Foster Soltoff & Love, Ltd.
The Benefits Life Cycle
Presented by:Paul F. Love, CLU, ChFC, CLTC
Foster, Soltoff & Love, Ltd.6550 Rock Spring Drive
Suite 190Bethesda, Md. 20817(301) 564-2966 [email protected]
Foster Soltoff & Love, Ltd.
Basic Medical Coverage•HMO
Phase I (0- 2 years)
•Point of Service
2-9 Employees
•Preferred Provider Organization
•COBRA
Foster Soltoff & Love, Ltd.
Phase II (2-5 years)
Comprehensive Medical
Core Benefits:
Dental Benefits
Vision Benefits
10 – 25 Employees
•HMO•Point of Service•Preferred Provider Organization•Follow the Platinum Rule
Foster Soltoff & Love, Ltd.
Phase IICore Benefits (Cont’d):
•Group Life Insurance
•Group Short Term Disability
•Group Long Term Disability
Foster Soltoff & Love, Ltd.
Phase II
Qualified Retirement Plans
•401(k) / Profit Sharing Plan
•Non Matching
•Safe Harbor
•Money Purchase Plans
Core Benefits (Cont’d):
Section 125 Plan•Premium Only
•SEP/IRA•SIMPLE IRA
•SINGLE K
Foster Soltoff & Love, Ltd.
Phase III (5+ Years)
Section 125
Voluntary Payroll Deduction Plans
•Medical Expense Reimbursement Plans•Dependent Care
•Supplemental Life
•Prepaid Legal•Pet Insurance
•Short Term Disability/Critical Illness
26 - 99 Employees
Executive Benefit Plans
Foster Soltoff & Love, Ltd.
Phase III (5+ Years)26 - 99 Employees
Employee Assistance Programs
• Confidential 24 hour access to personal problem solving resources, consultation and referrals
•Childcare•Eldercare•Crisis Management•Educational Issues
• Estimated 3-4% Payroll savings through reduced absenteeism
•Consumer Information•Financial Issues•Worksite Issues
• Issues include:
Foster Soltoff & Love, Ltd.
Phase IV (5 + Years)
•Supplemental Disability Insurance
•Long Term Care Insurance
•Partial Self-funding of Health Benefits
•Defined Contribution Medical Plans
•Section 529 Educational Savings Plans
•Pension Disability Benefit
> 100 Employees
Foster Soltoff & Love, Ltd.
Methods of Restructuring
Benefit Plans
for Affordability
9.7% Average Annual Premium Increases Between 2002 and 2012 in Fully Insured Plans
Avg. Premiums- $5,615 Single $15,745 Family
Less than 50% of firms with 3-9 employees offer coverage
Since 2002, Health Costs have Increased 97% vs. Inflation at 28% and Wage Growth at 33%
Source: 2012 Summary of Findings -Kaiser Family Foundation
Foster Soltoff & Love, Ltd.
THE PROBLEM
Foster Soltoff & Love, Ltd.
Some Solutions
•Higher Co-payments, Deductibles, Out-of-Pocket Maximums
• Prescription Drug Benefits
•Alternative Funding Methods
1. Medical
2. Prescription Drug Benefit
3. Short Term Disability
• Partial Self Insurance
Foster Soltoff & Love, Ltd.
Some Solutions Health Savings Accounts
• Created by the 2003 Prescription Drug Act PL No. 108-173 as amended by the Tax Relief and Health Care Act of 2006
• Creates savings accounts with maximums coupled with high deductible major medical plans
• Employee/employer contribution (2013 $3,250 single, $6,450 family)
• Lesser of 100% of annual deductible or Individual-min. $1,250-max $3,250 Family- min. $2,500-max. $6,450
• Catch-up contribution ages 55 or over (2013 $1,000)• Amounts grow income tax free and are withdrawn
income tax free for qualifying expenses.• Can be rolled over year to year• Accounts are portable on termination or retirement
Foster Soltoff & Love, Ltd.
Health Savings Accounts
•Providers do not understand how the plan works
Set up and maintenance fees
Must be coordinated with spouse’s health plan
Some Solutions
Issues:
Foster Soltoff & Love, Ltd.
• Defined Contribution Medical Plans
• Review Money Purchase Plans versus 401(k)/Profit Sharing Plans
Some Solutions
• Health Reimbursement Accounts (HRA)
Review plans annually Benchmark against competition When costs increase, make
incremental changes in benefits and, employee contributions
Choose a consultant who can work with you as you grow.
Foster Soltoff & Love, Ltd.
FINALLY…..