Health insurance exchanges will transform market

Health insurance exchanges will transform market - Health insurance exchanges will change the way people buy coverage and will help millions of uninsured people get a private plan. Nearly 49 million people are uninsured in the United States, but the numbers vary dramatically by state.
Exchanges will be the most visible part of President Barack Obama's health care overhaul law in everyday life. Open enrollment starts Oct. 1, less than 10 months away.

Some questions and answers on how the exchanges will work:

Q: What's a health insurance exchange?
A: "Exchange" is just another word for "marketplace." The plans sold in the new markets will start covering patients on Jan. 1, 2014. Each state will have its own exchange serving people who buy their health insurance directly, as well as a separate one for small businesses. The vast of majority of people now covered by employer plans will not see a change.

There will be three types of exchanges at the beginning: those run by states, those run by the federal government, and partnerships. Most Republican governors opposed to "Obamacare" are letting Washington run the exchanges in their states.

For consumers, the benefits should be the same no matter who runs the exchange.

Q: How will exchanges work?
A: Exchanges are supposed to have the feel of an online travel site — think Orbitz or Expedia.

Middle-class people will be able to pick from a range of private insurance plans, and most people will be eligible for help from the government to pay their premiums.

Low-income people will be steered to safety-net programs for which they might qualify. This could be a problem in states that choose not to expand their Medicaid programs under a separate part of the health care law. In that case, many low-income residents in those states would remain uninsured.

Q: How will I know if I can get help with my health insurance premiums?
A: You'll disclose your income to the exchange at the time you apply for coverage and they'll let you know. Only legal residents of the United States can get financial assistance.

The health care law offers sliding-scale subsidies based on income for individuals and families making up to four times the federal poverty level, about $44,700 for singles, $92,200 for a family of four.

But do yourself a favor and read the fine print because the government's help gets skimpier as household income increases.

For example, a family of four headed by a 40-year-old making $35,000 will get a $10,742 tax credit toward an annual premium of $12,130. They'd have to pay $1,388, about 4 percent of their income, or about $115 a month.

A similar hypothetical family making $90,000 will get a much smaller tax credit, $3,580, meaning they'd have to pay $8,550 of the same $12,130 policy. That works out to more than 9 percent of their income, or about $710 a month.

The estimates were made using the nonpartisan Kaiser Family Foundation's online calculator. Some people will also be eligible for help with their copayments.

Final note: Though it's called a "tax credit" the government assistance goes directly to the insurer. You won't see a check.

Q: What will the benefits look like?
A: The coverage will be more comprehensive than what's now typically available in the individual health insurance market, dominated by bare-bones plans. It will be more like what an established, successful small business offers its employees. Premiums are likely to be higher for some people, but government assistance should mostly compensate for that.

All plans in the exchange will have to cover a standard set of "essential health benefits," including hospitalization, doctor visits, prescriptions, emergency room treatment, maternal and newborn care, and prevention. Insurers cannot turn away the sick or charge them more. Middle-aged and older adults can't be charged more than three times what young people pay. Insurers can impose penalties on smokers.

Because the benefits will be similar, the biggest difference among plans will be something called "actuarial value." A new term for consumers, it's the share of expected health care costs that the plan will cover.

There will be four levels of coverage, from "bronze," which will cover 60 percent of expected costs, to "platinum," which will cover 90 percent. "Silver" and "gold" are in between. Bronze plans will charge the lowest premiums, but they'll have the highest annual deductibles. Platinum plans will have the highest premiums and the lowest out-of-pocket cost sharing.

Here's a wrinkle: The government's subsidy will be tied to the premium for the second-lowest-cost plan at the silver coverage level that's available in your area. You could take it and buy a lower cost bronze plan, saving money on premiums. But you'd have to be prepared for the higher annual deductible and copayments. ( Associated Press )

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Home insurance checkup could lower costs, improve coverage

Home insurance checkup could lower costs, improve coverage - The national average premium for homeowners insurance will increase by 5% in 2012, according to forecasts by the Insurance Information Institute. That follows an increase of nearly 4% in 2011, and it will bring the average annual premium to an all-time high of $1,000.

At the same time, home insurers are adding exclusions and requiring higher premiums to cover certain risks, such as mold and water damage.

Meanwhile, the housing bust and recession have pushed the median home price down 35% since the market’s peak. But the cost to rebuild a home after a total loss has increased by 40% since 2004 — 7% in 2011 alone — thanks to rising building-material and fuel prices.

So you could find yourself paying more for less coverage. Worse, you may not have enough insurance to cover the full cost of rebuilding your home and replacing its contents in the event of a fire, a tornado or some other major disaster.

Use your annual renewal notice or any improvements to your home as cues to touch base with your agent or insurer. Recheck how much insurance you really need and comparison-shop, taking advantage of opportunities to save. You can use the same tactics if you’re buying a new policy.

Check your limits

“In the aftermath of a total loss, every homeowner says, ‘My insurer told me I was fully insured,’ ” says Amy Bach, executive director of United Policyholders, a consumer advocacy group. “I’ve heard it a thousand times from people who have found themselves short—sometimes by hundreds of thousands of dollars.” She urges homeowners not to blindly trust that their home insurer has all the bases covered.

The first step in getting adequate coverage is to establish your policy’s dwelling limit. Your target number is the full-replacement cost of your home and its possessions. The dwelling limit bears no relation to your property’s market value (if you were to sell it), its appraised value (for mortgage financing) or its assessed tax value. And don’t mistake the cost of new construction for the cost to rebuild, which is more expensive because of factors such as debris removal and higher demand for materials and labor after a catastrophe. Bach says it generally costs $200 to $250 per square foot to rebuild the average home today. But if you live in a unique or historic home, in a high-end community, or in a hard-to-reach location, the cost could run $400 per square foot.

You can get a pretty good idea of what it would cost to rebuild your home by using an online calculator, available at sites such as ($7) and ($8). Both will ask you about the structural components, features and amenities of your home and, using databases of local labor and material costs, estimate your total cost to rebuild.

Your insurer or agent will probably help you determine the dwelling limit, using much the same script as the online tools do. Although you can answer many questions about your home over the phone, nothing substitutes for an on-site visit. Site visits are a routine practice for many independent agents, who represent more than one insurer, and for representatives of high-end insurers, such as Chubb and Fireman’s Fund.

The dwelling limit also determines your policy’s other coverages—typically 10% of the dwelling limit for other structures on your property, 50% for contents and 20% for loss of use of your home (additional living expenses when you can’t live in your home).

Take stock of your stuff

The amount of coverage built into your policy for the possessions in your home (as a percentage of the dwelling limit) may be inadequate to replace them. And although your policy may cover expensive items, such as jewelry and furs, it may limit the payout to $1,000 to $2,000. (Other items that may be capped include silverware, computer equipment, art, antiques, stamps, coins and guns.)

Create a home inventory to ensure that you have the right amount and type of coverage. In addition, an inventory will make filing a claim smoother, establish verifiable value for your things after a disaster, and make it easier to prove your losses for tax purposes. The Insurance Information Institute’s home-inventory iPhone app and the app from the National Association of Insurance Commissioners make saving that information a snap. Be sure to include serial numbers, photos or a video, and receipts or appraisals.

Once you know what you have and how much it will cost to replace, you can add coverage with a scheduled personal property endorsement (or personal article floater), which typically costs about $20 per $1,000 of property value annually (although it varies by item and location).

Update your inventory periodi­cally to cover new purchases and gifts, and get updated appraisals of your valuables so that you can adjust your coverage. For example, gold jewelry inherited from Mom could be worth almost three times what it was worth five years ago.

Cover the gaps

It’s a good idea to purchase guaranteed replacement coverage, meaning the insurer will pay whatever it costs to rebuild your home with materials of like kind and quality, without deducting for wear and tear. Avoid actual cash value coverage, which pays the depreciated value of your home’s components and could leave you short of the funds necessary to fully repair or rebuild your home.

Most insurers build a fudge factor of 25% to 50% into the dwelling limit. Lacking that, you need to buy extended replacement coverage, a bargain at about $25 to $30 annually for an extra $200,000 of coverage, says Bach.

You might be tempted to save money by reducing your dwelling limit and picking up the balance with extended coverage. Two caveats here: First, you’ll reduce coverage of your contents as a percentage of the dwelling limit. Second, in the event of a total loss, your policy’s current dwelling limit must equal at least 80% of the cost to rebuild or you won’t get the benefit of any extended coverage to make up the difference.

Also, look for protection against a higher cost to rebuild due to inflation (inflation-guard endorsement) or upgraded building codes (ordinance or law endorsement).

A number of insurers have switched from the broader and more desirable all-risks coverage (covering everything except those things expressly excluded) to the more narrowly defined named-perils policy, which should cost less but may not. Request an all-risks policy, and if an insurer doesn’t offer it, look elsewhere. Review your policy’s exclusions for risks such as wind, water, earthquakes, sinkholes and flooding, and buy supplemental coverage. Flood insurance is never included in standard homeowners policies. You’ll need to get coverage from the National Flood Insurance Program (get quotes and information about flood risks for your property at

Sewage backup is often excluded from homeowners insurance policies unless you get a special rider, which can often add $10,000 to $20,000 in coverage for about $50 per year. In fact, that’s one of the most common insurance gaps people discover during storm season and one of the easiest to fill. Last August, as Hurricane Irene moved up the East Coast, Steve Weisbart, chief economist for the Insurance Information Institute, was glad that he, unlike many of his neighbors, had coverage in case his sewers and drains backed up. As local sump pumps emptied water from basements into the overwhelmed sewer system, the sewage backed up into homes through toilets and drains. Weisbart collected on a $10,000 claim.

Your homeowners insurance also covers personal liability and medical payments to others. The typical policy provides $300,000 of liability coverage, which will protect you if someone is injured on your property. You can increase your coverage to $500,000 for about $25 more a year. Consider increasing your liability coverage to $1 million with an umbrella policy.

Get the best deal

When they decide whether to cover you, insurers consider factors such as the age, materials, condition and replacement cost of your home, the risk associated with your location, your claims history (the type and number of claims that you’ve filed or that your home has experienced), and your credit score.

Comparison shopping is easier if you work with an independent agent who represents many insurers (to find one, visit Independent Insurance Agents and Brokers of America). You’ll pay a commission (typically 10% to 15% of the annual premium), but it may be worth it for the guidance, and the agent should explain why one insurer or policy will better meet your needs than another. You can also get quotes from a direct-market company, such as Geico or USAA. And it’s worth checking out State Farm and Allstate, which sell through their own agents.

For specific advice about homeowners insurance in your state, visit the Web site of your state’s department of insurance, which may provide worksheets for comparison shopping. Before you buy a policy, check prospective insurers’ ratings for financial strength (at and complaint records. Also, keep a record of your communications, as well as the insurer’s assurances of coverage should there be any question of your coverage after a disaster. ( )

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46 million Americans lack health insurance

46 million Americans lack health insurance - A total of 46.3 million people in the United States do not have health coverage, a trend that has been rising in the past 15 years, said a US survey published Tuesday.

There was good news for children in the data from the 2011 National Health Interview Survey, which showed that seven percent of US youths were uninsured last year at the time of the interview, compared to 13.9 percent in 1997.

Young adults also appeared to benefit from increasing coverage, with 3.1 million people age 19-25 gaining health coverage from September 2010 to December 2011, an increase from 64.4 percent to 74.8 percent.
A graphic shows the increase in the number of working-age adults in the US without health insurance from 1997 to 2011, according to a survey published Tuesday. (AFP Photo/)

The Department of Health and Human Services hailed the rise in coverage for young adults as a direct result of President Barack Obama's signature health care reform package that since 2010 has allowed youths to stay on their parents' plan until their 26th birthday.

"That is terrific news because in the past many young adults just starting their careers or still studying struggled to find affordable coverage," said HHS Secretary Kathleen Sebelius.

"Today, three million more young Americans are no longer living with the fear and uncertainty that comes when you don't have access to health care."

But the overall picture for adults aged 18-64 showed lack of coverage remained high, even though down slightly from its 2010 peak.

For that group, lack of health insurance coverage was 21.3 percent in 2011, making up 40.7 million people, according to the data from the Centers for Disease Control and Prevention.

The study recorded the fewest uninsured adults in 1997 (13.9 percent). The high point came in 2010 when 22.3 percent of the population was uninsured.

"There has been a generally increasing trend in the percentage of adults aged 18-64 who lacked coverage at the time of interview," said the study, which was based on survey results from 32 of the 50 states.

The change in children's coverage status was largely explained by a 36.5 percentage point rise in government-sponsored public coverage for the poor from 1997 to 2011.

Meanwhile, the rate of private coverage among low-income children was 25.1 percentage points lower in 2011 than in 1997.

Private coverage held by adults also declined over the period studied.

The survey comes as the US Supreme Court is expected to rule by the end of June on lawsuits challenging Obama's health care reform package.

The ruling could halt key parts or all of the package, which aimed at requiring all citizens to have health care coverage and at creating cheaper coverage options. ( AFP )

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Millions still go without insurance if law passes

Millions still go without insurance if law passes - One of the biggest misconceptions about President Obama's health care overhaul isn't who the law will cover, but rather who it won't.

If it survives Supreme court scrutiny, the landmark overhaul will expand coverage to about 30 million uninsured people, according to government figures. But an estimated 26 million U.S. residents will remain without coverage — a population that's roughly the size of Texas and includes illegal immigrants and those who can't afford to pay out-of-pocket for health insurance.

"Many people think that this health care law is going to cover everyone, and it's not," says Nicole Lamoureux, executive director of the Alexandria, Va.-based National Association of Free & Charitable Clinics, which represents about 1,200 clinics nationally.
In this Wednesday, May 30, 2012, photo, Angela Laws poses for a photo in Leesburg, Va. Laws, 58, runs a small business that cleans and maintains commercial buildings and figures that she'll remain uninsured if she can't find an affordable coverage option that fits a monthly budget already crammed with payments of $1,203 for rent $530 toward her car. (AP Photo/Haraz N. Ghanbari)

To be sure, it's estimated that the Affordable Care Act would greatly increase the number of insured Americans. The law has a provision that requires most Americans to be insured or face a tax penalty. It also calls for an expansion of Medicaid, a government-funded program that covers the health care costs of low-income and disabled Americans. Additionally, starting in 2014, there will be tax credits to help middle-class Americans buy coverage.

The Supreme Court is expected to hand down a decision this month on whether to uphold the law completely or strike down parts or all of it. If it survives, about 93 percent of all non-elderly, legal U.S. residents will be covered by 2016. That's up from 82 percent this year.

Still, millions of illegal immigrants won't qualify for coverage. This population will account for roughly 26 percent of those who will remain uninsured, according to Urban Institute, a nonpartisan think tank.

And many legal U.S. residents will go without insurance, too. About 36 percent of the population that remains uninsured will qualify for Medicaid but won't sign up for various reasons. Others likely will make too much money to qualify for assistance but be unable to afford coverage.

Here's a look at some of the groups that will likely remain uninsured if the law survives:


More than 11 million unauthorized immigrants live in the United States, according to the Pew Hispanic Center, a nonpartisan research center. That amounts to nearly 4 percent of the total population. But there are no provisions that address illegal immigrants in the health care law.

They won't be able to sign up for Medicaid. They won't be eligible for the tax credits to help buy coverage. And they won't be able to use online marketplaces that the government will set up in order for people to get coverage in a process that's similar to buying plane tickets on travel web sites. Those online exchanges, much like the tax credits, will require proof of citizenship.

"They will still need to find alternative ways to seek care because nothing in the law really expands coverage and affordable coverage options for undocumented immigrants," says Sonal Ambegaokar, a health policy attorney with the National Immigration Law Center in Los Angeles.

The topic is a politically divisive issue. On one side, there are people who say that the government should provide health care for all U.S. residents — legal or not. The other side contends that doing so could take valuable resources away from U.S. citizens.

"Because of the limited supply of health care, we're almost in a sociological triage," says Bob Dane, spokesman for the Federation for American Immigration Reform, a national group that calls for stricter immigration laws. "It begs the question, 'Who do we serve, who do we serve first and who is not entitled?'"

Researchers have found that immigrants tend to use the health care system less than legal residents. Illegal immigrants, in particular, tend to avoid using the health care system until they have to, favoring home remedies first or making cash payments to providers when they need care. That population also is younger, so it generally has fewer health care needs, says Timothy Waidmann, a researcher with Urban Institute.

The think tank, using federal government survey data, estimates that illegal immigrants accounted for an estimated $18 billion of the $1.4 trillion spent on health care in the United States in 2007. That adds up to less than 2 percent of total spending.

Some say excluding illegal immigrants from the overhaul will keep some legal residents uninsured, too. Ambegaokar, the Los Angeles attorney, points to parents who are illegal immigrants but have children who are legal citizens because they were born in the United States.

If the parents are not eligible, they may not know that their kids qualify. And in other instances, if one child is legal and the other is not, the parents may decide not to sign up either to avoid playing favorites.

"The goal is to enroll everybody who is eligible," Ambegaokar says. "But when you make systems complicated and require proof of ID, you're going to inevitably keep out people who should be in."


Medicaid, which currently covers more than 60 million people, is expected to add about 17 million more people to its program by 2016 if the law is upheld, according to the nonpartisan Congressional Budget Office, which researches budgetary issues for Congress.

But people are still expected to fall through the cracks. That's because the requirements and process for signing up for Medicaid can be confusing. And while the overhaul aims to make the process easier, it won't smooth out all the wrinkles.

The problem? Many people don't realize that they qualify for coverage. And that likely will still be the case, albeit to a lesser extent, after Medicaid expands.

Coverage depends on how someone's income stacks up to federal poverty guidelines, which can be obscure to the average person. Plus, because income can fluctuate, someone could qualify one year but not the next.

"Regardless of how much outreach you do ... you're never going to get perfect enrollment," Matthew Buettgens, another Urban Institute researcher, says.

Staying enrolled can be another hurdle. Medicaid recipients have to re-enroll, sometimes more than once a year. They can be dropped if they miss deadlines, submit incomplete forms or if paperwork doesn't catch up with them after they move — something poor families tend to do more frequently than the average American household.

Leeanna Herman learned this when an unexpected $300 doctor bill arrived in the mail. The Bakersfield, Calif., resident was pregnant and unemployed and didn't know her government-funded health coverage had lapsed.

"I was freaking out," says Herman, 23, who went a month without coverage because she missed the deadline to re-enroll. "How do you expect me to pay that?'"

Experts say online applications and electronic verification of income levels and other things will make this process easier. But deadlines will still matter and some people don't have easy access to the Internet. And there will still be some people who simply won't enroll.

"There will always be that segment that says, 'Aw, the heck with it, I will just wait until I get sick and go to the ER,'" says Stephen Schilling, CEO of Clinica Sierra Vista, a nonprofit that has a network of 27 community health centers in California.

Schilling expects to still see a lot of uninsured patients at the nonprofit group's health centers even if the law is upheld. The center sits in an agricultural area in California's San Joaquin Valley, populated with migrant workers and saddled with an unemployment rate of around 15 percent.

It cares for about 60,000 uninsured people annually, thanks in part to grants and a sliding fee scale for patients based on their family size and income. Schilling says he still expects between 20,000 and 40,000 uninsured patients if the overhaul is implemented.


The overhaul calls for tax credits to help middle-class Americans buy coverage. But some people who make too much money to qualify for the tax credits may have a hard time finding an affordable option for private health insurance

The subsidies can pay a large chunk of the insurance bill. For instance, a 40-year-old person who makes $50,000 in 2014 and needs coverage for a family of four might receive a government tax credit of more than $8,000.

That would cover more than 70 percent of the premium, or the cost of coverage, according to a subsidy calculator on the nonprofit Kaiser Family Foundation's website. Of course, that estimate depends on the type of coverage the person choses, where they live and whether they can get coverage through work.

But the tax credits will go to people with incomes up to 400 percent of the federal poverty level, or $44,680 for an individual this year. People just above that level may have a hard time finding affordable health insurance.

Angela Agnew Laws worries that she might remain uninsured like she has been for the past eight years even if the health care law is upheld.

Laws, who lives in Leesburg, Va., runs a small business that cleans and maintains commercial buildings. She hopes her income will climb to about $60,000 by 2014, which would be too high for tax credit help.

A plan that offers more than just basic protection against big medical expenses could cost as much as $10,000 annually for Laws. She could find less extensive coverage for a lower premium, but that may only save about $1,000.

Laws, 58, figures that she'll remain uninsured if she can't find an affordable coverage option that fits a monthly budget already crammed with payments of $1,203 for rent $530 toward her car.

"It's a scary prospect for me," she says. (

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Avoid insurance disaster

Avoid insurance disaster - Insurance can be tricky. We know we should have it, but how much coverage do we need? Figuring that out can be especially hard with homeowners or renters insurance, which must cover not only the property itself, but also related belongings and more.

“Both [homeowners and renters insurance] provide liability protection including medical expense payments if someone is injured or hurt on your property,” says Frank N. Darras, an attorney from Ontario, Calif., who specializes in insurance issues. “Both protect your personal property, even if your personal belongings are not inside your house or apartment when damaged, destroyed, or stolen. Both also protect you if the house or apartment is damaged and you need to relocate while repairs are made.” (That's one of many insurance lessons Brent Mondel learned when her house was ravaged by Hurricane Irene.)

When you're figuring out how much homeowners coverage to buy, here are some questions to ask yourself:

How much is my mortgage?
“Your lender will require you to carry 80% of the property's value or insure the home to 100% of the mortgage,” Darras says. “Be sure if your home is older that you take into consideration inflation costs since you purchased. If you added an addition, remodeled, or finished your basement, make sure you have added these upgrades to your calculations. Buy guaranteed replacement coverage so if the property is damaged or destroyed, the carrier must repair or rebuild the home to the value it was before the loss.”

How much would it cost me to replace or rebuild my property?
Don’t make the mistake of assuming that a drop in your property value means you can cut back on coverage. “A surprising number of homeowners don’t realize that insurance values should be based on replacement costs – what it would take to rebuild what you had,” says Jerry Hourihan, senior vice president for the Private Client Group division of Chartis, a global property casualty insurer. “Despite a dip in market values, materials and workmanship costs for custom properties have held strong relative to real estate values.”

Do I need additional coverage for special circumstances?
“Read the fine print of your policy. All policies include particular caps or other restrictions that could impact what happens at claim time,” Hourihan says. “For example, homeowners’ policies place coverage limitations on water damage or certain contents inside your home, such as jewelry. Other items, like coverage for flooding or sewer back-up, may be excluded entirely. Carefully reviewing what is and is not covered will help you determine if a rider or additional policies need to be purchased for more complete protection.”

Have there been any changes to my home or lifestyle since I last renewed my policy?
Experts say the top insurance mistake is being underinsured, which often happens because consumers fail to update their coverage as their property or needs change. “Many people buy insurance based on values that are vastly underestimated,” says Hourihan. “If extensive home improvements and renovations aren’t factored into your policy, you could be exposed to hefty out-of-pocket costs in the event of a claim. Also, take time to reflect on any activities that could impact the level of risk you face. For example, if you like to entertain at home, you may want to increase your liability coverage and purchase a separate umbrella policy on top of that.”

How much is my stuff worth?
“Most people haven't really taken the time to inventory their personal possessions and don't have enough personal property insurance,” says Darras. “Many folks are shocked when they do have a loss and discover that their jewelry, silver, guns, rugs, furs, or family heirlooms should have been insured under a floater policy and their losses are capped at $500 or $1,000.”

If you are renting, don’t rely on the property owner’s insurance. Remember, that’s designed to cover the property itself, not the stuff you own inside of it. “Renters insurance is ‘must have’ coverage, especially if you are downsizing,” says Darras. “Your furniture, rugs, heirlooms, silver, electronics, and all that stuff you have in storage, along with the bikes and tools in the garage, your DVD collection—it all adds up to expensive items to replace. Make sure you videotape your possessions once a year by going room by room, drawer by drawer, closet by closet so you have an inventory, if disaster strikes.”

Hourihan offers two more tips for getting the best deal on home insurance and making sure you have sufficient coverage:

Buy in bulk.

Personal property and liability insurance is one area where it’s good to have all your eggs in one basket. Purchasing multiple policies (home, auto, umbrella, etc.) from the same carrier often offers better pricing and access to premium credits.

Work with an expert.
Many people unwittingly outgrow their coverage as they achieve career success. As a result, they can be severely underprotected. By working with an independent insurance agent/broker, you can be sure your unique personal risk management needs are addressed. (

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