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SNEAK ATTACK ON INSIDE BUILD-UP – On March 29, 2001, House Ways and Means Chairman Bill Thomas held a meeting to consider estate tax repeal legislation.  According to the National Association of Insurance and Financial Advisors (NAIFA), at this meeting, Chairman Thomas was to propose swapping the estate tax for a capital gains tax and a tax on the "inside build-up" in life insurance policies.  We were not able to get a complete understanding of the situation by press time, but we should hear more soon.  We suggest you monitor the NAIFA site at http://www.naifa.org for updates and actions you can take to help prevent this debacle.

ROLE OF HEALTH BENEFITS – In a recent survey commissioned by Consortium Health Plans, almost two-thirds of employees surveyed indicated a willingness to pay extra for key services, such as prescription drug benefits and the possible costs associated with a patient's bill of rights.  In addition, over 80% responded that health insurance has become a major factor in their decision to accept a job and 45% would prefer better health benefits to a pay increase.

DRUG COSTS RAISE MED SUP COST – According to Weiss Ratings, "the soaring cost of prescription drugs dramatically boosted premiums for Medicare supplement insurance policies from 1998 to 2000."  The average increase in premiums for the three Medigap plans covering prescription drugs was more than double the average increase for plans that do not cover drugs.

ERISA SUPREME – The Supreme Court ruled in a Washington state case (Egelhoff v. Egelhoff) that when state law is in conflict with federal ERISA requirements, the federal law reigns supreme.

STATE FARM FUNDS – State Farm is now offering its own family of funds, appropriately named State Farm Mutual Funds.  The company is responding to customer requests for more financial service products, and the move follows the opening of State Farm Bank. "Our goal is to serve our customers with one-stop financial services."

ALL NEWS IS BAD NEWS – It sure seems that way in the financial arena.  We just report what we read, so remember Marco Polo's admonition, "Believe only half of what you see and nothing that you read."  Best advice for tough times...continue doing what you have always done to acquire customers and control your expenses...that is, "Keep your head up and your overhead down!"
 

LTC TAX BREAK – The Health Insurance Association of America (HIAA) has launched an advertising campaign to support tax relief for long-term care purchasers.  The ad campaign points out a year's stay in a nursing home averages around $50,000, but can be double that in major cities.

SOOTHING NERVES – New ad campaigns by firms such as Fidelity, Schwab and Merrill Lynch are designed both to soothe nervous investors and to bolster the public's perception of the role investment advisors and brokers play in the investment chain.  Not much talk of day traders anymore! 

DEFINED CONTRIBUTION HEALTH – According to the Employee Benefit Research Institute (EBRI), many employers are considering, but not yet embracing, "defined contribution" health benefits.  With health care costs on the upswing, employers are increasingly interested in approaches to health benefits that shift the responsibility for payment and selection of health care services from employers to employees.

AUDIT RATES – IRS Commissioner Charles Rossotti states that the IRS is aiming to stabilize the level of audits and other tax compliance activities "at or slightly above current levels."  Rather than return to higher audit levels, the agency plans to modernize business systems to increase the effectiveness of such programs as the computer matching of tax returns with documents filed by employers and financial institutions reporting wages, interest, dividends and other income.

PALM PRU – Prudential Retirement Services will enable Palm-handheld computer users to move money between funds, change their contribution allocations, and rebalance their retirement accounts.  We suggest that if your retirement account is so volatile that you feel compelled to change allocations "on the fly," you: a. Need to diversify and b. Need professional help.

AFTER THE FALL – In an address to the National Press Club, Vanguard Founder John Bogle warned of the challenges the mutual fund industry faces in an environment of weaker equity returns.  Among them are reining in the "numerous and substantial" fund costs, a return to a longer-term investment orientation and making fund management a higher priority than fund marketing.  

AMERICAN SKANDIA – According to Variable Annuity Research, this Swedish company was the top dog in variable annuity sales for 2000.  However, it is cutting its U.S. workforce by 13% citing "the continuing turbulence and pullback of the stock market."

HIGH ROLLERS – Web-based wealth manager myCFO Inc. has raised $90 million to create an online service for the rich. Started by Netscape founder Jim Clark, the privately-held myCFO claims 310 clients with a combined net worth of $44 billion and hopes to capitalize on the rising number of wealthy households and the "inheritance wave."  Their statistics show households with a net worth of $5 million or more grew to from 90,000 in 1994 to 590,000 in 1999.