by J3 Patino
What is Kaiser?
Kaiser HealthGroup International is the healthcare partner of the International Marketing Group (IMG). It is a lesser known Health Maintenance Organization (HMO) compared primarily because it’s focus is on the individual family clients (and not the corporate accounts). The reason why Kaiser was created was to address the LACK of long-term healthcare provided in the country.
Why Do We Need Long-Term Health Care?
Typically, an average Filipino employee would have a healthcare plan provided by his/her employer. This is certainly very beneficial and helpful to the employee and his dependents, and this covers for the person’s SHORT-TERM healthcare needs.
But what happens when the person has to leave the company? What if he is already forced to retire, or perhaps was made to be redundant? The healthcare benefits will also disappear! I honestly find it quite sad that when people get older, that is the time they will most likely need a healthcare plan, but that is also the time when they won’t have it already.
This is the BIG GAP in healthcare. Everyone has the typical short-term plans, but no one is preparing them for the future – a time when they will no longer be covered by any company, and a time where medical and hospitalization expenses would most likely be in the millions. This is the need that Kaiser is solving, one family at a time.
The Kaiser Short and Long-Term Plan
During the seminar, the Kaiser 4-in-1 plan must have been discussed to you. Depending on the skill on the speaker, there are some things that might not be really clear to you, so let me simplify it.
The Kaiser plan has 3 phases:
Phase 1: The Accumulation or Paying Phase (Year 1-7): For the first 7 years you will be paying for the plan. During this time, it works like a typical HMO wherein you have an annual benefit usable for hospitalization expenses. (There are a couple of bonuses like the Annual APE, and Dental Benefits, but honestly I think these shouldn’t even matter in your decision making).
Comparison to Other Providers: During this phase, the kaiser plan addresses the Short-Term healthcare needs. When compared to other healthcare providers, this plan is actually very sub-par. Short-term healthcare is definitely NOT this plans strong point).
Phase 2: The Growth Phase (Year 7-20): During this phase, you have completed all the payments and all you have to do is WAIT and let the plan mature. At this point your plan will have a starting cash value, that you can also use for medical expenses. The money is invested in government and corporate bonds, which are expected to yield 5-8% per year.
Comparison to Other Providers: During this phase, the Kaiser plan is still there for your short-term needs. The money is still growing at this point and it is at this phase when the Kaiser plan starts to step-up and be more competitive with the other health providers.
Phase 3: The Maturity (Year 20 and beyond): At the plans maturity at year 20, several bonuses will be awarded like the Long-term Care Benefit and Bonus. Plus about 85% of the premiums will be returned to you if you didn’t use the plan during the earlier phases. Here the cash value of your investment would also be good as cash – meaning you can use it for anything, not just hospitalization and medical expenses.
Comparison to Other Providers: At this phase, Kaiser stands out because most healthcare providers are already TOO expensive (Try this: add 20 years to your age now, and inquire how much a healthplan will cost….) Meanwhile, your money with Kaiser has already accumulated (and depending on the plan you chose, your Total Health Benefits would be upwards of P500,000 all the way to several millions).
All in all, I think the Kaiser plan is a great compliment for those who have existing healthcare plans (especially if its provided by your employer). This way you’re covered for both your short and long-term needs.
Where the Kaiser Plan Fits
As you learned in the seminar, there are 6 steps to financial freedom.
- Increase Cashflow (by increasing income and decreasing expenses)
- Manage Debt (by debt consolidation and eliminating it)
- Create Emergency Fund (Save 3 to 6 months of your expenses)
- Ensure Proper Protection (Portect for medical emergencies, and risks)
- Build Long-Term Savings (through investments)
- Preserve Estate (through estate planning)
Where does Kaiser Fit into the Picture?
Kaiser is in the 3rd and 4th step of achieving financial freedom. While investing in the stock market is at the 5th step already. And to build a solid financial foundation, these steps must be STRICTLY FOLLOWED.
(Imagine a child asking for dessert BEFORE even eating the main course and the vegetables. Would you, as a responsible parent, actually do this even if the child wants it so badly? Of course not! That would be very unhealthy, and it would ruin the whole point of eating (which is to make us healthier).
It’s the same thing in building a solid financial foundation. No matter, how good investing may make you feel, if not done with the right foundation it is also unhealthy. The right way is to Have a source of income first, THEN make sure you don’t have any high interest debts… THEN save and secure yourself with insurance and healthcare, THEN that’s the only time you invest.
Should You Get the Kaiser Plan?
Affiliate Disclaimer: I (along with your IMG financial coaches) will receive a commission should you decide to purchase a Kaiser plan through us. But as an independent and Registered Financial Planner, I will only recommend the plan if it suits your needs.
So let me start off with who should NOT get the plan..
PLEASE DO NOT get the plan IF:
- You have no source of income.
The unemployed, children and students are a big-no no. Retirees can get the plan only if someone else will cover for it, and you have savings that will last you at least 3 years.
- You are buried in high-interest debts.
If you cannot fully pay your credit cards, then please repay them first. Auto and Home Loans are okay since these are more acceptable interest rates.
- You cannot save more than 10% of your salary.
Focus on increasing your income and decreasing your expenses first. Learn how to budget and save first. Learn how to increase your income before moving on to the higher stages.
If you belong to any of the above, you can still come to IMG for coaching, but it is really not recommended that you get the health plan. Put the first things, first.
If you DO NOT belong to any of the above, then you can consider getting the plan. For this, I will simply rank it if it’s excellent, very good or good for you to get a plan:
The plan is EXCELLENT for you IF:
- You are a young professional and you are already covered by your employers health benefits.
This is a perfect compliment to your short and long-term healthcare needs. This is actually also very good because if you do not use the Kaiser plan in the early phases, you get the 85% return on your premium. So you current plan acts like a BUFFER to your Kaiser plan.
- You are self-employed with no form of health/medical benefits.
The bonuses are really valuable here like the insurance, APE, and of course the health plan. It being a 4-in-1 (savings, insurance, short and long-term healthcare) is also very convenient for your complicated and busy lifestyle.
- You are an employee planning to transition into business.
One of the fears that employees cling on to are the ‘benefits’ in the company. This almost always prevents them to take the leap of doing what they truly want to do. When you have your healthcare covered, at least you’ll have a safe foundation as you venture into the unknown.
The plan is VERY GOOD for you IF:
- You are an established family man/woman in your 40’s to 55’s.
Given that the plan takes 20 years to mature, it would just be in time for your retirement years.
- You plan to grow old SINGLE.
Not to assume anything about your future, but generally you will have less people to rely on in your old age. (Both socially, and financially). Having to hiring a personal caregiver is also very possible so it would be good to prepare as early as now.
The plan is GOOD for you IF:
- You are starting or building a family.
Healthcare is always a good thing, but the challenge in your case is the very tight budget. In this case, I would actually recommend you to focus on getting life insurance first, and really saving up for the emergency fund prior to getting additional healthcare. I would also recommend that you start saving for your child’s college tuition already if you have excess money. So invest in this Kaiser plan only when you can really afford it, and all the other necessary steps are already covered.
If you did not belong to any group above, sorry for missing out on you. But I believe with these examples, you already know the befits of the Kaiser plan.
Abouit J3 Patino
This review was written by J3 Patino – the founder of Pinoy Money Academy and an independent Registered Financial Planner. J3 helps Filipinos understand investments and other financial instruments so that they can make the right investment decisions and achieve their financial goals.