you are looking for them, too) at a price you can afford.

1. See which insurance plans your existing providers accept.

Do you already have a primary care physician or specialists whom you like and want to keep seeing? If so, start your search for health insurance by calling those offices and asking them which plans they prefer, which other plans they accept and if they have any intention of changing what insurance they accept in the near future. Calling your providers directly is not only easier than contacting insurance companies to ask if your providers are in network; it also means getting the most current information and the scoop on any upcoming changes. You don’t want to choose a plan from a particular insurance company because your doctor appears to be in the network, only to learn that the insurer’s list of in-network providers is outdated and incorrect – or your doctor is leaving the network next year. (For related reading, see 7 Mistakes to Avoid When Buying Health Insurance and Finding the Right Health Plan.)

It’s possible that not all of your current providers accept the same insurance. If that is the case, you’ll have to make some tough decisions about which providers you want to keep seeing at in-network rates, which you might be willing to replace with different providers in your new insurance network and which ones you can afford to pay for at out-of-network rates. If you find yourself in this situation, ask your current providers about their cash and out-of-network rates to see what costs you might face if you have to choose an insurer that only has some of your providers in its network. (If cost is your primary concern, see Find the Cheapest Health Insurance Providers.) You’ll also want to make sure any prescription drugs you take on a regular basis are covered by the plans you’re considering, especially if the medications are pricey or don’t have generic substitutes.

2. Check out your options on the exchange.

If you’re not getting health insurance through an employer, there are two markets from which you can purchase it: the government market and the private market. You should consider both to see where you’ll get the best coverage for your budget. (Read Lowering Your Costs for Marketplace Health Insurance Coverage and How to Choose Between Bronze, Silver, Gold and Platinum Health Insurance Plans.)

To see what your options are on the exchange, go to HealthCare.gov and enter your zip code. From there, you can click to be taken to the official website of your state’s health insurance exchange, if your state has one (check here to find out), or to the federally facilitated marketplace at HealthCare.gov, if your state doesn’t have its own exchange. You’ll need the information listed in this checklist to apply for an exchange-based plan. One advantage of choosing a plan through the exchange: If your household income is low enough, you may qualify to receive a subsidy to help pay your insurance premiums.

Normally, you can only enroll in an exchange plan during open enrollment, which this year runs from November 1, 2015, through January 31, 2016. (See Tips on the Health Insurance Marketplace/Exchange.)

However, you can use the exchange outside of the open enrollment period if you have a qualifying life event, such as: You get married or have a child; you lose your existing coverage because of a layoff, divorce or other qualifying reason; or you receive benefits from Medicaid or the Children’s Health Insurance Program. (For details, see Can You Use a Healthcare Exchange After Open Enrollment?)

If you need to buy insurance in, say, April, and you don’t meet one of the special criteria, you’ll have to go to the private health insurance market and purchase a short-term plan. This plan won’t count as the required insurance you need to avoid tax penalties, but it will protect you against high healthcare costs until the next open enrollment period, since private insurance uses the same open enrollment period as marketplace insurance.

3. Compare your choices in the private market.

Unlike in the past, insurers offering Affordable Care Act-compliant plans can’t charge you higher premiums or refuse to cover you if you have a preexisting condition so don’t assume that an off-marketplace plan will provide less coverage or cost more. (See How to Buy a Health Plan With a Chronic Condition and Essential Health Benefits Under the Affordable Care Act.) To see what your options are, you can go directly to health insurance company websites or use comparison shopping sites. You’ll typically need to provide information such as your gender, date of birth, smoker status, household income, household size and zip code. If you have a spouse or children, you’ll likely have to provide their information as well. The sites will then show you a list of plan choices and some of the most important details about each plan, such as the monthly premium cost, primary care co-pay, deductible, out-of-pocket maximum and covered prescription drugs. These sites may show you both marketplace and off-marketplace plans; keep in mind that you must buy a marketplace plan through the marketplace to be eligible for a subsidy.

4. Consider using an insurance broker.

If you didn’t find a clearly good option shopping on your own in the public and private health insurance markets, if you’re so overwhelmed you don’t even want to try or if you just don’t have a lot of time, consider getting expert help. Using a health insurance broker won’t cost you a penny, and the broker will do all the hard work of finding the best plan for your situation. Unlike a captive insurance agent, a broker is independent, meaning he or she can offer you plans from many different companies. An insurance broker gets paid by commission from the insurance company whose plan you buy (find out more here), and the plan will not cost you any more if you buy it through a broker than if you buy it on your own.

Don’t confuse a licensed agent or broker with an exchange navigator; the latter cannot recommend a plan based on your needs, has not gone through a criminal background check and may have less expertise. That being said, a navigator can still be informative about your options on the ACA exchange, and you might feel that one is more impartial since he or she doesn’t receive any commission based on which plan you choose. (For related reading, see How to Avoid Common Health Insurance Scams & Fraud.)

Can your insurance company drop you after an accident?

It is possible, but highly unlikely, for an insurer to cancel a policy after one accident. If the accident results in a suspended driver’s license or is alcohol- or drug-related, however, there is a higher likelihood of the policy being canceled.
Next Up: Does your car insurance company report accidents to the DMV?
High-Risk Drivers

Insurance companies are in the business of making money, and they do so by hedging against risk. Just about every driver is in an accident at some point, so one accident is not likely to affect a policy much. If your recent driving record is dotted with other accidents, speeding tickets, moving violations and the like, you are categorized as a high-risk driver. Rather than dropping a high-risk policy, insurance companies often wait until such policies are up for renewal and either raise the premiums or simply do not renew them.
Do Not Drink and Drive

Nothing good comes from driving while under the influence of drugs or alcohol. Insurance companies are much more likely to cancel a policy of a driver who has been involved in an accident while driving impaired. Such drivers, if allowed to retain a driver’s license at all, can expect their car insurance premiums to skyrocket. If the car insurance policy is canceled, it is often extremely difficult to find a company that provides coverage to drivers with DUI or DWI convictions.

 

How do I calculate insurance premium tax?

In the United States, consumers do not pay any additional tax on health insurance premiums. However, your insurance premiums may affect your income tax burden, depending on how your premiums are paid.
Next Up: How are variable annuities taxed at death?
Employer-Sponsored Health Care

Participating in an employer-sponsored health plan can reduce your taxable income in a number of ways. Many employers offer health insurance benefits to employees through a payroll deduction program. In exchange for coverage under your employee health plan, your employer deducts a certain amount from each paycheck throughout the year. Because premium dollars are deducted before your income tax withholding, your total taxable income for the year is reduced.

If your employer pays for your medical coverage plan entirely, you are not required to include these premiums in your taxable income for the year. Even if you must pay for your insurance premiums out-of-pocket and your employer reimburses you later, your premiums are not included in your taxable income.
Out-of-Pocket Premiums

If you must pay for your health insurance premiums with your own money and are not reimbursed by an employer, your premiums may be tax-deductible. Because out-of-pocket expenses are paid with after-tax dollars, the IRS allows for a deduction of premiums and other nonreimbursed medical expenses that exceed a given threshold.

For 2015, itemized medical expenses, including insurance premiums, that exceed 10% of your adjusted gross income (AGI) are tax-deductible. If you incur $13,000 in medical expenses and have an AGI of $100,000, for example, then $3,000 of your medical expenses are tax-deductible.
Premium Tax Credit

To help individuals and families with moderate incomes afford health coverage, the Obama administration implemented a new premium tax credit program. To be eligible for the premium tax credit, taxpayers must enroll in a health plan through the insurance marketplace, be ineligible for minimum essential coverage, such as Medicare, Medicaid or employer-sponsored plans, and have annual income between 100 and 400% of the federal poverty threshold.

The premium tax credit varies based on your income and the amount of your monthly premium. The more money you make, up to the maximum eligible income, the greater the percentage of your income you can pay in premiums before the tax credit kicks in. This way, those who earn very little get the greatest amount of assistance because they need it the most.

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