Past Issues
-October 2006Contact us:
Edward Bates
952.944.5044
Peter Thoresen
952.225.0344
Mary Bates
952.942.8355
Jereme Bates
952.944.2919
Did you know?
During the Flu season, 59% of surfaces in the home can be contaminated with the Flu virus.
-WebMD
Quarterly Quote
The ultimate test of leadership is not the polls you take, but the risks you take. In the short run, some risks prove overwhelming. Political courage can be self-defeating. But the greatest defeat of all would be to live without courage, for that would hardly be worth living at all.Gerald R. Ford
In the News
HEALTH INSURANCE'S NEW WAVE
For
more than a dozen years, National Center for Policy Analysis president
John Goodman has been touting tax favored health savings accounts (HSA)
achieving only modest success before the Bush administration embraced
the concept and the GOP-controlled Congress in 2003 paved the way for
insurers to offer such plans, says Christopher Lee in the Washington
Post.
Now the dividends are beginning to pay off:
About 3 million people are already enrolled in the new plans.
Another
3 million are in similar plans in which employers contribute to
tax-favored medical spending accounts for their workers (HRA).
A
recent RAND Corp. survey found that employers reported saving at least
10 percent on health costs, and plan participants appeared to trim
health spending between 2 and 15 percent.
Provided by the National Center for Policy Analysis, December 26th 2006
Thank You for
Your Business
Written by Ed Bates
I love this time of year. It represents a new beginning with new challenges and opportunities. But I’d be remiss if I didn’t thank you all for a great 2006. We had our largest single year new business growth since our inception in 1988. It isn’t often that one can report such an outstanding achievement. I am especially proud of my son Jereme who this year set personal bests in obtaining new employee benefit and commercial clients and also had a strong effort in providing many of you competitive home and auto quotes.
A quick look back also recalls some of the events of the year. We took on a new image with a name change to Bates Insurance Group. That seems comfortable now and should serve to define our activities for years to come. We added corporate and personal financial planning to our list of services with the addition of Peter Thoresen. Pete has worked with a number of you and hopefully will have the opportunity to serve many more of you in 2007. Finally, along with our ever present employee benefit products, we really excelled in helping many of you save money on your business insurance coverage. We added two new commercial insurance markets to our list of existing companies, Safeco and CNA, two significant players in today’s marketplace. In all, it was an exciting year for our firm.
Turning to the future, 2007 we hope it will be more of the same. We are likely to expand our offices, possibly add personnel and hopefully add to our computer systems in such a way as to increase our ability to serve you. We will also be looking for more strategic partners to help us, help you, save money on your business insurance. As always, we ask that you please let us know how we can serve you better.
Mary, Jereme, Pete, and I would again like to thank you all for your business and the opportunity to serve you. If it were not for you, none of this would be possible.
Happy New Year!
Ed
Written by Mary Bates
The Star Tribune newspaper posted an article on Nov 29, written by Kevin Freking of the Associated Press, stating that “the Medicare drug benefit has cost nearly $13 billon less than expected this year, a rare federal program coming in under budget”. President Bush credits competition among the private insurance companies, as being a factor. The Center for Medicare and Medicaid Services agrees with that and adds lower member enrollment and drug prices rising less than expected, all contribute to this savings. As a result we have seen the private insurance companies who sponsor these drug plans actually lower or maintain their premium rates; good news when all we previously had was confusion. We’re seeing some similar trends with HSA medical plan renewal premiums. The insurance companies are seeing lower loss ratios and some are even reducing premiums as a result. The consumer engagement theory appears to be working and companies like Blue Cross Blue Shield are seeing that utilization is less than expected, thus they are passing the savings on. HSA’s don’t work for every group, but utilization can be affected by these programs, yielding in positive results. “Less is good”, and this holds true in insurance as well as other lessons in life. Have a great New Year.Mary
Written by Pete Thoresen
New Year’s Resolve!It’s a new year, and with everything ‘new’, comes opportunity. Opportunity to review many areas of our lives or businesses, and make that hopeful list of resolutions that always start out with best intentions, and then typically vanish into the oblivion because of our routine and daily demands. Of course the magic question is “why”? While this question may be better suited for philosophers and psychologists, my humble opinion points to two areas: resolve, and grandeur.
Let me offer a couple facts, and areas in our financial life that we as individuals, and or business managers should feel a resolve to improve upon, and are not too grand to incorporate.
Retirement Planning!
According to recent government statistics1, annual incomes for people age 65 and older are < $25,000 for 59% of our population, and 18% are between $25,000 and $40,000. So, almost 80% of our population is living on $40,000 or less a year. The main sources of income for this group are: Social Security - 39%, Earnings - 26%, Pensions - 20%, Assets - 13%.
To improve upon our resolve, let me embellish on these categories, in order:
#1 - Social Security: you may have heard about some of the concern here
#2 - Earnings: money from - still working…or going back to work. (i.e. not retired)
#3 - Pensions: what your employer(s) saved for you – on your behalf
#4 - Assets: what you and I have saved on our own
A simple retirement income formula: Annual Income = #1 + #2 + #3 + (#4 * 5% estimated value).
Resolution List:
Save more: up your percentage to your company retirement plan or enroll if you are not already participating. You may be missing free money!
Save taxes: look into funding your IRA or Spouse’s IRA and/or Roth IRA. You may contribute for 2006 up until April 15, 2007.
Business Owners: review your retirement plan in 2007. Are you utilizing a Profit Sharing Plan to improve your bottom line and employee retention?
Save first – not last: waiting to save what is left over generally leaves nothing.
Start small – make sure it’s doable, and be resolved to get it done.
Happy New Year, and best wishes for 2007
Pete Thoresen
Financial Advisor
Focus Financial Network, Inc.
1000 Shelard Parkway, Suite 400
Minneapolis, MN 55426
Securities offered through Royal Alliance Associates, Inc., Member NASD, SIPC. Advisory services offered through Focus Financial Network, Inc., a registered investment advisor.
Sources 1. Source: “Social Security Administration, The Office of Policy, Income of the Aged Chartbook, 2004”
Understanding the Pre Existing Conditions Clause
Written by Jereme Bates
What is a pre existing condition
clause? As an employer who sponsors a group health plan, you
should be able to explain what a pre existing limitation is and how it
applies to a new hire you are thinking about taking on.
A Pre Existing Condition Clause is a limitation of coverage to exclude
under your medical coverage, any “benefit for which medical advice,
diagnosis, care, or treatment (including treatment with prescription
drugs) was recommended or received by this new employee
during the 6 months immediately preceding the enrollment
date.” This exclusion lasts until the new coverage has been
in effect for 12 consecutive months, or for someone entering late, 18
consecutive months. However, credit is
given for each month of continuous qualifying prior coverage
prior to enrollment in the new plan., if provided.
O.K. then, what does that mean? It means that if your
employee went without coverage for more than a 63 days (63 days = COBRA
Election period) they do not have coverage for anything they were
treated for, within the prior 6 months. That limitation can
last as long as 12 months (18 mos. late entrants), with credit being
applied against the limitation for coverage within that
previous 12 months. For example; 3 months uninsured before
joining the new medical plan = 3 Months of Pre Existing
Conditions Limitation.
Why do the insurance companies have pre-existing limitations?
Well, look at it like this; if the pre existing conditions clause
didn’t exist, people would only purchase insurance when it
was necessary and then cancel it when there was no longer a
need. The concept of insurance no longer works under those
circumstances. It would be like trying to buy homeowners
insurance when your house was on fire or auto insurance after you
totaled your car. An insurance company that faces this type
of situation will not be in business very long, and certainly not able
to serve your needs.
The pre-existing limitation applies to everything from prescription
drugs, to doctors visits, etc, so knowing how to explain the limitation
to your new hires or an employee who thinks insurance is just too
expensive, is a valuable asset.
As always we are here to answer any questions or concerns you, or your
prospective/current employees may have on this subject.
Jereme