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When is as important as how much in this story: There once was a big international insurance company which bid on a reinsurance contract and won it based on rate and reputation. I felt it was a good decision to award them the business until a major claim came in and the reinsurance policy was triggered to the tune of ½ million U.S. dollars. Suddenly each of hundreds of claims had to be individually reviewed – not once but twice. After several months, and a suggestion of litigation, the claim was settled. When the check did not arrive and year-end was rapidly approaching, the broker was informed that the check would be sent the next week. Another week passed and still no check. A personal call to the office of the company president confirmed that the check had indeed been cut but could not be released without the President’s personal signature – and he would be back on Monday after his skiing holiday. Return and sign he did and litigation was avoided at the last minute. Observation: when interest rates are high or cash flow is low expect your vendors to pay much much slower than usual, if at all. How much depends on the circumstances: Dental coverage is common at large public and private employers but not at many small and no-profit firms. When hiring from the latter groups, the first question from the new hires was most often not – what’s the earliest date I can see then doctor? but, rather when can my family and I see the dentist under this plan? Observation: when care has been delayed for cost or other reasons, when it is covered, expenses will be unusually high the first year or two. Details Count: Students are covered under their parent’s policies until they are 18 or, if still enrolled in school, until they are 23 or 24. One of the problems with graduate school is that it often takes the student well beyond these age limitation. Some University systems have solved that problem by allowing graduate students into a group policy for all students. To be eligible one has to be enrolled n school. What happens when the student is ill for a protracted period and unable to attend school? Coverage is lost due to failure to be enrolled in school. Observation: read the fine print of all policies but especially those designed for relatively small groups and students. Do not forget to verify: Many group insurance plans cover individuals and families. If proof of relationship isn’t required up front as many a 10% of the individuals in the group may not actually be eligible. Asking for proof of marriage or a birth certificate for a child may be time consuming but it also can be instructive at times. One woman was assured by her man that they were in a common law relationship and that he could be covered under her policy at work. She found out that State law did not provide for common law marriage at all and was able to remedy that defect in her relationship to her own and her child’s betterment. Observation: Even simple questions must be explained carefully and answers verified. Creative Accounting: When the FSAB and GASB decided to require employers to put liabilities for retiree medical plans on the books, many, but not all, plan administrators took immediate action to either terminate or cut back on promises of future health care for retirees. Some chose to do nothing. One creative approach for Higher Education and other education related non-profits was developed by Emeriti Retiree Health Solutions which avoids the whole question of future employer obligations. The program sets up a defined contribution plan much like a 401(k) or 403(b) savings vehicle and VEBA trusts which restrict payments to health related costs in retirement. Employers and employees share the funding over time and retirees benefit from a single point of contact for their future medical plan needs. Observation: Plan for the future as if the long term heath of your organization depended on it (and don’t promise more than you can deliver).
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