Some employers readily provide free health insurance to their employees. Some engage in “tough” negotiations or use innovative financing techniques to gain temporary health insurance savings. However, most employers simply accept annual health insurance cost increases that they then shift to workers. Workers have no control over how their employers manage health insurance costs. Or do they…?

What Could Happen

When the Affordable Care Act (aka Obamacare) became law, its supporters and opponents anticipated the end of workplace health insurance. So far both are wrong... Now there is a new theory cropping up about the impending demise of workplace health insurance. The theory is that employers are doing such a poor job of managing health insurance costs that they are neglecting their fiduciary duty and opening themselves up to potential lawsuits.

This is an intriguing theory and it is not surprising that it is now getting attention. Employees have filed numerous lawsuits over 401(k) retirement plan fees, so suits over high deductible health plans must be the logical next step. Right? Also, the Department of Labor’s new retirement account fiduciary standards requiring brokers to make recommendations that are in the best interest of their clients could easily be extended to health insurance brokers. Right?

It’s not like employees haven’t sued insurers and employers before over health care related issues. Employers have been sued for:

• denying coverage for specific medical care procedures or inadequate health care (e.g., Wal-Mart)
• firing older workers for potentially having higher health insurance costs
• firing workers with high medical expenses

Tags: obamacare, Fiduciary rule

After much compromise, redrafting, haggling, interference, bullying and support, the Department of Labor issued its final version of the fiduciary rule on April 6, 2016. The fiduciary rule requires retirement plan advisors to put investors interests above their own when it comes to the products they recommend. Advisors will have to disclose, in writing, all fees, compensation and potential conflicts of interest associated with their retirement account recommendations.

Finalizing the fiduciary rule was a long and difficult process for the DOL and it did not get everything it wanted due to the intense opposition of those in the financial industry who saw the rule as a threat to their business practices. These in-the-best-interest-of-the-client opponents articulated their reasons for their opposition, including the costs of updating their computer systems and legal procedures. Basically, they are claiming that the disclosure paperwork they have to hire lawyers to draft, the minor changes they have to make to their computer systems and training their workforce to not take advantage of investors will be costly and burdensome to them.

Yet their lukewarm arguments were good enough to get the support of many members of Congress. Even after Wednesday’s announcement, some in Congress are still trying to stop the final rule from taking effect. But even if Congress succeeds in delaying the final rule (advisors already have two-years to get in full compliance with the final rule), Wall Street has heard the message of the Obama Administration and other retirement plan reform supporters.

You may or may not agree with Senator Elizabeth Warren’s statement that retirement plan service providers and fund managers are “bleeding savers dry,” but Wall Street knows she’s not alone in her opinion. Continue Reading...

Tags: retirement plan fees, retirement accounts, Fiduciary rule