Big Stories: October 2016   
 Business Links:
Coldwell Banker
    - Equity Group

1st Premier Properties
Capitol Cadillac
Contract Servicing
City Of Salem
Elsinore Theatre
Etcetera Antiques
Freeman Motor
George Fox University
Glance Eyewear
Graham Aviation
Kwans Original Cuisine
The Lighting Gallery
Lady Web Pro
Mercedes-Benz of Salem
The Meridian Building
Marion County
     Public Works

Oregon Smile Care
     Business Journal

Personnel Source
Rushing Group
Salem Blue Printing
Skyline Ford
Sperry Van Ness,
     Commercial Advisors

SMI Commercial
John L Scott Realty
Salem Downtown

Withnell Auto
Rudio Creek Ranch
Columbia Bank
Fidelity National Title
United Health Care
Universal Life Church
Valley Motor Company
Valley Credit Union
     Public Relations

Willamette Valley

Windermere Properties

  Oregon Business Journal
  P.O. Box 93
  Salem, OR 97308
  (503) 365-9544

Full October Issue * Salem Weather * Past Issues * About Us * Ad Rates * Contact Us

Gerry Frank's 93rd Birthday
Oregon's Who's Who Celebrate

    September 21st, my friend Gerry Frank celebrated his 93rd birthday, with a gathering of friends from all over the Northwest at the Yost Gallery in Salem.
    Four of Oregonís living Governors (Brown, Roberts, Kulongoski and Kitzhaber) spoke. Gerry invited me up to say a few words, so hereís a bit of what I said:
    Itís a great pleasure to join you here tonight. I honestly never expected to be at an event where I spoke after Governor Kitzhaber, but itís been a strange political year.
    Four score and 13 years ago, Aaron and Ruth frank brought upon this earth the singular individual who we honor tonight.
    Itís worth pointing out that, for reasons I donít entirely understand, Gerry has afforded me a singular privilege.
    Near as I can tell Gerry has only worked for three men in his life: His father Aaron Frank, the great statesman Senator Mark Hatfield and... me?
    When Gerry first went to work for me on the TV show NW Reports he was just a pup of 70. Despite his youth and inexperience, Gerry delivered. He traveled the northwest, to showcase great local travel opportunities. Great hotels, and restaurants, and the places right here in our own state that so many who have lived in the state their whole lives didnít even know existed: From Timberline on Mt Hood, to Paradise on the Rogue river by jet boat.
    There was no place Gerry would not travel to tell a story about a place he knew people would like.And he did it for a salary that wouldnít get you soup and sandwich at Gerryís Konditorei. Well, maybe soup but no cake.
    All kidding aside, what Gerry did for KPTV and me what heís been doing his whole life for the state he loves: Serving as the single greatest ambassador for Oregon and the Northwest.
    A lot of folks born in his circumstances would have simply enjoyed life on the beach. Not Gerry.
    Because Gerry comes from a family of leaders. They started a great department store, known nationwide. A family that employed tens of thousands over the decades since 1857 produced a governor for Oregon, who himself started the Oregon State Police.
    Rest is not in Gerryís vocabulary. Heís served in Washington DC, started and ran businesses, written what the Wall Street journal describes as Americas best guidebook to the Big Apple as well as the ONLY guidebook youíll ever need to the state Gerry knows and loves the best; Oregon.
    A man whose counsel has been sought for decades and still today by young entrepreneurs and experienced politicians alike.
    Itís a great tragedy that, despite Gerryís love for Oregon, he has never let the stateís great wines nor Pendleton Whiskey grace his lips. But even still, itís a pleasure tonight to lift a glass in honor of Mark Hatfieldís ďDollar-a-year-manĒ, the Chief Justice in the Supreme Court of Chocolate Cake, the Captain of the Konditorei, To Oregonís third senator; My friend and mentor Gerry Frank
    More Words and Pix on Page 7

A Game Changer for Businesses Battling Healthcare Costs

Ron E. Peck

    Just a few weeks ago, a report from the Kaiser Family Foundation revealed insurance premiums for employer-sponsored family plans topped $18,000 this year. As the price of health care and health insurance skyrockets, employers and employees alike are digging deeper and asking: "What is health insurance? Is it all the same? Can we do something to save money but maintain benefits?"
    Health insurance generally comes in two flavors -- self-funded and traditional fully-funded insurance. Fully-funded insurance is the type of coverage most people are accustomed to -- from automobile to homeowners insurance. People are accustomed to having an agent assessing them and the risk they pose, then charging a premium to provide coverage.
    Enter self-funding.
    A self-funded health plan is established when an employer -- the primary plan sponsor -- sets aside some of its funds to pay for its employeesí medical expenses. Those workers contribute to the plan instead of paying premiums -- although the similarity of the actions means itís not uncommon to hear employees and employers refer to such contributions as "premiums."
    Here are some reasons why an employer would self-fund.
    Plan Control
    Self-funding begins with drafting a plan document or summary plan description. This is where the employer chooses what to cover and what to exclude. Within parameters set by federal law, the employer customizes the plan to be generous where their particular workforce needs it, and stingy where benefits arenít needed. For example, if someone owns a yoga studio where the workforce is in tip-top shape, they can go lean on benefits meant to help those who are suffering from morbid obesity.
    In addition to customizing the benefits, the employer can customize the partnerships. Fully-funded carriers have selected their provider networks, vendors and other programs that they package and force upon policy holders. A self-funding employer, however, can shop around and select partners to customize their team.
    Interest and Cash Flow
    When an employer purchases fully-funded insurance, they pay premiums when they are told to pay. That money is gone. It sits in the carrierís account until itís needed to pay claims. While it sits, itís working for the carrier.
    With self-funding, the funds are in the employerís hands until theyíre needed, meaning interest on those assets belongs to the employer. Likewise, the money is in hand and usable where needed, when needed.
    Federal Preemption and Lower Taxes
    In the United States, we are governed by both federal laws and state laws. However, when you canít comply with a state law without violating a federal law, the state law is moot and federal law preempts the state. The Employee Retirement Income Security Act of 1974 states that a private, self-funded health plan is administered in accordance with its terms and federal rules. As such, these plans are not subject to conflicting state health insurance regulations or benefit mandates. Likewise, such self-funded plans are also not subject to state health insurance premium taxes.
    These days, everyone talks about "big data," and leveraging data to predict future needs and expenses. A fully-funded insurance carrier owns the claims data they receive and produce. Employers with self-funded plans, however, can examine the claims data, study trends, allocate resources and form partnerships to address their actual needs.
    Sharing Is Not Caring
    A fully-funded insurance carrier sets premiums based not only on what they anticipate you will cost them, but they add a buffer to cover other employersí employees, to soften the pain of underestimating how much one of those other policyholders will cost. In other words, all policyholders are contributing towards their own expenses and the expenses of others. As such, the steps an employer takes to make their own population healthy donít much impact the bottom line unless all other policyholder employers do the same thing.
    With self-funding, the employer pays only the claims of their own population -- so steps taken to reduce the cost directly impact the employerís bottom line. Employees of self-funded companies generally have lower single and family premiums than those with fully-funded insurance.
    Overall, these benefits result in net savings for the self-funded plan over a three- to five-year span, compared to a comparable fully-funded insurance policy. Yet there are risks. Among them: the threat of catastrophic claims, inability to fund claims and new fiduciary responsibilities to the members of the plan.
    Most self-funded health plans purchase "stop-loss," a form of reinsurance that reimburses self-funded plans for claims they pay in excess of a specific deductible. This is hardly a sure thing. As claims paid by the plan exceed what the plan actually covers or are otherwise excluded, the stop-loss carrier won't reimburse the self-funded plan -- leaving the employer holding the bag.
    Finally, a self-funded employer is -- or appoints -- a plan administrator. That administrator is a fiduciary of the plan and its members. Applicable law dictates the fiduciary must act prudently, protect the plan and apply its terms judiciously. Failure to comply with these terms, mismanaging plan assets or otherwise doing something not in the planís best interest could expose the plan sponsor to claims of fiduciary breach, resulting in steep penalties. Fortunately, there are third party organizations that will step in, aid in decision making and act as a fiduciary as it relates to those decisions. This indemnifies the self-funded plan administrator.
    Self-funding has its risks, but also presents numerous rewards. As the price of health care continues to increase, many employers who previously had been too risk-averse are second-guessing their decision -- and self-funding.
    My company, for example, made the decision to self-fund our health plan nearly a decade ago. Although self-funding is an obvious choice for employers with more than 1,000 lives that can spread the risk among their employees, employers with 100 or fewer workers are at greater risk. If one catastrophic claim is submitted, and the company lacks the population or assets to absorb the hit, the results can be devastating. Yet my company Ė with fewer than 100 lives at the time -- made the leap.
    Over the time we have been self-funding, our contributions dropped drastically from the premiums we had been paying -- by nearly 30 percent in two years. Since then, they haven't increased by more than a few percentage points annually and we have yet to submit a single stop-loss claim.
    Our ability to customize and control our plan certainly has helped. We've drafted terms into plan documents empowering participants to notify the plan administrator anytime a costly procedure is being sought. We also reward participants for collaborating with the plan sponsor to identify the most effective yet cost efficient options.
    Our health plan already has saved thousands of dollars this year, and awarded employees thousands in incentives as well. A plan member recently sought to obtain surgery with an anticipated fee of $60,000 for the facility, and another $10,000 for the surgeon. After research, we determined the fee was on the high end of the spectrum.
    We communicated with some area hospitals and found one facility that would take $20,000 cash up front for everything involved -- with the procedure being performed by the same surgeon. We saved more than 70 percent and a portion of that saving was given to the participant as a reward.
    With some companies already facing nearly 40 percent premium hikes in 2017, employers might be wise to explore self-funding. Many already are: self-insurance among mid-sized businesses jumped almost 20 percent from 2013 to 2015.
    Self-funding isnít for everyone. But for employers willing to get hands-on about their health care, the savings could be monumental -- enough, in fact, to save the employer-based health benefits industry.
    Ron E. Peck, Esq. is senior vice president and general counsel at The Phia Group, LLC.

Drone Photography & Videos
The New Thing in Real Estate & Business Promotion.

Drones are fast becoming a
necessary tool in Real Estate.

    Real Estate is all about showing a home or property to its best advantage and agents regularly work an age-old plan. They re-arrange furniture so it looks attractive, adding decorations and flowers, play classical music, and have fresh baked cookies as potential buyers view the house. This is called ĀgstagingĀh and a necessary piece to selling a home.
    However, in our current culture where schedules are tight and time is money, what about potential buyers who want to shop from the comfort of their home or customers moving from out of the area? How do you capture their interest? Aerial drones are fast becoming a necessary tool in the Real Estate world. Hiring a professional to produce high quality videos and photos of your house and property, inside and out, will entice potential buyers and improve your reputation with potential sellers.
    Drone videos are far more convenient than attending an open house, easily offering a 360Āá view that makes you feel as if youĀfre really there. Videos and photos provide a birdĀfs eye view of the property and a sense of scale. Aerial footage also gives buyers an idea of the surrounding neighborhood, as well as landscape and environment. Furthermore, they are significantly less expensive and much more earth-friendly than other options for capturing aerial footage.
    As a business owner, you probably know that the modern day consumer will Āglook you upĀh as a business before taking the time to drive to your location. A web presence that includes pictures and video of your business location and architecture not only gives the customer a sense of who you are, but a visual to help guide them to your location.
    Drone videos and photos are an effective, affordable, and creative way to add value, increase sales, and boost your online business presence. Incorporating them into your marketing strategy will set you apart and help you rise above the competition!
    For more information, please call Salem Aerial @ 503.602.9074 or go to