Tag Archives: National

What Are Catch-Up Contributions Really Worth?

What degree of difference could they make for you in retirement?

At a certain age, you are allowed to boost your yearly retirement account contributions. For example, you can direct an extra $1,000 per year into a Roth or traditional IRA starting in the year you turn 50.1

Your initial reaction to that may be: “So what? What will an extra $1,000 a year in retirement savings really do for me?”

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Could one State have no insurers next year?

The promise of Obamacare smells the worst in the state of Alaska, where three insurers have pulled out this year and will not offer coverage for January 1.    And Governor Walkers office states the remaining insurer “Premera Blue Cross Blue Shield, would have to pull out or pass costs on to customers if the state does not offer relief.”

According to an article on Fox News Politico, bipartisan legislation has been written to try and resolve the problem.  “The legislation establishes a state health insurance fund to stabilize rates for all Alaskans by subsidizing costs for high-cost customers, according to Politico, which earlier reported on the move. The costs would be covered by existing funds from a tax on insurance premiums that all insurance companies pay.

“Had this problem not been addressed this year, it would have cost the state more than $200 million next year,” Lori Wing-Heier, Division of Insurance director, said in a statement.”

Kudos to the State legislature for identifying and trying to fix a problem for the taxpayers, even if it throws money at trying to prop up the failed legislation.

More evidence of ObamaCare failure- pending rate increases

As Affordable Care Act losses mount for insurers, the only question is which of two actions will they take?  Some major players have all but left the market.  The other alternative is passing on large rate increases.

Blue Cross and Blue Shield of North Carolina has done just that this week, announcing  a 19% increase for 2017, after they lost $280,000,000 on ACA plans because people with high deductible plans go to the Emergency Room more.  Aetna announced 23% in the same state.

The very flawed theory:  

“Patients without health insurance do not seek primary care and therefore end up in hospital emergency departments, something that drives up costs. By providing these patients with access to health insurance, they will seek out primary care or urgent care when necessary, but ER visits will decline, and therefore overall costs as well.

According to Blue Cross data, the opposite has happened. These ACA customers are actually visiting emergency rooms more than patients with more traditional insurance plans, driving up medical expenses for the insurer. Those higher costs led Blue Cross to file for another rate increase – 18.8 percent for 2017, on top of the 32.5 percent rate increase approved for 2016.”

When you consider the deductibles on Bronze plans are $500-$6850, this is hardly a surprise.

Family Healthcare Costs top $25k

Employee Benefit Adviser:  Healthcare costs for a typical American family in 2016 surpassed $25,000 for the first time, according to new data out this week, spurred by rising prescription drug costs and a reduction in employer contributions.

The $25,826 in healthcare costs for a typical family of four covered by an employer-sponsored preferred provider plan is $1,155 higher than last year, and triple what it cost in 2001, according to the annual Milliman Medical Index analysis.

The employer portion is still the larger component — the employer pays an average of $14,793 of the total cost, while the employee — through payroll deductions and cost sharing at the time of service — pays $11,033.

Hitting the $25,000 threshold is a “significant and somewhat unsettling milestone,” says Milliman Medical Index co-author Chris Girod.

Healthcare costs remain a constant burden for both employers and employees. Poll after poll shows that managing health costs are one of employers’ biggest concerns.

Despite that, the MMI report says, family healthcare costs will increase 4.7% this year — the lowest rate of annual growth in the 15 years of the study.

Prescription drugs make up 17% of the average family’s healthcare cost, an average of $4,270 annually, according to the data. And, the average employer contribution to healthcare has decreased from 61% in 2001 to 57% in 2016.

The findings are important for employers and may impact how they deal with healthcare costs, says Sue Hart, consulting actuary in Milliman’s Dallas office and one of the study’s authors.

“With employers footing the majority (57%) of these costs, this means they will need to continue to explore solutions to control future growth,” Hart says. “This needs to go beyond cost-shifting to the employees, as affordability is a key issue for families as well.”

Employers have increasingly shifted costs on to employees, and deductibles have soared in the past decade, according to Kaiser Family Foundation and Health Research & Educational Trust.

“This year’s MMI reflects a number of initiatives — including solutions focused on consumers, delivery systems and technology — that have potential to continue to drive trends down,” Hart says. “A combination of these initiatives is likely needed to significantly impact the direction of future healthcare costs.”

You’ll be surprised at how much this one mistake can cost you

From Employee Benefit Advisor

There has been a long-standing rule that employers are prohibited from offering an incentive of any kind to an individual who is Medicare-eligible to enroll in Medicare in lieu of the employer’s group health plan.   Encouraging your older employees to leave your plan and financially incenting them to do so can cost you – big time.

While there are fines that can be assessed for encouraging or enticing the employee to take Medicare ($5,000 per situation), the bigger “hit” is the bill for claims that Medicare paid as primary versus what they should have paid as secondary. This claim can typically be for a scary big amount; representing what the carrier (if fully-insured) or employer (if self-funded) must repay Medicare for the discovered individuals.

The IRS and CMS, in a joint data-matching program, are mailing out demand for payment letters.   “Nearly every employer who has received one of these letters is usually in shock at the amount demanded that they (or the carrier) repay. Often your client is pointing the finger at you for suggesting that Bob (who turned 65 last year and is one of the reasons their renewal was so high) go on Medicare and encouraged them to pay for his Med Supp and Part D plan premium (which you probably handled for Bob, too).”

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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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