Larry M

Does the State of Wisconsin allow individual health policies, which are written in the state and cover residents of the state, to be non-renewed because of a change in the insured's health status?

Please expand upon your question. Are you asking what data is necessary in order for someone to calculate the costs for a specific plan? Or are you wondering where you can find the results of FAS 106 for other plans?

It is possible to amend the plan to change the normal retirement date to be something other than the anniversary nearest, following or preceding the nra. Any benefits earned prior to the date of change would be "protected", but the effect upon the plan should be negligible and it will be a rare situation where the actual beneits payable will differ. [Most people feel their 65th birthday (or other such date)is the day they want to kick back and retire. Why limit the reitrement plan to an artificial day such as the first day of the month or the first day of the year coinciding with or following the birthday? my preference is to have the normal retirement date the same as the normal retirement age. There is no need to have an individual wait one-half month or one-half year to get her/his retirement benefits. The concept of using an anniversary date arose when many of these plans were funded by insurance policies and they "matured" on the policy anniversary which coincided with the plan anniversary. Now that most sponsors (through their consultants)recognize the foolishness of having insurance in a qualified plan (yes, there are exceptions), there is no need to limit the retirement date. ]

Why the name "pension equity plan"? If I were a guessing person, I might opine the reason is because Kwasha was using "cash balance plan" and Segal (or Hewitt) wanted to sell something different. ..or it might be something simpler, such as the individual who finally put it together was named Pauline Ethel Pavlov and, just as IRA's were named, so was PEP.

yes

A PEP is a form of cash balance plan, which, in itself, is a form of a qualified defined benefit plan. Therefore, all the rules pertaining to a qualified defined benfit plan apply as well to the PEP.

It's a good thing IRS issued notice 99-44 and removed all ambiguities - that is, except at least this one - for plans which do specifically provide the 415(e) limits (w/o reference to the Code) and which, therefore, must be amended to allow the increase (in those cases where they wish to do so), do we have until the GUST remedial amendment period extension to do so? That is, must we amend before 1/1/2000 (and before the GUST amendments), or can we wait until the last day of the 2000 plan year? By implication, Q&A 7 suggest we can pay the higher benefits during the 2000 plan year, IF the plan is so amended by the end of that year. Is my understanding correct?

I suggest you contact Harry Sutton at Allianz

No. Why do you ask?

Be careful how your company "rewards" healthy employees. If the employees contribute towards their coverge and you return a portion of their premium to the healthy ones, you are very likely violating HIPAA - can not charge rates which differ by health status.

Since I have no experience whatsoever with Quantech, I may be the most logical person to answer your question with another question. Isn't it less expensive, and more practical, to keep only one set of software in house and not have to worry about the learning process involved with another system? This learning process would also include the periodic upgrades to each system. [This message has been edited by Larry M (edited 08-24-1999).]

1. the 15% limit does not appply to SEP plans, as I understand the rules. The employee may defer as much as $6,000 per year without concern as to whether it is 15% or 25% of his/her compensation; ON THE OTHER HAND, 2. If your question is whether the SEP contributions are to be aggregated with the employer contributions for another plan sponsored by the employer, BACK UP! There can not be another plan sponsored by the employer (or any othe member of the controlled group) in a year in which the SEP is active.

Gee, G. Burns, what a revelation. All these years my employer clients, in their and my ignorance, have been choosing their benefits and designing their plans and they did not know they had no control over the benefits they are paying to their employees. And my insurance company and hmo clients have been wandering in the wilderness, naively ignoring the world around them as they agree to provide benefits requested by those employers who are willing to pay for them. Yes, some states and the federal government impose some restrictions and mandates, but, generally, an employer can choose the level of benefits and the ones who will be covered. The extent to which states decree mandates varies from the extraordinary exception in Hawaii to the let them do whatever they want attitude which prevails in other states. [This message has been edited by Larry M (edited 08-21-1999).]

Sheila K, although it may be issued through individual policies, it is possible the whole arrangement will be considered an employer sponsored "group" plan. As an example of such a stretch, look at what happens to employee pay all group life plans where some employees pay less than the Table costs and others pay more. The result of this is to impute income to those who pay less. You should consider having your approach reviewed by your legal counsel and getting your insurance broker (and the insurance carrier) to provide you with a "hold harmless" letter.

Sheila, does your plan meet the HIPAA standards? I was under the impression you can not exclude or charge a different premium for individuals based upon their health status. Yet, you seem to be be determinig eligibility for medical coverage on the basis of individual medical underwriting.

EMK, I assume by your question you are trying to determine the claim costs for this year in order to estimate next year's claim costs. For every plan there is a unique IBNR (sounds as if this would make a nice beginning to a song). For your plan, it should be relatively easy to get information from the company providing the claims service. Ask it to give to you a listing which shows for calendar years 1997 and 1998 separately, all claims which were incurred in the year and which were reported one, two, three, four, five and six or more months after the year. From this, you will get an idea as to what percwntage of the year's claims are outstanding after each period. Assuming no material changes in claims handling or in plan design or in makeup of the covered group, you can assume the lag will be about the same for your current claims. You can estimate the claims incurred within the period - Paid claims minus previous year's reserve plus this year's reserve. Once this is done, the next job is to try to estimate what next year's claims will be. It's relatively simple in some respects Just remember, your estimate will never be correct. You just hope it will be within 2% of what will actually happen.

If it has not been too long since your last job, and if it provided group medical coverage, you may be eligible to continue that coverage (under COBRA) with your previous employer's plan. Ask, in writing, for COBRA rights.

whether the death benefit is part of the qualified pesion plan or in a separate plan should be a decision made by the plan sponsor based upon her/his wishes and needs. Presumably, the 1,000 benefit is a relatively small one which can be funded from general assets and, if the group is large enough, the amount can be budgeted with fairly accurate forecasting. If so desired, the plan sponsor could purchase a 1,000 group term insurance plan for the retirees (perhaps as an add-on to its active employees' group life plan). My preference is to keep qualified plans as free of incidental benefits as possible and to place those benefits in plans where I can control the flow of money with less restriction and expense.

If the Society's stuff was easy, do you think we actuaries could charge as much as we do? You can go to soa.org; then go to "libraries"; then highlight "statistics for Employee Benefit Actuaries", and hit search; or just go directly to http://nt80.syn.net/soa_lib/results.html and you will have your choice of a multitude of meaningful (to a few) data.

Your question raises a number of issues. They range from "should the govt continue to maintain Medicare at all?" to "should the govt provide all medical care to all people?" With respect to prescription coverage only, I have many concerns: a.Medicare costs are greater than any of us had anticipated they would become when it was first introduced. b. It appears as if the costs of the current Medicare benefits will continue to far exceed the current income for a significant number of years. c. The proposed additional prescription benefit (with a maximum of $1,000/year benefit) will reach the $1,000 per year cost per person who chooses it (we who are on Medicare are quite capable of discerning whether an optional benefit will return more in benefits than that which we paid for it) d.It will most likely cotnribute to a rise in drug prices for all (even greater than the trends we are experiencing now), just as Medicare created huge increases in hospital and physican fees for all people. e. [if I were a cynic, I would add:] The addition of such a benefit to the Medicare program will produce an increase in the number of people who will vote for the sponsors of the bill. f. The basis for the proposed increase in benefits is the assumed increase in the surplus position - however almost all of the surplus is created by the excess of current social security income when compared to social security outgo. This surplus is needed to pay for the future years of social security when its outgo exceeds it income. To use it for other purposes is to defer the problems with that plan.

The Society of Actuaries web site, soa.org, has a library section which includes economic statistics for actuaries. you'll find the 30 year treasury rates along with all sorts of other dull reading (nope, no pictures).

[i am not an attorney] It is my understanding the answer to your question is "it depends upon the precise wording of the plan document. There have been at least two cases (prior to HIPAA) which involved pregnancies which began prior to the effective date of coverage and which terminated during the period of coverage for medical benefits. The results went in opposite directions in the two cases because of the contract (plan document) language. In one case (Vance v Aetna Life), a plan administrator acted consistently with plan provisions in denying maternity benefits to the spouse of a covered employee on the basis of the plan's exclusion for preexisting conditions. The employee's spouse received her initial treatment for the pregnancy prior to the effective date of the employee's coverage, and the preexisting conditions clause excepted coverage during an employee's first 12 months for “preexisting conditions” defined to include conditions for which a person received services during the three months before being covered. In the second case (Aubrey v Aetna - hmmm, Aetna gets around, doesn't it?) a plan administrator denied maternity benefits for prenatal care expenses arising after the effective date of a participant's coverage, where the participant had become pregnant before coverage commenced. This plan contained a preexisting condition clause precluding benefits until three months had elapsed after any previous treatment and a provision that pregnancy would be treated as any other disease. HOWEVER, it also provided that maternity benefits would be paid regardless of whether pregnancy had commenced during the coverage period. The administrator's argument was the conflicting provisions should be read together so as to allow maternity benefits only where pregnancy began – but was not diagnosed or treated – within three months of coverage commencement. However, it was determined that the participant's interpretation – that post-coverage benefits would be payable regardless of the preexisting conditions clause – was correct.

You may wish to discuss this with your employer. Mistakes do happen with payrolls. Sometimes, an employee gets too little money and sometimes too much. When the error is discovered, the employer tries to correct it in an equitable fashion. If you are unhappy with what your employer is doing - consider explaining your feelings to him or her. The employer may forgive his/her own mistake, rescind the retroactive adjustment and you become a hero to all the other employees in the same position. On the other hand, the employer may thank you for your comments and keep the retroactive payments in effect.

It appears as if Medicare now requires your plan to become primary once he becomes covered by your plan. Whether you can delay the enrollment of the individual or apply a preexisting condition limitation is another question. These depend upon whether the individual is eligible to enroll immediately (because of HIPAA) or if the plan permits late enrollees to be deferred until they provide evidence of insurability satisfactory to the company.

I agree with pax - we should be consistent within the plan (and follow the plan's language if it specifies how to make the calculatin). However,Is this detailed calculation really worth the effort? Are you really being more accurate? If you are so "precise" in lump sum calculations - that is, calculating to months or days - when using the mortality tables (which are developed using rounded approximations), what do you do when an employee terminates one, two, three ...or 30 days after his normal retirement date? Do you adjust the monthly benefit for accruals after nra?