NAIFA Blog

Dr. Susan Waters, on the Moore, Okla. tornado

Our hearts go out to those suffering from the devastating effects of the tornado that struck the Oklahoma City suburb of Moore, Okla. The news reports and images are shocking, and it is heartbreaking to hear of the loss of lives that resulted from the destruction.

As CEO of the National Association of Insurance and Financial Advisors, I will seek regular reports from NAIFA members in the region to hear how they and their clients are living through these life-changing events.

It is overwhelming to consider the hard work and perseverance that will be required to aid in the recovery of this community, and in the other Midwest towns that have experienced such severe weather over the last few weeks. This is where we as an industry show our value by stepping up to the plate, honoring our commitment and upholding our promise to serve our clients.

DOL issues Model Notices for Employers to Comply with Exchange Notice Requirements

The U.S. Department of Labor’s Employee Benefits Security Administration recently issued new guidance on the Affordable Care Act (ACA) requirement that employers provide employees with a notice of their health insurance coverage options available through the future health insurance exchanges. This notice requirement is established through section 18B of the Fair Labor Standards Act (FLSA), added by the ACA.

All employers subject to the FLSA are required to provide the notice of health coverage options to each new employee at the time of hiring beginning Oct. 1, 2013, and to all current employees by Oct. 1, 2013. A notice will be considered to have been provided at the date of hire so long as it is provided within 14 days of an employee’s start date. All employees must receive this notice, regardless of plan enrollment status or of part-time or full-time status. Separate notices to dependents or other non-employees who may become eligible for coverage are not required.

• Model Marketplace Notice – Employers Offering a Health Plan
• Model Marketplace Notice – Employers Not Offering a Health Plan
• Model COBRA Notice - Employers Not Offering a Health Plan

NAIFA President Rob Smith Personalizes Importance of Life Insurance in Meeting With Congressional Working Group

NAIFA President Rob Smith

The life insurance industry was a force majeure yesterday. NAIFA President Rob Smith, along with NAIFA member and AALU Vice President Anthony Domino, added color to the Secure Family presentation to the Ways & Means Financial Services Working Group on April 25.

Congressmen Adrian Smith (R-NE), John Larson (D-CT), Richie Neal (D-MA) and Aaron Schock (R-IL) and members of their staffs were in attendance. The presentation covered the mechanics of  life insurance products, the significant public policy benefits and economic impact of the industry, as well as the appropriateness of current taxation.

Smith shared how life insurance preserved a family farm, which has a number of employees and families dependent on it, after a snowmobile accident killed one of the owners. This personal story really resonated with those in the room, clarifying that the issue goes beyond numbers and is really about the financial well-being of families.

The Secure Family coalition previously met with the Ways & Mean Pension and Retirement Working Group on March 14 and submitted formal comments on April 15.

Many Americans Are Not Prepared for Long-Term Care

A mere 35 percent of Americans aged 40 and over have set aside money for their potential long-term care needs as they grow older, according to a new survey by the Associated Press-NORC Center for Public Affairs Research. Fewer than half (41 percent) have talked about their long-term care preferences with their families.

The survey comes at a time when the U.S. Department of Health and Human Services estimates that 70 percent of Americans who live beyond the age of 65 will need one type long-term care or another.

Americans 40 and over, according to the AP survey, frequently underestimate the cost of long-term care and over-estimate the amount government programs like Medicare will pay towards long-term care.

Only 21 percent of the survey respondents said they have long-term care insurance. When the survey drilled down on the question, only 12 percent were “very sure” their insurance policies cover long-term care, while 5 percent were “somewhat sure” and 4 percent were “less sure.”

More than three-quarters (77 percent) of Americans 40 and over favor federal tax incentives to encourage individuals to provide for their own long-term care expenses.

As a strategic partner of the 3in4 Need More Campaign, NAIFA is a strong supporter of education on the long-term care issue.

NAIFA encourages Congress and the administration to promote long-term care awareness. NAIFA also supports measures to encourage the offer of quality insurance products at people’s places of employment, such as allowing long-term care insurance to be included in employer-sponsored cafeteria plans and flexible spending arrangements.

DOL fiduciary rule must consider impact on middle-market

The PBS Frontline story on “The Retirement Gamble” raises important points about the state of Americans’ retirement planning at a time when company-provided pensions are a thing of the past.

Among a number of issues raised about the usage of 401ks and IRAs in retirement planning, the program also cites the Department of Labor’s efforts to develop a fiduciary rule for advisors who serve retirement plans and individual retirement arrangements (IRAs). NAIFA opposed the fiduciary rule the DOL originally proposed, which would have been harmful to people trying to save for retirement and deprive them of access to products, services and advice.

Absent from the Frontline program is the potentially negative impact a new proposed DOL rule could have on consumers. If advisors are precluded from offering commission-based products, consumer choices will be limited, and many may not be able to afford advisor fees. Additionally, if advisors’ liability and costs increase, advisors may not be able to afford to work with small accounts or IRA holders. Middle-market consumers, who arguably have the greatest need for help and advice as they plan for retirement, may find access to advisors both expensive and difficult. Small employers may decide to scale back their employee benefits plans rather than pay the increased costs.

NAIFA's concern is not isolated, as there have been numerous bipartisan Congressional letters expressing concern, including the most recent effort by the members of the Congressional Black Caucus. They wrote: "We maintain concerns that if the re-proposal reflects the department's initial fiduciary proposal, it could disparately impact retirement  savers and investment representatives in the African-American community." NAIFA concurs that families in low- to middle-income communities could be disparately impacted. 

Middle-market investors must continue to have access to affordable professional investment guidance for their retirement planning. Any new proposal should adequately protect consumer access to retirement savings products and services while ensuring that consumers receive investment advice of the highest quality and reliability.

As NAIFA indicated in previously submitted comments to the Department, any DOL proposal should:

• Not extend ERISA-based regulation to individual retirement arrangements (IRAs),
• Include a robust seller’s exception to ensure retirement investors do not lose access to investment recommendations from broker-dealers and their representatives, and
• Not contradict the provisions of Dodd-Frank specifying that receipt of commissions and sales of proprietary products are not intrinsically fiduciary violations.