Spring 2022 Issue

News

Spring 2022 Issue

Is Your Group Disability Insurance Good Enough?

By Tom Strangstalien, Insurance Advisor

May is Disability Insurance Awareness Month. This is the perfect time to evaluate your disability protection, determining if you’re adequately covered and address any potential holes or gaps in your coverage. A common theme I hear when talking with our members is, “I have disability insurance coverage as part of my employee benefits, so do I really need personal disability protection?” For physicians and medical professionals, the answer is almost always yes!

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HSA – The Triple Attack!

Health Savings Account imagery

By Chris Noffke, GBDS, Vice President of Employee Benefits

As many independent physicians know, health insurance costs are high – and keep climbing! To help alleviate some of these increases, we suggest using strategies like Health Savings Accounts (HSA) and Health Reimbursement Accounts/Arrangements (HRA). The IRS recently published the approved contributions and plan allowances for HSAs in 2023, and things are changing.

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Your Life Has Only 3 Planning Scenarios

Human hand reaching through torn yellow paper sheet showing number three

By Mark Ziety, CFP®, AIF®, Senior Advisor, WisMed Financial

You’ll either have a long life, health problems along the way or a short life. That’s it.

Plan for those three situations whether you’re single, married, with or without kids and most of your planning is done. Let’s look at how to plan for each.

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Cyber Incidents on the Rise

Ransomware on a laptop screen. Cyber Crime concept.

As noted in the Winter 2022 Antidote article exploring cyber liability trends, cyber incidents are on the rise – ransomware especially. The Sophos State of Ransomware 2022 report found that…

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What is Inflation Guard?

Money is flying away by the inflation bubble and employees are trying to prevent it.

By Society Insurance Team

In 2021, we’re seeing a unique economic environment. Supply chains have been affected by the pandemic and a few industries experienced weather-related setbacks. This, along with the new challenge of a labor shortage, is not allowing supply to keep up with demand, which leads to inflation.

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WisMed Assure, Society Name Michael Flesher New CEO

Michael Flesher

The Wisconsin Medical Society Board of Directors has named Michael Flesher as its CEO. Mr. Flesher will also serve as the CEO of Wisconsin Medical Society Holdings Corporation, which includes WisMed Assure. Starting June 6, Mr. Flesher will replace Bud Chumbley, MD, who is retiring after five years as CEO.

Read more…


What is Inflation Guard?

By Society Insurance Team in 2021, reposted with permission from Society Insurance

In 2021, we’re seeing a unique economic environment. Supply chains have been affected by the pandemic and a few industries experienced weather-related setbacks. This, along with the new challenge of a labor shortage, is not allowing supply to keep up with demand, which leads to inflation.

Lumber is a relevant example and a commodity that has a significant impact on the cost of claims. The cost of claims in 2021 is significantly more than the cost of claims in recent years. This increase may subside quickly, however, economists believe inflation will persist.

What is Inflation Guard?

Inflation Guard is the automatic annual increase in property values on an insurance policy to keep up with rising costs of construction. It provides carriers with adequate premium to pay for losses and provides policyholders with protection against coinsurance penalties if a coinsurance requirement exists. Many insurance carriers apply an annual 4% Inflation Guard increase. If values don’t keep up with the pace of inflation, insurance premiums will eventually have to take a steeper spike upward.

What is Coinsurance?

Coinsurance language in a policy gives an insurance company the right to reduce the amount of a claim payment if the amount of insurance purchased was inadequate.

What Does This Mean for Policyholders & Insurance Agents? 

Policyholders could be underinsured at the time of total loss and find themselves with significant out-of-pocket costs in order to return to normal operations. If a partial loss occurs and the carrier imposes a coinsurance or underinsured penalty, the policyholder would also experience out-of-pocket costs. If the above occurs, there may be errors and omissions lawsuits against the insurance agent.

Does Society Insurance Include Inflation Guard in Policies?

Society Insurance does include Inflation Guard and does not include coinsurance or underinsured penalties in their policies. This provides protection for both policyholders and agents from some of the challenges in managing property values. Maintaining adequate values on insurance policies is critical. Inflation Guard – and annual conversations between insurance agents and policyholders – can fend off trouble.

Contact Brian Fowler, WisMed Assure Account Director, at 608.442.3718 for a quote or with any questions.

Reposted with permission from Society Insurance

WisMed Assure, Society name Michael Flesher new CEO

Michael Flesher
Michael Flesher

The Wisconsin Medical Society Board of Directors has named Michael Flesher as its CEO. Mr. Flesher will also serve as the CEO of Wisconsin Medical Society Holdings Corporation, which includes WisMed Assure. Starting June 6, Mr. Flesher will replace Bud Chumbley, MD, who is retiring after five years as CEO.

With more than twenty years of leadership experience, Mr. Flesher brings a wealth of experience as an association leader. He has served as the Executive Vice President and CEO of the Iowa Medical Society (IMS) since 2017, and has also been Pfizer’s Director of Strategic Medical Alliances and the American Medical Association’s Director of Resident and Fellow Services.

Jerry Halverson, MD, chair of the Society’s Board of Directors and co-chair of the search committee said, “With well-rounded expertise in association financial management, governance and innovation, Mike is the right person to take our organization to the next level of influence and change. Coupled with an extensive network of contacts in national and state medical societies, he will bring leadership and advocacy skills to grow membership and diversify revenue streams.”

“I am honored to join the Wisconsin Medical Society as CEO,” Mr. Flesher said. “Moving forward, I plan to rely on the continued participation and support of Wisconsin’s strong physician community, so we can be assured that the Society will continue to grow in supporting and strengthening physicians’ ability to practice high-quality patient care.”

With strong family ties here, Mike and his family are excited to make Wisconsin their new home.

Mr. Flesher is the ninth Society CEO in its more than 180-year history. 

Cyber Incidents on the Rise

As noted in the Winter 2022 Antidote article exploring cyber liability trends, cyber incidents are on the rise – ransomware especially. The Sophos State of Ransomware 2022 report found that:

  • Ransomware hit 66% of mid-sized organizations surveyed last year, up from 37% in 2020.
  • The average cost to an organization to rectify a ransomware attack in 2021 was $1.4 million.
  • 97% of organizations that have cyber insurance have made changes to their cyber defense to improve their cyber insurance position.
  • 98% that were hit by ransomware and had cyber insurance that covered ransomware said the policy paid out in the most significant attack.

For additional information regarding cyber liability insurance, contact Jim Davis at jim.davis@wismedassure.org or call 608.442.3728.

Your life has only 3 planning scenarios

Mark Ziety

By Mark Ziety, CFP®, AIF®, Senior Advisor, WisMed Financial

You’ll either have a long life, health problems along the way or a short life. That’s it.

Plan for those three situations whether you’re single, married, with or without kids and most of your planning is done. Let’s look at how to plan for each.

First, essential tasks for everyone

  • Manage monthly cash flow. Call it a budget, spending plan, living below your means or whatever makes it appealing to you. It doesn’t matter if you have high income or low income, everyone needs to control their inflow and outflow.
  • Life happens, have an emergency fund.
  • Pay off all high interest consumer debt.
  • Give of your time, resources and be thankful. Live happy.

Plan for a long life

  • Are you saving at least 15% for retirement with the right investments? Boosting it to 20-25% is even better.
  • Have you maximized your tax advantaged retirement accounts through your employer and on your own?
  • Will your tax burden be higher or lower in the future? Hint – if you have a lot of tax deferred investments, you could be igniting a tax bomb that hits later in life.
  • Save for kids’ education expenses.
  • Determine the monthly income you’ll have in retirement from all sources.
  • Dream about your future.

Plan for health problems

  • Health insurance is the obvious answer.
  • Auto and umbrella insurance can provide for you via uninsured/underinsured coverage.
  • Disability insurance that replaces two-thirds of your income if you can’t perform your own occupation is critical, especially during your early and mid-career. A policy with an inflation adjustment is even better.
  • Everyone over age 18 should have health care and financial power of attorney documents.
  • Do you have a source to pay for long-term care expenses? If not, consider an insurance policy.

 Plan for a short life

  • If anyone depends on you for income, get term life insurance. It’s cheap, so don’t skimp.
  • Are your beneficiary designations correct?
  • Do you need a will or trust?
  • Ensure your family knows where to find your documents and accounts.
  • Tell your family you love them. And if you’re faithful, pray.

Since we don’t know the future, all three plans are important for everyone. Our Physician’s Financial Guide has even more tips. Or, for one-on-one help schedule an appointment.

To your best life and healthy finances.

Mark Ziety, CFP®, AIF® 608.442.3750.
WisMed Financial, Inc. part of the Wisconsin Medical Society

Is your group disability insurance good enough?

Tom Strangstalien

By Tom Strangstalien, Insurance Advisor

May is Disability Insurance Awareness Month. This is the perfect time to evaluate your disability protection, determining if you’re adequately covered and address any potential holes or gaps in your coverage. A common theme I hear when talking with our members is, “I have disability insurance coverage as part of my employee benefits, so do I really need personal disability protection?” For physicians and medical professionals, the answer is almost always yes!

Typical limitations of group coverage

First, there is a cap on the amount of benefits that will be paid out for a claim. If the maximum benefit amount is $10,000 per month and as a physician you’re earning $300,000 per year, you’re not even covering half of your income. Are you willing to roll the dice for a potentially devasting and dramatic lifestyle change?

Second, group disability coverage contains “offset provisions.” This means that if you are drawing payments from other sources upon incurring a disability, the benefits paid by the group policy will be reduced pro-rata. These sources could include things like social security, liability settlements, workers compensation payments, employer provided retirement plan replacement benefits and other accident or short-term disability plans. A properly designed personal disability plan will not contain such provisions.

Next, group disability plans are not portable. In other words, if you change your place of employment or go into practice on your own or as an independent contractor, you will lose the disability protection. If you have incurred some health issues, coverage then can be very expensive or not available to you at all. This is why it’s so important to get a personal disability plan in place as early in life as possible.

Benefits of personal disability insurance

With a personal disability insurance plan, there are many optional benefits available to you. It’s not a one size fits all plan like a group plan tends to be. You can elect additional coverages such as:

  • student loan payment coverage
  • inflation protection
  • catastrophic coverage
  • partial and residual disability coverage levels
  • future increase benefits (you can increase the amount of benefits as your income increases with no additional medical underwriting)

What I want you to take away from this article during Disability Awareness Month is this: take a few minutes and review your current disability protection. If you do not yet have a personal disability plan, get one as soon as possible. Don’t roll the dice with your biggest asset – your ability to earn a substantial income! As the independent insurance agency of the Wisconsin Medical Society, we can shop all of the major insurers, review your current group plan and design a plan that will fully protect you and your family for your lifetime.

As your financial partner, your WisMed Assure team is here to take care of your personal financial security so that you can take the best possible care of yourself, your family and your patients.

For additional information regarding disability insurance, contact WisMed Assure at insurance@wismedassure.org, complete this online form or call 866.442.3810.

Hybrid Policies Shine in Addressing Long-term Care Concerns

Tom Strangstalien

By Tom Strangstalien, Insurance Advisor

It’s not a secret that the rapidly increasing cost of long-term care is driving dramatic increases in long-term care (LTC) insurance premiums. You may also have been victim or witness to a dramatic increase in long-term care insurance premiums on a policy purchased years ago.

In the 1990s and early 2000s, people realized the potentially huge benefit of buying long-term care insurance. Along with advances in medicine and the benefits of nutrition and exercise, life expectancy increased. Coming with that was the demand for long-term care services, assisted living facilities and home health care. Popularity in long-term care insurance grew exponentially and consumers bought policies with lifetime premiums, ten pay premiums or even single premiums at an affordable price.

Actuaries calculate statistics with acute precision to guide insurance companies to make their profits. However, this is one of very few instances where they missed the mark. Typically, with life and health insurance, a significant number of people will not hold the policy for their lifetime, and the policy will lapse. This lapse rate was miscalculated, as people who purchased these policies held on to them. Furthermore, inflation for this sector of health care was severely under calculated. Simple supply and demand economics manifested cost increases well beyond the costs of other consumer goods and services. Exacerbating the situation was the decrease in interest rates, as long-term bonds are purchased to provide the future benefits.

Now, consumers are experiencing the results of this perfect storm. We are seeing shockingly increased premiums, lowered benefits or even offers by insurance companies to buy-out or provide a dramatically lower paid-up benefit. Thankfully, actuaries have learned the impact of past transgressions and traditional long-term care policies are now priced properly. But what does this mean to you? A very expensive insurance protection, along with the risk that it may never be used, so what should you do?

What happens if you pay for LTC insurance but never actually need it?

Despite long-term care insurance being so costly, I remain steadfast that long-term care protection is paramount to your financial plan! The facts speak for themselves; longtermcare.gov and the AARP agree, 70 percent of people 65 and older will require long-term care and meeting that need will continue to become more expensive.

Genworth’s Cost of Care Survey shows national annual median costs increased across the board for assisted living facilities (6.1%), home care (4.3-4.4%) and skilled nursing facilities (3.2-3.5%). The median monthly cost of an assisted living facility is $4,051, a home health aide costs $4,385 and a private room in a skilled nursing facility $8,517 a month. Genworth estimates these costs will almost double over the next 20 years.

There’s a new option for long-term care planning: hybrid life insurance long-term care policies. Actuaries have been properly pricing life insurance policies for decades. They now know the amount that will be paid out in benefits and when that benefit will be paid. In these hybrid policies, the life insurance benefit can be paid out early if needed for long-term care. If benefits are not used for long-term care, the life insurance amount is paid upon death to the policyholder’s beneficiaries. This addresses the concern of never using the policy. Benefits will not be taxable if paid out for long-term care and the life insurance benefit is paid out income tax free. In the majority of cases, this type of plan outperforms self-funding.

Hybrid policies have a lot going for them:

  • They offer flexible premium payment options. You can make one lump-sum payment, pay over ten or twenty years, or pay premiums over time.
  • It is often easier to qualify for coverage as the insurer knows what will be paid out in benefits.
  • A hybrid policy can also pay for home health care, assisted living, adult day care and even respite care for a loved one.
  • Permanent life insurance policies build cash value that can be cashed out in the future if you feel there’s no longer a need for long-term care protection or independent wealth negates the benefit.

You have options…lots of options to choose from

Hybrid life and long-term care policies come in several shapes and sizes.

  • Linked benefit policies are true hybrids that link a life insurance policy to a long-term care policy. With these, the typical long-term care benefit amount is close to or equals the life insurance amount. The greater the life insurance amount, the greater the LTC benefits.
  • You can also get a long-term care rider on a life insurance policy which only allows you to add LTC coverage at the time you buy the life insurance policy – you can’t add it later.
  • There are chronic illness or critical illness riders that let you accelerate the death benefit to pay for care if you have a qualifying chronic lifetime illness.

If you currently own some form of LTC insurance and want to compare which coverage may fit best into your current financial plan, we are here to comprehensively explore all the options and make sure your plan is suitable and won’t blow up at a time when you may need it most.

If you do not yet have any form of LTC insurance, the longer you wait, the more expensive it will become. I highly recommend exploring a hybrid life insurance / long-term care policy and getting it early. The younger and healthier the better! Avoid crisis mode or future exorbitant premiums.

As your financial partner, your WisMed Assure team is here to take care of your personal financial security so that you can take the best possible care of yourself, your family and your patients.

Contact me today to protect your tomorrow.

tom.strangstalien@wismedassure.org

608.442.3730

Cyber Liability Trends Continue in 2022

Jim Davis

By Jim Davis, WisMed Assure Vice President Medical Professional

As companies shifted to more virtual work, cybercriminals took advantage of every slight vulnerability. So, let’s review some cyber security basics, specifically focusing on why health care professionals and organizations are the most vulnerable to cyberattacks, what their greatest vulnerabilities are and what risk mitigation you must have in place to even qualify for insurance these days.

Most Common Cyberattacks

Cyberattacks impact businesses of all sizes, from global corporations to small startups. Though smaller businesses may think they are too small to be targeted, it’s quite the opposite. Cybercriminals specifically target smaller health care facilities knowing that they are unlikely to have implemented adequate endpoint security. Most successful cyberattacks occur because of human error. It only takes one exposed file or answered phishing email to cause a massive data breach. These are the most common cyberattacks:

  • Ransomware – This malware denies the victim access to their data unless they pay a ransom to the attackers.
  • Phishing – This attack consists of fraudulent emails sent inconspicuously with malicious files attached intended to gain access to the victim’s device.
  • Password Attack – By accessing a victim’s password, cybercriminals can gain entry to critical data and computer systems.
  • Denial of Service (DoS) Attack – In this attack, cybercriminals flood systems and networks with traffic to overload its bandwidth so the owners are not able to operate their system. 
  • Internet of Things (IoT) Attack – Hackers can gain entry through any end point and then access other devices in the network. 

Most Targeted Industries

Cyber perils are currently the most significant concern for all industries, but some business sectors are hit harder than others. According to Forbes, this is the rate that cyberattacks have increased from 2020 to 2021.

  • Health care – 71%
  • Insurance/Legal – 68%
  • Internet Service Providers – 67%
  • Financial/Banking – 53%
  • Government – 47%

Top Five Underwriting Requirements

The basic requirements that need to be in place for an insurance carrier to underwrite cyber liability insurance for medium to large health care facilities is unchanged for 2022, and are as follows:

  • MFA/Multifactor Authentication – a security process that requires two or more validation factors to verify a user’s identity, such as a six-digit code via a mobile phone in addition to a username and password.
  • Cloud based back-ups.
  • Ability to bring systems back up within 10 days.
  • Ongoing phishing training.
  • Endpoint Detection & Response System (EDR) – an endpoint is any device that is physically an end point on the network, such as laptops, tablets and mobile phones. These end points can be entry points for a cyber breach. EDRs continuously monitor and identify threats to contain and remove them. EDRs should also be cloud based.

For additional information regarding cyber liability insurance, contact Jim Davis at jim.davis@wismedassure.org or call 608.442.3728.

Your 2022 Tax Strategy

Mark Ziety

By Mark Ziety, CFP®, AIF®, Senior Advisor, WisMed Financial

Tax laws feel like stepping into quicksand lately, don’t they? Trying to understand if, when and how the tax laws will change can make you feel like the floor will fall out from under you at any moment. (Particularly at tax time.)

This is especially true if you’re a high earner or have accumulated a significant nest egg. With each tax change, it feels like your tax-saving strategy is in jeopardy. However, we are in familiar waters because the tax laws have evolved constantly. In the past 20 years alone, the wealthiest taxpayers’ top marginal tax rate has shifted between 35% and 39.6%.

It sounds all doom and gloom, but it’s possible to find tax-saving opportunities hiding inside your current strategy and every new tax law update.

With your 2021 tax return in hand, it’s time to start planning your 2022 tax strategy by checking some important lines on your 1040 or 1040-SR. Things to consider:

  • Lines 2b and 3b show dividends and interest that are adding to your current tax bill. Should you hold these investments in a tax deferred account?
  • Was line 4b exactly $6,000 or $12,000? If so, your backdoor Roth IRA contribution(s) was probably not reported correctly.
  • Did you have realized capital gains that may have added to your tax? Check line 7 to find out. If your capital gain tax rate is low, consider whether you should realize additional capital gains in 2022 or defer them to a future year.
  • Did your deductions help you? If line 12a is $12,550, $14,250, $18,800, $25,100, or $27,800 you did not get a deduction. Consider bunching multiple years of deductions into a single tax year so you can itemize deductions.

US Senators still intend to pass portions of last year’s failed Build Back Better Act in 2022, so the timing of property tax payments, additional tax deferral, and Roth conversions are all strategies that should be considered this year.

Want help with your tax strategy? Download WisMed Financial’s free tax planning guide  or schedule an appoinment.

P.S. Download the 2022 tax brackets, retirement contribution limits, investment checklist, and quick decision flow charts from the new WisMed Mobile app.

To your best life and healthy finances.

Mark Ziety, CFP®, AIF® 608.442.3750.
WisMed Financial, Inc. part of the Wisconsin Medical Society