What employers should know; Non Discrimination by employers in Health Benefits is comming!

Non-discrimination testing, is going to be very similar to non-discrimination testing for pension and 401k plans but specifically relates to the components of the health insurance coverage versus the employer contributions to the premium cost.  The testing will look at items such as deductibles, co-pays, coverage, etc. and ensure that the highly compensated individuals are not receiving a "richer" benefit than the non-highly compensated, similar to retirement plan testing.

All non-discrimination testing related to health care programs will commence in 2014, or at least that is the predicted date at this point in time.  Employers, however, should be thinking about requirements that will begin in 2012 for the reporting of employer contributions to health care premiums.  This information will have to appear on W-2's given to employees in 2013 for wages, etc., earned in 2012.

Opportunities Grow for Workplace Disability Sales

Seventy-one percent of companies surveyed said that group long-term disability insurance is extremely or very important. The study by Mass Mutual and The American College also reveals that many companies have shortfalls in their plan designs. On average, only 60% of employees’ base salary is covered by a group long-term disability insurance program. Only 27% of group long-term disability insurance programs include variable compensation — leaving bonus and commission income unprotected.

The majority of group plans offer a basic foundation of coverage, but limit benefits for high earners. Surprisingly, just one-quarter of companies are considering making changes to their group long-term disability insurance program.

Tara Reynolds, cor

porate vice president for MassMutual said, “It’s a real travesty that employees are being left exposed when they don’t need to be and when they may not be aware of it. While group long-term disability programs provide strong foundational coverage, they may not meet the needs of all employees and they do not cover all sources of employment income.” The opportunity to purchase buy-up coverage through a group long-term disability insurance program is not widespread, with only 25% of employers offering this option to some or all employees. Only 15% of companies surveyed offer individual disability income insurance to supplement their group plan. Cost and administrative burden were cited as reasons why companies do not offer individual disability income insurance coverage, along with the option that employees can purchase it on their own outside of work.

The study points out that individual disability income insurance can provide consumers with portable protection. Employ

ees who purchase individual coverage through the workplace get discounted premiums and simplified underwriting. For increased protection, employees can select riders for catastrophic coverage or retirement contribution protection. For more information, visit www.massmutual.com/DIstudy.

Health Savings Accounts Surpass $10 Billion in Total Deposits

Health Savings Accounts (HSAs) surpassed $10 Billion at year-end 2010, according to a survey by Devenir, an investment firm that specializes in providing investment options for HSAs. HSAs continue to see dramatic growth as the total number of HSA accounts rose to 6.2 million with assets totaling almost $10.1 billion, a year over year increase of 27% for accounts and a 41% increase in assets.

Jon Robb, lead research associate with Devenir said, “The industry has experienced tremendous growth and is likely to continue growing at this pace.” However, when looking back at a number of HSA market reports dating back 2005 to 2007, almost always the conservative 2010 projections were the most accurate. Taking this into consideration, Devenir conservatively projects the HSA market to reach $61 billion in assets by the end of 2015. Devenir also projects that HSA investment dollars will continue to grow quickly as health savings account user’s balances become larger, representing 17% of all HSA assets by the end of 2015.

The top five custodians hold over $4.4 billion in HSA assets amongst almost 2.7 million accounts, accounting for 44% of all HSA assets. The average account balance grew almost 11% in 2010 to $1,627. HSA investment assets reached  $725 million in 2010 (102% year over year increase) and are projected to reach $10.3 billion by end of 2015. For more information, visit www.devenir.com.

The Top Employee Wellness Concerns

More than one-third of employees say that weight loss is their top health concern this year and 23% say stress is their main health concern, according to a poll by ComPsych Corporation.  Dr. Richard A. Chaifetz, Chairman and CEO of ComPsych said, “With more and more individuals slipping into the overweight category, it’s no surprise that weight management is a top issue this year.

Stress levels are also unusually high, given the additional workloads many have taken on during a recovering economy.” Employees were asked: Which health issue are you most trying to stay ahead of this year? They said the following:

• 39% cited losing weight.
• 23% cited reducing stress.
• 22% cited exercising.
• 7% cited improving diet.
• 5% cited quitting smoking.
• 4% cited other.

We can assist you in putting together a program for you company; info@amsinsure.com

Obama Would Allow States To Opt Out Of Healthcare Law In 2014

Media reports and analyses are treating the President's announcement that he was endorsing an accelerated schedule to allow states to opt out of his healthcare reform law as a significant concession to his Republican opponents, as well as an attempt to reach out to the nation's governors grappling with budget deficits. Ultimately, however, some of the law's supporters argue that the President's announcement will enhance the Administration's legal case as it strives to defend the law in court.

        The story generated print coverage and some cable and local TV reports, but was not mentioned on the network newscasts. USA Today (3/1, Wolf, Jackson) reports that in his remarks, Obama endorsed legislation originally proposed by Sens. Ron Wyden and Scott Brown which "would give states" the freedom to opt out of the legislation, though not "entirely," by 2014. Still, "key requirements would remain, such as those prohibiting insurers from canceling coverage because of pre-existing conditions."

Many More Workers Are Taking Advantage of Their Wellness Benefits

Achieving better health is the top reason American workers (43%) say they participate in a wellness benefit program or would participate, according to the latest Principal Financial Well-Being Index. Other reasons include reduced personal health care costs (33%) and a greater chance of living longer and healthier lives (31%).
The survey also found that 53% of workers use weight management programs offered by their employers — a 25% increase over last year. There was a 21% increase in workers’ use of personalized action plans for high-risk conditions to 68%, and an 18% increase in workers’ use of blood sugar screenings to 84%.
Forty-three percent of workers agree wellness benefits motivate them to work harder and perform better. Twenty-eight percent say they have missed fewer days of work as a direct result of participating in a wellness program and 38% attribute wellness programs to improved energy and productivity at work. Forty-eight percent said that their wellness benefits encourage them to stay in their current employment situation.

Many Employers Want Healthcare Reform to be Repealed

Sixty-two percent of employers say they hope healthcare reform is repealed, according to a study by Market Strategies International.

Seventy-two percent of employers say they don’t believe that healthcare reform will reduce their healthcare cost burden. This finding is independent of firm size and whether the firm offers employee health benefits. Sixty-three percent of employers don’t think that healthcare reform will make their business more competitive from a cost standpoint or more competitive in attracting and retaining employees.

However, 70% believe that some parts of healthcare reform should stay in place and 58% believe that reform was long overdue. 

Whats new in a Disability Income Policy

1.  Critical Illness - Return of Premiums
If a policy owner with a Critical Illness contract in force (Assurity or Mutual of Omaha) - the company will refund 100% of the premium paid by the client - less any benefits paid. 

2. COLA - it isn't the same for every carrier.
Some carriers are simple, some are compound. Some are a flat rate, some are geared to the CPI. For young clients - it is good to know what you are receiving.

3. Prudential LTC - they actually have 3 different kinds of products under one policy chassis.
.Reimbursement, partial cash and full cash. Let us get you runs on all 3 for and we will let you know the why's and wherefore's of the premiums differences.

4. Guaranteed Renewable vs Non-Cancelable. Do you know the difference?
Guaranteed Renewable says that as long as you pay the 'billed' premium - there is coverage. The company does have the ability to increase premiums. However, they have to prove to their state commissioner that they had an unprecedented amount of claims that the didn't expect. Plus they have to do so on a whole class of clients. Non-Cancelable - says that the company cannot increase premiums.

Traveling in 2011 Don't forget to take a travel medical plan with you

I have medical insurance, so why would I need a travel medical policy?  My insurance requires me to pay the bill and then be reimbursed or I am hurt or sick and want to get home for medical care, the repatriation benefits can do what no other insurance can do. Interactive Travel Insurance Guide Not sure which plan to choose? Use this tool to help you navigate our plans!
Get a quote link:	Interactive Travel Insurance Guide Find the best plan by answering just a few questions Get an Instant Quote as soon as you find the right insurance plan

Health Spending Grew At Slowest Pace In 50 Years.

Media outlets widely covered a CMS report that showed the recession hindered Americans' spending on healthcare, but most sources still expressed concerns that healthcare expenditures continue to grow unchecked. The New York Times (1/6, A19, Pear) reports, "Total national health spending grew by 4 percent in 2009, the slowest rate of increase in 50 years, as people lost their jobs, lost health insurance and deferred medical care, the federal government reported on Wednesday." Nevertheless, "health care accounted for a larger share of a smaller economy -- a record 17.6 percent of the total economic output in 2009, the report said."

        The AP (1/6, Alonso-Zaldivar) reports, "The recession slowed the growth of the nation's health care bill to the lowest levels ever measured," yet, "the slowdown did not change the nation's underlying problem with out-of-control health care spending." Data from Medicare's Office of the Actuary show that "Americans spent $2.5 trillion on health care in 2009, or $8,086 per person." Notably, the "figures do not reflect the impact of President Barack Obama's landmark health coverage expansion, which didn't pass until 2010."

        McClatchy (1/6, Pugh) reports, "Unlike previous recessions, when spending for health services began to slow some two years after an economic downturn, the effect of the Great Recession was swift and profound on insurers, health care providers and patients in both 2008 and 2009." McClatchy adds, "Fueling the spending slowdown in 2009 was a 3.2 percent decline in private health insurance enrollment as 6.3 million people lost job-based health coverage that year. That loss of private coverage also curbed growth in out-of-pocket spending by patients, many of whom delayed medical care because of a lack of cash."

        Meanwhile, "spending on Medicaid soared -- by 9 percent, compared with less than 5 percent in 2008 -- as more people qualified for the public insurance program for the poor," the Washington Post (1/6, Goldstein) reports.

        In fact, "government spending on Medicaid and Medicare rose almost six times faster than insurance company expenditures in 2009 from the prior year as the recession pushed more Americans onto public assistance," Bloomberg News (1/6, Young) reports. The federal government "and states combined to spend $373.9 billion on Medicaid...an increase of 9 percent. Outlays for Medicare, aiding the elderly and disabled, rose 7.9 percent to $502.3 billion." Meanwhile, "insurance companies led by UnitedHealth Group Inc. spent $801.2 billion, an increase of 1.3 percent."

        Politico (1/6, Coughlin) says that despite the trend, "some sectors saw accelerated health spending, including a whopping 10 percent bump for home health care, an 8.3 percent increase in other residential and personal care and 5.3 percent for prescription drugs." Commenting on the data, Karen Ignagni, president and CEO of America's Health Insurance Plans, said, "The continued rise in health care costs is not sustainable. ... Rising health care costs threaten our economic competitiveness, make health care coverage less affordable, and crowd out other urgent national priorities. We urge policymakers to work on a bipartisan basis to pass reforms that will control the soaring cost of medical care."

        The Wall Street Journal (1/6, Landers, subscription required), Reuters (1/6, Heavey), CQ HealthBeat (1/6, Reichard, subscription required), and Modern Healthcare (1/6, Zigmond, subscription required) also cover the story, as does The Hill (1/6, Pecquet) in its "Healthwatch" blog.

Choose your Disability Policy

1.  You can choose your Disability Income policy...
But - you can't choose your disability!!

2. Residual Benefit - this is almost always necessary.
You do  not need to be totally disabled. What is normally needed is a loss of income of at least 15-20% due to a sickness or injury. The benefit paid is equal to % of benefit equal to the % of income loss.

3. Survivorship/Waiver Rider - LTC
This says that if a couple have both of their policies in force for at least 10 years - if one of them should go on claim and/or pass away - the Surviving person has their coverage paid up - and/or gets to use their spouses left benefit.

4. Work around other insurance.......Our company will issue a policy that works around in force coverage.
If  you have STD that ends in 180 days – our company will issue a small amount to go on top of the STD from the elimination period. Then, when the STD ends, the our companies benefit will increase. Other companies will start with the smaller amount and stay at that amount.

Online Health Advice, Don't Believe Everything You Read

Record numbers of people around the world turn to the Internet for online health advice, but should they believe everything they read? A new survey suggests many people are getting inaccurate information and are not checking up on their sources.

Always check sources of online health info

The Bupa Health Pulse 2010 International Healthcare survey questioned 12,262 people from 12 different countries, including Australia, Brazil, China, France, Germany, India, Italy, Mexico, Russia, Spain, United Kingdom, and the United States between June 10 and July 14, 2010.

The main reason people use the Internet for health purposes is to find information about medications (68%). Nearly half (46%) of people surveyed said they are self-diagnosing, and 39 percent reported they were looking for other patients’ experiences. Eighteen percent of all respondents to the survey said they used social networking sites to learn about healthcare issues.

Few people, however, are checking the accuracy or source of the health information they find. Among online searchers in Britain, for example, while 58 percent looked for information to self-diagnose, only 25 percent took the time to check where the information came from.

The survey also found that people searching for health information on the Internet will likely find many different potential health conditions to match their complaints, depending on which websites they visit. The range of suggested health ailments for the same symptom can range widely; for example, a search for the symptom stomach cramps was diagnosed as being a symptom of angina, indigestion, or appendicitis, depending on the website.

In a recent survey published in Birth, 613 pregnant women who used the Internet to look for pregnancy-related information said they went online because they were not satisfied with the quality of information given to them by their healthcare providers. Eight-three percent said they used the information they found to influence their pregnancy healthcare options.

While the Bupa survey found that most of the top 20 healthcare websites people use to find health information are geared toward the scientific and academic communities and are based in the United States, online health information seekers should always check the sources of the information they find.
The Bupa report suggests individuals be as specific as possible when entering search terms, check each website for a quality mark (e.g., HONcode, URAC), read the “About Us” section on the website to find out if the authors are health professionals, and look for the date of publication, because medical advice can be out of date very quickly. Finally, individuals should consult with their physician before taking any action based on what they find on the Internet.

The bottom line is, don’t believe everything you read on the Internet. When searching for online health advice, use reliable (e.g., academic, government, scientific institutions) websites, check your sources, including references to scientific articles on the website, and protect your health.

SOURCES:Bupa Health Pulse 2010 International Healthcare SurveyLagan BM et al. Birth 2010 Jun; 37(2): 106-15

Major health insurers in California to resume offering individual policies for children

The companies abruptly halted the sale of individual policies for kids in September rather than comply with provisions of the nation's new healthcare law. A new state law forced them to change course. 

California's largest health insurers, fearing they'll lose new customers in the state's lucrative individual insurance market, have canceled controversial decisions last fall to stop selling policies for children.
The insurance companies abruptly halted the sale of individual policies for kids in September rather than comply with provisions of the nation's new healthcare law that required them to accept all youngsters under age 19 regardless of their medical conditions.  get a quote here

Insurers said at the time that the healthcare overhaul could saddle them with huge and unexpected costs, particularly if competitors exited the market. Their decisions prompted criticism from health activists and a spokesman for the Obama administration, who accused them of abandoning children and families.
But a new California law forced the insurers to change course. Beginning Jan. 1, it will prohibit those that abandon child-only coverage from selling new policies in the broader individual insurance market for five years — slicing into profits in a state filled with throngs of potential customers.

On Wednesday, Aetna Inc., Anthem Blue Cross, Cigna Corp., Health Net Inc. and UnitedHealth Group Inc. said they would resume sales of child-only coverage Jan. 1 for an estimated 80,000 children who are not insured through family policies or their parents' employers.

"It's good that the insurers are back in the market, even if they had to be brought back kicking and screaming," said Anthony Wright, executive director of the consumer advocacy group Health Access California. "It will make a big difference for thousands of families."

All the insurers have notified the state Department of Insurance of their intention to resume sales.
"We've let brokers know that as of the 1st, we have plans for child-only policies," said Brad Kieffer, a spokesman for Woodland Hills-based Health Net.  Cheryl Randolph, a spokeswoman for Minnesota-based UnitedHealth Group, said: "We will have child-only policies on Jan. 1.  Anthem, the largest insurer in the individual market, will work with regulators to start selling again "in the best interest of our customers in California," spokeswoman Peggy Hinz said of the Woodland Hills company.  There is plenty at stake. California's private insurance market — where individuals and small businesses buy coverage — generated $17 billion in revenue last year. The market is only expected to grow as millions of uninsured Californians buy coverage, beginning in 2014, through a new marketplace exchange set up as part of the federal healthcare law.

"California offers a significant opportunity for us and we believe we will be highly competitive in this market," Cigna spokeswoman Gwyn Dilday said in announcing the Philadelphia company's decision to resume child-only sales.  The insurers were guarded about their plans in other states. Only one, Connecticut-based Aetna, gave details, saying it would also resume sales in Kentucky, where changes in state law have required the company to rethink its approach.  "We are committed to working with states to address the issues originally raised by the change in federal law in a way that will allow us to participate in these markets," spokeswoman Anjanette Coplin said.

Regulators from the California Department of Insurance have been trying to prod insurers to start selling child-only policies once again since they announced their departure shortly before Sept. 23, when the federal healthcare law would have required them to accept all children with preexisting conditions. On Wednesday, officials sent the companies two pages of "guidance" to help them interpret the new state law.
The officials said AB 2244 requires insurers to offer children's coverage as part of all their policies, not just a select few. And they said parents must apply for the insurance during a two-month open enrollment period that runs from Jan. 1 to March 1, or in the month after their children's birthdays.

Families with sick children that apply during these periods can be charged no more than twice the standard rate. Families that apply outside the enrollment periods are not protected against higher rates.
The author of the state law said he was delighted to hear that insurers would once again offer coverage for children. "The law seems to be having just the effect we intended," said Assemblyman Mike Feuer (D-Los Angeles). "For a family there is little more important than being sure their children have access to health insurance, so I'm very pleased to see these insurers are choosing to make that insurance available."

Get a quote here

duke.helfand@latimes.com

Copyright © 2010, Los Angeles Times

 

 

Non-Discrimination Testing - Patient Protection and Affordable Care Act (PPACA)

Notice 2011-1 addresses prohibiting insured group health plans from discriminating in favor of highly compensated individuals.  The Treasury Department, IRS and the Departments of Labor and Health and Human Services have determined that compliance with these requirements should not be required until after regulations or other administrative guidance of general applicability has been issued.  The notice includes a request for public comments.

Parents Should Be Aware of Potential Dangers of Alternative Medicine

A growing number of parents are considering complementary and alternative medicine (CAM) to treat their children’s illnesses for a variety of reasons. While some therapies may be healing and therapeutic, parents should remain aware of potential dangers of treatments, especially when they are substituted for conventional medicine.

Coordinate Complementary Medicine with Traditional Therapies for Best Outcomes

According to the National Center for Complementary and Alternative Medicine, CAM is defined as a diverse group of medical and healthcare practices that are generally not considered part of conventional or “Western” medicine. Practitioners often focus on treating the whole person and promote self-care and self-healing. CAM includes broad categories of therapies, such as natural products (ie: herbs, dietary supplements), mind-body medicine (meditation, yoga), and manipulative practices (spinal manipulation and massage).

While complementary medicine often accompanies Western medicine practices, alternative therapies are used in place of medical treatments. According to a study by the Australian Pediatric Surveillance Unit conducted between 2001 and 2003, adults are mislead to believe that CAM treatments are better for children because they are “all natural” and therefore less harmful. However, during the same timeframe, four deaths were reported in association with CAM practices because they were used in place of conventional treatments.

Read: Alternative Health Practices Gain Popularity with US Children

The researchers, who published the study in the Archives of Disease in Childhood note tha
t one death occurred in an 8-month-old child who was initially admitted with severe malnutrition and septic shock following naturopathic treatment with a rice milk diet to relieve constipation. A second case involved a 10-month-old child who was being treated with homeopathy and a restricted diet for chronic eczema.

There were also 46 instances of “negative outcomes” with seventy-seven percent experiencing a worsening of symptoms after starting a CAM therapy. Two-thirds of the cases were rated as severe, or life-threatening with symptoms that included seizures, infections, stunted growth, allergic reactions and malnutrition.

Read: Families Often Use Complementary Medicine for Children with Cancer

Forty-four percent of the parents of the children who had been harmed were warned by a pediatrician not to continue. Dr. Steven Dowshen of KidsHealth.com suggests talking with your child’s pediatrician before starting any complementary or alternative therapy to ensure that it is not dangerous and will not conflict with the traditional care your child is receiving. “By coordinating alternative and traditional care,” he says, “you don’t have to choose between them. Instead, you can get the best of both.”

Source Reference:"Adverse events associated with the use of complementary and alternative medicine in children"Alissa Lim, Noel Cranswick, Michael SouthArch Dis Child doi:10.1136/adc.2010.183152
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Successful Companies Gain Profits by Adding Employee Benefits

Marc Acito
Dec 22nd 2010 at 3:00PM

What recession?

That's how employers from Florida to Vermont to California feel after seeing their revenue double and triple in the past two years.

At a time when companies are cutting jobs, Dealer.com, a Burlington, Vt.,-based developer of websites and online marketing tools for car dealerships and manufacturers, has added more than 150 employees, bringing their roster up to 420.

CEO Mark Bonfigli believes that employee wellness and workforce productivity are directly linked, so Dealer.com has a full on-site gym and tennis court, a subsidized local/organic "Dot Calm Café" and weekly chair massages. And they're adding a yoga studio, a solarium and a rooftop vegetable garden.

Miami businessman Max Borges subscribes to the same philosophy. "When you feel good physically," the triathlete says, "you feel good mentally." So his company, which does public relations for the consumer electronics industry, also boasts employee benefits such as an on site gym, as well as fitness classes and reimbursement for athletic competition entry fees. Borges also motivates his employees by sharing his profits with them. "They don't feel like, 'Oh, I'm just getting my boss rich,'" he says. "They act more like owners. Not only do they work harder, they work smarter."

The proof, however, is in the profits. With his company's revenues up by 58% this year, MBA was selected by Inc. magazine in 2009 and 2010 as one of the fastest-growing private companies in America. Borges rewarded his 27 employees by taking them on a cruise to the Bahamas.

Across the country in San Francisco, Bibby Gignilliat gave her team a luxury weekend after seeing an 80% increase in her business, Parties that Cook, which stages hands-on cooking parties and corporate team-building events for fortune 500 companies like Apple, Google, PayPal, Wells Fargo and Facebook. Since she started rewarding her staff with equity compensation, she says, "My employees are more invested than my former partners were...This is my recipe for success."

Forget quantitative easing. These employers have figured out that the way to bring back the economy with this simple equation: profit-sharing = profit-earning. It's the perfect marriage of socialism and capitalism -- a profit not without honor.

"Most companies do it backwards," Borges says. "When you decrease their pay to increase profit, you take away their incentives." He adds, "People think, 'That will work for him, but not me,' but it will work for any situation."

Including the American economy.

And that, my friends, is The Upside.

Are you familiar with 2011 compliance topics in employment law.

Here is what HR clients had to say;

Poll of the Month

How familiar are you with the top employment law compliance topics for 2011?

1 %

Absolutely Familiar

7 %

Very Familiar

29 %

Somewhat Familiar

52 %

Barely Familar

11 %

There are employment laws?

We offer a value added program where you stay informed of HR changes and laws, get forms, handbook and posters.

The Reality of Early Retirement

Is early retirement on your "wish list?" Do you envision a relaxing lifestyle in a warmer climate or the leisurely pursuit of a personal hobby? Unfortunately, retiring later than anticipated, rather than sooner, is becoming more and more commonplace. But, some people are still managing to retire early. You may be asking yourself, "How do they do it?"

The key is to be proactive in your retirement planning. Of course, the sooner you begin planning and saving, the better your chances are for early retirement. Keep in mind that a general rule of thumb is that you may need as much as 60% to 80% of your pre-retirement income to meet your expenses and maintain your desired lifestyle in retirement.

Redefining Retirement

There are many factors that are redefining how Americans approach retirement. Due to financial necessity, or sometimes too much leisure time, some retirees are reentering the workforce. Many retired executives start their own part-time consulting businesses; others trade in their hectic seventy-hour workweek for a pseudo-retirement, in which they work less and spend more time with their families. Part-time work during retirement can be an important income supplement, especially if you plan to retire early from your full-time career.

Longer life expectances are also changing the retirement landscape. Some people spend one-third of their lives in retirement, and your chances of a longer retirement are certainly greater if you retire early. Therefore, relying solely on retirement plans and Social Security may be more difficult, as these programs were not designed to provide perpetual income. Furthermore, as longevity has increased and the use of traditional pensions has decreased, the responsibility for retirement planning has gradually shifted from employers to employees. The task of acquiring adequate retirement savings has been placed directly in the hands of the workforce, who often must take initiative to contribute to their company-sponsored retirement plans. As a result of all these factors, your retirement assets, as well as your personal savings, may have to work harder to meet your objectives, no matter when you retire.

An often overlooked aspect of retirement planning is money management once retirement has begun. To help ensure adequate retirement assets, your money may have to continue working for you throughout your retirement years. Inflation—along with the amount of income withdrawn from your retirement plan—will have a direct effect on how long you can continue to meet your expenses. Thus, personal savings will continue to be an overall part of your financial plan.

Budgetary constraints can also determine your lifestyle choices in retirement. In order to determine whether you will be able to maintain your desired lifestyle if you retire early, it can be helpful to estimate your retirement income and expenses. Unfortunately, this process may be difficult, as you will need to consider everything from greens fees at the local golf course to health insurance costs. In addition, you must factor in inflation and how your financial needs may change over time.

Finally, for those who wish to retire early, it is important to realize that certain penalties may apply for early withdrawals from retirement plans. All options need to be examined and reviewed with a qualified financial professional.

It's Your Retirement: Be Involved!

Today, early retirement remains a possibility. By planning ahead and maximizing your personal savings, you may increase your chances of reaching your retirement goals. Remaining proactive and focused is particularly important if you are contemplating, or are forced into, early

Know Your Competition

The Ins and Outs of Pricing for Profit

Set prices too high and customers may disappear; set prices too low and customers may bang your door down, but will your business be able to meet the demand? How do you go about pricing your company's goods and services in a way that benefits you and the customer?
First, you've got to know your competition. You can often find out how your competition is pricing their products or services by visiting their premises or their websites. Other resources for researching prices include industry publications, online discussion boards, trade associations, or networking groups. You may also try contacting business owners in your industry who are not direct competitors to ask them how they establish their pricing structure.

Setting the Selling Price
If you discover that prices for comparable products and services are similar in your market, arriving at a competitive price range for your own offerings may be relatively easy. However, if prices vary considerably, try to find out why. For example, a company that charges considerably more for its products may have a reputation for superior quality, a particularly attractive location, additional services, or extensive advertising. In other cases, you may find that a high-priced competitor offers no additional value to customers but has been successful in marketing its product to a willing and able clientele.

Ceiling Price vs. Base Price

One way to determine the ceiling price, or the highest price the market will bear, is to survey customers. What type of businesses and kinds of people comprise your prospective market? What are they willing to pay for particular goods and services? You may discover that the prices customers are willing to pay are, in fact, higher than current market rates.
The next step is to establish your base price, or the minimum price you must charge in order to break even. What are your outlays for supplies and materials? What are your fixed overhead costs for your building, equipment, and utilities? What is the cost of servicing loans? How much interest would otherwise accrue on investments made in the business? What are the product development costs? How much will the business spend on marketing? What financial cushion do you need to keep the business running? What are your payroll costs? When considering how much to charge, do not forget to factor in compensation for your time, labor, and personal investment in the business.
If this analysis reveals that your business is unable to price its products or services competitively while still turning a profit, try to figure out why. Are there inefficiencies in your business that could be remedied? Is it possible to lower your costs—and, consequently, your base price—through economies of scale, a change in suppliers, or outsourcing?
Once you have determined the base price, you can set the selling price. This should be substantially higher than your breakeven price; if it is not, your business and your personal wealth cannot grow.
Sometimes it is necessary to raise prices because costs have increased. You can cushion the blow of a price increase by offering new or enhanced products or services. Many businesses offer discounts to clients who buy frequently or in bulk. If your business sells multiple products or services, consider bundling them and charging a set price for the package.
Once set, reassess your prices regularly. As the marketplace changes, your prices may need to change accordingly. Small, incremental price increases are likely to be tolerated by your customers. If extreme costcutting by competitors threatens your business, try to weather the storm by maintaining realistic prices, while offering customers consistently superior quality and service.

Our Newsletters are designed to help you and your business grow.

Making Your Finances "Picture Perfect"

While most people find the notion of creating a budget about as appealing as yard work, like mowing the lawn and weeding the garden, most would agree that the work is well worth the effort once they've achieved picture-perfect surroundings.

Two financial "snapshots" you can take at any time to help view your financial landscape are a balance sheet (or net worth statement) and a cash flow statement. Along with demonstrating where you are today, these tools can also help provide a foundation for important financial comparisons in the future. Although there are software programs available to help with budgeting, it can be easy and helpful to create your own worksheets on paper.

Assessing Your Net Worth

To create a balance sheet, simply draw a line down the center of a blank piece of paper. Label one column "Assets" and the other column "Liabilities." Assets are everything you own, and liabilities are everything you owe.

You can add structure by grouping your assets into three categories: 1) cash or cash equivalents—checking and savings accounts, money market funds, and certificates of deposit (CDs); 2) investments—stocks, bonds, mutual fund accounts, and retirement accounts; and 3) personal property—your house, home furnishings, autos, boats, and other personal items.

Liabilities can be labeled as follows: 1) short-term—auto loans, most personal loans, and credit card debt; or 2) long-term—home mortgages, some home equity loans, and some educational loans.

Enter all of the relevant numbers and add up the two columns. We'll examine the outcome later.

How Fluid Is Your Cash Flow?

Next, create a cash flow statement. Draw a line down the center of a blank sheet of paper, and label one column "Cash Inflow" and the other "Cash Outflow." On the inflow side of the ledger, list monthly or yearly income from all sources, such as wages, self-employment, rental properties, and investment income (interest and dividends).

On the outflow side, list all monthly or yearly expenditures, separating fixed expenses (mortgage payments, other periodic loan payments, and insurance premiums) and variable or discretionary expenses (utilities, food, clothing, entertainment, vacations, hobbies, and personal care). You may choose to put taxes (Federal, state, FICA) in a separate category. Again, fill in the relevant numbers and total the columns.

The Results

If your balance sheet shows your assets exceeding your liabilities, you have a positive net worth, especially if your cash flow statement shows more inflow than outflow. This picture shows that you are solvent and spending within your means. The degree of your financial health depends on the amount of your surplus.

Your financial picture may look somewhat different if your balance sheet shows your liabilities exceeding your assets and/or your cash flow statement shows more outflow than inflow. This indicates that you are spending beyond your means. It may be time to assess areas in which you can decrease your liabilities.

Each year, strive to increase your net worth and keep your expenditures under control. If your financial picture is a little out of focus, taking action now to sharpen the view may help you create a more promising snapshot in the future.

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