Full Show_ Clark Stinks! and Warning_ Fake Health Insurance Scam

It's my pleasure to welcome you here to the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you to make better financial decisions in your life. I hope that as you go into your weekend, you'll remember that clark.com and clarkdeals.com are here to serve you all weekend long. But today, it's time for you to serve me with some feedback in our weekly Clark Stinks segment. And also, there's something you gotta know about with healthcare plans. The scams are booming, the rip-offs are growing, and you gotta know how to protect your wallet and your health. But first, let's talk Clark Stinks. I should have never encouraged you to speak. You must think I'm pretty stupid. You should be ashamed of yourself. Well, maybe I'm wrong, maybe I'm wrong. Maybe you're right, pal. All right, Rick in Indiana wrote in with this one. Clark, you're confusing us with your answer on health savings accounts. I understand the triple tax benefits of HSAs, but you failed to mention that if your employer already offers a flexible spending account, FSA, through work, then you're generally not eligible for the health savings account at brokerages such as Fidelity. Likewise, those on Medicare are not eligible. Am I confused, or are you confusing me? And several people wrote in. Okay, this is great, because this isn't something I've explained in full in a good long while. An FSA, a flexible spending account, in my opinion, is significantly inferior to an HSA. The flexible spending account is very inflexible. It should be called the inflexible spending account. The money has to be used current year, if an employer plan allows a little bit in the following year, or you forfeit the money to the employer. You can't use both. You can only do one or the other. And normally, the FSA, if an employer offers an FSA, and you're also HSA eligible through them, you have to pick either or. It's not Fidelity saying, well, you can't do an HSA. It's the law saying, if you already have an FSA, you can't add an HSA. Now, FSA, current year. So let's say in 25, you have an FSA from your employer. When you select benefits or elect benefits for 26, at that point, you could start a HSA for 26. You cannot continue the FSA in 26. One caveat, I believe, gosh, this might generate more Clark Stinks about me, is that you can use an FSA for dental and things that aren't medical, like actual medical services. That's what, in the past, I was told. You mean why an FSA would be better than an HSA? No, no, you could have both. You can do an FSA, but only use it for dental expenses. That's something I've never heard. I believe you, but as is so often the case with benefits rules and the tax code, they're way too complicated, just as retirement accounts are way too complicated. The second part, yes, if you're on Medicare, you can't do an HSA. There may someday be a procedure to allow you to do that, but you cannot continue to contribute to an HSA once you're on Medicare. Justin says, I work for a major insurance company in a frontline role, and I think your comment on an insurer's accident response feature was a bit stinky. I can understand general privacy concerns, and that is why this is an opt-in feature, but concerns about claims handling was overblown. When it comes to coverage for your car or your injuries, you either have the coverage or you don't. It does not matter if the app shows you were negligent or accidental, as that is what insurance is actually for. You would have to be doing intentional damage to not have coverage, which is not what the general population is doing. However, the data from the app could actually support your story in a liability claim against you. When another driver or pedestrian makes a false statement against you, information from the app could back up your side of things and protect you legally. You use the same logic in your support of a dash cam. There may be several reasons to desire a tight leash on your privacy, but the insurer using data to protect you legally or even save your life is not one of them. Okay, thank you for that. If you did not hear that podcast or YouTube show or watch that YouTube show, what this was about is that certain insurers offer devices that one of the things they promise is that in an accident, they'll know you were in an accident, they'll get help for you, but in the terms of service, it basically says in layman's terms, anything they find tracking your driving, they can use against you. That's why I prefer the second thing posted, and that's the dash cam, because you can completely control that. The dash cam video is so fantastic. I remember years ago when you were in an accident and there were two different stories, yours and the other driver, and then the police officer watched your dash cam video and told the other person, just knock it off, and gave them the ticket for causing the accident. They became, I guess that's called driver one or something. They were at fault, yeah. So the dash cam is cheap, a lot of cars, like you drive a Tesla, dash cam's built into it. Yeah, that wasn't even a dash cam. It was like side cameras that showed every angle and showed the person's wheel coming into my lane to sideswipe me, so yeah, crazy. Okay, you ready for the next one? Mike in California, Clark talked about the importance of wearing a helmet when riding a bicycle, and I agree. With the ever-increasing number of distracted drivers, riding a bicycle on city streets is riskier than ever. As an avid cyclist, I wish that Clark had included in his advice for riders wearing a reflective or high-vis apparel and to attach LED lights to both the front and rear of your bike. They're inexpensive and you can get rechargeable ones. It's equally important to make yourself as obvious as possible to drivers. And by the way, riders should never assume that a driver sees them and or will yield the right of way to them. Yeah, the last point, absolutely true. With the higher driver eye-level position of SUVs and crossovers, often the driver does not see somebody on a bike who's riding on the passenger side of that vehicle. Do not ever assume that that driver has seen you. Plus, distracted driving, drivers looking at their phones, they don't see pedestrians or people on bikes while they're looking at their phones. As for wearing reflective gear, I do so during the winter months when I'm walking, when I used to run, I always wore reflective clothing because you think the drivers are seeing you, they're not. Okay, this is from WithLoveFromPhoenix. You answered a question, it was Mr. Howard. Oh, mean. You answered a question about long-term care insurance where you actually painted a situation in which whole life insurance made sense for a high wealth individual. Wouldn't it be more prudent to advise that someone of such wealth would be self-insurable instead of steering them into a whole life cap insurance product that they really, truly don't need? I think they said something else there. Well, oh yeah. These things are bad, ugly, expensive, and I'd even go so far as to classify them with, sorry for my profanity, annuities in never, never, not ever territory. Okay, I appreciate that so much because you're right. If somebody's net worth in investable assets is beyond about four million dollars, you don't need to worry about having insurance for long-term care unless you want your heirs to receive money. The reason is your spending level even in skilled nursing will usually be lower than your lifestyle costs were as an ultra-wealthy individual or couple. So a lot of people, even in that situation, want to have some form of long-term care protection because of a desire for their surviving spouse to have plenty of money or because they want the next generation to inherit as much as possible. But if neither of those are a key criteria, once your assets, investable assets, not including real estate, go beyond four million, then you can absolutely self-insure. Dana in New Jersey says, Clark, like Elf tells fake Santa, you smell like beef and cheese. I was excited to sign up for the Capital One Venture X after my current travel card exploded to $695 a year. Your newsletter states that lounge access and priority pass are included. They're not. Capital One has removed that perk. You will need to pay per visit. But hey, if you spend a whopping $75,000 a year, you can regain that perk. Okay, so what Capital One did, you as the cardholder still have access. Your authorized users no longer have lounge access unless you pay a higher annual fee for their authorized user card. And so the $75,000 was something Amex put in place where Amex platinum cardholders no longer have the lounge privilege bringing in guests and all the rest unless they spend $75,000 or more. What's happened is the lounges have become too much a success to the point where they're not special anymore because you can't get in them so much of the time. I'm trying to remember what airport I was in. There was this long, long, long, long line. Was it Denver or Phoenix? And that was for the American Express Centurion Lounge. And people were walking up and they were talking to one of the people with a tablet, being told how long they were gonna have to wait and they were just turning away. Then the next lounge was a Capital One, same huge lines. So the lounge thing they sold so heavily is why they sign up for these cards that now they're taking privilege back but not lowering the annual fees. Chagin Florida says, Clark, you stunk up the place when you pulled out your can of soda and told us how much you enjoy your soft drinks. Maintaining one's health is job one in personal finance. I was surprised someone who is so careful with his finances can make light of the serious health consequences related to the epidemic of sugary drinks. I was also once hooked on soda. My suggestion is that you go to Aldi's and buy a few 12 packs of their Belle V sparkling water. They have several flavors but you should rummage through the palette and pull out the blue boxes which have no flavor added. They are less expensive per can than the 24 packs of flavored seltzer drinks at the big box stores. And you'll find they're even more refreshing than sugary sodas. Wishing you a long and healthy life so I can continue watching your YouTube show from my rowing machine, Chuck. Chuck, thank you very much. I do drink a lot of water and sparkling water. I do also love my diet drinks. I don't drink the sugar soft drinks but I know to a lot of people, the diet ones with the long list of chemicals are even worse. It is an addiction if you will but it's one I've not been able to break. Corinne in North Carolina says, I would never say Clark stinks but he did not go far enough when discussing medical insurance abroad. I broke my wrist in two places in Switzerland last year. Oh, I'm so sorry. They do not take third party insurance so even though I had trip medical insurance and Medicare, I had to put the cost on my credit card. Luckily, it is very inexpensive to get 10 extra x-rays, a tetanus shot, traction, and my arm cast. It cost $833 and we could put it on our credit card. I did get it reimbursed once I got home. Wait, wait, wait. Think about what that would cost in the United States. You'd add a zero to the end of that. No doubt, at least. A week later, they determined I needed surgery at a down payment of 60,000 euros with any difference to be refunded. Once I got home, my doctor said I did not need surgery. So although medical insurance is important to have, a large credit limit on your multiple credit cards is even more important. And you know, this hasn't come up in a while, but there are a number of countries that if you are admitted to a medical facility and you can't pay your bill, you are essentially imprisoned until you can reach a family member overseas who will send money to pay the bill, that you are actually detained and not allowed to exit until the bill is settled. Stephen Oklahoma wrote in with this one. Thanks for all you do, but your advice to the young entrepreneur looking to expand his business smelled like my dog who learned the hard way not to corner a skunk. Wow, I love these descriptions. You made it sound like he can choose between treating new hires as contractors or employees when in fact the IRS has strict rules for determining that status. You briefly alluded to the fact that there are no rules regarding how much you can control their time, but in no way did your advice clearly communicate the reality of the regulations involved or the potential consequences of misclassifying an employee as a contractor. It sounds like it's time for him to find a good CPA who provides business advisory services, not just tax preparation. Asking other entrepreneurs for recommendations is a good place to start. You should also check out the resources at score.org. I love score.org. If you are starting a business, thinking of starting a business, or you're in a business and you're struggling for whatever reason in that business, score.org, the Service Corps of Retired Executives is a great place for you to go for guidance. Almost everything they do is free and wonderful. Okay, and this one's from Tim in Florida. I didn't answer the thing about the ICs. ICs, independent contractors. This has been an ongoing slugfest for decades now, and the reality is that the IRS, unless they're specifically targeting you, it's almost like a trust factor whether you classify somebody as an IC or an employee. Now, yes, there are means tests, and you can look them up. One is you can't control their schedule, and there are a bunch of other things that are the things that I'd say lean towards somebody being an IC versus the other direction, leaning towards being an employee. The reality is the IRS is so frightfully understaffed that even if you're not following the rules, the odds that you're gonna get in trouble right now on this one is so close to zero. I mean, it's probably, the odds are probably lower than even the low, low possibility of winning a lottery. I mean, now we're gonna get more Clark Stinks about that. That's okay. And I can say, because I've had to deal with this at your company, and we are very careful to follow all the guidelines. We follow the checklist because one thing I can't do, I can't get in trouble for anything because credibility's all I got. I'm not entertaining, I'm not funny. Stop it. All I've got is credibility, and we can't mess with that. All right, Tim in Florida says, Clark was discussing a caller's plan to fly to the West Coast over Thanksgiving. He suggested flying on Thanksgiving Day to save money because the three-hour time zone difference. What was he thinking? Sure, time zones change, but not the kickoff time for the NFL games. Come on, man, what's more important, spending time with family or spending time rooting for the Lions and Bears to simultaneously lose? Obviously a Packers fan. A Packers fan. Yeah, okay. Thanksgiving Day football. If you fly on airlines that provide free television, you're good, other than American Airlines, which has been on their narrow-body fleet, making it tougher and tougher for anybody to access anything when you're in the air and pulling out all their seatback screens. Almost everybody, including the deep discounters, most of them have video content available, live TV available. Just make sure, whoever you're gonna fly Thanksgiving, saving money instead of flying the Tuesday or Wednesday before, or the Sunday and Monday after, that the airline you're flying on has live TV so you don't miss football. I was watching, I was on a flight on day zero for college football recently, and a lot of games that I never would have paid any attention to, but I was hungering for real football, which actually is coming soon, the NFL. Anyway, I was on Southwest, and the Wi-Fi was misbehaving. And I kept having the games freeze. And then when it would pick back up, it had missed whatever the excitement was at that moment, and finally I gave up. So yeah, so as long as the Wi-Fi is reliable, you're not gonna miss your Thanksgiving Day NFL games. And by the way, I think the Lions are like a crowd favorite around the country, because they're kind of like the team that's always lost, and so people cheer for them even if they don't really care about them. The Packers have the most ardent, loyal fan base ever, so I'm not saying anything dissing any Packers fan. Better not. Yeah. And my wife has an old Packers jersey, I think for Brett Favre, maybe? Nice. Anyway, coming up ahead, I wanna talk about something that you really gotta pay attention to. Fake healthcare plans. They are perhaps the hottest scam of the moment. Healthcare costs are just bonkers. My 26-year-old daughter aged out of coverage on my healthcare plan. Dependents were covered up to age 26, and so she was just an add-a-dependent, and essentially, coming out of my pocket was basically free, and so she then had to go shop for real health insurance on her own, and let me tell you, she was really, really blown away how much it actually costs her for real health insurance, and why do I keep using the word real, real? Real. I've said it three times already, I think, because the extremely high cost for individuals and small businesses buying health coverage has led to a big business of scam artists pretending they're selling you health coverage. You haven't heard me say the word insurance for it, have you? And then people are like, wow, this is great. It pays for this, that, and the other, and there's no deductibles, and I get all this wonderful coverage for so little money per month, and they'll say things like we cut out the middleman or whatever, so what you need to know is that the people that solicit you with these policies, and there's even telemarketers calling people who are small business owners, offering them these special healthcare plans, and people are like, wow, this is awesome. I'm gonna save all this money, not gonna have to pay all those premiums, and now we're not gonna have those huge deductibles anymore for ourself and our employees, or if somebody's buying individual, you'll see these things available on the internet, on social media, and you'll think this is great. I'm gonna dump, fill in the blank, whatever big monster insurance company policy, I'm gonna get rid of that, and I'm gonna go with this, but the problem is these range anywhere from really bad deals to out-and-out scams that people don't find out till they really need the coverage. An example, these ultra-thins, these policies that pretend they're so comprehensive actually exclude major illnesses like cancer, heart disease, you name it, as for doctor visits, the ones that are just bad deals. They may look great for doctor visits. You go, and they'll pay for routine doctor visits, but anybody gets really sick, that's when you find out that your wallet's gonna be really sick because you have no actual coverage, but that's one category. Those are these plans that are being sold that are just bad deals, but then the other that's the part that seems to be spreading like wildfire right now are complete fakes where you buy a plan, you pay a premium often, the premium's so low that you pay a year in advance, and then only when you go to the doctor just for a simple doctor's appointment, that's when you find out you got scammed, you have no coverage, the money's gone, and depending on the circumstance with the new rules on buying a policy that is part of the healthcare exchange, healthcare.gov, you may now be ineligible after you've been scammed to buy any real health coverage for a whole nother year, so be very, very cautious and careful with any of these pitches for ultra-cheap health coverage that appear to be a bargain, but they're no bargain at all when the chips are down, when you get sick. All right, we'll go to questions. This one came in from Meldon in Ohio. My term life policy is running out. Should I replace it with another term life or spring for the whole life policy? I talked to an agent from a recommended company and he really pushed whole life. Oh my goodness, I'm shocked, shocked! I just wanna make sure that my family is provided for. I'm not necessarily concerned with the cash value of the account. So, Meldon, if you're not interested in using a life insurance policy as some kind of goofy savings or investment account, you should buy a term life insurance policy, a level term life insurance policy. Buy another one. Make sure you buy it for the time coverage period you need to protect either your kids growing up or the remainder of your working lifetime. Because later, you may not be able to medically underwrite, so you wanna make sure you ensure that whole period. You can buy level term typically 15 to 30 years. As for why, I'm not shocked at all that when you talk to a human agent, all they were doing was pushing whole life or any other kind of goofy life insurance policy is that's where the commissions are. They don't even make enough money selling a term life policy to cover the cost of their gas for coming to see you or if they drive an electric car, they might break even, to come and write up that policy for you. That's why level term insurance policies are almost always automated. You fill out an application online, you submit everything online, and you're either accepted or rejected after medical underwriting for that policy. And at Clark.com, we even have insurers that use an industry database and there's no medical exam. You're approved instantly for that policy and it goes into effect right away for a level term policy of 15 to 30 years. By the way, the policy cost on level term insurance for a year will be less than what that agent was trying to sell you for a premium for one month. Michael in Florida says, you mentioned that it makes no sense to pay off your mortgage if you have a low interest loan. I have a 2.88% mortgage that has about $80,000 left. But in Florida, my $650,000 home has trouble getting insurance. The insurance company won't even cover the home if the value is over 700K, which I will hit soon. In this case, would it be better to pay off the mortgage and stop buying insurance instead of investing the money? Okay, Michael's in, this is Florida, I'm guessing? It is Florida, yeah. Yeah, okay, so what Michael was referring to with the $700,000 limit is the state has an emergency backup insurer called Citizens. And so Citizens, to limit the harm to Florida taxpayers generally, is not insuring expensive homes in the state of Florida, which is anything above 700,000. And so you have to buy from a private insurer. So here's the problem, Michael. Yeah, you could pay off your mortgage. You won't be required to have insurance anymore. And a very large number of people in Florida, because of the very high insurance premiums, have decided to go that route. Now what that means is you have no coverage for your house. You also have no liability coverage, which is a potentially greater risk to you than losing your home. So if you did decide that you were gonna basically self-insure and walk away from the value of your home, if it was destroyed for any reason, you at least need to buy a liability insurance policy that protects you, and that will be much cheaper, for anything that happens that turns out to be your fault to protect your assets. If you are wealthy enough that it doesn't really matter if your home is wiped out and you get nothing for it, and you wanna self-insure, that is your choice. And again, more and more people are making that choice in the state of Florida. Chelsea in Minnesota says, Dear Clark, recently you described how bad 403B retirement plans are for teachers when compared to 401ks. Both my husband and I are teachers in Minnesota. Our school district automatically deducts 7 1⁄2% of our salary, and matching that saves it in the state educator's pension plan, which is not 403B plans. Right, right, right, so having a pension is a pretty great deal. We have the option to contribute more to a 403B, which the district will match up to $100 a month. We have been doing this 403B match for 10 years. Are 403B fees so terrible that we should stop contributing the $100 extra to the 403Bs and stop getting the district's $100 match, or keep contributing the minimum to keep getting the match? And we did have a lot of Clark stinks I didn't get to since I knew I was gonna read this question about like, you said not to do the 403Bs, but what do you do? Yeah, a wonderful question, and we've addressed that at length on prior podcasts and YouTube shows. But when I talked about it most recently, it was just kinda shorthand about how hideously, horrifically awful 403Bs are. So in your case, district matches, you put in $100, they match with $100. Even as horrible as the 403B plans are, do that, keep doing that, because having your money instantly doubled will be worth it, even though there will be this enormous drag on your returns over the years, because of how dirty, rotten, terrible almost all 403B plans are. So what would you do instead? And by the way, there are tools at 403BYs.org that will walk you through, for most school districts in the country, is your plan rotten, terrible, or not? And is there a good plan available in your district that you didn't know about that is the one you should be using? That's step one, for sure, for any teacher, yeah. As to what you do instead, you do a Roth IRA. And you contribute in a Roth IRA up to the max permitted, depending on your age, 7,000 a year or 8,000 a year. If you are wanting to put more money aside, believe it or not, it's better to just open a regular old investment account with one of my three favorite children and put it in an index fund. Total Stock Market Index Fund is an example. Even though you'll have to pay capital gains tax on your earnings on that, your gains on it, way down the road when you need that money, believe it or not, paying the tax on that will be far cheaper than the actual net return you would have from any 403B plan, because the fees are so awful, awful, rotten, crooked, dirty on 403B plans. And there is no excuse, no excuse at all. Why did the Congress specifically do this for the insurance industry? That teachers, people who work in hospitals, people who work for nonprofits, that people who do public service-type jobs would have the worst retirement plan offerings on planet Earth and not have access to the really great plans that are available to people who work in the traditional for-profit sector. I just wonder why, because everybody says how much they appreciate the work of firefighters, police officers, teachers, people in the medical profession, whatever, but then turn around and give them these horrifically awful, dirty, rotten, scoundrel 403B plans? Why am I being so strong about this? Because I need you, if you are offered a 403B where you work, you need to do your homework and see if you're being cheated or not. And I can tell you, if a nice man or woman comes to you for free to talk to you about their 403B plan, I can just about 100% guarantee you you're gonna be ripped off with monster fees. Monster fees. And it's your future, it's your retirement that you're attempting to save for. So what a negative way to end as we're approaching a holiday weekend, Labor Day weekend, where we are celebrated for our work. And we as Americans work more hours and work harder than most people anywhere on earth. We have work ethic. And we got one day a year to celebrate that. Monday, Labor Day, hope you have a wonderful holiday weekend. And I'm taking Monday off too. So I will be at your service next Wednesday and just have a grand old time.