New insurance rules a mixed bag

There are such to be winners and losers as the federal government finalizes new rules for health insurance plans in the coming months.

Starting in 2014, the federal health care overhaul will limit the factors that insurance companies can use in setting rates, allowing premiums to be based only on a person’s age, history of tobacco use, family size and geographic location. And even those disparities in premium rates will be limited.

And the law requires health insurers to provide “essential benefits” as part of their coverage, ranging from mental health services ad prescription drugs to preventive and pediatric services. That will provide a greater degree of health care security for people who buy health insurance on their own, but it also will increase the cost.

The rules, proposed in late November, are likely to have the greatest impact on those who buy health insurance on their own. An estimated 350,000 Ohioans bought their own health insurance in 2010, but the number is expected to increase to 537,000 by 2014, according to a report produced by Milliman Inc. last year for the Ohio Department of Insurance.

In Ohio, overall premium rates for those who buy individual policies are expected t rise by 55 percent to 85 percent. For employers with fewer than 100 workers, premium increases are expected to be 5 percent to 15 percent. At employers with 100 or more workers, the increases, if any, should be less than 5 percent, according to Milliman.

Young, healthy men are likely to see the biggest premium hikes under the new rules. In part, that’s because women can no longer be charged more than men for health insurance, s men who buy individual insurance will effectively subsidize the premiums of women, Milliman said.

Currently, premium rates for those on the cusp of Medicare eligibility are about six times what they are for young adults, according to Milliman. Under the new rules, those rates can be only three times as high. That’s likely to lower premiums for older workers who are ill.

Health insurers are concerned that some young people will find that it’s to their advantage to decline to buy health insurance and instead pay a penalty.

“You need the young and healthy people in the system for this to work,” said Robert Zirkelbach of America’s Health Insurance Plans, which represents insurance companies.

There also will be implications for choice; those who are older than 30 won’t have the option of buying an individual health plan that provides only bare-bones, catastrophic coverage.

But Fabien Levy, press secretary for the U.S. Department of Health and Human Services, said young adults will benefit from the law in several ways. Those who don’t have health insurance coverage available elsewhere can remain on a parent’s health plan until age 26, he said. And tax credit subsidies of premiums also should defray the cost, he said.

Aetna said the proposed rules’ limits on deductibles and their minimum-coverage requirements will change the mix of plans it offers. But Kelly McGivern, Aetna’s senior director of government affairs, said the health insurer sees opportunities to customize its products and plans to meet its members’ health and financial needs even after the new rules take effect.

“For instance, we could see a product that could be offered in the marketplace that has a more-narrow network design focused on the highest quality providers, “which could result in lower premiums for consumers, McGivern said.

 

Information from "Middletown Journal," December 2012 edition

 

 

 

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The New Medicare Taxes

The New Medicare Taxes

          Starting on 1/1/2013, additional Medicare taxes will be imposed on the wages and investment income of high income taxpayers.  These taxes are part of the funding for health care reform and are not expected to be delayed as part of discussions on extending the “Bush era” tax cuts.

          The two Medicare taxes are:

·    0.9% additional Medicare tax on wages of taxpayers in excess of $200,000 (single) and $250,000 (married filing jointly); and

·    3.8% new Medicare tax on investment income of taxpayers with AGI in excess of $200,000 (single) and $250,000 (married filing jointly).  Investment income includes interest, dividends, capital gains and distributions from annuities but not tax-exempt interest or distributions from qualified plans and IRAs.

Information from “Inside Columbus Life”, October 2012 edition

Protect Your Clients and Your Business from Cyber Attacks

Protect Your Clients and Your Business from Cyber Attacks

In April 2011, thousands of email addresses were stolen from several major retailers and financial institutions.  One of the major concerns of these types of attacks is that hackers could create phony e-emails, known as “phishing attacks” aimed at defrauding consumers or taking control of their computers.  Consumers could also be tricked into giving out sensitive information like their passwords and bank account information.

Fortunately, Columbus Life was not among the companies that were affected.  However, this occurrence should serve as a reminder of the duty we all have in protecting our customers’ nonpublic personal information.

Here are a few reminders regarding email privacy:

Q:  What is “sensitive, personal, or confidential” data?

A:  Client, associate and other business data of a sensitive nature must be protected.  This includes name, date of birth, Social Security Number, credit card information, medical information, and policy of contract numbers. Anything that can be used to identify a person, or identify a person as a client, is important to keep confidential.

Q:  How might this data become exposed?

A:  When information is keyed to a public web site or sent via email, it travels across the public Internet.  If the transmission is not secured (encrypted) there is risk that data contained in it could be compromised.  This risk generally does not apply to email that is sent within a company.  If you send e-mail to clients, business partners or any other outside entity (including your personal email address, like @yahoo or @NetZero), that message is potentially traveling outside of a secure environment.  If it contains sensitive information, that is at risk.

Q:  What should I do to avoid revealing sensitive client data via email?

A:  If you receive an email that contains sensitive information, and need to reply or forward the e-mail, you should do so only after deleting the sensitive data or creating a new message.  You have probably seen Columbus Life replies to your e-mails where sensitive data has been removed and altered.  Fore example a policy number may appear as XXXXX1234.  A good practice when sending emails regarding your clients is to limit the client’s identifying information to last name and policy number, or just the policy number.

Article taken from “Inside Columbus Life”  July 2012

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Wealthy Women's Concerns for Retirement

Wealthy Women’s Concerns for Retirement

 
Women are district and potentially productive market that is underserved by financial and retirement planning advisors. Financial professionals who recognize and respond to the unique needs of wealthy women are likely to find a particularly rewarding market.
 
According to the Boston Consulting Group (BCG), women in general control 33% of North America’s wealth, approximately $9 trillion. One of the larger segments of the women’s market – mass affluent women ($100l- $1MM of net worth, not including primary residence) tend to be married and older, with an average age of 59. They are primarily concerned with having adequate resources to sustain a comfortable retirement.
 
 The majority of their assets are derived from employment income as opposed to investments, where only 9% contributes to overall total wealth. Of those fully retired, only 29% of total wealth is generated from investment income.
 
Women are more likely than men to change their financial priorities as a result of “life events.” Changes in martial status, the birth of a child, death in the family, changes in external political, economic and financial factors – all of these can shape the attitudes and behaviors of wealthy women.
 
So where do these women turn to for financial advice? Not necessarily banks or financial advisors. The mass affluent women surveyed in BCG’s study claimed to be inadequately served by them.
 
 The survey reported that 55% of affluent respondents with $250,000 or more in bankable assets said private banks need to do a better job serving female clients. They felt men received better attention, better advice and better deals and terms. Respondents also stated that many wealth managers, when dealing with couples, mostly ignored the female client and directed their attention primarily to the male, even if the women was making the financial decisions for both.
 
The survey results also revealed an impression among respondents that some wealth managers assume women have a low risk tolerance, and therefore give them fewer choices.

 In order to change this negative perception that many women hold for financial advisory roles, advisors should recognize that the lifestyles of working and retired affluent women, both married and single, require a specialized, personal approach to serving them financially. They should receive assistance in planning for a long life with special attention placed on major life events and unpleasant eventualities such as divorce, death, or the possibility of the primary wage-earner being unable to work.

 
Financial institutions that do not respond to this enormous opportunity risk missing the benefits that can be captured from serving this fast-growing mass affluent segment of the population.

Wall Street Journal citing Boston Consulting Group study, July 29, 2010.

SpectrumAdvisor. “Retirement a Concern for Wealthy Women.” Web. January 10, 2012.

SpectrumAdvisor. “Advisors Fail Affluent Women.” Web. January 10, 2012.

Now More Than Ever

Now More Than Ever

Market volatility. Pension Plans being killed off. The future of social security in Flux. All of these factors-and more-conspire against. Consumers, who are trying to create a solid stream of income for their retirement, enter or perhaps better phrased. Re-enter annuities.

 According to LIMRA (life insurance marketing research association) and organization that does life insurance marketing and research “will retirement last a lifetime?”

 One in five retirees receives income from individually purchased annuities! While data from LIMRA recent “sources of retirement income.” Studies show that just 4 percent of retiree’s income currently comes from annuities (most come from pension plans-38 percent, and social security 34 percent.) It’s becoming clear that annuities will have a growing place in consumer’s plans for retirement,

 At Newsad Insurances Services we guide our clients through a education process on current plans and designs. “Fear of the unknown is a bug reason clients have a version to annuities.” So I try to explain to people you need to know what your saying no to.

Everybody has two forms of expense in retirement Living Expenses and Life Style Expenses.

Our goal at Newsad Insurance Services is to provide financial information to our clients so they don’t make income retirement mistakes!

Newsad Insurance Services consults with clients in the surrounding area’s Middletown, Trenton, Franklin, Miamisburg, West Carrolton, Hamilton, Prebel County, Lebanon,

We currently offer Life Insurance and Financial Services with over go companies.

Feel free to call Newsad Insurance Services:

Cell: (513) 348-9573

Office: (513) 424-6871

Rewarding Employee Performance

Executive Bonus Plans:

Rewarding Employee Performance

Rewarding employee performance strengthens the stability of a business and reduces turnover among the ranks of valuable employees. Losing an important employee to a competitor can disrupt current and future business profitability.
 
Privately-held business entities have limited options when designing compensation packages for their employees. Many small companies are unwilling to establish qualified retirement plans because of the high cost of the plans and because they have to include all eligible employees.
 
Nonqualified deferred compensation plans are an option but participation is restricted to certain highly paid management employees. Having benefits in addition to normal compensation is a proven method for improving employee morale and job satisfaction and thereby reducing costly employee turnover.
 
An executive Bonus Plan (also known as a Section 162 plan after the section of International Revenue Code that permits an employee to deduct compensation paid to employees) offers the opportunity to reward any employee. It could be a one-off bonus for exceptional work in any year or, more commonly, an on-going arrangement to provide additional compensation annually. To enhance the future value to the employee and the employee’s family, the payment is usually paid as the premium for a cash value life insurance or annuity contract owned by the employee.
 
Attaching conditions, such as job performance or continued employment, to the right to continue receiving this additional compensation increases the attractiveness of such a plan to the employee and further increases the likelihood that the employee will remain with the company.
 
These restrictions are often referred to as “golden handcuffs” and such plans are known as “Restrictive Executive Bonus Arrangements.”
 
The employee is responsible for payment of income tax on the bonus paid by the employer. In some cases, the employer will pay an additional amount to cover the associated income tax liability in which case the plan is known as a “double bonus” plan.
 
As long as the bonus represents “reasonable compensation,” the business can deduct the bonus used to pay the life insurance policy premium. The employee owns the life insurance policy and names his or her beneficiary.
 
An employer can place certain restrictions on the policy as an incentive to the insured employee to remain with the company. One such restriction can be limiting access to policy of cash values by the employee for a selected period of time, such as until the employee’s for a selected period of time, such as until the employee’s expected date of retirement.

Additional Considerations

 
Employers should seek legal counsel regarding creating a formal agreement between the employer and the employee governing the Executive Bonus Plan. Any corporate records notation or agreement should spell out who will participate in the executive bonus program, why such employee or employees were selected for participation, and the nature of the benefit these employees will receive. Any restrictions of an employee’s right to access insurance policy cash value, or any “golden handcuffs” arrangement, should be spelled out in the written agreement between employer and employee.
 
Actual restrictions on the policy itself, such as liming the employee’s access to cash values, can be enforced using a policy endorsement should indicate the time period during which policy restrictions will remain in effect, and list the conditions for removal of any restrictions on the employee’s access to the policy.
 
The purpose of a permanent cash value life insurance Executive Bonus Plan include growing funds on a tax-deferred basis to be made fully available to the employee for supplemental income in retirement.
 
From an employee’s perspective there are two concerns with this type of arrangement. If this is not a “double bonus’ plan, the employee may be concerned about having the funds to pay the income tax liability. Also the employee may be concerned about the viability of the life insurance contract if the employer does not pay the bonus each year. To address some of these concerns, the employer and employee could agree to establish the plan for a limited period and make payments in an amount sufficient to sustain the policy after the payment period.
 
With a properly structured executive bonus plan, both the employer and employee win. The employer benefits from greater employee loyalty and lower staff turnover; the employee benefits from expanded compensation options.

Bonus Plan Benefits

Benefits to the Employer:

• A current income tax deduction for compensation paid and a benefit provided to the employee.
• Employer can discriminate in selecting the employees who will receive the benefit.
• Employer can establish performance goals that must be reached for the employee to receive bonus.
• Easy to install and administer.
• Helps retain valued employees.

Benefits to the the Employee:

• A cash bonus is provided to cover cost of permanent life insurance coverage.
• Employee’s out-of-pocket cost is limited to income tax owed on the bonus paid.
• Insurance policy cash value grows tax-deferred to provide supplemental retirement income
• Additional family protection is provided in the event of a premature death
• Employee owns the life insurance policy and names policy beneficiaries.

-article taken from Columbus Life Advanced Markets Insights, Columbus Life Insurance Company, 400 E. 4^th Street, Cincinnati, OH 45202-3302. From September 2011http://www.newsadinsurance.com/

Newsad Insurance Service

Company Value Statement

1. To provide my clients with the ut-most honesty and standards of fairness.

2. To maintain a high level of personal service in the life insurance and financial service industry.

3. To provide advertising and sales material that is clear, honest and fair to its content.

4. To offer my clients and potential clients a true independent source of Life Insurance, Disability, Health Insurance, and Fixed Investments.

5. To comply with all state and Federal Insurance Regulations

6. To operate my business in the highest standard’s and practices of the million dollar round table.

Valuing a Key Employee

Valuing a Key Employee

There is not an easy method for determining the value of a key employee. Business owners customarily use one of three methods to estimate the worth of an employee to their company. 

• Multiple of Compensation: Annual compensation multiplied by a selected factor determined in part by the difficulty the business will have in replacing the employee. (This method needs to be adjusted to market salary if the employee is an owner that is being paid only a small salary which does not accurately reflect his or her value to the business.)
• Contribution to Profits: The company’s total excess profit is multiplied by the percentage of the company’s profit attributable to the key employee, then multiplied by the number of years needed to find and train a competent replacement.
• Cost of Replacement: The total of the direct, out-of-pocket costs involved in finding, hiring, and training a replacement, as well as the estimated “loss of opportunity” costs.

Pre-Funding the Loss of a Key Employee

Most businesses do not have the necessary funds on hand to meet the unexpected costs related to the loss of a key employee. Many business owners choose life insurance to protect themselves against the loss of a key employee. The premiums are small compared to the lump sum which will be available when death occurs.

  If permanent type policies are used and the key person becomes disabled or leaves, policy values can be available to the business in time of need. Additionally the business may be able to continue the policy with a new key person as the insured.

How Does It Work?

 
Key person life insurance is a simple concept for business owners to understand. The business applies for, pays premiums on, owns and is the beneficiary of a life insurance policy on the key person’s life.
 
Premiums are not income tax-deductible, but death benefits are received by the business income tax-free if the requirements under IRC 101 (j) for employer-owned life insurance are met. IRC 101 (j) requires a signed notice and consent from executed before the issuance of the policy and other administrative reporting. Life insurance proceeds received by a C corporation may be subject to Alternative Minimum Tax.
 
Life insurance is a logical solution to the uncertainty of loss of a key employee. Having a plan in place will help ensure the continued success of the business in difficult times. Columbus Life offers various types of policies to meet coverage and premium needs. Contact your Columbus Life financial professional for more information.

 -article taken from Columbus Life Advanced Markets Insights, Columbus Life Insurance Company, 400 E. 4^th Street, Cincinnati, OH 45202-3302. From September 2011http://www.newsadinsurance.com/