FOUR WAYS TO SLASH YOUR INSURANCE COSTS IN 2010

By Scott Golden, CFO and co-founder
scott@golden-cohen.com

1. Increase your deductible – check with your broker to find out how. It can save you on premium payments.

A good rule of thumb to use is to base the estimated deductible on the probability that something will go wrong, and couple it with the cost of the lower deductible plan. That is, the higher the probability that the person will need medical care (or get into a car accident, or have a fire at home), the lower the deductible should be – and vice versa. Keep in mind that a lot depends on price points for the policy. If what you save makes up for any additional potential expenses, take the higher deductible.

Rough estimates to use as a starting point would be a $1000 deductible for a car and $2500 for a home. So if the price of the plan justifies a higher deductible, take it!

What are the benefits to term life insurance? The family would receive immediate liquidity at the time of death, which provides income replacement – and that's critical especially if the deceased is a high income earner. It also provides funding for a buy-out in the case where a business buy-sell agreement is in place. The bottom line is that term insurance is simply a good, affordable plan that covers your bases for a specified period of time.

Is that the most economical short-term? Term is most economical when there is a need for short-term planning (15-20 years). However, when the initial term expires, the insurance becomes very, very expensive. So the owner of the policy will usually drop the coverage due to the huge cost of carrying the insurance beyond the term.

And long-term insurance? Term insurance does not make sense if planning for death (that is, if the person is in their 80s or 90s). Permanent insurance (such as whole life or universal life) offers lifetime protection for a consistent cost. Plus, the premiums are fairly constant if designed properly.

2. Buy the package today that you will likely need tomorrow – don't scrimp.

Insurance is a necessary evil. Get the coverage you need because you get what you pay for. Period. And it's important that people plan for both at the same time. Why? There is uncertainty in life, but one way to make sure there can be some certainty, at least from a financial perspective, is to put into place a secure foundation for those who are left behind by the deceased.

As time passes, long-term insurance eventually becomes the short-term, as obviously no one will live forever. In essence, the clock keeps on ticking until it cannot anymore. I always advise my clients to hope for the best but prepare for the worst so they never get caught without a way to replace income.

3. Get healthy and stay that way – eat better, exercise daily, take control of your life.

My wife Stephanie and I are avid triathalon participants because we believe in the power of staying strong and fit – in our lives and with our company. We believe in the power of wellcare, and especially as a supplier of healthcare benefits we feel strongly that we need to set an example for our staff and our clients. That's why we have signed up for several triathalons this year that we'll compete in as a couple – Nations Triathalon, the New York Triathalon and the West Point Triathalon. I am the swimmer and Stephanie does the biking and running.

In order to prepare and train for these events, we rise at 4:15 am to begin training every day. I am on a Masters Team and compete in the region where we live in Maryland. I also train by doing open water events and solo swimming. Stephanie runs and bikes outdoors and indoors, depending on the weather. We also encourage our staff to participate in a 5 k run each fall and give everyone an extra vacation day if they participate. This type of motivation seems to get everyone up and moving and as we know from research, that's the key to staying healthy.

Check out the article below by Dr. Greg Swistak, founder of the Active Family Chiropractic in Gaithersburg, MD. He offers more good tips on ways to stick with a fitness plan and keep that New Year's Resolution!

4. Be realistic about your benefits.

If you are employed, be sure your employer covers the cost of your health insurance – or at least a majority of it. And throw away pre-conceived notions about certain health plans, such as HMOs. Think they are no good? Think again, especially if you are looking to cut insurance costs.

Aging doesn't help cut costs, either. Of course there is nothing you can do about this. But if you aren't young, and you own your own firm, hire young because insurance premiums account for the median age of all the employees in a firm.

EMPLOYERS TAKE NOTE: ARRA Cobra Subsidy Has Been Extended

By Jack Cohen, COO
jack@golden-cohen.com
Golden & Cohen, www.golden-cohen.com

As Stephanie and Scott explained in chapter 2 of their book, "You Gotta Laugh: Life in the Trenches of the Health Care Business," when it comes to continuity of care, COBRA benefits are important – and constantly changing.

In fact, on Dec. 21, President Obama signed the Department of Defense Appropriations Act, 2010 (DoDAA), H.R. 3326, into law. The DoDAA included a provision extending the eligibility for the COBRA subsidy for employees involuntarily terminated through Feb. 28, 2010, instead of Dec. 31, 2009. Additionally, the time period to receive the subsidy has been extended from nine months to 15 months.

The Act requires two new notifications.

1. Under the provisions of the American Recovery and Reinvestment Act of 2009, involuntarily terminated employees who become eligible for COBRA after Dec. 31, 2009 were not eligible for the COBRA premium assistance.

Additionally, many former employees receiving the subsidy have already exhausted or are very near exhausting the nine months of premium assistance. The passage of DoDAA will provide immediate relief for these individuals.

Those employees who are involuntarily terminated through Feb. 28, 2010 will be eligible for the premium assistance regardless of when the individual becomes eligible for COBRA coverage.

The legislation provides the opportunity for COBRA beneficiaries, which includes former employees and any dependents covered under COBRA whose subsidy has already expired, to receive retroactive coverage if they have not yet paid the full premium.

For example, subsidy-eligible workers who have been paying the reduced 35 percent premium since Mar. 1, 2009 would have seen their COBRA premiums increase to the normal premium amount (typically 100-102 percent) on Nov. 30, 2009. If these beneficiaries did not pay the unsubsidized premium for December, the new legislation provides an extended opportunity to pay the 35 percent premium retroactively and reinstate coverage.

2. The legislation requires a notice to be sent to these individuals to notify them of the extended grace period.

The grace period is extended to 60 days after the enactment date of this bill (Feb. 17, 2010), or 30 days after the DoDAA notice is sent to the assistance eligible individuals, whichever is later. More details, including the release of any model notices, will be forthcoming.

A second notice is required to be sent within 60 days of the enactment date of this bill (Feb. 17, 2010) to all individuals who were assistance-eligible as of Oct. 31, 2009 or later. The purpose is to notify the individuals of all changes to their coverage, including another provision that extends the maximum subsidy period under ARRA from nine months to 15 months. This extended time period applies to all assistance-eligible individuals, including those whose subsidy expired on or after Nov. 30, 2009. More details, including the release of any model notices, will be forthcoming.

The legislation also states that employers can offset future COBRA premiums or issue refund checks for those who have overpaid the COBRA premium. This clarification is appropriate since in some cases a beneficiary whose subsidy expired Nov. 30, 2009 may have paid the full premium in December and is now due a refund of the overpayment as a result of this legislation.

It is widely anticipated that both the Department of Labor (DOL) and the Treasury Department will quickly issue guidance about how to handle the transition of individuals who have exhausted the original nine month subsidy, as well as any new recipients who have a Jan. 1, 2010 or later COBRA eligibility date who would have previously been ineligible to receive the subsidy.

In fact, the Employee Benefits Security Administration (EBSA), a department of the DOL, issued a statement following the signing of this legislation. In it, Assistant Secretary Phyllis C. Borzi encourages employers to subscribe to the COBRA Web site, www.dol.gov/cobra, to get information on new notice requirements, updated guidance, fact sheets and frequently asked questions as they become available.

In addition, the department has benefits advisors available toll-free at 866-444-3272.

And there's more

Another bill, H.R. 2847, has passed in both the House and the Senate, but the two versions are currently being reconciled. This bill includes further changes to the COBRA subsidy. NFP will provide further communication if H.R. 2847 is signed into law.

The American Recovery and Reinvestment Act of 2009 (ARRA), as amended on Dec. 19, 2009 by the Department of Defense Appropriations Act, 2010 (2010 DOD Act) provides for premium reductions for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit.

To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee's employment.

The involuntary termination must occur during the period that began Sept. 1, 2008 and ends on Feb. 28, 2010. The premium reduction applies to periods of health coverage that began on or after Feb. 17, 2009 and lasts for up to 15 months.

What is COBRA?

COBRA gives workers and their families who lose their health benefits the right to purchase group health coverage provided by the plan under certain circumstances.

If the employer continues to offer a group health plan, the employee and his/her family can retain their group health coverage for up to 18 months by paying group rates. The COBRA premium may be higher than what the individual was paying while employed but generally the cost is lower than that for private, individual health insurance coverage.

The plan administrator must notify affected employees of their right to elect COBRA. The employee and his/her family each have 60 days to elect the COBRA coverage; otherwise, they lose all rights to COBRA benefits.

COBRA generally does not apply to plans sponsored by employers with fewer than 20 employees. Many states have similar requirements for insurance companies that provide coverage to small employers. The premium reduction is available for insurers covered by these state laws.

Changes Regarding COBRA Continuation Coverage Under ARRA, as Amended by the 2010 DOD Act

The 2010 DOD Act extended the COBRA premium reduction eligibility period for two months until Feb. 28, 2010 and increased the maximum period for receiving the subsidy for an additional six months (from nine to 15 months).

In addition, individuals who had reached the end of the reduced premium period before the legislation extended it to 15 months will have an extension of their grace period to pay the reduced premium. To continue their coverage they must pay the 35 percent of premium costs by Feb. 17, 2010, or, if later, 30 days after notice of the extension is provided by their plan administrator.

Individuals who lost their subsidy and paid the full 100 percent premium in December 2009 should contact their plan administrator or employer sponsoring the plan to discuss a credit for future months of coverage or a reimbursement of the overpayment.

Have questions? Feel free to send me an email: jack@golden-cohen.com

HOW TO SUCCESSFULLY MANAGE CONFLICT IN THE WORKPLACE

By Anne Lee
Bethesda Counseling Associates

The ability to manage conflict in the workplace is a critical skill, one that can significantly affect job security. Understanding the difference between being assertive and aggressive is one of the keys to communicating effectively with others.

Consider this:

1. An aggressive statement is a put down of its receiver, which in turn evokes a defensive response. It implies criticism not of the message but of the messenger. "This was a lousy report," "You never seem to be around when you are needed," "You never give clear directions," are examples of aggressive statements, and though the intent may be positive, the effect in the workplace is negative.

2. An assertive statement never undermines the receiver. It sets clear boundaries and states what is needed to move forward. The receiver does not feel humiliated or defensive and there is room to ask questions or acknowledge problems. Assertive messages express the reactions or feelings of the speaker.

"That was a lousy report" becomes "I did not understand the report" or "I found the report confusing." Assertive messages are also specific, such as "The conclusion is not supported by the data."

3. Assertiveness can also be used to countermand the negative effects of aggressive interactions. In fact, assertive responses allow the receiver to stay away from counteraccusations and de-escalate a situation.

4. An assertive message from a receiver would describe what is objectionable: "I am open to criticism, but the word ‘lousy' feels like an attack." An assertive response would also focus on the issue at hand, and propose a solution: "Why don't we discuss changes that would improve the report?" or "Why don't you email me changes to improve it?"

5. Enhance delivery of assertive messages by using appropriate body language. Maintain proper eye contact by using a relaxed and steady gaze, stand up straight and keep your voice quiet, even and well-modulated.

Other strategies for communicating effectively with colleagues include:

• Begin your statements with an "I" rather than a "You." "I didn't understand your conclusion" versus "You wrote a sloppy conclusion."
• Ask open-ended questions. "Why did you include this in the report?" implies a judgment. Using "what or how" is more effective in eliciting information. "What was your reasoning for including this in the report?"
• Make observations that comment on what is going on without judgment. "I noticed you left the room in a hurry. Are you upset?"
• Understand your own thinking. Do you tend to see things as black or white?
• Nothing is ever all bad or all good, so challenge your perception of a person or situation. Can you think of positive aspects or exceptions?
• If you find yourself entangled in an aggressive interaction, disengage from the situation to defuse it. "Let me go back and take another look. We can review this again later."

CONTACT BETHESDA COUNSELING ASSOCIATES
Bethesda Counseling Associates
4948 St. Elmo Avenue, Suite 301
Bethesda, MD 20814
(301) 654-1583 tel.
(301) 654-1584 fax