Category Archives: Investing and fiduciary requirements

Required services to cost SC health plan $70M

AP News, By Seanna Adcox on August 24, 2012

COLUMBIA, S.C. (AP) — South Carolina’s insurance plan for public employees expects to spend about $70 million to provide the preventive services that federal health care law requires insurance plans to offer at no out-of-pocket cost to workers.

While workers and retirees won’t pay at the doctors’ office, they will pay elsewhere, said Stephen Van Camp, director of employees’ insurance program.

State actuaries estimate the required services will cost between $65 million and $75 million to provide, likely starting in 2014, Van Camp told a retirement advisory panel on Thursday.

The health care law passed by Congress requires insurance plans provide — without co-payments and regardless of deductibles — services that include immunizations, contraception and screenings for high blood pressure, cholesterol, and breast, cervical and colorectal cancers. The idea is that such services reduce health care costs over the long term.

For example, catching high blood pressure early will hopefully prevent a host of health problems.

“That’s what the hope is,” Van Camp said. “It’s an investment — one we’re forced to make by the federal government.”

But when and whether those savings would be realized is unknown, he added.

What is known, he said, is that the upfront cost to the state health plan will require either increased premiums or benefit changes, or some combination. That could include reducing other benefits and increasing deductibles.

The state plan covers 234,539 public workers and retirees, plus their spouses and children. The changes don’t start immediately because of a grandfathering provision in the federal law, for which the state plan will probably no longer qualify in 2014, Van Camp said.

An additional $70 million would increase the plan’s total cost by less than 5 percent.

Claims tallied about $1.6 billion last year, though the numbers keep rising, Van Camp said.

Currently, those insured under the state’s standard health plan must meet a $350 deductible before any health costs are covered. After that, employees and retirees foot 20 percent of the bill for most services. However, physical exams sometimes offered at the workplace cost $15.

Starting Jan. 1, health care premiums for state workers and retirees will increase 4.6 percent. Their current rates for the standard plan range from $98 a month for a single, non-smoking worker to $366 monthly for a family with a smoker in the household.

The increase is due to a vote earlier this month by the Budget and Control Board. Gov. Nikki Haley convinced a 3-2 majority of the board to split the cost of premium hikes between workers and employers, even though legislators had fully covered the hike in the state budget.

A lawsuit challenging the board’s authority to ignore the budget is before the state Supreme Court. The state employee and teacher groups suing have asked the state’s high court to take the case directly.

Haley has repeatedly said that workers should have some “skin in the game,” and it’s only fair that taxpayers not fully fund public workers’ health care bills.

In South Carolina, employers — which include state agencies, public colleges, school districts and local governments — pay 73 percent of premiums, while workers foot 28 percent. Employers’ rates — the part paid by taxpayers — rank fourth lowest among the 50 states’ insurance programs for public workers, while the rates paid by employees and retirees rank 16th highest nationally, Van Camp said, citing a national survey.

The total, when combining what employers and workers pay, ranks third lowest nationally.

Since 1999, premiums have increased in all but two years. Employers footed the whole bill in six of the 14 years that costs increased, while employees and retirees paid the full cost in two of those years, according to the Public Employee Benefit Authority.

Employees’ rates increased by double digits in 2001 (by 10 percent), 2002 (by 23 percent), 2003 (by 37 percent), 2004 (by 28 percent), and 2005 (by 30 percent), according to the agency.

While the state’s done well in comparison to other states, the state must do more to cut costs, said the agency’s executive director, Bill Blume.

SCORE HOLDS TAX AND FINANCIAL PLANNING Workshop

Tuesday, September-18th
Entrepreneurs have great abilities to develop business concepts and transition the concept into
a business. Many rely on outside services for accounting, bookkeeping, and tax
preparation without a clear understanding of their role in financial planning.
This workshop will review the critical financial issues the entrepreneur should be
aware of and manage in order to have optimal business and financial success.

Our Speaker will be Brian Kurtz, CPA who has worked for large
corporations and as a business partner for many small businesses in the Charleston area.

Time & Location: 6:00pm – 9:00pm
Charleston Metro Chamber of Commerce

4500 Leeds Ave

N.Charleston, SC  29405
Fee: $25 registered / $30 at door
To register go to WWW.score285.org

Another bubble, in Student Loans?

Students these days are graduating with unprecedented amounts of debt.  The government now guarantees $450 billion in student loans, more than a 300% increase in just 3 years.  When you add in private sector loans its more than a trillion dollars!

Perhaps this is a sign of the times- those laid of in the recession went back to school, and those in school stayed in school.  In the meantime, students are graduating and cannot get a job. 

The average student graduates with a student loan debt of $24,000, $5000 in credit card debt, and personal loans of $10,000.  They start $39,000 in debt, which is about $100/month in bills they have to cover.

How did we get to this point?  Did you know that the following things are NOT considered when applying for federal student loans:  current income, potential income, high school academic record, and credit history?  Isn’t this how we got into the housing bubble?

Did you know that Colleges often steer students to “preferred lenders” which provide revenue sharing to the college?  This results in higher interest rates to the students.  When you consider that student loans are not discharged in bankruptcy, they are almost risk-free, so why are they charging 7% plus in this environment?  Is this in the best interest of the students?

Another big contributor is the entitlement attitude of many in this generation- I “need” an ipad, a smartphone, a new car, etc.  We have, through our own educational fialures IMHO, raised a generation of financially illiterate, fully unprepared for the harsh economic world in which the emerge.

It will be small wonder to me when this bubble pops. 

 – Reeve Conover

Health Care Reform Checklist

Your company has more obligations than you may be aware of under Health Care Reform.  Here is a checklist of things to prepare for:

On January 1, 2014 if you have more than 50 employees, you will be subject to penalties if you do not provide a minimum level of coverage, or if your employees have to pay more than 9.5% of therir income for health insurance.  Keep this in mind as you plan your renewal and employee contribution pathways.

Expect a health plan audit to prove your are compliant.   Just as they have stepped up audiots and penalties for retirementplans, the general feeling is that will happen here as well.

Beginning next year you will have to report the value of your employees health insurance on the W2.

Benefit Summaries will have to be inyour employees primary language.

Health Care Reform reminders for 2013

Flexible Spending Accounts

 Contributions may not exceed $2500 per year.  The cap will be indexed for inflation going forward.

Medicare Payroll Tax increase:

Effective for tax years beginning after December 31, 2012, an additional 0.9% hospital insurance (HI) tax is imposed on wages in excess of $250,000 for married taxpayers filing a joint return, $125,000 for married taxpayers filing separately, and $200,000 in all other cases (single or head of household).

STATE BASED EXCHANGES:

All employers will be required to provide notices to their employees about the existence of these programs.

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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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