Irish Financial Review

Rebates on health insurance as new laws take hold across US

Health insurance policy holders in the US have begun receiving rebates on their policies as part of the federal health care law or Obamacare.

The law requires insurers to give out annual rebates by Aug. 1, starting this year, if less than 80 percent of the premium dollars they collect go toward medical care.

As a result, insurers will pay out $1.1 billion this year, according to the Department of Health and Human Services, with an average rebate of $151 per household. The highest average amounts are going to people in Vermont ($807 per family), Alaska ($622) and Alabama ($518). In some states such as New Mexico or Rhode Island, no rebates will be offered because all the insurers in those states met the 80/20 requirement.

Although the percentage of insurance companies that owe rebates this year is relatively small, about 14 percent, many giants of the industry are on the list. They include Aetna, Cigna, Humana and UnitedHealthCare.

This being election year in the US, President Obama is highlighting the rebates as a tangible early benefit of the controversial legislation; on the day the Supreme Court upheld the law as constitutional last month, he said millions of Americans would see rebates because their insurance companies had “spent too much on things like administrative costs and C.E.O. bonuses, and not enough on your health care.”

But not everybody will be in luck when it comes to those juicy rebates.

Self-insured employers, which cover more than half the nation’s workers, are exempt from the new rule, as are Medicare (health care for those over 65 years of age) and Medicaid (health care for low-income families). That said, the new rules will benefit approximately 12.8 million people in the US. Many who buy coverage directly from insurers(including self-employed people) are receiving checks. But in most cases rebates are being sent to employers, who can choose to put them toward future premium costs instead of distributing them to workers.

Minimum wage for all as one city scrambles to balance books

Austerity, austerity everywhere and not a cent to spare.

In the case of one US city, it has become a case of do or die as wages are slashed to minimum for all city workers.


Out of money Scranton forces minimum wage

Out of money Scranton forces minimum wage


Scranton Pennsylvania is located in one of the old ‘rust belt’ that runs from Pennsylvania west into Ohio. Once a bastion of economic production which was fuelled by an abundance of iron ore and coal, today, this is an area filled with empty factories and empty municipal bank accounts.

The Mayor of Scranton, Chris Doherty ignored a judge’s ruling that his administration could not cut the pay for almost 400 workers. The mayor did so anyway, arguing that there wasn’t enough money in the city coffers to pay the owed payroll on time.

While the legal implications for the Mayor of this US city are unknown (he could be held in contempt of court), the financial reality is grim.

Scranton, with its 76,000 residents in northeast Pennsylvania, is fighting a different kind of battle than some other cities. It faces questions of financial solvency because of shrinking tax revenues and rising costs; Stockton, Calif., for example, recently became the largest municipality to file for bankruptcy protection. Central Falls in Rhode Island filed for bankruptcy earlier, wiping out the retirement funds and pensions for many retirees.

In Scranton, the latest payroll of about $1 million was scheduled for July 20, and it was unclear if the city had enough money to write the checks. If the Mayor continues on his path to financial salvation and sticks to the minimum wage route, the payroll cost drops to about $300,000, but city officials have said they will pay the owed wages when – and if – the current problems are resolved.

So, it would seem on the face of it that there are places where the financial reality on the ground is far worse than they are here in Ireland. It would be hard to see the head of any state or city or even council organisation here being forced onto minimum wage to help balance the books.

Wealthy sports stars forced to save for retirement

Finally, there is some recognition that money management skills are needed at every level of society. It no longer about the less well-off, even the ridiculously wealthy need help too!

In the US, National Basketball Association players, who were paid an average of about US$5 million last season, will be forced for the first time to save money for retirement.

NBA athletes forced to plan for retirement

Wealthy sports athletes forced to plan for retirement

The program is part of the 10-year collective bargaining agreement between the NBA and the players union that ended a lockout in November.

Former NBA players Scottie Pippen, Latrell Sprewell and Antoine Walker are among retired professional athletes who have experienced financial difficulty after careers in which they earned tens of millions of dollars. Antoine Walker filed for bankruptcy after being paid more than $100 million over 12 years in the NBA.

Retired players can access the money before their pensions begin at age 50. Players can take an early pension at 45, Klempner said.

Basketball-related income in the NBA will top $4 billion next season, meaning the amount of forced savings also will rise.

Beginning next season, players also will surrender 5 percent to 10 percent of their salary for retirement. They automatically will be enrolled in the program and would have to opt-out to keep from participating in the plan.

Investment details for that plan aren’t complete.

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