A (serious) Thank You to Obamacare

Say what you will about the Affordable Care Act, sarcastically or lovingly (take you choice) called Obamacare.  But I have to say, I am a BIG fan.  In honor of Thanksgiving last week, this is what I am thankful for...

In my previous post (Government Shutdown vs. Obamacare), I mentioned that I was glad that the ACA was passed, and subsequently upheld by the Supreme Court for very personal reasons.  Last month, I finally found a great job, with less great benefits.  After 5 months of unemployment (well, technically 4 months of underemployment followed by 1 month of unemployment), I was just thankful to have an income again, and did not take any real consideration into what not having a good set of benefits would entail.

As it turns out, being a 25 1/2 year old on your parents' insurance is an awesome thing, until you are (almost) kicked off of it, thanks to insurance company policies.  You see, when I got my job, I was hired through a temp agency, due to funding reasons of some sort.  Therefore, I was eligible for the Health, Dental, Vision, and Life insurance policies through the temp agency.  However, they have the bare minimum of coverage to help minimize costs for their employees.

Now, you must be thinking "Wait!  The Affordable Care Act will fix that-- they have to have a certain minimum to be in compliance," right?  Wrong.  Apparently, for whatever reason, the temp agency and their health insurance policy is exempt from the provisions of the ACA until Jan 1... of 2015.  Therefore, the insurance coverage was not required to cover pre-existing conditions.  Including my super-awesome-fun-time pre-existing condition that is Crohn's Disease, at least for the first 180 days (6 months) of coverage.

I looked into it further with the temp agency, and they referred me to an insurance broker, who referred me to Covered California (California's online marketplace similar to HealthCare.gov).  However, this is where it gets tricky.  Covered California's coverage begins on Jan 1, 2014 (just 1 month away!).  Unfortunately, under the policies of my current insurance (my parents' insurance), I was supposed to be kicked-off within 30 days of being hired by a company that offers health insurance.  Since my 1st day was on Nov 1st, I would be ineligible after Nov 30th.

If you didn't follow that, that means that my current insurance would expire on November 30th, and a new plan under Covered California would not begin until January 1st.  That leaves 31 days (the entire month of December) for me to go without health insurance.  If I were a normal, mostly healthy person, that would not really have been much of an issue.  However, I am not... and I generally end up in a doctor's office, lab, or hospital at least 1 time every month or maybe 2 if I am lucky.  Additionally, I had several routine check-ups and tests scheduled for December.

So I had 3 options:
1) Lie to the benefits people, and pretend I didn't have coverage options (not a super great choice, as my parents' insurance policy could be cancelled & lying is generally frowned upon...)
2) Quit my job & restart my unemployment (not a great choice either, seeing as I am essentially broke without my steady, weekly paycheck)
3) Get married to my fiance now instead of in 5 months, and hop on his insurance (not a bad choice, but I'd rather go-ahead with the wedding I have been planning for about a year now in May than have a "shotgun"-style wedding right now just to have health insurance)

Thankfully, my parents' decided to check in with their benefits guru, who just informed us that under the new provisions of the ACA (a.k.a. Obamacare), I am allowed to continue my health insurance coverage through my parents' plan through my 26th birthday, regardless of my employment status or benefits eligibility!

Long story short, I am extremely thankful for the Affordable Care Act, not just for the reasons stated in my previous post, but because those reasons will continue to be relevant for me.

Thanks to Mr. President, the Democratic-run Congress of 2010, and those 5 Supreme Court justices who upheld the law, I continue to have health insurance, with no lapse in coverage.  The website may be flawed, many Americans will see their insurance premiums rise, but overall, it is helping the individuals like myself.  And I can be thankful for that. :)

Government Shutdown vs. Obamacare

Does it really have to come down to this?  The U.S. House voted this morning to keep the government running with another short-term budget solution.  The trade-off?  Defunding Obamacare.  While this bill is unlikely to pass the Senate, the fact that it did pass the House is noteworthy.

I get it-- Congress wants to keep the government running, because the consequences of a shutdown are pretty big.  And by doing what they just did, they can kill 2 birds with 1 stone!  The Republican Party has been anti-Obamacare from the get-go, and even after it was initially passed, the Supreme Court upheld it, and the President re-elected, they just cannot get over the fact that it is here to stay.

I understand that Obamacare is not the best solution to the issues that have come up in the health care industry, but at least it is something!  I, for one, am extremely thankful that it passed.  I haven't admitted this to many people, but I feel like this is as good a time as any, so here goes:

In 2008, at the age of 20, I was diagnosed with Crohn's Disease, a chronic illness that seriously affects the intestinal tract, especially the part where the small intestine connects to the large intestine.  I had been having severe stomach pains for quite some time, and finally went to see a doctor about it.  After several [uncomfortable, panic-inducing] tests and 3 doctors, my diagnosis was official.

As a 20-year-old college student who was about to study abroad for 3 months, it was kind of scary, but it was nice to know that I was covered under my parents' insurance, and that my medication was affordable with that insurance.  Fun fact about medication for Crohn's disease: almost every single medication prescribed for treatment is extremely expensive without insurance (try $1000 for a 3 month supply)!

Fast-forward 3 years to March 2011.  I was about to turn 23, which, without the recently passed Affordable Care Act, would mean that I would be kicked off my parents' insurance come March 20.  I was employed by a non-profit organization which, at the time, was not required to provide health insurance for employees.  Besides, I was more of a paid intern than a full-time staff member.  I started feeling extremely ill on March 11th and checked myself into the hospital (through the emergency room).  I spent 5 days in the hospital on lots of antibiotics and pain medication to combat a bad flare-up of my Crohn's disease.  When I was released on March 16th, I had to follow up with my regular doctors in 1-2 weeks, which would have taken me past my 23rd birthday (again, without Obamacare, I would have been S.O.L.)

Let's fast-forward one more time to 2 years later, to February 2013.  I was about to turn 25.  I was in the midst of finishing up my second-to-last quarter of my Master's degree, and had several ups-and-downs in my health over the past year or so.  My doctor started me on a newer medication, Humira, and injection clinically proven to help calm the symptoms of Crohn's disease (and several other diseases as well).  Once again, Humira without health insurance is extremely expensive (try $13,000-$14,000 per year for someone with no health insurance coverage).  It is a specialty medication, which comes in an overnight shipment from a specialty pharmacy.  However, my disease was much too severe for the Humira to really take effect . . .

It was February 22nd, and I had just gotten off a shift at the pool where I was working part-time while attending grad school.  I started having severe stomach pain, worse that I had ever felt!  I figured I just had a really nasty case of the stomach flu.  I waited for 2 days until the evening of the 24th, when I just wasn't getting better.  So my fiance drove me to the emergency room, and basically carried me in, since I was in so much pain.  They took me right back, for fear that I had appendicitis (HA!).  I ended up having to have emergency surgery the next day to remove 23 centimeters of my small intestine, which had swollen to 4-6 times its normal size due to the Crohn's disease.

Once again, I was extremely lucky to still be on my parents' insurance! I did have the option of being covered by UCSD's Student Health Insurance Plan (SHIP); however, coverage was better under my parents' insurance.

Now we fast-forward to the present.  It is September 2013.  The U.S. House of Representatives just had a vote to fund the government for another short period of time (yay, I suppose), but in exchange, have also voted to defund Obamacare.  Clearly none of those who voted YES for the bill (230 representatives, to be exact) have experienced issues similar to those that I have faced.  Clearly none of them has been sick a day in their lives, or have been without insurance, even for a short period of time.

As my 26th birthday quickly approaches, I am starting to get worried.  As of tomorrow, I will be unemployed, and in 6 months from today, I will no longer be eligible to be on my parents' insurance.  Add that to my worries.  The job market is not really any better today with my Master's degree than it was 3 years ago when I graduated with my Bachelor's degree.  Additionally, if I have to purchase my own health insurance in the future, for whatever reason, I have a pretty serious pre-existing condition (fun side note: not only do I have Crohn's disease, but I also have asthma, and several smaller "pre-existing conditions" which are essentially side-effects of the Crohn's).  Without Obamacare as law, I could be denied health insurance, meaning that $112,000 hospital bill from February, which was mostly covered by my insurance, would fall to me to pay . . . with my lack of money . . . due to my unemployment . . . because of the not-so-great economy.

I guess what I am saying is: I appreciate Obamacare.  Yes, it is not perfect.  But at least it is something.  I already have piles of student loan debt, I don't need hospital bills piling up too.  So please, Mr. Speaker and all you representatives in the House, please be reasonable.  The government needs funding-- shutdowns cost more than nothing, and Obamacare isn't really killing anyone.

8 Fun Facts about Mortgages (that you wish you had known yesterday)

Have you ever watched an episode of House Hunters & thought to yourself "I wish I could buy a place of my own.  I bet I could afford a decent place here!"?

Going through the process of buying a house/condo/townhouse/etc. can be a very confusing process, especially if it is your first time!  How do I know this?  I happen to be in the process of being a first-time home-buyer with my fiance.  So I thought I'd write down some of the things we learned... after we met with the banker...

Maybe this is obvious, but I didn't necessarily know all of it until after we met with a banker... and they basically laughed us out of the bank & said "Good Luck!"  So here are 8 things about mortgages you wish you had known:

1) You should get pre-approved for a mortgage.

Before you really start your search for a new home, you need to know your budget.  Start by looking at home prices in your ideal neighborhood, but also consider other areas nearby that might be cheaper, just so you don't get your heart broken.  That will give the bank an idea of what you really want so that they can (at least pretend) to try to find a place for you.

1a) Documents you will want to bring to your pre-approval meeting (not that you will necessarily show them to anyone):
-At least 2 years worth of W-2's & Tax Returns
-At least 2 months worth of Pay Stubs
-Your last bank statement(s)
-401(K) statement(s)
-Other statement(s) of income
-Current rental agreement(s) (if applicable)
-Your SSN
-Other documents may be necessary (check with your bank!)

2) Your down payment should be at least 20% of the home purchase price you are looking at.

Anything less than 20% will result in a higher interest rate, and will likely require you to have to pay for "mortgage insurance," making your total monthly payments much higher than they really need to be.  So for instance, if you are looking at buying a $250,000 condo in San Diego, your down payment should be about $50,000!

3) The bank wants to see lots of credit history AND a good credit score.

Not only do you need a good credit score (which makes sense, right?), but you also need at least 3 current lines of credit that have been open for at least 12 months (obviously all with good payments/usage/etc.).  Without at least 3 lines of credit for at least 12 months, they might laugh you out of the bank (that almost happened to us...), even if your credit score is good.

4) Banks are only allowed to force you to pay up to 47% of your income towards your debt.

And that income should be documented in 2 years worth of W-2s or Federal Tax Returns (think Form 1040 that you fill out between Jan 1-Apr 15 every year).  Your debt includes anything and everything that you might have, not just the mortgage payment-- that includes student loan debt, other loans, or credit card debt.

The 47% includes debt + mortgage payment + interest + [property] taxes + mortgage insurance (see #3) + homeowner's insurance + HOAs (if applicable) + any other minor payments that are included in your housing costs.  That means if you make $16/hour, you can afford monthly payments of up to (approx.) $1300.
[The Math: hourly wage * 40 hours/week * 52 weeks/year, divided by 12 months, * 47%]

5) Your pre-approval is good for 90 days.

That means that for the 90 days after you get pre-approved, you can pretty much assume that your mortgage rate and payment (and your purchase price) will basically be the same as your pre-approval.  After 90 days the changes in interest rate will most likely have changed, so the bank doesn't want you to think you can afford something they no longer are willing to lend you.  That brings me to #6:

6) Your pre-approval does not guarantee that particular mortgage or rate.

Rates change daily and can affect the amount the bank is willing to lend you.  For the past several months (summer of 2013), the interest rate has increased over one full percentage price, which has discouraged home buyers.  If the interest rate is high, your loan will be lower, because monthly payments cannot exceed 47% of your income (see #4... also the economic collapse of 2008).

7) There are 3 basic types of mortgages: 30-year fixed, FHA, and VA.

30-year fixed is the most common.  If you have at least 3 lines of credit open for over a year, a good credit score, and at least 20% for a down payment, you will most likely go with this one.  You have equal payments for 360 months.  Yay.

FHA (Federal Housing Administration) loans are for people who don't quite meet the minimum qualifications for a mortgage.  You can get this if you don't have enough credit history (or less than 3 lines of credit for a year) but still have a good credit score.  The FHA loan already has mortgage insurance built into it, so more of your payments will go toward the insurance than under the 30-year fixed (meaning the payments going toward your house will be smaller, also meaning you will be approved for a smaller loan).

VA loans are for veterans.  I can't give you much information about those, but if you're a veteran, definitely look into these. :)

There are also other variants of the 30-year fixed, such as 30-year variable, interest-only, or 5-1 or hybrid ARM (adjustable rate mortgage).  Again, I can't give you much information about those, but if your financial situation is special/might change in the near future, you can look into those.

8) More costs that might be hiding that you should consider (aka Closing Costs)!

Loan origination fees, Title Insurance, Appraisal Fees.  Sound familiar?  Probably not (unless you've done your fair share of research already).  These are all costs to take into account for the "closing" process-- after you decide you want to buy the house but before you get the key-- this is a process which can take weeks or even a few months.

These costs are estimated to be about 3-5% of the total loan cost.  For example, a $250,000 loan could have closing costs of approximately $12,500.  Those are upfront costs, which will typically come from what you originally thought would be your down payment.  Sometimes you can ask the seller of the home you are purchasing to help cover those costs, but don't count on that happening, just in case.

And a bonus fun fact!
9) Make sure you budget for miscellaneous expenses, such as moving costs, maintenance costs, HOA fees, and an emergency fund (for Just In Case).


Disclaimer:  This is advice from my own personal experiences.  I am not a financial expert, nor do I really necessarily know what I am talking about.  Check with your local bank for true, expert advice.  I only share my experience to prepare you for what could be ahead.