Health insurance for indy rep

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Jul 21, 2005 12:43 am

Been in regional and wirehouse environment for entire career. Another d**n merger has me thinking about indy environment & have received considerable encouragement from clients in that direction.


Here's the catch- have a chronic illness (not life-threatening but expensive to maintain) in the family that makes health insurance problematic. Anyone else have to deal with this?


In anticipation of the obvious questions- yes I'm looking at RJ & Wachovia independent employee programs. Production >500m, aum +/- 60 mm. 20+ years in biz, 75% fees & trails


With an insurance license you'd think I'd know this...


Jul 21, 2005 1:03 am

OD,


You are right about insurance being expensive.  If you are a good boy, you might look at www.medi-share.org.  It won't take care of chronic stuff, but nothing that will is cost-effective.  One way or the other, you'll end up paying for it.


You could also look at a high deductible policy with a HSA incorporated into the program so you at least get some good tax benefits.


BTW, you might want to throw LPL in also next to Wachovia and RJ.  I looked at RJ and LPL and ended up going to LPL (see my RJ vs. LPL thread under what's up with the firms), although the two programs were both very, very good for independents.


Good luck...I know how you feel...

Jul 21, 2005 9:15 am

Olddog, I'm a little confused by your post.  You said you're looking at the RJ & Wachovia "independent employee" models.  At least at RJ under their independent employee model (called Advisor Select) you access all the group benefits of being an employee of RJ.  And for health insurance, besides being covered they also pay the normal employer portion of the premium for you and family.


I guess what I may be missing is that you may also be contemplating the independent contractor model (RJFS for RJ, FINET for Wachovia) in addition to the indy "employee" models, and that's the reason for your question about health insurance.  Right??

Jul 21, 2005 1:04 pm

 have a chronic illness (not life-threatening but expensive to maintain) in the family that makes health insurance problematic. Anyone else have to deal with this?


Yes, as an independent I have no coverage from the company.  My spouse has a medical condition that makes it hard/expensive to get coverage.  What we are doing now is forming a LLC with his business which is a sole proprietorship now, and adding me as an employee.  Ta Da.....instant group. Now we can apply for group health insurance.  Will cost less in the long run. Still not cheap....but less.

Jul 21, 2005 4:03 pm

Indy1- thanks for the tip. I will check into it. I suppose, though, things may depend on how you define good boy...


Duke- sorry for the confusion. If I choose the independent employee model then problem solved. You are correct in your guess that I would also like to consider the full independent model but the insurance piece will be a major factor.


babbloon- interesting. Let me know how that works out. Never having purchased group health coverage before (since I've always been an employee) I'll have to dig a bit to get a "small group" quote. My wife and I own another business, so perhaps we could form a holding company to own both businesses. Hmm...


Thanks for the help so far. Any more ideas feel free to pass them along.

Jul 21, 2005 7:33 pm

Take a look at a high deductible HSA insurance plan and using a lump sum critical illness plan as arbitrage for any catastrophic event. With this set up you pay your insurance premiums into a "sinking fund" similar to a flexible spending account. These funds are used to cover everyday medical expenses up to the deductible. At that point your insurance kicks in. Having the high deductible will cause you to have very low premiums and you will essentially pay for everyday medical situations from this sinking fund. Unlike a cafeteria plan, with a HSA the unused portion of the money in this sinking fund does not disappear at the end of each year. The excess money stays and continues to grow. You are actually able to invest these excess funds (www.hsabank.com). Then you say..."This all sounds good but what if I get cancer and have to pay a $2,500-$10,000 deductible all at once?" That is what the lump sum critical illness policy (Mutual of Omaha) is for!!! Say you have a $50,000 lump sum critical illness policy that pays the entire benefit amount all at once (similar to a life insurance policy) once you are diagnosed with any one of a number of "critical" illnesses.

Viola!!! Low cost health insurance that allows the healthy individual to pay for routine expenses out of pocket and provides deep pocket insurance coverage for major illnesses!!!

Jul 22, 2005 9:14 am

OldDog, since you're already considering RJ, make sure you take a good close look at the Advisor Select (independent employee) platform in comparison to RJFS (indy contractor).  With your production above $500k, as you probably know you do meet the minimums for Advisor Select. 


While the payout is lower on AS, there are no ticket charges as in RJFS.  Depending on your production & product mix they'll still probably be a 5% or so net payout differential in favor of RJFS.  But, once you factor in the extra services/support provided under AS you may find that comes close to making up the difference.  And, re your particular situation with health ins, as you said AS obviously solves that problem.


RJ can run a proforma for you showing the net economic differrences between AS and RJFS.  If you haven't had them do that and you're seriously looking at RJ, I'd do so.


You're also talking w/ Wachovia.  From what I understand when I looked (casually) at their indy employee ("profit formula") model a couple years ago, they're much more costly than RJ's AS model.  Not too much difference in payout, but they pass on a lot higher level of costs than RJ does.  If that's still their situation, then I'd guess there is a wider spread at Wachovia between FINET and Profit Formula, than at RJ between RJFS & Advisor Select.  The point being, if I were going to Wachovia (ugh!), FINET is probably a clear-cut economic pick over Profit Formula, but at RJ when you factor in everything, AS may often come up as the best deal.

Jul 22, 2005 9:54 pm

Thanks to everyone for the advice, public posts and private messages included. You've given me a lot clearer picture and helped me gain more knowledge & perspective. Any other insights & ideas anyone has, please don't hesitate to post or pm.


I'm new to this forum, but have been reading RR for about as long as I've been in the biz. It seems if you can ignore the war between the EJ bashers & supporters you can find good stuff here. Thanks again!