Question:
I’ll be changing jobs next month, and I’m pregnant. Will I qualify for health insurance coverage with my new employer?
Answer:
That depends on several factors. If your new employer offers a group health insurance plan, the federal Health Insurance Portability and Accountability Act (HIPAA) may apply. This act prevents your new group health plan from treating your pregnancy as a pre-existing condition, if you were covered by group health insurance through your previous employer. But read your new policy carefully. Although most health plans cover maternity care and pregnancy, your new plan is not required to do so, if it doesn’t normally offer such coverage.
Unfortunately, you won’t qualify for the protection offered by HIPAA, if you had an individual (nongroup) health policy, or if you had no health insurance at all. In either case, your pregnancy could be considered a pre-existing condition. If considered pre-existing, you may be subject to a waiting period under your new health plan.
Even if your new employer’s group plan includes pregnancy and maternity care, you may be subject to such a waiting period before you become eligible for coverage. So, if you need prenatal care during this period, you may need to pay for the doctor’s visits from your own pocket. Remember, you may need more care near the end of your term. You may be able to continue health coverage through your previous employer under the Consolidated Omnibus Budget Reconciliation Act, (COBRA). You will likely have to pay the full premiums yourself.
Of course, your new company may not provide health insurance coverage. In this case, you can apply for an individual health insurance policy, but it will be difficult to find an insurer that will cover you at an affordable price due to your pregnancy. Therefore, before you take a new job, make sure that you understand the coverage and eligibility requirements of your new employer’s health insurance plan. Plan carefully for the protection of your health and the health of your baby.
The Patient Protection and Affordable Care Act of 2010 changes how plans treat pre-existing conditions. Beginning in 2014, all health insurers must sell coverage to everyone who applies, regardless of their medical history or health status, nor can plans exclude coverage for those medical conditions.
Question:
I know you don’t talk about mutual funds much anymore, but it’s been a few years since I looked to see if mine in my Roth should be adjusted. I currently have 40% in Schwab 1000, 30% in Perkins Mid Cap Value (JDPAX), 20 % in Gabelli Small Cap (GABSX), and 10% in Artisan International (ARTIX). Any suggestions for changes? I’m 59 years old. Perkins and Artisan seem to be lagging, but I know sometimes funds can be cyclical. Thanks for the great service you offer.
Answer:
Unfortunately, without knowing a little more about your risk profile, meaning your willingness to tolerate volatility and your ability to withstand large market swings, we can’t really tell you how your Roth should be positioned at the moment.
We practice a 10-year Rule, meaning any money that’s needed within 10-years should be invested in fixed income, while anything outside that time should be invested in stocks. If this is money that you won’t need to touch for the next 10 years, then an allocation of 40% domestic large cap stocks, 30% domestic mid cap stocks, 20% domestic small cap stocks, and 10% international stocks should be fine.
When looking at a total universe of nearly 30,000 mutual funds, including many share classes of the same fund, the task is obviously quite daunting. At Henssler Financial, we narrow the available universe of mutual funds by eliminating funds that do not meet our investment criteria. We screen for availability, initial investment, performance, management, and expenses.
Availability:
First of all, you want to make sure the fund is actually “open to new investors” because you won’t be able to buy shares of a closed fund. All your listed funds pass.
Initial Investment:
Secondly, you need to check the “minimum initial purchase constraints” to make sure you can afford to buy shares. Some funds carry initial investment amounts of $100,000 or more for the less expensive institutional share classes. We, generally, look at funds with a minimum initial purchase of $10,000, or below, so that most of our smaller clients can buy shares. The funds you own all have low minimums.
Performance:
Next, we look for a Morningstar rating of at least three stars so that its risk-adjusted returns are average to above average at a minimum relative to the fund’s peer group. The funds you hold have solid performance.
Management:
After passing the rating test, you want to make sure the fund’s portfolio manager is responsible for that performance. For example, say you’re looking at a 5-star fund over the last 10 years, but the fund has a new portfolio manager. The new manager is not responsible for the performance. The new manager may not employ the same investing techniques.
As a general rule of thumb, we prefer a manager to have at least five years performance under his or her belt. With that in mind, all your funds pass that test, with a minor exception being the Schwab 1000 Index. While the longest-tenured manager at the Schwab 1000 fund has been there for more than five years, his two co-portfolio managers have only been there for six months and 18 months. Then again, the Index is a passively-managed fund, so that’s not really a worry because the Index’s holdings dictate the portfolio’s decisions
Expenses:
Finally, a high expense ratio will eat away at your returns, so we look for funds with below average expense ratios. Fortunately, most of your funds have significantly lower expense ratios than their category average. Only the Gabelli fund’s expense ratio is right in line with its Small Blend category average.
Overall, it looks like you did a fine job selecting your funds. If you don’t need the money, we recommend you stay the course.
At Henssler Financial we believe you should Live Ready, which includes understanding how the decisions you make affect your financial future. If you have questions regarding your financial strategy, the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
The following information is reprinted with permission from Forefield, a division of Broadridge Financial Solutions, Inc. This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
