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S&S Benefits.....Opinion, Hearsay & News Review

S&S Benefits Consulting, Inc.  219 Darien , Dundee , IL 60118   Phone: 847-428-5353, Fax:847-428-9876

Email click: mailto:jseiler@ssbenefits.net                                                    http://www.ssbenefits.net/               May 2005 Issue

Workers underestimate the value of their health benefits according to a MetLife study. Twenty-eight percent of full-time employees believe that their company spends less than $1,000 per employee annually on medical and 49% believe the number is less than $2,000. Only 27% correctly estimate their company spends $4,000 or more per employee per year. Only 36% of employees give their benefits package high marks and 60% don’t understand which benefits meet their needs. To quote the movie Cool Hand Luke, “What we have here, is a failure to communicate.”

EBRI finds that benefit and pay costs for state and local government workers were 46% higher last year than they were for private sector employees. The average cost per public sector employee per hour worked was $3.49 for health insurance compared to $1.56 for the private sector. For retirement and savings plans, government employees were at $2.23 per hour compared $0.85 per hour in the private sector. Eighty-six percent of government workers have health coverage compared to 66% in private business and 98% of government workers have some retirement savings plan compared to only 60% in the business world. It’s good to know your tax dollars are hard at work!

Wachovia Bank has purchased insurance broker Palmer & Cay. A.J. Gallagher finally sold their maligned benefits TPA to the Parker Group which also bought American Administrative Group.

An article in BI reports that IRS Revenue Ruling 2005-24 clarifies that HRA arrangements will lose their tax favored status if employers allow employees or their dependents to take unused HRA balances in cash. The status would be lost for all participants, even those who did not take cash. The ruling clarifies that HRA money must be used for medical expenses.

An AARP study which tracks price changes in what Rx manufacturers charge wholesalers, shows that the average prices  for 195 brand name drugs widely used by the over age 50 group increased by 7.1% in 2004. However, the same study found generic drug prices rising by only 0.5% for 75 commonly prescribed generic drugs. That’s down from a 13.3% rise in generic pricing in 2003.

The Illinois Attorney General has sued HealthCorp International and International Association of Benefits for violation of Illinois Consumer Fraud and Deceptive Business Practices Act. They are charged with misrepresenting health discount cards as health insurance. Both companies were doing business as IAB out of Arlington , Texas .

Cigna Healthcare has hired four former Definity Health executives to key sales positions. Definity was recently purchased by UnitedHealth Group. This is somewhat of a mixed signal since it would seem that Cigna is intent on pushing “consumer driven” plans while at the same time they have let many long time representatives go from their sales offices. Is Cigna positioning itself for sale?

Executives from 270 insurance and reinsurance industries were recently surveyed by Know Technologies for Reactions/US Insurer magazine. Some 70% revealed that they were aware of alleged practices of bid-rigging and 21% said they “saw it coming.” Now isn’t that reassuring?  Also, Sir Eliot Spitzer has Willis paying $50 million in restitution to settle an investigation into their practices regarding incentive fees.

One of our respected readers pointed out that S&S Benefits seems to have a bias against “Consumer Driven” plans. To that we agree, simply because it is our opinion that the consumer is not driving. What we are saying is that the latest spin on these plans is usually just that, uninformed spin. There are companies which may find these plans to be helpful, but many will not. Bucking the trend may be bad for business, but we are more concerned with providing the right advice, depending on the client situation. Many times, we can provide a better solution.

Shifting costs in the form of higher deductibles does not necessarily mean that a consumer will make better choices. The result of cost shifting can also be a consumer choosing not to receive needed care. Making a change to a low cost generic as opposed to a high priced brand drug is usually a good thing. However, we also recognize that certain medical conditions may require a $9.00 per hour employee to take certain high priced brand name medications, or not take them if they can’t afford them.  Each client’s specific situation dictates whether these plans make sense. Spin does not. A recent survey of 28 insurers and health plan vendors representing 800,000 people enrolled in “consumer driven” plans also showed that 44% published no cost information and that when that information was provided, it was spotty. Fifty-six percent published no quality information and only 11% published hospital and physician quality information.

We’ll be honest, writing this can be fun, but we really want to generate business relationships. If you like this newsletter, you may want to consider using our services to provide good advice on your benefit plan. Perhaps you will want to pass along our name to someone who could use excellent, straight-forward, cost saving advice. Don’t be shy. Call us for help. If you have a friend in need, forward them a copy or send them to our website to subscribe.