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How much training should your broker have?

A prospect asked me this a while back, and its a good question.  Does the person you are interviewing, or using, have the background to handle your account properly?  Are they up to date on the latest trends and can give you forward thinking advice?

While initials after your name (I have a few) are important, and require Continuing Education.  The biennial license renewals require a set amount of education, and are heavy these days on ethics.  The average broker can get away with 24 hours every two years in many states.

Over my 32 hours in the Benefits business, I have come to learn that these requirements are simply not enough.  Simply keeping up with the changes is a full time job.  Therefore I strive to keep pace with innovation.  Here is the breakdown of the 94.5  hours of education I received last year:

Business Growth-  5

401(k) and investments- 35

Medical- 22.5

Medicare- 20

General Education- 12

Will Association Insurance be allowed again?

Reuters reported in an article this week that “The Trump administration on Thursday proposed a rule to allow Americans who are self-employed or work for small businesses to buy health insurance that does not comply with all Obamacare requirements in an effort to unwind the 2010 healthcare law.

The rule, put forward by the Department of Labor, would allow individuals and small businesses to form an association based on geography or industry and purchase health insurance that would be exempt from some rules of the Affordable Care Act.

The rule also allows sole proprietors to join such associations. Currently, sole proprietors can purchase individual insurance through the Obamacare individual market, created under former Democratic President Barack Obama’s healthcare law.”

IN another related article, it is reported that

“The rule would:

  • Allow employers to form a Small Business Health Plan on the basis of geography or industry. A plan could serve employers in a state, city, county, or a multi-state metro area, or it could serve all the businesses in a particular industry nationwide; and
  • Allow sole proprietors to join Small Business Health Plans, clearing a path to access health insurance for the millions of uninsured Americans who are sole proprietors or the family of sole proprietors.”

The agency notes that Small Business Health Plans (Association Health Plans) cannot charge individuals higher premiums based on health factors or refuse to admit employees to a plan because of health factors. The Department of Labor’s Employee Benefits Security Administration will closely monitor these plans to protect consumers.”

ObamaCare Open Enrollment dips to 8.7 million

The reduced enrollment, announced by the marketplace this week, is a 500,000 drop from last year, and down about 1.3 million from earlier years.    2.8 million people didn’t do anything and so automatically got renewed in their current plan, at the new higher price in many cases.

Why it happened seems to depend on your view of the world  For some the drop is due to the Trump Administrations’ reduction in the enrollment period length and marketing reductions, and cutting of Cost Reduction Subsidies on Silver plans.

Others believe that the  plans are crazy expensive, offer few choices and have few insurance companies.

From where I sit, I think they are all correct to some extent.  Cost Reduction Subsidies only affected insurance companies, but did drive prices up.  80% of healthcare.gov customers were eligible for plans costing less than $75 a month – and some at no cost.  Humana, Aetna and a number of Anthem/Blue Cross companies left the market.  We found more people panicking after the enrollment ended because they didn’t realize it was already over;  there was a big rush this year after Thanksgiving we have not seen before.

What effect – the repeal of the individual mandate?

The new Tax Bill repeals the individual mandate – in 2019.  Not this year, mind you, you are still required to have insurance this year.   So what affect will this have on ObamaCare going forward?

If you listen to the politicians, Bill Pascrell (D.NJ) said “They obviously couldn’t kill it so they’re trying to starve it to death slowly.”  Lindsey Graham (R.SC) said “…we ripped the heart out of ObamaCare…”  I think both are a bit off base, and here is why-  Despite all kind of claims to the contrary, in my experience with clients, the mandate was not a big modifier of behavior.  Do I have some clients that pay premiums to avoid the penalty?  A few, yes – but not many.  Far more simply said ” I can pay $400- or more- a month for insurance, or pay a penalty a year from now that is far less.  If you make $50,000 a year your penalty is $1000;  insurance for that time period could cost you $6000 or more.

Another great number is the Congressional Budget Office claim that the loss of the mandate will cause 13 million fewer people to be covered over the next ten years.  Considering there are fewer than 10 million under ObamaCare, This trend analysis always seems a bit faulty.  Especially in light of the CBO’s estimates in 2012 that 25 million would currently be covered.

Some of the recent modifications may, in the end, have a much greater affect on policyholders.  here are some of the less-understood changes:

  1.  Cost-sharing subsidies-  Trump “de-funded” these.  When someone who earns less than 250% of the Federal Poverty Level (about $30,150) takes a Silver plan, their deductibles and other expenses are lower than someone who earns more than that amount.  This makes the insurance more affordable on a day-to-day basis.  for 2018, because the insurance companies followed the law and got their policies approved in this manner, they have to honor the lower amounts- but the government isn’t reimbursing the insurance company for those amounts now.  Many carriers saw this coming, and raised their rates accordingly for this year – one reason why rates are so much higher again this year.
  2. Shortened Enrollment and less marketing- The Trump administration cut the enrollment period and sharply dropped the marketing budget for this year.  While enrollment is done, I still have this week several people who just figured out that they missed it for this year!
  3. “Skinny” Health Plans – This may turn out to be the most destabilizing force.  In October, an executive order allows both association plans and Short-term major medical plans to not meet the ObamaCare rules.  Under the Obama Administration, Short Term plans had been limited to 90 days.   Plans like MediShare and US Health Advisors are already gaining traction as people stare in horror at their renewal premium, and these new plans may attract a lot of the younger and healthier folks – adversely putting the sicker into “regular” plans, and driving costs up even further.

 

One thing is for sure – with the changes the Republicans have made, after two years of “repeal and replace” noise – the Republicans now own as much of ObamaCare as the original Architects.  I fully expect that to be used against them in the coming midterm election season.

 

Human Resources Administrator found guilty in 401(k) Lawsuit!

In Tibble vs Edison International, a long-running case that ended up at the supreme court, The Human Resources VP was found guilty.  The case involved improper selection of funds – by using retail funds instead of the available institutional funds, which costs the plaintiffs $7,000,000.  Additionally, they used the retail fees to offset management fees charged by their record keeper.

It is important to understand how these seemingly small decisions can have enormous repercussions.  Recent fee-oriented suits by employees at Nordstrom, BlueCross Blue Shield, Lockheed Martin, and a number of educational facilities show that these suits are not going away.  Further, audits are increasing, as the Department of Labor has found that 70% of plans are not in full compliance.

According to a 2012 article in Financial Advisor Magazine, “An estimated 70% of retirement plans audited by the Department of Labor (DOL) in 2009 and 2010 were fined, received penalties or had to make reimbursements for errors–all of which ending up costing plan fiduciaries about $450,000 per plan, according to the department.” 

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
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