Council On Insurance Report

Dr. George J. Shia

The AAO Council on Insurance met in St. Louis for its biannual meeting to discuss the status of the association's endorsed insurance plans. As your SWSO representative, I am glad to report that the AAO Insurance portfolio of products had one of its most successful years in terms of growth, retention of members, and favorable financial status. The AAOIC is now in better financial condition than it has ever been since its inception.

GOOD NEWS ON HEALTH INSURANCE
We are pleased to announce that the AAO Health Insurance plans now available to members and their families are HSA-qualified plans, which provide significant tax advantages to the members. Health Savings Accounts (HSA) have replaced Medical Savings Accounts (MSA) as of April 1, 2004. The two concepts are almost identical with the main distinction being that HSA's are available to all individuals, whereas MSA's were available to self-employed individuals only.

NOTE: Your current coverage with AAO that has been offered over the years may not be HSA-qualified. Please call the AAO Insurance Office to learn your status and ask about the new HSA-qualified plans.

The concept is simple. Once a member enrolls in an HSA-qualified health insurance plan such as offered through the AAO, the member can then independently open an HSA with a bank or financial institution, and voluntarily deposit pre-tax earnings into this account up to $5,150 annually. Similar to the rules governing an IRA, these accumulated funds can earn interest on a tax-free basis until age 65.

The HSA funds can be withdrawn each year without penalty or taxation to offset any out-of-pocket medical costs not covered by a member's health insurance plan. Also, the HSA balance each year is not a "use-it-or-lose-it" scenario, but can be accumulated over the years and withdrawn at age 65 for retirement purposes at normal tax rates.

The AAO HSA-qualified Catastrophic Health Plans offer 4 different high deductible options ranging from a $1,500 individual deductible to a $10,000 family deductible. Not only do the higher deductible options help make this an HSA-qualified plan, but they also keep the premium rates down by asking the member to pay a little more out-of-pocket costs up front.

The AAO Health Insurance Plans are available in 41 states and they are underwritten by New York Life. If located in one of the nine restricted states (ID, KY, ME, MA, NH, NJ, ND, VT, WA), members may call the AAO's insurance broker, JLT Services, and ask for their Medical Benefits Center at 1-800-622-0344. Their representatives have access to a variety of insurance plans through 12 major companies to obtain competitive quotations for health insurance in these select states.

HEALTH INSURANCE FOR YOUR EMPLOYEES
Health insurance is now available to your staff through the Medical Benefits Center (MBC) developed by the AAO's insurance broker. This service allows members and/or their employees to call and receive assistance in finding health insurance options for individuals or for the entire staff. MBC representatives are licensed brokers who will shop the insurance market in a respective state to secure health insurance at the most competitive rates. Call the AAO Insurance office at 1-800-622-0344 and ask for the Medical Benefits Center.

LIFE, DISABILITY AND MEDICAL
The Life, Medical and Disability Plans continue to grow with policy insureds increasing over the 6,600 mark. Considering there are about 8,500 members in the U.S. and Canada, our total penetration rate is well above the 50% mark since many members carry more than one AAO product.
The new 10-Year Level Term Life Plan was recently introduced. Members and their spouses can buy up to $1,000,000 of coverage available in all states and Canada. Rates in most age classifications have been significantly lowered as much as 50%. "Preferred" rates (non-smoker) are available for those healthy-individuals who qualify, and there are built-in premium discounts for those who buy more than $500,000 in coverage.

PROFESSIONAL LIABILITY
The AAO Professional Liability Plan now has over 3,700 U.S. members insured, representing just under 50% of the eligible members in the U.S. Participation by constituent group is as follows:

The most convincing statistic that proves the AAO-endorsed plan is very competitive is the plan has a persistency rate of 98%. This means that only 2% of the currently insured members drop the plan each year. However, half that terminate are due to death or retirement. As a result, less than 1% of all cancellations are lost to the competition.

AAO BUSINESS OFFICE PACKAGE
The AAO specifically designed its Business Office Package (BOP) so it can be purchased independently, or in conjunction with the AAOIC Professional Liability Plan. Plus, a 10% premium discount on the BOP plan is credited to all AAO members. The Council approved the use of several different A-rated carriers in addition to the Travelers Insurance Company, to be certain that members receive the most competitive benefits and rates.

The BOP Plan covers the insured member's office for physical damage to the premises, but also includes general liability, worker's compensation coverage (optional), vandalism, and business interruption coverage.

EMPLOYMENT PRACTICES LIABILITY INSURANCE (EPLI)
This is the newest plan now available to members to protect against suits brought on by allegations of discrimination, harassment, wrongful termination, failure to promote, and other employment practice related incidents. The AAO EPLI Plan includes legal defense, a variety of plan options depending on the size of the practice, excellent risk management benefits, and the Travelers Insurance Company underwrites it.

It should be noted that the type of liability exposures covered by the EPLI Plan are increasing at a double-digit rate in the United States, and are rarely, if at all, covered under a member's practice insurance plan, professional liability plan or homeowner's coverage. The exposure to a small, self-employed practice is significant. These types of complaints and allegations are difficult and expensive to defend, and the judgments are large in dollar amounts.

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This will be my last report to the SWSO as I am completing my eight-year term on the Council on Insurance. How quickly time passes when you are enjoying the task! I have certainly learned much more than I ever brought to this position. I wish to thank Mel DeSoto for appointing me to this council and the SWSO for the honor of representing its members.

Younger member are encouraged to volunteer for positions on the various councils since there is a need for good representation. The AAO is under assault from many sides and it takes a concerted effort to keep it afloat. Gayle Glenn, our new trustee, can use some energetic and willing volunteers. In the final analysis, this AAO and SWSO are all we have.

If you need any information on any of the AAO-endorsed Insurance Plans, please call our AAO Insurance Office at 1-800-622-0344.

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