Have You Had The Talk With Your Kids Yet?

No, not That Talk.  I mean The Talk about health insurance, why it is so important to have, and what it will cost to pay for and use it.

I came upon an article posted on CNBC by Abigail Summerville titled “The 5 health-care terms every millennial should know.” As someone who has young adults entering the job market, I thought her summary useful and worth passing on.

She includes five key definitions provided by Katelyn Gleason, CEO of Eligible, a developer of health-care Application Programming Interfaces (APIs).  I have edited them a bit and added a sixth to her list. 

  • Premium:  This is the amount of money you pay for the insurance policy.  Not unlike other types of insurance, the premium only covers the policy and does not necessarily cover the costs of services you use.
  • Out-of-pocket costs:  These are the costs for medical care that are not reimbursed by insurance. They include co-pays, deductibles, and co-insurance for covered services, plus all costs for services that aren’t covered.  Typically, there is an annual cap on out of pocket expenses.  Gleason provided the following example. Say you develop a serious medical issue and the costs add up to $100,000 for that year. If your out-of-pocket maximum is $10,000, then after you have paid $10,000 (generally through co-pays, deductibles and co-insurance) your insurer is responsible for the other $90,000.
  • Co-pay:  A co-pay is a predetermined amount of money you would pay out of your pocket when you receive medical care. However, the co-pay can vary depending on what type of care you need or the type of doctor you visit.  For example, as Gleason points out, there is usually a smaller co-pay for visiting your regular doctor, and a higher co-pay for an emergency room visit.  Know too, however, that some services have no co-pays.  Rather, 100% of the cost is paid by you and applied to the policy’s deductible or co-insurance.
  • Deductible:  This is a specified amount of money you must pay before an insurance company will begin to pay for certain types of claims. For example, a routine visit to your regular doctor may be covered by a co-pay, but any tests which may be ordered may be charged to you at 100% of the network cost until your deductible is met.  For example, if you have a $500 deductible, and the tests cost $100, you would pay the co-pay plus the $100.  Once you have reached the $500 deductible level, then any additional costs would likely be applied to co-insurance.
  • Co-insurance:  Some plans include a provision where the insured also pays a share of the payment above and beyond the deductible. For example, say your co-insurance is 20 percent and you receive a medical bill of $1,000.  After you have paid your deductible, you would pay $200 and your insurer would pay $800. You typically pay co-insurance after meeting your annual deductible and it is capped by your out of pocket maximum.
  • In network / out of network providers:  The difference if often a significant source of confusion.  Most plans have a defined ‘network’ of healthcare providers with which the plan has contracted to provide services at a defined and often significantly discounted rate.  Providers who have contractually agreed would be ‘in-network’ for the plan. If the providers do not they are considered ‘out of network’ and more than likely you will have to pay the full cost of the service.  Thus, it is very important to verify if the provider is in-network or out of network before receiving services.  This can be a major source of surprise when a bill for services comes.

Here at A. Alliance we know all too well that health related debts are the number one source of bad debt, and often this is the result of patients not fully knowing or understanding the cost of their insurance or the services their policies will pay for.  Helping our young adults understand the ins and outs of health insurance can prevent financial surprises which often impact debt and even credit ratings. 

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 14 years.

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Financial Literacy: How Savvy are You?

Since April is financial literacy month, I thought it would be a good time to discuss the sobering results of the Standard and Poor’s Ratings Services Global Financial Literacy Survey.  The S&P survey is the world’s largest, most comprehensive global measurement of financial literacy.  The results are based on interviews with more than 150,000 people from over 140 different countries, aged 15 and older. Unfortunately, the outcome revealed that worldwide only 1-in-3 (~33%) adults (15 and older) are financially literate.  Sadly, this leaves about 3.5 billion people ignorant of basic financial concepts.

To determine financial literacy, questions were asked that measured knowledge in four basic financial concepts: risk diversification, inflation, numeracy (interest), and compounding interest. A person was considered financially literate if they understood (at least) three of the four concepts.

Here are the questions. Multiple choice answers are in brackets.

RISK DIVERSIFICATION

Suppose you have some money. Is it safer to put your money into one business or investment, or to put your money into multiple businesses or investments? [one business or investment; multiple businesses or investments; don’t know; refused to answer]

INFLATION

Suppose over the next 10 years the prices of the things you buy double. If your income also doubles, will you be able to buy less than you can buy today, the same as you can buy today, or more than you can buy today? [less; the same; more; don’t know; refused to answer]

NUMERACY (INTEREST)

Suppose you need to borrow 100 US dollars. Which is the lower amount to pay back: 105 US dollars or 100 US dollars plus three percent? [105 US dollars; 100 US dollars plus three percent; don’t know; refused to answer]

COMPOUND INTEREST

Suppose you put money in the bank for two years and the bank agrees to add 15 percent per year to your account. Will the bank add more money to your account the second year than it did the first year, or will it add the same amount of money both years? [more; the same; don’t know; refused to answer]

Suppose you had 100 US dollars in a savings account and the bank adds 10 percent per year to the account. How much money would you have in the account after five years if you did not remove any money from the account? [more than 150 dollars; exactly 150 dollars; less than 150 dollars; don’t know; refused to answer].

Here are the answers:

Risk Diversification: Multiple businesses or investments

Inflation: The same

Numeracy (interest): 100 US dollars plus three percent

Compound Interest: More, More than 150 dollars

How did you do?

Worldwide, risk diversification was the least understood concept.  I was surprised by this. I guess a lot of people have never heard of the old adage, “Don’t put all of your eggs in one basket.” Kind of spells it out for you, doesn’t it?

Overall, men fared better than women. Worldwide, 35% of men and 30% of women were financially literate.  People from Northern European countries had the highest scores: 71% of adults in Denmark, Norway, and Sweden understood the concepts. People from South Asian countries had some of the lowest scores, where, at best, 25% are financially literate. Here in the United States 57% of the people passed and in Canada 68% did well. The Republic of Yemen had the lowest score with a financial literacy rate of only 13%.

One of the things I found interesting about the results was that worldwide financial literacy was lowest among adults 65 and older. But as poorly as scores generally were, I found it encouraging that globally and in countries with emerging economies people in the 15-35 age group did the best. This tells me that perhaps there’s been an increase in education for people in these younger age groups.  Hopefully this will translate into higher scores for everyone in the future.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 14 years.

Debt Collection: It’s All About the Info

Unless you collect 100 percent of charges billed at time of service (or delivery) people are going to owe you money. That’s a fact. How successful you are at getting paid is dependent on a number of factors (like the age of the debt). But without a doubt the most important thing you can do to improve the collectability of past due accounts isn’t some elusive collection strategy privy to only a few. It’s actually quite simple: get as much information as you can about the person (or company) before you provide service. 

I can’t tell you how often clients, especially the smaller sized ones, will send us placements for collection that are missing key pieces of information. I can’t stress this enough: The more information you provide, the more collectable the account will be.

To be fair, simple is not the same as easy. I understand that. Getting all the requested information will take some work. I know most of our clients already provide their customers with a form requesting the information.  But oftentimes simply asking for the information isn’t enough. It’s important to follow up to make sure the form is filled out in its entirety.

At first it might feel awkward asking customers to fill in the unanswered questions. But if you make the completion of the form a company policy it will make it less personal when you explain that everyone is required to do it.

Contrary to what you might have heard debt collection is a heavily regulated industry. There are certain pieces of information that we are required to have and others that will aid in the collection process.

Best practices include the following: 

Please note: * denotes information we are required by law to have or we cannot pursue the debt.

  • First and last name of debtor* – It might be hard to believe, but we have had clients send us accounts without the last name of the debtor. This is a must-have piece of information!
  • Address – We are required by law to send a debt validation letter on all accounts placed.  If you had an address that is no longer valid send it along as the last known address.  We can use it to skip-trace the account to find debtor’s current address.
  • Date of Birth and/or Social Security Number – Having this information makes finding the debtor’s current address easier. Also, we must have either a DOB or a SS number or we are unable to report the debt to the credit reporting companies (Experian, Equifax and Trans Union). Reporting debts to these agencies is a great tool we use to get debts paid.
  • Phone Numbers – Best practices include: home, cell and work. We use telephone calling campaigns as one of our collection tactics.  Lack of phone numbers prohibits this worthwhile tactic.
  • Amount Owed* – Many of our clients include late fees and interest on amounts owed.  Typically these fees are not collectable and should not be included in the amount owed. (There are some instances when fees can be collected, but only on certain types of debt that have a contract with the debtor such as a signed lease or signed financial agreement. Even then the fees must be expressly stated in the contract. And a copy of the signed agreement must be submitted when the account is placed.) Law requires us to be able to validate the debt. Balance forward pages do not fulfill this requirement. Accuracy is extremely important. We must be able to notify the debtor of the exact amount they owe. 
  • Last Date of Service* & Date of last Payment – There is a Statute of Limitations (statutes vary state to state) on how long we can pursue a debt for collection. To stay compliant with collection laws we need to have last date of service.
  • Employment – Name and address of employer.  This is a critical piece of information needed when considering litigation as a way to collect.
  • Spousal Information – Name/Address/phone numbers/employment information for spouse.  Sometimes (depending on the state and type of debt) the spouse of the debtor is also financially responsible for the debt.
  • Name of Creditor* – We must have both the legal name of your business as well as a DBA if it is different (or if you have more than one business) to validate the debt and when reporting to credit reporting agencies. 

I hope you found this list to be useful. Whether you partner with us or another reputable collection agency it is important to work together as a cohesive team so the money owed can be collected as effectively and efficiently as possible.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded innorthern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 14 years.