A Lull Before the ObamaCare Rate Storm

via Wall Street Journal

Premiums this year are a nice surprise. It’s 2017 when hikes will kick in—‘bronze’ family plans alone could rocket 45%.

Americans visiting Healthcare.gov to purchase 2015 health-insurance plans are finding a nice surprise: Average premiums for the cheap “bronze” plans have increased only by 3.4% and premiums for the middle-of-the-road “silver” plans are rising by 5.8%, according to the American Action Forum. Where are the double-digit premium increases that so many predicted? Check back around this time in 2016. That’s when you’ll see the real spikes.

The Affordable Care Act includes two temporary programs that make compliant health-care plans temporarily appear far cheaper than they are: Risk corridors and reinsurance. Both programs will expire on Jan. 1, 2017. By November 2016, consumers will know how that sunset will affect their plan’s premium….

Read full WSJ Article by Stephen T. Parente Here

Posted in Health, Health & Welfare, Health Reform, News & Updates | Tagged , ,

America’s Income Protection Picture

The Council for Disability Awareness released the results of its 2014 consumer survey. America’s Income Protection Picture summarizes the state of working adults’ awareness of their chances for being out of work due to an illness or injury, their knowledge of how to maintain an income stream while they are out of work, and most importantly,  how to plan for a potential income loss due to disability.

Posted in Uncategorized

2015 Health Plans: It’s Crunch Time to Select

via Wall Street Journal

The self-employed are finding it easier to buy health insurance on their own because of the Affordable Care Act, as are workers looking to leave corporate life. But as the 2015 enrollment season ramps up, many of them must weigh new trade-offs between cost and coverage.

Plans opened for enrollment last month and the deadline is Feb. 15. Those who bought plans last year will be automatically renewed in those plans on Monday if they don’t opt for a new plan.

Beth Moore, a 32-year-old independent behavioral therapist in Louisville, Ky., credits the 2010 law with making it possible for her to leave her job at a not-for-profit agency in January to counsel children with autism—in part because it meant she could afford and qualify for health insurance on her own for the first time this year.

She plans to wed her fiancé this summer, and she says the couple hopes to begin a family shortly thereafter.

Yet some doctors don’t participate in her current plan’s network, including her obstetrician. As she looks at the plans available for 2015, Ms. Moore’s biggest concern is whether her doctors accept the policies, which she says is tricky to determine without calling individual physicians’ offices.

In addition, Ms. Moore says she doesn’t qualify for government subsidies, and her monthly cost is rising to $220 from $192, a price she says she can handle as long as it doesn’t go much higher in coming years.

The new law isn’t universally popular with independent workers, says Katie Vlietstra, vice president for government relations at the National Association for the Self-Employed. For some, the requirement to have health insurance adds costs and means a loss of flexibility, she says.

Some shoppers could face higher prices and a constrained choice of doctors, while others—especially those who qualify for government assistance or have pre-existing health-care conditions that made it difficult to obtain coverage before the law—are reaping the benefits, says Sabrina Corlette, project director of Georgetown University’s Center on Health Insurance Reforms.

Here are health-care experts’ top tips for self-employed workers trying to navigate the marketplace this season.

Consider the coverage.

HealthCare.gov is the main federal marketplace, and the site also will direct shoppers to state-based exchanges in those locations that run their own programs.

People in business for themselves who have no employees can shop the federal and state individual exchanges, while those with employees should look to separate small-business portals, says John Arensmeyer, chief executive of the Small Business Majority, a national group that advocates for small businesses.

The plans come in five general tiers. Four of them—platinum, gold, silver and bronze—correspond to how much in medical expenses they cover. Bronze plans, for example, pick up an average 60% of expenses, while platinum plans cover 90% on average. Consumers who choose the fifth option, catastrophic plans, cover costs up to a specified limit. Such plans are available only to people under 30 or those with hardship exemptions.

Most plans now are required to pay for certain essential health benefits, such as emergency services and maternity care, and there are typically limits on out-of-pocket spending: for 2015, $6,600 for an individual plan and $13,200 for a family plan, according to HealthCare.gov.

Costs are likely to vary depending on where consumers live, how old they are and whether they smoke, among other factors, experts say. For 2015, the average lowest-cost monthly premium for bronze-level plans is $265, before any government subsidies, and up to $439 for platinum-level plans, according to the Department of Health and Human Services.

Look into lowering costs.

Applicants should check to see if they qualify for financial help, says Christine Barber, senior policy analyst at Community Catalyst, a consumer advocacy group based in Boston.

Some 80% of current enrollees in the marketplace plans could get 2015 coverage for $100 a month or less, after taking into account tax credits available to people who qualify, says the Department of Health and Human Services.

Professionals might be surprised to find that they qualify for some support even with relatively high incomes. According to HealthCare.gov, a family of four making less than $95,400 can qualify for help. When an applicant’s household income is lower than $29,175 for a single person or $59,625 for a family of four, premiums as well as copayments are subsidized on the marketplaces.

One problem for entrepreneurs is that their income can vary sharply from year to year, Georgetown’s Ms. Corlette says. This presents a problem when calculating the tax credits for which people might be eligible. She advises taking less help than you might be eligible for to pay for monthly premiums up front, in case your income rises later in the year, as consumers will be repaid at tax time if they were eligible for more support.

Evaluate the network.

For people used to employer-provided coverage—which can pick up close to 90% of medical expenses—it is important to evaluate marketplace plans for the adequacy of their network of doctors and their out-of-pocket costs, says Caroline Pearson, vice president of Avalere, a health-care data firm based in Washington.

Experts say one way some plans keep prices down is to limit the doctors in their networks, so check with your doctors to make sure they take the policy before signing on.

The law requires health insurers that sell plans through the exchanges to meet certain network adequacy requirements, says Aaron Albright, spokesman for the Centers for Medicare and Medicaid Services, which runs the HealthCare.gov marketplace. People also can review plan details on that site to see which providers or facilities are in a network, he says.

The exchange contains on average 25% more issuers than last year, according to the Department of Health and Human Services.

Ms. Moore, the behavioral therapist, says she is unlikely to change medical plans. She is grateful for the coverage she got this year, which helped pay for an emergency appendectomy and a hospitalization for pneumonia. Plus, the plan accepted her even though she had a pre-existing thyroid condition.

“I’d rather spend a little more and be confident in the benefits,” she says.

Posted in Health, Health & Welfare, Health Reform, News & Updates

CEO Council 2014: The CEO’s Top Priorities

via Wall Street Journal

More than 100 chief executives of large companies gathered at The Wall Street Journal’s annual CEO Council conference to discuss today’s pressing public-policy and business issues.

The CEOs divided into six task forces to debate priorities about doing business in China and what governments can do to help; how public companies can stay focused on the long term; the future of health care; dealing with disruptive technology; balancing energy security with environmental sustainability; and how to expand middle-class jobs. Each task force presented its recommendations, and the full conference then voted these five as the top overall priorities:

1. 21st-Century Workforce

A competitive work force requires action on all fronts, from expanded early childhood education to reform of funding mechanisms. Involve business in the education system, including curriculum development, to help students prepare for available job opportunities. Encourage schools and parents to sign up for programs engaging businesses. Improve focus on STEM and technical training.

2. Pro-Growth Fundamentals

Focus on pro-growth fundamentals including corporate income-tax reform and free trade. Promote smarter regulation by eliminating constraints on starting and growing businesses to generate additional jobs quickly. Expand H-1B visa program and grant a visa to every technical graduate. Allow immigrants who already received a STEM degree (or are pursuing one now) to stay.

3. Modernize Infrastructure

The market needs clear rules to spur private investment in a range of infrastructure, including modernizing and expanding the electric grid, pipelines and transportation sector. Streamlined permitting is especially needed. Investment would also help electrify the transportation sector. Establish a national infrastructure bank, aimed at professionalizing public infrastructure investment and being a model for states. Also use public-private partnerships for funding. Establish independent, nonpolitical leadership with a structure similar to the Federal Reserve system.

4. Taper Capital-Gains Tax

Structure the capital-gains tax to create an incentive for investors to hold their shares for an extended period, reducing the tax rate as time goes on. It would discourage traders and attract investors, and help align executives’ interests with shareholders’. This would help U.S. companies grow, hire and compete in the global marketplace.

5. Empower Health-Care Consumers

Give consumers more information to make smart economic choices and promote wellness. Cost, quality and outcome data must be made available in a way that will advance paying for quality and value. Shift more accountability to consumers, but make sure they’re informed. Allow insurance companies and employers to provide consumer incentives.

Posted in CEO, Health, Health & Welfare, News & Updates

The New Way to Measure Your 401(k)

via Wall Street Journal


The whole way that 401(k) savings are measured is about to be turned on its head—if a new approach catches on.

Under the new approach, investors could get a clearer picture of whether they are nearing their retirement-savings goals by focusing less on the dollar amounts they’ve accumulated and more on how much income that money can generate in the future.

A lump-sum figure, the thinking goes, doesn’t tell you much more than how well your portfolio has fared and how much you have saved. The new approach—known as projected income—would show instead what your current balance would pay out as income beginning at a certain age.

Projected income has some prominent supporters. Last year, the Labor Department sought comments on proposed rules that would encourage company plan sponsors to provide a projected retirement-income calculation for their participants as well as information about current account balances.

The Total-Return Fixation

John Rekenthaler, vice president of research at investment-research firm Morningstar Inc., says projected income could sit alongside more-traditional yardsticks such as total return in measuring portfolio performance. Morningstar analysts are having internal discussions about adding a projected-income calculation to the part of its website that advisers use to analyze client portfolios. “As we refine our thinking, total return is a fine metric, but annual income is the most relevant number,” he says.

Investors struggle to translate the lump sum of money they see each quarter on their account statements, he says. That is particularly true of retirement savings, which accumulate over long periods. People tend to fixate on total return and ignore the effects of inflation and interest rates on future spending power. A projected-income calculation would show them how their current balance translates into, say, an annuity that pays out starting at age 65, or set annual withdrawals beginning at that age.

A 35-year-old man with $50,000 socked away in a 401(k) plan doesn’t have an easy way to understand what that quantity of money means for him 30 years down the road when he hits retirement age. He might be tempted to take a loan from the account today to pay for a car. If he could see not only how much he has saved but how much income that translates into three decades from now, he might forgo the loan and leave the money to grow in the plan instead.

That leads to better investor behavior, Mr. Rekenthaler says. “Any action that you take on your 401(k) should make people think twice,” he says, adding that the approach might also be used for college saving. “This is certainly a starting point.”

How It Plays Out

For a look at how projected income might play out, consider some new offerings from BlackRock Inc. Last year, the New York asset-management firm, with $4.5 trillion under management, rolled out a set of indexes that were designed for those age 55 to 65 to track how much they need to save now to produce $1 of inflation-adjusted annual income starting at age 65 and running the rest of their life (based on actuarial calculations). There are 11 indexes that follow each retirement year of the current 55- to 65-year-old age group. A set of mutual funds to track those indexes was introduced earlier this year.

Chip Castille, a managing director of BlackRock and the firm’s chief retirement strategist, says the shift gives investors a more concrete way to look at their savings—as a source of potential income, not a lump sum. “We’re not trying to build a big pot of money that we’re going to roll around on later,” he says. “We’re not building a money slide.”

Each index level reflects the performance of bonds picked to mimic median annuity prices for each age, and their values change daily. For example, as of Nov. 13, it would take a 65-year-old $20.54 of current savings to generate $1 of annual retirement income beginning this year. But someone retiring at age 65 in 2024 would need $14.54 of current savings to generate every $1 of income, measured in 2014 dollars, starting 10 years from now.

BlackRock uses three variables for measuring projected income: the portfolio value, current annuity rates and years remaining until age 65. BlackRock factors in the effects of inflation, interest rates and risk, too. The withdrawal rate is floating rather than the rule-of-thumb 4% fixed amount because it adjusts daily to current annuity prices.

Say you are 61 years old and have $750,000 in savings. You are going to retire in 2018. BlackRock’s index projects you will need $16.35 in savings now to generate $1 of income starting at age 65. The projected annual income off your savings is $45,871. That is a much higher number than the $30,000 in annual income you would get from a $750,000 portfolio if you just used the 4% formula to calculate income.

Quirks of Return

BlackRock’s process also shows how it is possible for a portfolio to do well in terms of total return, but slip when it comes to projected income.

That is because bond prices fluctuate and affect annuity rates. If annuity prices increase faster than total return, projected income will decline. Median savings for current 55-year-olds this year through September rose 16.5%, to $271,620, BlackRock data says, boosted by market gains. But the estimated cost of retirement income rose even faster, 18.5%.

This year a 55-year-old would need $15.12 to generate $1 in annual income beginning a decade from now. A 55-year-old last year would have needed only $12.76. Falling interest rates over the past year have made it difficult to maintain spending power.

Liz Moyer – WSJ

Posted in News & Updates, Retirement, Retirement Plans