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Tuesday, May 31, 2011

Life Insurance After 50

If your term life policy is ending but your needs continue, consider the cash-value alternative.

By Kimberly Lankford, Contributing Editor
From Kiplinger's Personal Finance magazine, June 2011

For anyone weary of writing checks to pay for life insurance, retirement used to spell relief. With the mortgage paid, the kids on their own, and Medicare and Social Security on the way, common sense suggested you could safely let your insurance expire. But now many fifty- and sixtysomethings don't have the flexibility to shorten the life of their life insurance. Life expectancies are longer, and the expenses that the death benefits were earmarked to take care of are hanging around longer, too. You may be retired, but you haven't retired your mortgage. Without a pension, your spouse may need an extra financial safety net after you die. And what if your children aren't self-sufficient? Read more:

Wednesday, May 25, 2011

Factors That Will Affect Healthcare Costs in 2012

U.S. employers can expect to see healthcare costs rise by 8.5% in 2012, compared to an increase of 8% in 2011, according to a study published by PwC’s Health Research Institute. However, mitigating changes in health benefit plan designs, including increased cost-sharing with employees, could keep employers’ costs increases to an average of 7% next year. Meanwhile, American workers are beginning to show signs of post-recession stress and the effects of delayed care is taking a toll on their health.

The slow economic recovery, unemployment, and reduction in disposable income have caused Americans to seek fewer healthcare services, which led to lower-than-expected growth in employers’ medical cost trends in 2010 and 2011. Based on interviews with health plans, PwC had projected a 9% increase in employer medical costs. However, low utilization led to adjusted estimates in the medical cost trend to 7.5% for 2010 and 8% for 2011 before benefit plan changes. The end of subsidized COBRA coverage in 2010 is offsetting otherwise rebounding utilization growth rates so far in 2011, but employers and health plans expect pent-up demand to put upward pressure on medical costs in 2012.

To help employers design their health benefit, PwC’s Health Research Institute provides annual estimates of how private medical costs will grow over the next year and what the leading drivers of the trend are expected to be.

In this year’s report, PwC identifies three factors that are likely to inflate the medical cost trend in 2012:

We can show you how to save money on your health care costs:

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Healthcare Costs Trends Slow Down

Healthcare costs continue to rise, but at a declining rate, according to a report by the S&P Healthcare Economic Commercial Index. The cost of healthcare services covered by commercial insurance and Medicare programs increased 5.77% in 2011. David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s said, “If you look over the last year or so of data, it is apparent that the rates of increase in healthcare costs continue to slow down.” Blitzer said that most of the annual growth rates peaked in the late winter/early spring of 2010. Since then, most of these rates have fallen by two percentage points or more.

The biggest slowdown has come from the Hospital Medicare Index, where the annual growth rate fell from 8.30% in August 2009 to 1.18% in March 2011. “On the other hand, we have not seen an equal trend for the Hospital Commercial Index where the annual growth rate peaked at 9.36% in May 2010 and is still reporting a healthy 8.36% as of March 2011,” he said. Blitzer said that two things may explain this phenomenon: costs for Medicare patients are being better contained than costs for patients with commercial insurance plans. Also, hospitals are using more procedures and services covered under commercial plans, contributing to the increase in total costs.

The index is virtually back to the lowest annual growth rate in its six-year history, which was 5.76% in June 2007. The highest annual growth rate was during the 12-months ending May 2010, when it posted 8.74%. In the following 10 months, the index had a sharp deceleration, down 2.97%. Over the year ending March 2011, healthcare costs covered by commercial insurance rose by 7.57%. Medicare claim costs rose 2.78%, which is the lowest annual rate of growth posted for the Medicare Index in its six-year history.

For more information, visit www.standardandpoors.com

IRS Announces 2012 Cost-of-Living Changes for HSAs

The IRS released the 2012 cost-of-living adjustments affecting HSAs. The HSA contribution limits and HDHP out-of-pocket maximums will increase slightly while the HDHP minimum required deductibles remain unchanged. Here are the details:

•    HSA Contribution Limits — The 2012 annual HSA contribution limit for individuals with self-only HDHP coverage is $3,100 (a $50 increase from 2011) and the limit for individuals with family HDHP coverage is $6,250 (a $100 increase from 2011).

•    HDHP Minimum Required Deductibles — The 2012 minimum annual deductible for self-only HDHP coverage remains $1,200 and for family HDHP coverage remains $2,400.

•    HDHP Out-of-Pocket Maximum — The 2012 maximum limit on out-of-pocket expenses (including items such as deductibles, co-payments, and co-insurance, but not premiums) for self-only HDHP coverage is $6,050 (a $100 increase from 2011), and the limit for family HDHP coverage is $12,100 (a $200 increase from 2011).

For more information visit http://www.irs.gov/pub/irs-drop/rp-11-32.pdf.

Tuesday, May 10, 2011

New Wage and Hour Division

The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) underwent several new developments to be effective on May 5, 2011. The developments relate to amendments made to the federal Fair Labor Standards Act (FLSA) and the Portal to Portal Act. Based on the updated federal regulations that may be different from regulations in your state, the following illustrate some of the major provisions:

• Tips and Wages. As long as an employee’s pay (plus tips) equals or exceeds the federal or state minimum wage (whichever is higher), an employer may pay a non-exempt employee (who earns tips) less than the minimum wage and may use the individual’s tips to make up any difference. In addition, an employer should notify employees of any tip credit usage, and the employees are to keep all tips received unless tip pool amounts are to be shared among those who customarily earn tips. Also, while the FLSA does not impose a maximum contribution to a valid tip pool, an employer must notify employees of any required contribution amount. (Note: The DOL raised the maximum federal tip credit from $4.42 to $5.12 per hour.)
• Sub-minimum Wage. An employer may pay an employee (who is under 20 years of age) a sub-minimum wage of not less than $4.25 per hour for the employee’s first 90 calendar days of employment.
• Stock Options. Stock options are to be excluded from the calculation of an employee’s regular rate of pay.
• Fire Protection Activities. Regarding employees involved in fire protection activities, the amount of non-exempt work in which such an employee (considered as exempt) may participate is not limited. Regarding exempt employees engaged in law enforcement activities, however, a 20 percent limit for such work remains in effect.

More developments and updates from the WHD continue to be expected. So, in the efforts of protecting against costly compliance violations, be sure to take the time to learn about how these and other new provisions could impact your business.