Category Archives: Investing and fiduciary requirements

Upstate SC companies say workplace clinics help cut costs, improve quality of health care

Jan 17, 2013-Tammy Cramer eases into a comfortable gray dental chair inside BMW’s modern
new family health center and gives Dr. Peter Mehr a look at her pearly

The $5 million, 25,000-square-foot center offers workers and their families primary care, vision, dental
and pharmacy, among other services, just down the road from their
workplace in Greer, with the option of an appointment before and after
their shifts.

As one of the first employees to use it, Cramer had a dental visit once her
workday ended, and she looks forward to scheduling more convenient
medical exams there as well.

“It was a great experience,” the Boiling Springs woman told

“I can leave work at end of my shift, drive to the family medical center
and have an appointment and not have to wait for hours,” she said. “And
I’m saving money by not having to miss time from work or take personal

BMW Manufacturing Co.’s new Associate Family Health Center opened last week,
becoming the Upstate’s latest business to offer employees an on-site
health center.

A growing number of employers — typically large, self-insured companies
like BMW — are looking to workplace clinics as a way to hold down health
care costs, according to the Center for Studying Health System Change, a
nonpartisan think tank in Washington.

The center reports that the number of companies planning to open one doubled between 2007 and 2011.

Still, only about 11 percent of American families most likely to have access
to these clinics — and 4 percent overall — reported using them in 2010.
That’s about the same as in 2007, according to the center.


For the rest of this story, go to:

Insurers may prove choosy with overhaul exchanges

There is a mistaken assumption that all the major insurers- Aetna, Blue Cross, CIGNA and United – will all be in the exchanges.  This article points out (part) of why that won’t happen.  The part it doesn’t mention is adverse selection- millions of sick and uninsured folks are finally going to be able to get coverage they can afford, driving up the claims substantially for the first couple of years. – Reeve


Tom Murphy, Associated Press, 1/17/2013
The leader of the nation’s largest health insurer warned Thursday not to assume
widespread participation from his company in part of health care
overhaul’s coverage expansion that unfolds later this year.

UnitedHealth Group Inc. CEO Stephen Hemsley told analysts the
insurer’s involvement in online exchanges that are expected to help
millions buy coverage will depend on whether it’s financially viable for
the company.

“We will only participate in exchanges that we assess to be fair,
commercially sustainable and provide a reasonable return on the capital
they will require,” he said.

These exchanges are expected to start accepting enrollment this fall
for coverage that begins in 2014. Customers will use the websites, which
will vary by state, to compare policies and apply income-based tax
credits toward their bills. Many details on the exchanges have yet to be
worked out, so Hemsley said the company hasn’t made any specific

But he estimated that UnitedHealth will participate initially in roughly 10 to 25 exchanges, when at least 100 might be set up.

“In a perfect world, we would participate in them all,” he said,
adding that the insurer will keep evaluating exchanges and could
eventually join more.

These exchanges will target individuals and people who have coverage
through small employers. The consulting firm PricewaterhouseCoopers has
estimated that they will generate $50 billion in premiums for the
industry and at least 11 million customers by next year.

But insurers will have to spend money to make that money. The
overhaul will impose taxes and fees on insurers, and it introduces some
restrictions on how they can set premiums or the price of coverage.

Insurers, who are not required to participate in the exchanges, also
will have to design plans that fit the requirements for each state
exchange and build networks of health care providers.

“There is a significant risk … that if the economics on the
exchanges are not favorable, they’re simply not going to participate,”
said Sheryl Skolnick, an analyst who covers insurers for the
institutional broker and dealer CRT Capital Group.

That could affect the premiums people pay for coverage. Proponents of
the overhaul say the exchanges will help restrain premium hikes because
insurers will be competing against each other as customers compare
several policies side by side to find the best match.

UnitedHealth competitor WellPoint Inc. said it is planning to be on
exchanges in all 14 states in which it sells plans with its well-known
Blue Cross Blue Shield brand. But a company spokeswoman said in an email
the insurer wants to see exchanges that emphasize competition and
maximize choice for customers.

Whether insurers ultimately leave some exchanges thin on competition remains to be seen.

Wells Fargo analyst Peter Costa said every company will weigh the
risks of participating in those exchanges against potential benefits.
But too many details about the exchanges remain unknown to say how those
deliberations will pan out.

Morningstar analyst Matthew Coffina expects widespread insurer participation.

He noted that some companies will lose business to the exchanges, so
they will need to be on them to recapture it and gain new customers. He
also noted that government officials will want credible companies like
UnitedHealth or WellPoint on their exchanges and not just small, local

“I think regulators are aware of that, so they’ll want to offer rules
and terms that are attractive enough to attract a robust
participation,” he said.

Hemsley spoke to analysts Thursday morning after UnitedHealth
announced results from the recently completed fourth quarter. The
insurer’s earnings slipped 1 percent to $1.24 billion. Earnings per
share rose 3 cents to $1.20 compared to the last quarter of 2011, when
the company had more shares outstanding.

UnitedHealth’s total revenue climbed 11 percent to $28.77 billion.

New regulations shed light on looming health-care reform costs for businesses

We are in the “rule-a-week” period that follows any new law, where the various agencies put meat on the bones of the law.  THis is a long, but very important article, if you have more than 50 employees!- Reeve


By ,  January 16 | Washington Post

The ramifications of health care reform for business owners are coming into focus as regulators float new rules to govern employer-sponsored coverage.

Lost in the political fervor over the fiscal cliff, the Internal Revenue Service
recently proposed new regulations to govern what has been dubbed the
“employer mandate” section of the Affordable Care Act. The provision,
which takes effect next year, requires companies with 50 or more
employees to either provide adequate and affordable coverage to their
workers or pay tax penalties.

But just how are those 50 to be counted? Business owners
have been waiting to find out how part-time and seasonal employees will
count toward staff totals, how owners of more than one business are
supposed to tally their workers, and of course, exactly how steep the
penalties will be for failing to provide coverage.

The IRS addresses several of those issues with its newly proposed regulations.
Here’s a look at what we now know about the employer health care
requirements, as well as three key questions that remain unanswered.
Included in the proposed rules

A formula for calculating full-time equivalents: The health care law
set the threshold for large-employer penalties at 50 full-time
employees and full-time equivalents, but left the definition of those
terms up to the IRS. The agency has proposed counting all employees who
work an average of 30 hours per week as full-time workers and
calculating full-time equivalents by adding up the total number of hours
worked by part-time employees each month and dividing by 120. Thus, a
company with 45 full-time employees and eight part-timers who each work
85 hours per month (about 20 hours each per week) would be subject the
large-employer coverage mandate (5.66 full-time equivalents + 45
full-time employees = 50.66 employees).
A slim margin-of-error for no-coverage penalty: The law
states that a no-coverage penalty shall apply to any eligible large
company that “fails to offer [coverage] to its full-time employees,” and
the penalty has been pegged at $166.67 per month multiplied by the
number of full-time employees, excluding the first 30. By that formula, a
firm with 51  full-timers that doesn’t provide coverage would generally
pay $3,500 per month (21 X $166.67). But while that language granted
regulators permission to penalize large firms that do not immediately
provide benefits to each and every full-time employee, the IRS has
granted some leniency. The new regulations would only enforce the
non-coverage penalty for employers who fail to offer coverage to more than 5 percent of their employees (or five workers, whichever is larger).
The inclusion of paid-leave hours: But what about paid
vacation, holidays or extended leaves—do those hours count toward
monthly totals for each employee? This was a pressing question for many
business owners, and most of them won’t like the answer. Regulators have
suggested that hours used to determine full-time status will include
hours worked and hours for which employees are entitled to compensation
even if no work is performed. That means time spent away for paid vacation,

illness, maternity leave and even jury duty can push workers over the threshold for full-time benefits.


A transition rule for determining employer-size status:
Business owners must make their own large- or small-employer
determination on an annual basis by counting the number of full-time
employees and equivalents they had during each month of the past
calendar year. But for the first year, to ease the transition,
regulators have included a provision that allows them to count their
employees for any six-month period in 2013 to determine their size
status for 2014. The rules also delay the penalty for failing to provide
coverage to employees’ dependents until 2015 so long as large employers
that don’t yet offer those benefits take steps toward implementing them
by 2015.

A delayed start for non-calendar year plans:
The law
states that the employer mandate provisions will take effect on January
1, 2014, which left business owners with fiscal-year (rather than
calendar-year) health care plans wondering whether they would be held to
that start date (which may fall right in the middle of their current
plan) or permitted to wait until the start of their 2014 fiscal year.
The proposed regulations grant them that break, noting that large
businesses will not be subject to penalties until the start of their
plan year for 2014.

Still up in the air

What constitutes a controlling interest in a business?
The language in these latest proposals remains vague for owners of
multiple businesses and part-owners of a single business. For example,
if a pair of business partners share ownership of two companies, each
taking a two-thirds majority stake in one firm and one-third ownership
of the other, the regulations do not specify whether they will each be
forced to count only one entity’s employees toward their respective
totals or whether they will both count all workers.

What constitutes a seasonal employee?

The regulations leave the term “seasonal employee” open to
interpretation when calculating their contribution to a company’s size
status and their eligibility for health benefits. In one case, the
regulations refer to definitions of “seasonal employee” set by the Labor
Department, but later, regulators state that through at least the end
of 2014, employers will be responsible for using a “reasonable good
faith interpretation” of the term to determine which of their workers
should be considered seasonal.
What constitutes adequate and affordable care? While
the IRS has started to clarify the tax penalty side of the health reform
equation, plenty of large employers are still waiting for the
Department of Health and Human Services to define the law’s essential
health benefits package — in other words, they haven’t yet been told
what type of medical and health-related expenses their plans must cover
for full-time employees. Until then, projecting future health costs for
many businesses remains difficult.

Reform expected to raise young adult premiums

By | January 7, 2013 • BenefitsPro

A provision in the Patient Protection and Affordable Care Act might
make health insurance a lot more expensive for young adults, a new
study finds.

According to actuaries at consulting firm Oliver Wyman, the law’s age
rating provision could mean a 42 percent hike in premium costs for
people aged 21 to 29 when they buy individual coverage.

Similarly, the research finds that “single adults up to age 44 with
incomes beginning above approximately 300 percent of FPL can expect to
see higher premiums, even after accounting for premium assistance.”

Under health reform, insurers are limited to the amount they can
charge older people for their health insurance to a maximum of three
times the amount younger people pay.

Supporters say the age rating restrictions are necessary to ensure
seniors are fairly charged for coverage, but others argue the
requirement will raise costs for young adults and lead them to forgo
health insurance, which will negatively impact the entire market.

“If younger, healthier people choose to forgo purchasing insurance
until they get sick or injured, costs will increase for everyone—young
and old,” says AHIP President and CEO Karen Ignagni.

America’s Health Insurance Plans has urged the Health and Human Services Department to delay its implementation of the 3:1 rule.

“Higher rates for the younger population combined with low mandate
penalties during the first years of the ACA implementation will result
in adverse selection because younger individuals are likely to choose
not to purchase coverage,” AHIP wrote in comments to HHS. “When these
younger individuals do not enroll, destabilization of the individual
market will occur, premiums will increase in the individual market for
enrollees of all ages, and enrollment will decline.”

The study also found that people in their 30s with single coverage
who are not eligible for premium assistance would see an average
increase in premiums of 31 percent, while those with single coverage
aged 60 to 64 who are not eligible for premium assistance would see
about a 1 percent average increase in premiums.

The authors said that to understand the full impact of the PPACA on premiums, “it’s important to move beyond broad averages.”

“Averages may mask substantial differences in how market reforms will
affect individual states and various populations in those states,
particularly in the pricing of coverage and the pooling of risk,” they

The study was published in the January/February issue of Contingencies, a publication from the American Academy of Actuaries.

Fiscal Cliff Legislation Provides New In-Plan Roth Conversion Opportunity

This is a good summary of the change to 401k Roth Conversion Rules included in the legislation. – Reeve
by Brian M. Pinheiro and Josh Bobrin
The newly enacted American Taxpayer Relief Act (H.R. 8) includes a significant new
opportunity to perform “in-plan” conversions of pretax dollars to Roth
(after-tax) dollars of funds held in defined contribution retirement
plans (such as Section 401(k) plans, Section 403(b) plans, and
governmental 457(b) plans). President Obama signed the legislation on
January 2, 2013.

Plan sponsors who previously considered but rejected implementing an in-plan Roth
conversion feature for their plans due to the modest benefit previously
available to employees may now want to reconsider whether such an
approach makes sense in light of the greater benefits provided under the
new law.

For plan years beginning after December 31, 2012, employers will have the option, but
not the obligation, to amend their defined contribution retirement plans
to add (or expand) the new conversion feature. An in-plan Roth
conversion of pretax (non-Roth) plan assets causes the converted amounts
to become taxable in the year of the conversion, but allows any future
qualified distributions of the converted amounts, along with any
accumulated earnings, to be provided tax-free to the participant.

Prior to the passage of the Act, in-plan Roth conversions were available on a more limited basis.
Such conversions were only permitted for amounts that participants were
otherwise eligible to withdraw. In general, this meant that the amounts
eligible for conversion were limited to funds the participant had
rolled over from a prior plan and/or amounts the participant could
withdraw upon reaching age 59 ½. This resulted in a relatively small
pool of potential participants and assets that were eligible for the
in-plan Roth conversion.

Under the new, expanded conversion right, an eligible plan that permits regular
non-rollover Roth contributions could allow participants to convert any pre-tax
vested amounts to Roth amounts within the plan – whether or not
participants are eligible to withdraw such amounts. By broadening the
potential assets eligible for conversion to include previously
ineligible amounts, such as employee elective deferrals and employer
matching contributions, the new law provides participants with a much
higher potential base from which they can choose to convert to after-tax

Additional guidance will be needed to confirm how the expanded conversion right
will be carried out. It is likely that the new conversion right will
operate in the same manner as existing in-plan Roth conversions under
IRS Notice 2010-84, but this has not been confirmed by the IRS.

If you have questions regarding the new Roth conversion opportunity provided by the American
Taxpayer Relief Act and how it may affect your retirement plan, please
feel free to contact Brian M. Pinheiro at 215.864.8511 or, Josh Bobrin at 215.864.8409 or, or any member of Ballard Spahr’s Employee
Benefits and Executive Compensation Group.

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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. - SIPC - Brokercheck