The rising cost of health insurance makes choosing the right plan a big financial decision. Taking time to review the plan options, whether on a marketplace or employer-sponsored, can save money for the enrollee. With the new administration coming in January, policy changes are expected and could affect pension plans and other retirement benefits. Understanding what benefits are available and what changes are expected to come next year will help make sure your retirement decisions are sustainable long-term.
During the past six years, federal workers (among others) have not seen pay increases in line with the rising cost of health insurance premiums. With the open enrollment period ending December 12, researching the available plans for 2017 can result in better values for enrollees. For example, choosing the self-plus-one option instead of a family plan can often save money. There are also medicine-price calculators available to help manage the cost of prescription drugs. However, even with careful buying consideration, insurance prices are rising faster than incomes.
Health insurance is an issue that affects all Americans. For individuals who purchase a plan from the ACA marketplace, there are subsidies and other monetary adjustments that can offset the cost of a private plan. However, for individuals with employer-sponsored health insurance, monetary adjustments like subsidies are not available. The cost of insurance is not based on salary within a company and typically disproportionately hurts lower income employees. The lack of diversity in insurance plans also slows down technological innovation in the medical field. The incentive to develop cost-saving or high-value treatments is missing for innovators. Policy is going to have to change to see any real transformations in the health care field.
Lemonade, a peer-to-peer insurance company, re-emerged in September with its first product on the market. An SEC filing December 2 shows the company has raised $33 million in funding. They are offering fully app-based peer-to-peer homeowners’ and renters’ insurance in New York, eliminating the cost of paying a human broker. Instead of traditional price structuring, Lemonade will take a straight cut of the policy rate as profit and donate any leftover money. The company hopes to disrupt the way traditional insurance companies do business and handle profits.
The Department of Labor’s fiduciary rule requires all fixed indexed annuities (FIAs) sold on commission to IRA accounts to comply with the Best Interest Contract Exemption. The rule’s implementation date is set for April 10, 2017 and will require independent marketing organizations to apply for a financial institution exemption. The National Association of Fixed Annuities (NAFA) is struggling to assess how the DOL will set guidelines for exemptions and who will oversee the regulations. The rule is expected to have a big impact on FIA sales as well as the role of the independent agent. There are currently lawsuits pending to challenge the DOL’s rule, but the lower courts have not overturned any decision that would result in thwarting the DOL’s implementation.
The new administration’s economic policies are expected to boost inflation and interest rates, which would improve pension plan funding ratios. Under new economic conditions, pension plans are expected to look for ways to eliminate plan risks by offering lump-sum payouts and purchasing annuities from insurers that would take on the plan’s obligations. The Treasury Department delayed the release of its updated mortality tables until 2018, making it more attractive for single-employer plan sponsors to offer lump-sum payouts over purchasing annuities.
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