Author Archives: Reeve Conover

Because businesses dont pay enough…

2 Senate Democrats recently proposed legislation that would REQUIRE business to pay $0.50 per hour into an employee retirement savings account.

“Noting that 3 in 10 workers lack access to a workplace retirement plan and that 4 in 10 adults do not have enough liquid savings to pay a $400 emergency expense, Sens. Amy Klobuchar (D-MN) and Chris Coons (D-DE) introduced legislation that calls for a hybrid emergency savings and 401(k)-type government-run program. Klobuchar is seeking her party’s nomination to run for president. ” (click here for more)

Lets examine this for a moment. For an employee making $10 an hour, thats a 5% employer contribution. At $15 an hour, its a 3.3% contribution. Currently SIMPLE IRA’s match 3% (there is no requirement for the employee to contribute in the bill), and Safe Harbor 401k plans match up to 4%.

As I see it – already being required in some states to raise hourly wages to $15 an hour, and then adding this in, changes the equation for employers substantially. Lets say an employer has 30 employees at $10 an hour currently, and are mandated to raise their employees just to $12 an hour, and add this contribution. Thats another $156,000 a year to the employer in expenses, a clearly unfunded mandate.

How will this get paid? Well the employer could eliminate 6 jobs to cover the expense. If they are in a business with, say, a 10% profit margin they would have to raise revenues by $1,560,000 just to cover this expense. So this either ends up with higher unemployment, or price inflation. This stuff isn’t free, folks.

“…doing away with traditional insurance”

The words of the CEO of pinterest, citing being “fed up with the healthcare system…” as well. They, like a growing number of companies, are switching away from traditional coverage, and opting for self-funded or level funded plans.

“Nobody remembers how good health benefits are on paper, but everyone remembers what the experience is like,” says Alice Vichaita, head of global benefits at Pinterest. “Despite all our effort and thoughtfulness, the traditional health insurance experience was letting us down.”

When you are a relatively health company, you end up paying more than you need to. We operate on the assumption that all those premiums are needed to pay claims, and sometimes they are. However in my experience claims typically run around 70% of the money set aside for them. Who gets the remaining 30%? The Insurance company keeps it.

With Self-funded or Level-funded plans, you begin with lower premiums and a lower claims pool, and you share in any funds unspent at the end of the contract.

For the full article, click here.

Medicare for all?

Senator Tim Kaine recently released a bill called “Medicare X”- to allow people to decide if they like Medicare better than the other options. He says it will “increase competition and drive down health care costs.” The cynic in me also assumes you could keep your current plan and doctor if you like them…

So here is the obvious question- Medicare is funded by the medicare tax – 2.9% total split between employee and employer… for your entire working life. Therefore, Medicare Part A is free and Part B costs most folks $135 a month. How will this be paid for? Consider that most models at least suggest that Medicare is underfunded, and claims trends continue at between 7-8% per year.

I think that most people, if they could get a $2000 deductible health plan, that allowed them to use any MD, for $135.50 a month, would jump on the opportunity. I know I would. Just very unclear on hows it going to be funded.

Lowering your costs? Think differently!

In general, business owners and brokers are stuck in a rut. They believe they are stuck at the mercy of the few insurance companies out there, stuck with yet another huge increase, high deductibles and marginal service. And they are – until they think differently.

If you are a small business with 10-100 employees, primarily healthy, with a younger population, there may be a solution. The last 4 new clients we have brought on board have saved 15-20% on their premium, and improved their benefits.

How is this possible? Its called Level Funding. Essentially its unbundling all the services your current carrier provides, and finding less expensive ways to do each part- network access, hospital discounts, administration, service, etc. Its being able to participate in the savings in a good year – rather than the insurance company pocketing those funds. Its gaining control over your benefit design.

Give us a call if this intrigues you.

SMALL BUSINESS BENEFITS DONE RIGHT!

Judge strikes down association health plans

From The PBS News Hour, click here for the full article:

WASHINGTON — A federal judge has struck down a small-business health insurance plan widely touted by President Donald Trump, marking the second setback in a week for the administration’s health care initiatives.

U.S. District Judge John D. Bates wrote in his opinion late Thursday that so-called “association health plans” were “clearly an end-run” around consumer protections required by the Obama-era Affordable Care Act.

On Wednesday, another federal judge blocked the Trump administration’s Medicaid work requirements for low-income people.

The plans at issue in Bates’ ruling Thursday allow groups of small businesses and sole proprietors to band together to offer lower-cost coverage that doesn’t have to include all the benefits required by the ACA, often called “Obamacare.” They also can be offered across state lines, an attempt to deliver on a major Trump campaign promise.

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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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