Health Insurance Rate Increase

The Credit Union recently received our annual group health insurance renewal information from Blue Cross Blue Shield of Alabama. There had been some anxiety over this renewal due to the implementation of the Affordable Care Act. Our management staff had heard about possible rate increases but nobody was prepared for the reality of the actual increases reflected in our annual renewal package.

To begin with, our prior health insurance plan (a very good health plan) through Blue Cross Blue Shield of Alabama was no longer available. It was not a "qualified" plan under the Affordable Care Act which basically means it did not match any of the tiered plans now available as a result of the law's implementation. So much for being able to keep our current health plan if we wanted to. The most similar plan that Blue Cross Blue Shield of Alabama has now to our previous group health care plan would see a 42.5% increase across our entire group of employees. The next lower benefit group health plan, with reduced benefits to our employees, would still reflect a healthy increase of 19.2% over the cost of our prior plan. These figures of course were shocking numbers for an employer who pays 100% of the employee's individual health care plan as a benefit of employment. The additional annual costs to the Credit Union would range from $19,000 to $40,000+ depending on which plan is selected. Obviously the Credit Union will have to review our benefits package as a result of these enormous cost increases.We value our employees very much but cannot bear these type of increases overnight.

Nothing about the Affordable Care Act is proving to be affordable so far. Older workers (from age 50 to 65) will find it very difficult to retire or pay for health insurance on their own since monthly insurance premiums would range from $700 to $1,000+ PER MONTH for this age group. People who could not afford health insurance before will find the costs higher, at least for now. Blue Cross Blue Shield and the other insurance companies will say that rates are now higher because of Affordable Care Act taxes included in all plans, no underwriting for individual approvals, and no exclusions for preexisting conditions. It could also be debated though that more people paying for insurance should in theory lesson the costs.

Employers will be forced to make changes to employee benefits, reduce staff, or utilize more part-time employees to reduce the costs of benefits. Other employers throughout Alabama are seeing similar rate increases from Blue Cross Blue Shield of Alabama which has roughly 88% of the state health insurance market. There has been considerable discussion about the merits of the Affordable Care Act over the past few years. Everyone does need health care which is why North Alabama Educators Credit Union has provided this necessary benefit to our employees. The issue now however is the cost of health care. Again, right now there is nothing affordable about the Affordable Care Act. We are hopeful that changes and other health care options can improve the rather dismal picture that we have before us now.

Debt Ceiling of United States

Congress has been kicking the can down the road on debt ceilings for many years now. A deadline date is looming that requires another increase in the allowable debt ceiling to insure that government obligations get paid as promised. Really? It is one thing to borrow money for long term projects that can be seen as an investment in the country's future, but to continually raise the nation's credit line to fund check disbursements for monthly obligations is troubling to say the least. Financial literacy resources for consumers has been a hot topic for credit unions over the past few years. It seems as if financial literacy education is necessary by our leaders in Congress as well. The current debt situation of the United States is not a political party issue as both major political parties have greatly contributed to the excess spending habit in Washington. Expenses need to fall closer in line with revenues.We can't continue to borrow money to fund basic operations of government. Like consumers, our government needs to live within its means.

Our nation's economy and business community need leadership and financial stability out of Washington, DC. A further reduction of the nation's credit rating is at risk because the credit rating services all said how and why it would be lowered possibly in the future. Inaction and unsatisfactory attention to the debt problem would result in a further lowering of the credit rating. That pretty much sums up what has occurred in Washington. Why would it matter if the credit rating were lowered? Financial markets and retirement accounts could take a hit. Most investment policies require a minimum investment grade for investments held within a portfolio. When owned investments fall below the minimum investment grade level they must be sold and removed from the portfolio. When the volume of selling goes up, what generally happens to the price?? Demand would also be lowered because there would be less investment buyers available. A large supply combined with low demand  would translate to greatly reduced values for investments backed by the United States government. This scenario possibility is not good at all.

Our nation's debt is not going away. It increases in size every day. The level of debt held by the United States is not a political party issue. It is an American issue. The message to Congress should be clear - address the debt problem and begin a plan to reduce the nation's debt. Any action would be better than no action. Hopefully Congress will recognize the financial stakes at play here and formulate an effective debt reduction plan.