Achieving Diversity in Your Investment Portfolio

Achieving Diversity in Your Investment Portfolio

By Richard F. O’Boyle, Jr., MBA, LUTCF

As you approach retirement, and even during retirement, you want to diversify your portfolio to protect what you’ve earned and to grow more. Getting to this point wasn’t easy so you will need to exercise caution. But you likely want to achieve real growth in the next few years, to maximize your enjoyment during retirement, and to leave something behind for the ones you love. I’ve laid out some of the best ways you can do both. By engaging in some safe and secure allocations, you’ll protect your funds from the whims of time. By taking on some risk, you’ll stand a greater chance of adding to the wealth you’ve already accumulated.

1)    Bonds. Bonds are a relatively stable form of investment. In effect, when you buy a bond, you are lending money to an entity (Federal government, state, municipality or corporation) and will recoup the loan plus interest over the duration of the bond’s term. Federal government bonds have never defaulted in the history of the United States. What’s more, your bond money will generally grow in value faster than the present rate of inflation. Therefore, you won’t lose buying power, while increasing your wealth slightly. Unfortunately, there is a payoff for the security that bonds provide. Just as there is little risk or loss, there is little hope of large gains on this kind of investment. As you age, you’ll want to allocate more and more of your portfolio in secure bonds, but you also want to leave yourself a little wiggle room to grow. This is where the other kinds of investment come in.

2)    Stocks/ETFs/Mutual Funds. If you have invested at all, you likely know about these. These are the riskier cousin to bonds. Buying stocks is buying a little share in a company – which allows you to benefit from the growth of that company. By spreading out your investment across many stocks, through index mutual funds, you will follow the historical upward trajectory of the market overall. Of course, sometimes the market drops and, when it does, your investment will decline with it. But generally, the market grows over the long term. If you expect to have many years or even decades ahead of you, a significant allocation of stocks may be appropriate. You may even be comfortable with more than average. Wisdom typically dictates that you have your age reserved in bonds (a 45-year-old will have 45% of her portfolio in bonds). The remaining amount will be in stocks, or spread out in other kinds of investments.

3)    Binaries, Real Estate, and Alternatives. Spread Betting is a quick way to see return on your investment. It is the quickest way, actually, though caution is urged because you can see a loss just as easily. Other common investment forms like Real Estate and investment in specific business enterprises are less risk-prone, but do not offer the same speed of return as spread bets. Some people feel comfortable investing in gold and other static commodities. While it is impossible to anticipate how something like gold will change in value, its inherent worth is comforting to those who don’t have the same understanding of the stock world.

A diversified portfolio, properly stocked, will carry you through your retirement in comfort and security. Talk to your financial professional about the above options, and about how to best implement your retirement portfolio for your personal needs.

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Divorce and Life Insurance

by Richard F. O’Boyle, Jr., LUTCF, MBA

Divorce is never easy. It is an emotionally taxing experience, but may be an opportunity for a new beginning. There are so many minor details that need to be ironed out between the two parties that some are bound to get overlooked. Life insurance is an important aspect that many people might not think about until it’s too late.

Divorce Decree

When you purchase life insurance, the goal is to make sure your family is provided for in the event of your death. It’s important that the life insurance is addressed in the divorce decree and the proper language associated with it.

You and your soon to be ex-spouse need to come to an agreement on what you plan to do and what your options are. The odds are your spouse is the beneficiary of the money. While you most certainly make changes to your will after a divorce, remember that beneficiaries on a life insurance policy can only be changed by filing a new beneficiary with the insurance company.


In many cases, the divorce decree will spell out one partner’s financial obligations to the couple’s children. These may include a requirement to provide financial child support, health insurance coverage, college funding or assistance of other sorts until the children reach a certain age. Just as with a married couple, life insurance would provide a ready financial asset in the event that the individual dies prematurely. Some planners would calculate the value of these obligations and obtain a term life insurance plan (or repurpose an existing plan) that would cover this amount.


As married couple accumulate assets over time, at the time of divorce those assets are usually split up. The cash values in a permanent life insurance contract are assets just as a house, retirement plan or ownership in a business. Keep in mind that permanent life insurance has very specific tax rules associated with it – which can be a curse and a blessing.

Transfer of Value and Taxation


When you transfer the value of your life insurance to another party, the government says that the death benefit is now taxable. This is called the “transfer for value” rule. Life insurance death benefits are generally federally tax free, but people were taking advantage of this by continuously transferring the policy and reaping the benefits.


The rule has been adjusted so that divorcing parties are not subject to the transfer for value rule: The recipient spouse will have a cost basis in the policy equal to the net premiums paid by the transferor spouse. So while the death benefit might not be fully tax free, it will depend on how much in premiums were spent over the previous years. It’s wise to speak with your attorney about the specifics of your case and relevant state laws (which may vary considerably).


If the divorcing partners have significant assets, including the value of life insurance death benefits, they may be subject to federal and state estate taxes. This can be extraordinarily complicated and is not the subject of this article.


It’s a good idea to keep a policy in force until all of the details have been worked out: don’t jump the gun and cancel a policy to buy a new one. You may not be getting the best rate and in some cases may even be uninsurable. For this reason, make sure that you have a good grip on exactly what coverage you have, and what coverage you will need.


Designating Beneficiaries


If children are involved, you should carefully consider whom to name as the new beneficiary. Minor children who receive life insurance proceeds may wind up with the ex-spouse as their guardian – and controller of the inheritance. This may not be in synch with your wishes.


It’s not uncommon to place a life insurance policy into an irrevocable life insurance trust so that you can spell out how the death benefit will be paid out after you die. A trust is an entity that is managed by a person or group of people to manage the trust’s assets according to the guidelines spelled out in the trust’s founding documents. For example, if your children are very young and can’t handle suddenly having several hundred thousand dollars, you can make the trust the beneficiary. The trustees would ensure that the children get enough money for college, health or even vacations. The children or your ex-spouse can’t touch the money without the trustees’ approval.


You should also address the possibility of a future spouse and their claim to the insurance. If children are not involved, you can negotiate taking your current spouse off and either canceling the policy or changing to a different beneficiary. Your spouse may want to fight you on this, especially if they stand to get a significant amount of money, but it should be hammered out in the divorce decree.


Divorce can be a messy business and hardly anyone leaves it with exactly what they want, but the key is compromise. This goes for life insurance claims as well. You and your ex-partner need to agree on what to do and have it written into the decree. You may not get what you want and your partner may not get what they want, but the decisions need to be made.


If you have no children, you may want to consider simply canceling the policy and getting another one for yourself when the time is right. The goal of life insurance is to provide financial stability in the event of your death. Since your spouse will no longer be your spouse, you may be under no legal or moral obligation to provide for them after your death.

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Year End Retirement Tips 2013

by Richard F. O’Boyle, Jr., LUTCF, MBA

As another year winds down – and another begins – it behooves us to take a look at our current retirement plans and make necessary adjustments.

Retirement Plan Contributions for 2013

You may have limited time to maximize your retirement plan contributions for the tax year 2013. Most people can stash money into traditional IRAs and Roth IRAs as late as April 15, 2014 (for tax year 2013), but some plans have to be filled before December 31, 2013.

The annual limit for traditional IRAs and Roth IRAs is $5,500 for 2013 ($6,500 if you are over age 50) – and must be deposited by April 15, 2014. Company-sponsored and Union/Non-Profit plans such as 401(k), 403(b) and 457 plans allow 2013 contributions up to $17,500 or $23,000 (age 50+).

If you have not yet maximized your 401(k) contribution for this current year, you may want to change your contribution percentage before the end of the year. You can increase the percentage of your salary that is contributed (and reduce your take-home pay). Contributions to deferred plans reduce your current taxable income.

Retirement Plan Contributions for 2014

The IRS has left retirement plan contributions for 2014 at the same levels as 2013. But the thresholds for qualifying for Roth IRAs is increasing slightly. If your adjusted gross income is less than $129,000 (for singles) or $191,000 (for married persons filing jointly) then you are eligible to contribute to a Roth IRA. Eligibility starts to phase out if you earn more than $114,000 (singles) and $181,000 (couples).

Year-End Tax Strategies

If you want to reduce your taxable income for 2013, you may consider paying off more expenses that you can deduct. For example, some people will prepay their real estate taxes, homeowner’s insurance premiums or make mortgage payments in advance that would normally be due in early 2014.

Deductions for Medical Expenses

For 2013 the amount of medical expenses required to reach the deductible threshold has increased for people under age 65.  You must have medical expenses greater than or equal to 10% of your adjusted gross income in order to be able to deduct them. People aged 65 and older only need expenses of 7.5% through 2017.

Health Insurance Individual Mandate

Beginning in 2014, individuals are required to carry health insurance either through their employer or individually. In order to set an individual plan in place for a January 1, 2014 effective date, people shopping on the government Insurance Marketplace (http://www.healthcare.gov) and for New Yorkers (http://www.nystateofhealth.com) must sign up for (and pay for) a plan by December 23, 2013. The actual mandate kicks in March 31, 2014.

Health Savings Account Contributions

If you have a high-deductible health insurance plan that includes a tax-preferred Health Savings Account, you can still maximize your contributions for 2013. The contribution limit for 2013 is $3,250 for individuals and $6,450 for families. The maximum takes into account both employer and employee contributions to the HAS. For those 55 and older the maximum is increased by $1,000.

Social Security and Medicare in 2014

The Social Security Administration will increase benefits by 1.5% in 2014. Medicare Part B premiums will remain at $104.90 per month, but high-income individuals will see the surcharge for Part B and Part D increase slightly.

 

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Homes at risk as flood insurance talks break down - Specialist Insurance Articles

Home insurers and the government have stepped back from crisis talks over cover for homes and businesses in flood risk areas.

Millions of properties are facing higher insurance premiums as negotiations have broken down.

Owen Paterson, the minister leading the government side of the talks, has announced no legislation is expected for about a year.

The row between insurers and the government is over a ‘statement if principles’ that ends in June 2013.

The statement basically states that if the government spends money on decent flood defences, home insurers will offer cover to homes owners and businesses in areas liable to flooding.

However, both sides have been arguing for months about new terms for continuing the agreement.

Meanwhile, the government’s chief scientist has warned extreme weather, including more rain and floods is here to stay as a result of pumping hothouse gases in to the atmosphere in previous decades.

Although hinting at legislation, the minister has given no indication at what the new law may say.

Home owners and businesses are left paying the price, as insurers have no cap on pricing under the agreement, which simply states they should offer cover to flood risk property.

The result is premiums could increase for all home and business insurance customers, while home and contents insurance for some properties could be too high to be affordable.

Insurers understand that this means some properties are unmortgageable because owners cannot afford buildings cover, which is typically a condition of a loan.

So it looks like while there may be a solution in the pipeline, the insurance industry and concerned homeowners will have to remain in limbo for a little longer.

For competitive flood risk insurance quotes from a leading independent broker get in touch with the specialist team at Quoteline Direct.

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5 good reasons to have adequate home insurance cover Read more: Insurance Blog UK - Specialist Insurance Articles

As a homeowner having adequate insurance in place should be high on the list of priorities, but unfortunately not everyone feels the same way. Last year a report found that almost 3.5 million UK homeowners don’t have sufficient cover – 1 in 10 had either buildings or contents insurance, not both, whilst almost 650,000 had no form of insurance whatsoever. This is something that needs to change, and in case you’re one of the few that don’t see the importance, here are five good reasons to have adequate home insurance cover at all times:

1. No insurance means you’re open to financial loss. You only need to think of how big the losses could be should your possessions be stolen, destroyed or damaged. And what about if the house itself suffered at the hands of a fire, flood or storm? Could you afford to cover the costs? Probably not, and that means not having any insurance is an expensive risk to take.

2. One or the other won’t cut it. You might think that buildings or contents cover will be sufficient, perhaps thinking it’ll be a good way to keep costs down, but in reality it could be a costly mistake. In a lot of scenarios you’ll need to make a claim for both – a flood could damage internal fixtures and electrics (buildings cover) as well as TVs and furniture (contents), so only having one or the other will leave you drastically out of pocket.

3. Thefts and burglaries are on the rise. That, in a nutshell, is why you need adequate contents cover.

4. The UK weather is becoming increasingly extreme. We’ve experienced unprecedented weather conditions over the last few years with storms and flooding being common, so you need to make sure you’re prepared for anything the good old British weather could throw at you.

5. Your mortgage requires it. The terms and conditions of most mortgages require you to have a suitable buildings policy in place, so at the very least, you need this level of cover. Make sure you’re getting a suitable amount too, and this applies to both buildings and contents – if you under-insure you won’t get a sufficient payout to cover the costs, and in the worst case scenario your policy could be null and void as you gave false information.

Ultimately, you need adequate home insurance cover because failing to do so means you’re putting your finances on the line. What if a storm destroyed your kitchen, your furniture and your possessions? What if your jewellery was stolen? What if a fire left you homeless? Without suitable cover you wouldn’t have any financial recompense, and of course, you could be violating the conditions of your mortgage too. It may seem like an unnecessary expense but it’s a small price to pay should you need it, so never underestimate the importance of adequate home insurance and you can have the peace of mind you need.

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Help! I Need Affordable Health Insurance ~ Top 10 Ways to Get Affordable Health Insurance With No Job or Little Money

Top 10 Ways to Get Affordable Health Insurance With No Job or Little Money

Affordable Health Care for You !!

The statistics are startling when it comes to the outrageous uninsured Americans and the numbers keep getting bigger. But what do you do when you don't have a job and can't get affordable individual or family health insurance from an employer? Or, what about all the families that have jobs but still cannot afford the health insurance offered by their employers and can't find an option for affordable health insurance?

There are low cost health insurance options out there that, in fact, many Americans have already implemented and are beating the rising battle against being uninsured. In addition, more individual and family health insurance options are being brought into the market as the rising number of uninsured Americans increases. This is great news for people who just don't know what to do when it comes to obtaining low cost and affordable health insurance. Below are the top 10 ways Americans are getting the affordable individual and family health insurance coverage they need.

1. COBRA: First, it is best to start with the Consolidated Omnibus Budget Reconciliation Act (COBRA). If you are not employed you may be eligible to continue your previous employers' health insurance through COBRA. This also applies to children going off to college... you also may be able to continue on your parent's health insurance coverage through COBRA. This is a very good option for people who may have lost their job and are still undergoing medical treatments. If you were to switch to another insurance plan, your current medical treatments may not qualify under the new health insurance plan. But.. WARNING! This will not be an affordable health insurance option. The premiums will be much higher and you may be able to better afford one of the below options first. It is best to gather all your available health insurance options and pick the best health insurance plan for you.

2. Workers' Compensation: Many people don't realize that they may be covered under their state's Workers' Compensation program. If you are being treated for any work related injury, your employer must offer you treatment under their Workers' Compensation program.

3. Medicaid: Don't automatically think that since you have a job you won't qualify for Medicaid. Medicaid will pay health care expenses for low-income families and individuals. Each state sets the eligibility requirements so qualifying for the program is state specific. If you are working and still don't have enough to buy affordable health insurance, it doesn't cost you a penny to see if you or your children qualify for Medicaid so it is always best to check Medicaid first before moving on to the next options. And, there is good news about Medicaid... more and more states are adding health care benefits for low-income families so if you don't qualify now, keep informed of your state's Medicaid and health insurance laws because you may qualify in the future.


4. Medicare: Most people know if they qualify for Medicare or not, but I need to add it to the list just to make sure it is not overlooked. Medicare is provided by the government and administered by the Social Security Administration. If you are sixty-five years old or older you would qualify for Medicare. You may also qualify if you are getting Social Security disability benefits.

5. State High Risk Health Insurance Pool: If you are turned down by individual health insurance companies because of pre-existing conditions, your state may have a high risk health insurance pool you can obtain health insurance from. It may not be an affordable health insurance choice, but it may be the only individual or family health insurance option available to you that will pay for your pre-existing conditions if you don't qualify for COBRA (see #1 of this list).

6. Individual and Family Health Insurance: This is where you just go to an insurance company and buy individual or family health insurance the same way you would by home or auto insurance. These plans work similar to what an employer would offer their employees but would be more expensive since you don't get the cheaper group rate and you would not have an employer contributing to some of the costs. Another drawback of individual and family health insurance plans is that there is usually a pre-existing conditions clause (they may not cover pre-existing conditions or may not cover them until after a certain period of time) and a medical exam. If you do want to choose an individual or family health insurance policy, remember the higher the deductible you choose the lower your premium will be, but the more you will pay out of pocket when you go to the doctor or hospital. Getting a high deductible "emergency" policy is a better way to maintain a low cost health insurance plan and keeping a Health Savings Account for smaller health issues will probably save you money in the long run.

7. Short Term Health Insurance Coverage: This is a great affordable health insurance option for someone in-between jobs or who knows they will be starting a job soon. Short-term health insurance coverage works the same as an individual health insurance policy (see #6 above), but you will only be covered for a specific amount of time which would keep your premiums down. This is also a good option for someone who needs time to examine their individual and family health insurance choices but still would like to be covered quickly to avoid any coverage gaps.

8. Group Insurance from Organization Memberships: This is often an overlooked source of affordable or low cost health insurance. Some people are members of specific organizations that offer health insurance coverage. For example, people who are members of The Sacramento State Alumni Association can obtain a variety of insurance choices. Although these organizations often do not help pay the health insurance premiums like an employer would, the rates would be lower because of the group discount. So, figure out what organizations you are a member of and see if they offer group health insurance. You could also research organizations that provide group health insurance and join those groups, or even ask current organizations you are a member with to offer group health insurance. They may just not realize they could offer a plan to their members.

9. Group Health Expenses Sharing Plan: This is not insurance but works similar to it. This is when a group of people pool their money together and pay each others' health expenses... they pretty much become their own insurance company. The contributions are pooled together and usually invested in order to accrue interest on the pooled funds. It works well when there are a lot of people who contribute and everyone is only using the money for major medical expenses. There are religious groups that use this model successfully. Medi-Share is a popular health expense sharing plan and has been around since 1993. If you are interested in this option make sure you choose a group that has been around for a long time and has a good track record.

10. Health Insurance Discount Cards: Again, this is also not an insurance plan but can be a good source for getting low cost health services. There are many companies who offer affordable health insurance discount cards and they work like this: You pay a small monthly fee for a membership card and when you go to the doctor or hospital you will get a discounted rate on your services. These are not for everyone and one thing you have to remember is that if you had a catastrophic health crisis the discount on these cards is not a lot, so you would still have an enormous amount of bills left to pay. But, on the other hand, some people do choose to go this route and at least are able to get a discount on their doctor bills. These cards should not be used in place of insurance and if you choose this option you should still be working towards getting health insurance in the future.

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Property Insurance Coverage Exclusions ~ 5 Basic Exclusions in Your Property Insurance Policy

5 Basic Exclusions in Your Property Insurance Policy

Property Insurance

Keeping your personal property safe is important. Property insurance coverage protects your property against many risks. But have you thought about the exclusions in your property insurance policy?

Every property insurance policy has exclusions. It is important to realize that exclusions can be different depending on your particular property insurance coverage and what type of property is being covered under your property insurance policy. There are a few common exclusions that are usually contained in all property insurance policies.

These property insurance exclusions are:

Losses Not Caused by an Accident: Since it is certain your carpet will get worn out, insurance will not cover worn carpets along with other things that are considered certain to happen and not a risk. Insurance is designed to cover risks and not something that is bound to happen over time such as wear and tear, rust, and mechanical breakdowns.

Things that are Controllable: In order for an insurance company to make money, they need responsible people to maintain their property. This exclusion is designed to encourage policyholders to take care of their property. Scratching and breaking objects can be examples of things that are controllable by the insured.

Extremely Hazardous Events: Some events are very hazardous that the insurance company would have to charge a much larger premium for the property insurance policy. These events, such as earthquakes, floods, and mudslides are usually not covered under a standard property insurance policy but can be added on if an insured would like the extra coverage.

Major Disaster Losses: Huge losses such as a loss from a war or a nuclear disaster are usually not covered. These types of losses are not covered because catastrophic losses could cause an insurance company to go bankrupt and also are generally rare.

Coverage Exists Elsewhere: If the property already has its own insurance policy then it would be excluded. An example would be a car. Cars are not covered under a homeowners policy since they are required to have their own car insurance policy.

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Pet Insurance Exclusions ~ pet insurance policy

Pet insurance is a popular choice now for many pet owners. Knowing what is covered in your pet insurance policy is important but knowing what is usually excluded is just as important.

Getting the Right Pet Insurance Policy

Taking the time to understand your particular pet insurance policy is key in getting the right policy for your pet. Companies are different in what they cover and exclude so make sure you get as much information as you can so you can get the most coverage available for your particular pet.

Pet Insurance Policies are Different: Know the Exclusions in Your Pet Insurance Policy

Below is a list of common pet insurance exclusions. Exclusions in pet insurance vary from one company to the next, so again make sure you understand your particular policy.

Common Pet Insurance Exclusions:

1. Pre-Existing Conditions: This most of us understand because it is common to see this as an exclusion in health insurance for humans. In pet insurance, a pre-existing condition is usually something that your pet has before the policy start date. This includes conditions that may not have been diagnosed yet so just because you have not taken your pet to the vet and know they have a condition does not guarantee that you will get covered for the condition.

2. Hereditary Conditions: This really depends on your policy if it is an exclusion or not. And, if hereditary conditions are covered they are usually covered at a lower level.

3. Congenital Conditions: Congenital conditions are not covered because they are considered pre-existing. These are congenital problems that a pet is born with. Some examples include patellar luxation, entropion, ectropion, liver shunt.

4. Fleas, Ticks, and Other Parasites: Some pet insurance policies may provide benefits for preventative medications against parasites but for the most part, getting rid of the parasites would not be covered.

5. Preventable Diseases and Chosen Procedures: Anything that a pet could get a vaccination for to prevent is generally not covered. Also, any procedures you would choose yourself to have done, such as tail docking, is considered an elective procedure and is usually excluded.

6. Teeth Cleaning: Dental care is provided if it is needed due to an injury or accident but general dental preventative care, such as teeth cleaning, is usually not a coverage in pet insurance.

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5 Steps to Filing Your Auto Insurance Claim

5 Steps to Filing Your Auto Insurance Claim

1. Evaluate whether or not you should file an insurance claim: Did you know that just when you call your insurance company with a question about possibly filing a claim it is often recorded on your insurance record? It is important to keep your insurance record clean and one way is deciding whether or not you should file a claim. It doesn’t matter if the accident is your fault or not, you should ask yourself first if you can pay for the damage. Simply put, if you can pay for it yourself without financial hardship, don’t file the claim.

2. Fill out your What to do After an Auto Accident Worksheet: This worksheet, which when you click on the title is provided for print-out, will help you keep track of the information you will need to file your auto insurance claim. It is important to get every detail of the accident documented and to try to find witnesses that would be willing to talk to your insurance company to back-up your story.

3. File the claim ASAP: You will want to file the claim as soon as possible with your insurance company. Even if it is not your fault, your insurance company will handle the claim process as your advocate.

4. Prepare for a possible call from the other insurance company: If there is a dispute between the two parties in the accident, you may get a call from the other driver’s insurance company asking for your version of what happened at the accident scene. If this happens make sure you document everything you say and the name of the customer service agent you talked too.

5. Finally, getting your car fixed: If you had body damage to your vehicle this is when you will finally get it fixed. After your claim is approved, you will likely get a call from your insurance company about sending an insurance adjuster out to assess the damage or asking you to send your car to a pre-approved shop to get it fixed.

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Healthcare Inflation Slowing Down, USA

Despite newly insured people being added to the system, American healthcare inflation is expected to fall to 6.5% in 2014, says a new report by the Health Research Institute, part of PricewaterhouseCoopers LLP.

Healthcare inflation in 2014 will drop even lower than this year "Defying historical patterns", the authors wrote.

Continued downward pressure is expected for the health sector, mainly because of aggressive and creative steps taken by employers, elements of the ACA and new locations and models for delivering care.

Healthcare organizations have had to adapt to a more modest growth rate after being squeezed on reimbursements and going through the ravages of a recession hangover This trend will continue well into next year as healthcare organizations seek out cheaper locations for providing care and taking on less costly personnel.

The recession was followed by stops and starts and then a "tepid" recovery. People's personal wealth has either slowed down in growth or declined; all this has had a dampening effect on the demand for healthcare. The authors wrote "As we reported a year ago, the sluggish recovery has created a 'new normal' in healthcare spending patterns".

As patients have to bear more of the costs for their medical bills, procedures are being questioned, delayed or even cancelled, as are imaging and elective services. It is early days yet to confirm whether ACOs (accountable care organizations) can deliver significant savings.

Healthcare spending will be slowed down further by the ACO system as hospitals strive to keep down expensive readmissions or face penalties, and employers continue using their new powers to influence employee behavior, and either discontinue or increase premiums, which in some cases might shoot up by 50%.

While preparing this report, the Health Research Institute interviewed industry executives, health policy experts and health plan actuaries. The authors also analyzed data from PricewaterhouseCoopers' 2013 Touchstone Survey, which included over 1,000 employers from 35 different industries.
Four factors slow down medical cost trend for next year (2014):

•    Health care continues moving from expensive locations, i.e. hospitals, to more reasonably priced retail clinics and mobile health. Patients appreciate the lower costs and convenience. In some cases, medical bills can be two-thirds lower when compared to traditional healthcare sites.

•    Major employers are contracting with large health systems for complicated and more expensive procedures, such as spinal fusion or heart surgery. Even when taking into account travel costs (some "high performance networks" may be far away), these big-name health systems work out a lot cheaper.

•    There is an estimated "waste" of 30% in the health system, which drives up costs. In December 2011, Dr. Donald M. Berwick, head of Medicare and Medicaid said that up to 30% of spending on health is waste with absolutely no benefit to patients. The federal government's new readmission penalties punish wasteful health care facilities. According to government figures, in 2012 hospital readmissions went down by almost 70,000. The numbers should be even more impressive next year, the authors added, as hospitals concentrate on discharge planning, compliance and continuum of care.

•    According to PwC's (PricewaterhouseCooper's) 2013 Touchstone survey, 17% of employers offer only a high deductible health plan to employees today. Another 44% are considering doing the same. When employees have to pay more for their healthcare, they tend to become more cost-conscious.
What will inflate medical cost trend in 2014?

•    The recent adoption of generic drugs helped slow down overall medical inflation. However, there are many new expensive complex biologics that will push inflation up. The authors wrote "Approvals of new biologics now outpace traditional therapies, and that pattern will continue in 2014 as research efforts target complex cases such as cancer."

•    Since 2009, health industry consolidation has risen by over 50%. The authors expect this trend to continue into next year, which will result in rising prices in some markets. The report quotes a recent study which found that hospital mergers can lead to price rises of up to 20.3%. In markets with one dominant system, these price hikes are generally more pronounced.

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