Chicago Area Celebrates in September!

Chicago area fesitvals celebrate life insuranceSeptember is Life Insurance Awareness month and already many communities have scheduled festivals and parades.  Oh, wait, what? They’re not celebrating life insurance awareness?  Well, at least let me make you aware of it. 

The Chicago Tribune is reporting that almost 35 million American households neither own their own life insurance policy nor are covered under employer sponsored plans.  That’s up from 24 million households only six years ago.  Among households with children under 18, four in 10 respondents said they would immediately have trouble meeting living expenses if a primary wage earner died, and another three in 10 would have trouble keeping up with expenses after several months.

Let me be clear, if you have a family and you are the primary wage earner, you need life insurance.  The only reason you wouldn’t need it in that situation is if you are wealthy enough that you have put aside enough money to cover your funeral and burial expenses and provide your spouse and children with enough money to cover their immediate financial needs for at least a year.  Traditionally, people have been told that they should carry at least 10 times their salary in life insurance.  In reality, you should sit down with an advisor and let them do a needs analysis.  You may want to provide your family with enough money to pay off your home mortgage, provide for your child(ren)’s education and/or provide enough to pay your estate taxes. 

Many people get life insurance through their employer, but typically the amount offered is just enough to cover burial expenses.  If you are an employer, you may want to review the life insurance benefit you offer to your employees.  In addition, if you are a partner in a business, you may want to talk with someone about how you can provide for the continuation of the business if either you or one of your partners passes.  Life insurance can help you achieve that goal.

I know people don’t like to discuss life insurance because it reminds us of our own mortality, but for the peace of mind and security of your family you should at least have a brief conversation with a life insurance agent.  If you would like a no obligation, free consultation, please contact me.  Trust me, you’ll enjoy those September festivals a lot more knowing that you’ve secured the future for your family.

Here’s a list of upcoming festivals in the Chicago area and beyond for the month of September:


Festival Name  Start Date  Community Name 
On the Waterfront 09/02/2010 Rockford, IL
Buffalo Grove Days 09/02/2010 Buffalo Grove, IL
Taste of Melrose Park 09/03/2010 Melrose Park, IL
Kewanee Hog Days 09/03/2010 Kewanee, IL
Lake In The Hills Summer Sunset Festival 09/03/2010 Lake in the Hills, IL
Taste of Polonia 09/03/2010 Chicago, IL
Naperville Last Fling 09/03/2010 Naperville, IL
Keepataw Days 09/03/2010 Lemont, IL
Back to School Concert 09/04/2010 Chicago, IL
Rock Island Grand Prix 09/04/2010 Rock Island, IL
Schaumburg Septemberfest 09/04/2010 Schaumburg, IL
34th Annual Fox Valley Folk Music & Storytelling Festival 09/05/2010 Geneva, IL
2010 Oktoberfest 09/09/2010 Villa Park, IL
Winfield Good Old Days 09/09/2010 Winfield, IL
Itasca Oktoberfest 09/10/2010 Itasca, IL
Festival of the Vine 09/10/2010 Geneva, IL
Festival of the Vine 09/10/2010 Geneva, IL
River Days 09/10/2010 Plainfield, IL
Darien Fest 09/10/2010 Darien, IL
Chuck’s Fest 2010 09/10/2010 Bridgeview, IL
4th annual amateur RibFest 2010 09/11/2010 Forest Park, IL
Ukrainian Village Fest 09/11/2010 Chicago, IL
Forest Park Ribfest 09/11/2010 Forest Park, IL
Cruise 11 to remember 9-11 09/11/2010 Decatur, IL
Historic Route 66 Car Show 09/11/2010 Berwyn, IL
Clinton County Art & Wine Festival 09/11/2010 Carlyle, IL
Scandinavian Day Festival 09/12/2010 South Elgin, IL
Dog-toberfest 09/17/2010 Berwyn, IL
Altamont Schuetzenfest Inc. 09/17/2010 Altamont, IL
Fall Fest 09/17/2010 Des Plaines, IL
Berwyn Oktoberfest 09/17/2010 Berwyn, IL
Lewistown’s 4th Annual Fall Festival 09/17/2010 Lewistown, IL
OakToberfest 09/17/2010 Oak Park, IL
Oktoberfest Berwyn 09/17/2010 Berwyn, IL
Good Shepherd Manor Fall Festival 09/18/2010 Momence, IL
Huntley Fall Fest 09/24/2010 Huntley, IL
Chicago Oktoberfest 09/24/2010 Chicago, IL
Highwood Last Call Art Fair 09/25/2010 Highwood, IL
Apple ‘ n Pork 09/25/2010 Clinton, IL
14th Annual Eli Cheesecake Ferstival 09/25/2010 Chicago, IL
31st Annual Barching Band Jamboree 09/25/2010 Palos Hills, IL



The Secret of Health Insurance Quotes

The mysterious health insurance black boxMost people are mystified by the quoting process that health insurer’s use.  I have to admit, it isn’t an easy process to understand, even for someone who has been in the industry for years.  As I’ve mentioned in the past, the insurance companies employ actuaries to access the risk of an individual or group based on a number of factors.  The factors include the groups demographics (age, sex, etc), health status and geographic location along with the probabilities of certain incidences occurring in the general population.  Then they put it all in a black box, add water and stir…and out pop your insurance rates!

Rates vary company to company and from individual to individual.  However, once they are determined (here’s the secret) the differential in rates across plan design remain the same.  Let me illustrate.  Company ABC has individual rate of $360.00 and Company XYZ has an individual rate of $400.00 based on the factors described above.  Both have the same plan design, in this case a PPO with a $500 deductible, $2000 out-of-pocket limit, 90/70 co-insurance, $20/$40 copays and a $15/$35/$50 drug benefit.  Given that the plan design is the same, any variable of the plan that is changed should effect both companies’ rates by the same percentage.  For example, moving the deductible from $500 to $1,000 will result in the same decrease in individual rates for the company.  As a rule of thumb, each $500 change in deductible will result in a 5% change in premium.  So, in this case, ABC’s rate would fall to $342 and XYZ’s rate would become $380.  Simple right?

The PPO plan design changes that will affect your rates the most are 1) the deductible – this has the largest affect, 2) out-of-pocket expenses, 3) co-insurance, 4) office and ER co-pays and finally 5) drug co-pays.   The reason that deductibles and out-of-pocket expenses affect your rates the most are because they effectively shift the risk away from the insurance company and toward the covered individual.  Over the course of a year, the insurance company has a range of claims that it expects to pay out on your group based on your demographics and health conditions.  If you are a large enough group, the insurance company doesn’t need detailed health histories, because they can rely on their actuarial tables (the probabilities in the total population).  As a result of knowing the range of claims, the can determine approximately how much less they will have to pay based on a change in deductibles, copays, etc.  Because of this, the percentage change in premium based on a plan change is basically the same for all groups.  This rule tends to become less true the smaller the group we are talking about becomes. 

Obviously, there are several ways to improve your health insurance quote/renewal.  The first is to improve your demographics.  How do you do that?  Well, you could hire healthy young males and healthy middle-aged women.  Both of these groups tend to have lower health care expenses, however you could run afoul of the Department of Labor with discriminatory hiring practices.  Or, the other thing that you could do is to improve your company’s overall health.  This is a little harder to do , as it requires changing people’s behaviors, but it can be done through focused wellness programs.  Of course, you can’t focus on what type of wellness program to implement until you know the general health status of your company.  If you’re not self-insured it can be difficult to understand what health conditions are driving the costs.  That is why it is important to start with a Health Risk Assessment before introducing a full-blown wellness initiative.  Typically, we like to pair the Assessment with a blood draw.  This not only gives us information about a your populations behaviors, but also gives us hard facts through the blood panel.  If you would like more information about how wellness programs can help your company control health care costs, drop me a line.

St. Charles Chamber Introduces Benefit Plans for Members

St Charles Chamber Insurance ProgramYesterday, the St. Charles Chamber of Commerce introduced a new program for its members.  The Chamber will be providing access to medical, dental, life and disability plans for member organizations.  The Chamber will be collecting censuses from its member companies in order to create one large group that will be able to leverage its size to get rates for dental, life and disability (both long-term and short-term) insurance.  The Chamber will also provide access to medical insurance through an ‘underwriting day’.  For health insurance, each member will be underwritten separately as  there is no way to pool all of the member groups together for health insurance (due to Illinois law, as discussed at the rollout meeting). The underwriting day could provide better rates through sheer volume of cases being presented at one time.  If you are a chamber member and would like to participate in the program, please read the FAQ section and complete a census for us.  Contact me to get a census template.  Please complete it and return it to me by Sept. 6. 

Eventually, the Chamber would like to work toward a health care cooperative for its members.  While Illinois does have a law on the books that allows for small employer groups to form a purchasing cooperative for insurance (which, unfortunately, the insurers will not sell to), there is no law in Illinois that allows for private employers to form a self-funding cooperative.  That will change in 2013 with the rollout of Community Oriented and Operated Plans.  The CO-OPs are not traditional cooperatives, but have been created by the Affordable Care Act (health care reform) to provide an alternative for private business.  As more details become available about CO-OPs, we will update you.

For those that are interested, Wisconsin does allow the formation of health care cooperatives.  I encourage you to take a look at the Alliance, which is a large cooperative located in southwest Wisconsin.  They could definitely serve as a model for employers here in Illinois.

States, School Boards – Cutting Benefits

I need a new drugI came across two interesting articles recently.  Both concerned health plans sponsored by government.  First, the State of Nevada, which is facing a shortfall of over $110 million just to support existing benefits for its employees, slashed benefits dramatically AND increased the employees’ share of premiums.  Here’s what they did: They got rid of almost all dental and vision benefits. Cleanings and x-rays are still covered and an annual eye exam is covered, that’s it.  They also took an axe to the medical insurance.  Here they raised the employee deductible from $800 to $2,000 for individuals and $4,000 for families.  Out of pocket maximums increased to $3,900 for individuals / $7,800 for families.  Co-insurance, the amount the plan pays after the deductible is met, fell from 80% to 75%.  They also cut the state-paid life insurance benefit for employees from $20,000 to $10,000.  Doing all of that, they managed to save $80 million dollars.  The other $30 million will be paid for by state employees in the form of higher premiums.  Got that?  The state was short on funds so they cut benefits AND raised employee premiums.  Needless to say, this is NOT going to be considered a grandfathered plan.   State of Illinois employees better take note.  Our state is in even worse financial shape and most State of Illinois employees get a plan that costs them $47 – $85 per month with a deductible between $300 – $450.   Those are nice benefits at very little cost to the employee.  Don’t get used to them however, you state government workers.

The second story concerns the Milwaukee area school district.  Facing budget shortfalls, the district gave layoff notices to over 400 school teachers in June.  Back in 2005, in order to save money, the district cut one benefit from the health plan.  They excluded erectile dysfuntion drugs (e.g. Viagara) and saved over $200,000 that year.  This year, the teacher’s union has filed suit to get jobs back AND to get their e.d. drugs back.  Adding e.d. prescriptions back to the plan is estimated to raise costs by more than $750,000.  Sure, that’s a drop in the bucket for a health plan that spent over $1.3 billion dollars last year, but the district does need to cut expenses.  Adding a million bucks back to the budget is going the wrong way.  Besides, wouldn’t the union want some of those jobs added back over getting their little blue pills? 

So it’s not just private employer health plans that are hurting.  As taxpayers, we should all be aware of what public employees (state workers, teachers, police, fire, village officials, etc) get for benefits.  After all, we are paying for them.

What is Your Opinion of Health Care Reform?

Obviously, there has been a lot of discussion on the new health care reform law here and in the media.  I’m curious, based on the changes we’ve seen so far, what people think about it at this point.  I know Gallup and every other media group has run surveys on this but I want to experience it first-hand.  So  please, answer the question on the poll to your right.  Let’s get a read on what people are thinking about it now.

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