Hiked medical premiums a real pill for advisory firms

Financial advisory firms are seeing substantial spikes in the cost of providing health insurance for employees. Some insurance companies handed out steep increases this fall because, under the Administration's health-care reform, carriers will be required to explain premium increases starting next year, said Carolyn McClanahan, a certified financial planner with Life Planning Partners, who is also an M.D. She spoke to advisers at the Financial Planning Association conference in Denver on Monday. “Advisers are seeing increases now," she said. “This was a free-for-all for the insurance companies because next year they have to explain their premium costs.” Starting in 2011, federal and state governments will do an annual review of insurance company premium increases. Carriers will need to justify premium increases and post the information on publicly accessible websites. These recently hiked prices are difficult for advisers. They must either eat the costs themselves — or pass them on to employees. Adviser John Blamphin, an adviser with Retirement Management Systems Inc., whose firm manages about $570 million, said his firm increased employees' costs by 100%. Employees in the 30-person firm had contributed $28 every two weeks. Now, workers pay $54 every two weeks.. “Employees were really grumbling,” he said. “But we tried to explain it to them.” Most financial advisers negotiate their health costs in the fall. Those who haven't gotten jacked-up quotes yet anticipate they'll hear from their insurers shortly. In fact, adviser Bill Carter of Carter Financial Management, whose firm manages more than $750 million in assets, said he's nervously anticipating getting his new insurance quotes in the next few days. His firm didn't have any increases last year for the company's 10 employees. But he said he's anticipating at least a 15% to 20% increase this year. Sorting out this information and dealing with the hikes is difficult, he said. “I'm just puzzled by all of this,” he said.