Valley View Blog

It's All About Control!

Hi all, my name is Chad Nehring, and I’m a Certified Financial Planner™ and “recovering spender.” I’m your new host of the Financial Friday blog that I took over from my former colleague, Nathan Gehring, who has decided that Florida winters are somehow warmer than Wisconsin winters, and joined a firm in Florida.

My goal over the next several hundred Fridays is to share with you some wisdom, some wit, and some practical advice for your finances. You should keep in mind that what I preach is not a “one size fits all” type of scenario. Your situation is bound to be a little bit different than the next person’s, and I encourage everyone to seek the help of a professional financial advisor (preferably a Certified Financial Planner™ professional…I’m a little biased about that!). And yes, if you want to see me in person, you can e-mail me for an appointment or check out the rest of our services at www.cfpi-wis.com or www.myfirstfinancialplanner.com.

For the last 4 years, I’ve been fortunate to have worked on a contract with a firm contracted to the Department of Defense to provide financial education for our servicemembers. I’ve given hundreds of briefings on financial topics, and one common theme is the issue of control.

What’s really in our control?

I think the first step is recognizing what you can and cannot control. Call it the “Serenity Prayer” for finances, if you will.

I, as an individual, have no control over the daily volatility of the stock market. I have no control over whatever “bailouts” our government decides to give, and who they give it to. I have no control over an executive’s salary or stock option awards; nor do I have control over if that executive decides to close a factory that has been employing generations of hardworking employees. No control whatsoever. And that bugs the hell out of me.

I’m a “Type A” kind of a guy. I like to be in control. I like to evaluate, analyze, and then make a decision and move on. Woe to those who get in my way after I’ve made a decision, but as I learned, “Be flexible.” Macro issues in finance are beyond my control. No matter how much the media hypes things up, I still have really no say in the matter.

So, what am I capable of controlling?

Simple.

My emotions and my emotional response to volatility.
My budget.
My spending.
My saving.
My debt.

As we move through the next few Fridays, I’ll address each of these topics, and more. I’ll also give you some practical ideas that you can put into place NOW to help gain some control back.

Until next Friday…getting you on track and keeping you there,

Chad Nehring, CFP®

Chad Nehring, CFP® writes weekly in his Financial Friday column. He can be contacted via email at cnehring@cfpi-wis.com.

Embracing Social Networking in Your Workplace Wellness Program

Rising health care benefit costs, poor health habits and unnecessary medical care costs consume large portions of employer resources and your employees’ paychecks. In fact, employees with risk factors such as smoking, being overweight and having diabetes cost more to insure and pay more for health care than people with no risk factors. An investment in your employees' health through your workplace wellness program may already be lowering health care costs.

If you’re looking for ways to increase the effectiveness of your workplace wellness program, consider social networking as a low-cost solution. Utilizing social networking to enhance your wellness program can increase participation and retention, help improve employee behaviors and save your organization money.

Why Utilize Social Networking in Your Workplace Wellness Program?

Tapping into social networking can increase participation among your employees. It allows colleagues to challenge each other to participate in wellness initiatives in ways that traditional wellness programs cannot. The peer-to-peer dynamics online and offline can increase employee participation and engagement.

Example: Consider creating Facebook^® groups for employees, depending on their wellness interests. Employees can invite others to join the group and become more involved. If some of your employees are interested in running, create a “Running Club” group where members can post dates and times of group runs, races they plan on running or goals such as running a certain number of times each week. Once a few groups are created, invite employees to create groups of their own and encourage their colleagues to participate.

Social networking can keep employees involved in the program. It can be difficult to find new ideas and initiatives to keep wellness programs fresh. And it’s always a challenge to find a way to reach employees outside the workplace. With social networking, employees can create their own groups and share information about topics that are important to them. This can result in a more long-term engagement with the wellness program.

Example: Once employees have found the wellness area that they’re interested in improving, they are much more likely to stick with the program. Finding others with similar goals is also important for staying with the program. With help from social networking outlets such as Facebook^® groups, employees can find exactly what they’re looking for and get involved with other employees who have similar interests. Achieving wellness goals is much easier when you’re not in it alone. Social networking can help employees stay in the program, whether they are tapping into an outlet to plan group workouts or just finding moral support.

Modify behaviors to become healthier with social networking. Those around you have a tremendous impact on your health – if your employees see colleagues losing weight, quitting smoking, increasing their exercise or otherwise embracing a healthier lifestyle, they will be more likely to join in and do so as well. You can help employees adopt healthy behaviors by increasing peer influence through social networking.

Example: Consider using a corporate Twitter^® account to post health and wellness articles, information and success stories. When employees “follow” you, they will receive overall wellness information as well as examples of how others are embracing a healthier lifestyle. This is a simple way to continue to connect with employees about wellness as frequently as you would like. Adopting healthy behaviors doesn’t happen right away, but social networking can help keep health and wellness on employees’ radar year round.

Utilizing social media is free. Don’t have a large budget for financial incentives related to your wellness program? Social media is free and public recognition within these mediums can be very influential in reaching the goals of your wellness program.

Example: Twitter can be a great outlet for recognizing employees as a component of an incentive-based program. Consider tweeting names of incentive winners to create company-wide awareness for the program. If there is a prize associated with the recognition, make that known as well. The public recognition will encourage others to meet incentives and continue to embrace a healthier lifestyle into the future.

Facebook^® is a registered trademark of Facebook, Inc. Twitter^® is a registered trademark of Twitter, Inc.

David Brand writes bi-weekly in his Benefits Blogged column. He can be contacted via email at dbrand@viainsurance.com.

The Consumer Revolts

This morning I had a discussion with a local small businessperson who was absolutely disgusted with the manner in which his current medical carrier pays claims.

As you read that lead-in sentence you are probably thinking to yourself…Well, who isn’t disgusted? They never pay enough or fast enough, they charge too much premium, etc… etc…

However, his disgust is not with the fact that the carrier doesn’t pay enough for claims, or charges too much premium but rather the negotiated discounts between the carrier and the providers are too small to ensure the stability of the premium in the first place…in other words, they pay too much!

In a typical PPO or HMO/POS setting, the carrier and the provider panel have pre-negotiated fees for each and every service available from the facility or doctor. Those pre-negotiated fees are ostensibly lower than the “street cost” or the amount you would pay without insurance, and again ostensibly should serve to increase the chances for rate stability. But is this always the case?

In the instance of the businessperson referenced above: after receiving care at a local hospitals’ emergency room he was shocked to receive an Explanation of Benefits from his carrier which indicated that the discount for service through his insurance carrier was less than 20%. In this case the issue is cogent to the consumer because the plan is a High Deductible Health Plan and the insured pays a large deductible prior to the carrier paying any claims. His frustration stems from the fact that he pays his premium and, by and large, it appears he gets very little for it. His deductible is high, so in a typical year he finances most, if not all, of the claims himself. His premium certainly is kept lower with the high deductible and buys him the security of coverage in the case of a large or catastrophic claim. What he is not receiving is the preferred pricing (discount) he feels that his premium should be supplying…and it’s difficult to fault him for feeling that way.

This insured has discovered that if he walks into a provider and asks for a cash discount, in some (more and more) cases he will be charged less (sometimes much less) than the negotiated fee from the carrier. This would seem to be a counterintuitive circumstance until we examine the real extenuating issue here: the cost inherent with submitting a claim to an insurance company. In all cases a good deal of the provider’s overhead goes to administration (submission) of claims. Certainly in fairness a large portion of the carrier’s overhead also goes to administration (payment) of claims.

For the Consumer, however, it seems that expectations are changing…for the better. Not only are we as consumers expecting our medical insurers to pay claims on time and accurately but we also are requiring them to do the best job possible to get the lowest claims cost possible.

I have seen it written that this Health Care Reform we are experiencing currently is not reform at all but rather nothing more than a change in payer (shifting from private to government).

If that is the case, and I believe it is indeed, then true reform can only be achieved by a cooperative effort between all the concerned parties: consumers, insurance carriers, medical providers and government entities.

The first step is for the consumer to step up and demand the best effort from the carrier to negotiate the most cost-efficient contracts possible. Then the carriers and providers must work together to streamline the administration process on both ends.

True health care reform cannot be instantly created by legislation, it rather will take a concerted cooperative effort and it will take time, and we had best get going now because time is running out.

If you have questions regarding how you and or your employees can make an impact as consumers please contact your VIA Benefits representative.

David Brand writes bi-weekly in his Benefits Blogged column. He can be contacted via email at dbrand@viainsurance.com.

What Happens to Your Company If You Lose a “Key Employee"?

When thinking about your commercial insurance & risk management program, it’s easy to focus on the building, contents, vehicles, and so on.

But what about your key people…business owners and other vitally important employees?  What would happen to your business if one of these people passed away?  Most firms have at least one person who is essential to the company’s success, and this risk can be addressed.

There is an easy insurance solution that can help…Key Person  Life Insurance.  The company can purchase the policy and be the beneficiary, thereby providing an infusion of tax-free dollars to help compensate for any potential loss of business during the transition, and to help with recruiting, hiring, training, and so on.

In addition to the risk of one of your key people passing away, there is also the risk of the person becoming disabled.  Disability Insurance can be reviewed for these Key Employees, as well.

So we need to remember there are other “Key Assets” to consider when reviewing your commercial insurance & risk management program to help your business survive and thrive!

Mike Fitzgibbon is a guest writer for the Valley View Blog. He can be contacted via email at mfitzgibbon@viainsurance.com.

Employee Assistance Programs

During the course of our interaction with clients and prospective clients we often are asked to review and evaluate the quality and breadth of the companies’ employee benefit offering menu.

One of the overlooked and perhaps undervalued pieces of the successful employee benefit plan is the structured Employee Assistance Program, or EAP.

If we take it as a given that the economic welfare of the employer is hugely dependent upon the health and well-being of its employee population, then the need to help manage those issues that may impact health and well-being becomes self-apparent.

The latest statistics tell us that stress cost American employers about $200 billion annually. These costs are generated through medical claims, sick leave, industrial accidents, presenteeism, absenteeism and countless other “isms” that prevent an employee from focusing on or adequately carrying out the day-to-day functions of his or her job.

Employees and their job performance may be negatively impacted by family or personal health problems, death of a loved one, divorce, personal or family drug/alcohol abuse. They may be impacted by the inability to interact successfully with co-workers and/or supervisors. There may be instances of traumatic incidents in or affecting the workplace along with other issues that may be more difficult to pigeonhole.

The successful EAP plan will be designed to identify the employees’ primary and secondary issues/problems and then determine the most effective and appropriate treatment protocol.

That assessment and treatment many times can be determined and carried out within the confines of the EAP or, in the case of severe or more difficult issues, an outside referral may be in order.

When evaluating an EAP administrator, the qualifications and credentials of the staff and affiliated providers should be of the highest concern. Certainly these professionals are the lifeline of the EAP and their experience and expertise are the harbingers of the long-term success or failure of the plan.

The number of covered counseling sessions per issue per year also can be a differentiator (3 to 6 sessions per issue per year is typical).

Most, if not all, EAP providers offer 24-hour telephonic access to crisis prevention, as well as provider and counselor appointments.

Assuming then that the intrinsic value of the EAP is apparent, how can an employer help to ensure that the program is a success?

The key is education and promotion!

Education may take the form of orientation meetings, ongoing seminars and events such as wellness and health fairs. Promotion can be accomplished with payroll stuffers, newsletters, posters and table tents in employee common areas and other more or less subliminal methods.

If you or your employer has an interest in initiating an EAP or having your current Benefit offering menu evaluated, please contact a Valley Insurance Associates Benefit Specialist for details.

David Brand writes bi-weekly in his Benefits Blogged column. He can be contacted via email at dbrand@viainsurance.com.

Health Care Reform & Essential Benefits

Part II

Maybe we should copy Singapore instead of Massachusetts.

Singapore spends less than 4% of its GDP on health care…U.S. spends 17%…according to Economists, matching this performance in the U.S. would free up a $2 trillion annually for other purposes…

In Singapore roughly 1/3 of health spending is paid directly by individuals (who usually carry “catastrophic coverage,” as well). These payments are made through earnings, as well as mandatory health savings (and retirement) accounts. Employees are required to contribute 20% of earnings to these accounts, to which their employer must add an additional 13% annually.

In the U.S. about 90% of spending is via an insurer, an employer or a government entity (State or Federal).

In Singapore public (government managed) hospitals provide 80% of acute care, which serve to set affordable care levels with which private providers must compete. In the U.S. the tables are completely turned and the private care providers set the marketplace…

Rules require training of new Family practitioners over the more pricey specialists…

Health care outcomes are purported to be superior to that of the U.S.

In the U.S. the law of health care politics is: “Every dollar of health care waste is someone’s dollar of income.”

“As a stable advanced democracy, we’re so overrun by groups with stakes in today’s waste that real efficiency gains are perennially blocked.” Matt Miller - The Washington Post.

At what level of government should mandates be determined?

Currently Lawsuits alleging that the Federal Government is violating the Constitution by creating mandates and forcing them upon States without providing funding for those mandates are pending in various arenas.

The most prominent suit was filed in Florida with these States participating: FL, IA, KS, ME, OH, ID, WI…

Curiously, Wisconsin has as many or more State mandates as any other State in the Union. Many would think this to be nothing more than a grasp for Federal money…or a partisan political move…as opposed to a struggle for autonomy of governance…

In the end, the pressure in the U.S. to include any one particular benefit as “essential” will come from special interest groups and not from the at large consumer. The consumer will be left to attempt to discriminate between what is essential and non-essential, based on their personal viewpoint and needs.

The challenging question is not to simply provide a list of covered services and exclusions, but to clearly lay out the process by which what is left in and what is left out is determined.

Should all benefits be standardized?

Should states or other “purchasing entities” be allowed to add benefits above the federal mandates?   

In conclusion the public will need to be educated to the fact that even if a treatment is essential for some it may certainly not be essential for all. If we do in fact end up with a connector system similar in scope to Massachusetts’ a detailed description of the manner in which a reatment decision will be made (type of procedure, where it is done and for what indications) and a specific list of exclusions should be mandatory, but currently is not. Without this information it will continue to be business as usual…including annual double digit increases…

This is the second segment in a two-part blog series on Health Care Reform; click here to view part one.

David Brand writes bi-weekly in his Benefits Blogged column. He can be contacted via email at dbrand@viainsurance.com.

Broken Refrigerators & Unseasonable Snow

Man, life can be unpredictable. When I speak with people, they are so often looking to grasp control of their life and finances. They want to be making decisions that control the direction of their lives, and I like to help them do so.

But a critical part of my role as a financial planner is helping people recognize just how unpredictable life truly is…and then planning for that unpredictability. That unpredictability can be good. It can also be bad. It can result in emergencies that cost us time and money and spirit. It can also bring tremendous opportunity and be uplifting.

This week we've seen some of that unpredictability. Wednesday it snowed in much of Wisconsin. The Fox Valley was hit fairly hard for so early in November. Weather forecasts the day prior indicated we would have little to no snow here. Yet it snowed.

People lost power. It cost them money. Car accidents happened. Those cost them money and time and health.

Last week a colleague discovered his freezer was not working properly. The freezer had no problems prior, but it simply would not cool enough suddenly. He had to buy a new fridge/freezer. It cost him money and time. And I can attest to him being frustrated by this unpredictability.

And while he hadn't planned for his fridge dying seemingly overnight, he had put money aside for a rainy day. He wasn't happy spending the money, but he was able to do so without major impact.

Our lives are unpredictable. Stuff happens we don't expect. Our goals change suddenly. We discover a new passion that we never realized we had. We decide to live intentionally and that changes our path.

You can prepare for these things financially. You can be ready for the good unexpected and the bad unexpected.

And you can be certain there will be the unexpected.

For informational purposes only and not intended as financial advice. Please speak with your financial and tax professionals for specific recommendations.

Nathan Gehring, CFP® writes weekly in his Financial Friday column. He can be contacted via email at ngehring@cfpi-wis.com.

Freaky Friday Financial Fhrases

It's Halloween weekend and there's spooky stuff all over the place. In preparation for the ghoulishly grim weekend, I want to share nine freaky financial phrases that should send you screaming from the person uttering them.

 

 

1. This is guaranteed
2. You can't lose
3. There is no risk
4. This time it's different
5. It's easy money
6. Trust me
7. I need an answer quick
8. This is a limited opportunity
9. I recommend this to everyone

Ok, so maybe you don't need to run away screaming. But each of these should give you pause and prompt you to really think about what is being offered or advised.

Do you have any freaky financial phrases you'd add to the list? What scares you when you hear someone say it?

Nathan Gehring, CFP® writes weekly in his Financial Friday column. He can be contacted via email at ngehring@cfpi-wis.com.

Personal Savings Rate Declines. Already?

Over the past three years, you have learned to save more and to rely on debt less. We watched this happen across the country as we headed into recession and credit became difficult to find. But can you keep it up? Can we keep it up as a nation?

By mid 2010, the American personal savings rate had increased to 5.8% from a paltry 1% prior to the recession. We had learned to save! Many financial planners rejoiced in the belief that as a citizenry, we had rediscovered the importance of saving. We hoped that this was a lasting change. It appears we may have been wrong.

According to The Kiplinger Letter, the personal savings rate has already begun to drop, and at a fast rate. Since the high of 5.8%, our personal savings rate has fallen to 4.5%! In just over a year, we have experienced a major turnaround in savings rates. And this while confidence in the economy has remained very low. It's not a good sign that we have changed our habits.

Fortunately, you can maintain the habits you formed during the recession. You've learned to live on a bit less and to put money aside for another day. You have adjusted your lifestyle and realized that you already have much to be appreciative for. You have recognized that stuff is not what makes life good. Remember these lessons.

There are strategies you can use to remember them well. Spend some time over the next few months journaling what you have discovered about life and money. Write yourself reminders that having more for the sake of more does not make you happy. Spend a few minutes each day acknowledging what made you happy and what you appreciate that day.

At some point, our economy is likely to improve. We will feel like our finances are in great shape and that we can have what we want. There will be a renewed focus on "more" and the savings rate will likely continue to drop. Be aware of this. Consider whether you want to be in that group that returns to a paycheck-to-paycheck life, or would rather continue to have a little less in order to have a lot more happiness and freedom.

Nathan Gehring, CFP® writes weekly in his Financial Friday column. He can be contacted via email at ngehring@cfpi-wis.com.

Health Care Reform: Five Things You Should Do Now

1)  Get ready for new reporting requirements scheduled to take effect in 2012.

• Employers with greater than 250 employees will be required to report the cost of employees’ health benefit coverage on their 2012 W-2 forms. (Informational only, employees will not be taxed.)
• Employers must provide an easy to understand uniform coverage document that follows standards established by the Department of Health and Human Services. Those who chose not to comply with this requirement will face a fine of up to $1,000 per member. This requirement is effective no later than March 23, 2012.
• Employers must inform members of certain material changes to health benefit plans 60 days in advance of when the change becomes effective. Those who choose not to comply with this requirement will face a fine of up to $1,000 per member.
• By March 2013, employers must provide all employees with information about Health Benefit Exchanges.

2)  Leverage tax credits if you are a small business. The Small Business Health Care Tax Credit is designed to encourage small businesses to offer health insurance coverage for their employees. In 2014, the tax credit will be increased and is available only to those employers that purchase insurance through an Exchange.

3)  Understand the medical loss ratio requirement. Carriers must report the percentage of premium dollars spent on clinical services, quality improvement, patient care and other related services. This applies to fully insured individual and group plans only. The medical loss ratio means that 80 percent of small group premiums and 85 percent of large group premiums go toward these areas. If the ratio falls below that percentage, health insurance companies must issue member rebates.

4)  Be aware that group and individual health insurance plans now have a standard appeals process if a claim, coverage or health care service is denied. The appeals process is now available for both fully insured and self-funded plans.

5)  Determine how Health Benefit Exchanges could impact how you offer coverage to your employees in the future. Although Exchanges are not in place until 2014, it’s important to think about them now.

Sources:  United Healthcare “The Road to Reform”

Anita Lind is a guest writer for the Valley View Blog. She can be contacted via email at alind@viainsurance.com.