Does Disaster Loom in
the
Sun City
Anthem
Self-Management
General
Manager Agreement ?
(Part One of Two)
This is the first of a two part series discussing the Sun City Anthem General Manager Agreement that, according to the 6-1 Board vote on September 24, 2015, has been offered to a specific individual.
We are hoping that prior to sending
that offer (if it has not yet been sent), that these
concerns be FULLY ADDRESSED for the sake of Sun City
Anthem solvency.
Today we will discuss the "salary/benefit package" that will be offered....our GREATEST CONCERN
!
Here were some of the benefits included in that package.
Here were some of the benefits included in that package.
a. Salary of
$250,000.00
b. A Bonus
arrangement of a potential $20,000.00
c.
Relocation Expense reimbursement.
d. Long-term
disability (presumably through an insurer)
e. 401(k)
plan.
f. medical
insurance for the individual AND family.
As the meeting progressed, my mind kept
wandering....
What bothers me
about this arrangement ???
...and then it me like a brick
!
There were several areas that I felt
were unanswered and needed clarification before this offer be submitted to the
"chosen one".
At the conclusion of the meeting, I was
one of a few people who requested my "ticket" to make a comment in the 2 minutes
I was being allotted.
My FIRST
concern was MEDICAL
INSURANCE.
I fully agree as to the necessity of
providing a medical insurance plan to attract and retain qualified employees,
but there was one question that needed to be
clarified.
When the benefit package was announced,
the words "family coverage" were included in the
verbiage.
And so...my question to which I
received NO RESPONSE.
"Is the
association paying the cost of the GM's family in addition to the employee
premium?"
Silence was the initial response, but I
couldn't help but notice that a number of Board members were taking notes as I
proceeded with my comment in this regard.
Why was this matter
of vital concern to me?
For three reasons.
The general
business climate, the Law, and ultimate burden Sun City Anthem residents would bear !
First, let's discuss the general
business climate with these facts in mind:
1. Many of
our residents have retired from the military; and as a result, obtain V.A.
medical benefits FREE OF CHARGE.
2. A number
of our residents are retired government employees and they too, receive medical
benefits FREE OF CHARGE.
3. There are
also many residents who are retired from large corporate America and receive
some form of "subsidized" retiree medical
benefits, paying premiums far less than the actual
cost due to the retiree subsidies.
4. Many of
our residents are covered by medicare paying a minor monthly
cost...the highest of which is $145 that is
deducted from the social security check deposit for Part B coverage; and in
addition, also carry Medicare Supplements with a premium of approximately $200 each month.
Finally,
there are those of us....who have "done it ourselves" through self-employment, and pay the full
freight without any subsidy at all.
...and what these facts in my mind,
clearly demonstrate is simply....
Most people have no
idea as to the TRUE cost of medical insurance if they
must pay the premiums themselves without the availability of any subsidy to
"cushion" the true cost.
And...with these facts in mind...as a
future Self-Management independent not-for-profit
corporation...
...to provide any such benefits for
employees...THERE IS NO
SUBSIDY...
..with one exception...that "subsidy" is...
THE DUES PAYING
MEMBERS OF THE ASSOCIATION.
Now let's discuss the LAW....and...The Affordable Care
Act provisions which become effective as of January 1,
2016.
Prior to that date, only employees
considered "full-time"... those working 30 or more hours per week, were
considered eligible for group medical benefits...
...and as such, they had the ability to opt out of coverage DUE TO AN EMPLOYEE in
most of the cases, being asked to "share" in the
premium cost.
This is still the case...but...we have
something called "discrimination laws" that must be
adhered in allowing corporations to establish benefit plans on behalf of their
employees.
...and herein lies the conflict in
providing "family coverage" to the new General
Manager of Sun City Anthem.
If Sun City Anthem
pays 100% of the cost for that
individual, it must also pay 100% of the cost for ALL
OTHER full-time workers. Hence NO ONE WOULD OPT
OUT...and association costs would increase.
But...there's
more...
Obamacare
has entered the equation and under certain conditions (and in my belief,
applies to Sun City Anthem)...
If Sun City Anthem
pays 100% of the cost for dependents for one particular individual (the General
Manager), it must also pay 100% of the cost not only for the dependents of
full-time employees but THOSE HAVING DEPENDENTS WE
UTILIZE FOR INDEPENDENT CONTRACTING SERVICES as
well.
Let me use a CONSERVATIVE
example...
...I use the word "conservative"
because most people are unaware that the cost of DEPENDENT COVERAGE ONLY for an individual under age 65, now
exceeds $1,000 a month or
more.
Finally, how does this affect the property owners of Sun City Anthem ?
Finally, how does this affect the property owners of Sun City Anthem ?
Just considering DEPENDENT COVERAGE ALONE....NOT
INCLUDING THE EMPLOYEE COST...
..If the association pays the full cost
of the dependent for the GM's dependent coverage alone, and if we have 150 "eligible"
(employees or contractors) with families under age 65, for dependent coverage ONLY, that would mean a monthly cost
of:
$150,000
Annually
$1,800,000
...and that startling
figure amounts to approximately...
23%
...of the gross annual
dues revenue !
And
if premiums rise a minimal 5% after the first
year?
This percentage
increase would add an additional annual cost of ...
$90,000
...which when added to
the above 23%, would effectively increase that percentage
to...
24%
...of gross annual dues
revenue !
In addition...
Payment of 100% of the GM's EMPLOYEE COVERAGE would further
trigger requiring 100% of all employees and contractor individual costs to be
paid at 100% as well...and based on a MININMAL COST of $300 per month per
covered employee or contractor (with 150 eligible
individuals)...
...further INCREASES the monthly
expenditure ...
$45,000...
$540,000
Annually
Totaling
$2,340,000
almost 30%
of gross annual dues
revenue
Adding the minimal 5% increase the following year,
brings the total
to
$2,520,000
32%
of gross annual dues
revenue
Does this shock you? If these estimates alone don't convince you this is impending
disaster...
Based on the above
assumptions and a 5% increase in rate structure, that would mean that of your
total...
$1,100.00
of current annual
dues...
$352.74
...would be applied to
medical insurance ALONE.
Would our financial
future be capable of sustaining a dues structure without having to increase
the assessments?
We
are convinced that would be impossible...that to increase our budgeted
expenses 24%....increasing each year...for this one item alone...
...would create financial catastrophe for
our community!
Accordingly, we believe
that is very idea CEASE IMMEDIATELY before a salary/benefit package including the FULL payment of
employee and dependent medical insurance premiums be offered to that
individual...
...that a cost sharing formula EXIST for
both employee and dependent premiums for the sake of the FINANCIAL HEALTH
of the Sun City Anthem.
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From Marcia Socolik...to...Anthem Opinions
I am a retired federal employee - 12 years now.
Ii have been paying hundreds of dollars each month for federal health insurance in addition to my medicare premiums.
Please tell me how i can get this insurance for free, as mentioned in your blog post. -
Marcia, this is the second comment that we received regarding this matter. I will answer you in the same manner in which I answered that individual.
In order to correct our article, please send us a note as to what branch of the government you worked for, and a detail of what your benefits entail; if they are PPO, HMO, deductible, co-pay, etc. and what your monthly premium contribution amounts to; and if you have dependent coverage, what the breakdown between the two costs would be? We will post that information.
Thus far, the other individual has not responded to our request.
If an error was made, we will surely correct it, but the point of the article was NOT what you pay as an individual, it was WHAT YOU CAN ANTICIPATE WHAT YOU WILL PAY AS A RESIDENT if this measure is not corrected immediately. -
From Nancy of Sun City Anthem...to...Anthem Opinions
"While I certainly agree that all of us homeowners should be concerned with our Board pushing towards self-management, its costs and its consequences, I am not sure that your characterization of FREE Medical Services for Veterans/Military Retirees and Federal Government Retirees is totally accurate. The Veteran’s Administration (VA) uses a system referred to as “means testing” to determine eligibility and costs for those eligible for medical services at the VA. Just being a Veteran or retired military DOES NOT guarantee one FREE Medical Services. Some Veterans may in fact receive FREE care, but that is dependent upon injuries sustained during periods of war and/or their financial status. Many Veterans/military retirees PAY for medical services provided at the VA because they exceed the financial “threshold” to qualify for FREE care. Likewise, I don’t think that retired Federal government employees receive FREE medical services either. Least not those who retired under FERS. I am not familiar with the CSRS retirement benefits, however, I would think that they would be getting FREE medical services either.
Nevertheless, the compensation package as described is concerning due to the potential financial impact upon all of us, as you mentioned. We voted this Board in to represent our (us homeowners) interests and as such they have a fiduciary responsibility to do so. They have failed miserably, putting their own individual interests and desires above that of us homeowners on a number of occasions. Self-management is something not to be taken lightly and the implications from mistakes can cost all of us homeowners financially, if not done correctly. The Board President went to great lengths to READ a Canned statement regarding the legality of the Board to go forward and make the decision independently of us homeowners. Well, just because it may be legal, it DOESN’T MEAN it is the RIGHT thing to do. The Board should have put it to a vote of us homeowners to see if the majority of us homeowners wanted to go to self-governance or not and then acted accordingly, representing our best interests. All of us should be deeply concerned as this moves forward as the impact can affect all of us to the detriment of a very nice Community we currently enjoy. Just my 2 cents."
There are many folks who live here in SCA that came from the private sector and never interacted with, nor worked with anyone in the military or federal government service. For some, their idea of a federal government employee is formed by what they hear or see via the media and is reflective of Washington DC. and their idea of a Veteran or military retiree is that what they see at the Ice Cream Social or what they see on TV. While here in Nevada, I can honestly say that folks are VERY supportive of us Veterans, more so than in other parts of the country in which I have lived. Some folks are downright disrespectful and un supportive of our Military (but that's their opinion and their are entitled to it. )
Nevertheless, I don't know of any Military Retiree who gets FREE medical coverage (although as I stated in my original comment, there MAY be some war Veterans who do based upon wartime injuries, or IF one was a Medal of Honor awardee (of which there are few) or IF via financial means testing, one qualifies. And I know of NO Federal Government Retiree that gets FREE medical coverage, although as I indicated in my original comment, I am not thoroughly versed in the CSRS retirement system. I can say however that I have first hand knowledge of BOTH military retirement (myself) and Federal Government Employee retirement (my Father (CSRS) and my husband (FERS). IF I am incorrect in my statement, PLEASE, PLEASE enlighten me as I would be ever so grateful to learn HOW I CAN GET FREE MEDICAL COVERAGE AS a military retiree and/or as a federal government retiree. I hate to be missing out on entitlements due to my ignorance. -
Nancy, as I mentioned to two others who have sent me a similar message, If I made an error, I will be most happy to correct it.
All three of you seem to think this was some form of "attack on the government" or criticizing those who were in the military or government service. Nothing like that was said in any way.
I would never do that.
I too was in the military.
Why you thought that, I fail to understand, but I will answer you in the same manner I answered them.
In order to do so, please inform me as to what your current benefits are, namely the plan type (HMO or PPO), the deductible, out-of pocket expense, prescription drug coverage. Also provide me the monthly cost and if that is for employee only coverage or includes dependent cost as well. I will post that information so all can see the costs borne by retirees of the military and federal government.
The other two individuals have not responded to my request. Hopefully, you and they will.
Unfortunately, you may have missed the point of the entire article...it was about how most people are unaware of the TRUE cost of medical insurance.
For most people, not only retired military and government workers, but also for others in the private sector, those costs are GREATLY SUBSIDIZED.
Under the proposed plan with SCA, YOU AND I would be the ones SUBSIDIZING the plan.
Were you aware that the average cost of medical insurance for an employee under age 65 is now close to $400 per month and to add dependent coverage, that would add an additional $1,000 ?
I was quite conservative in my assumptions in the article. I used a 5% rate increase, but the reality of 2015 is that the AVERAGE COST IS CLOSER TO 15%...with projections to 2016 exceeding an ADDITIONAL 25% due to the Affordable Care Act.
The object of the article was to dramatize the cost YOU & I will be paying in order to provide it TO THOSE WHO will be working for us under the self-management transition. As my article stated, unless this plan by the board is altered, that it be cost shared, you can be assured that your dues will substantially increase in the next year as a result.
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From Marcia Kosterka...to...Anthem Opinions
As a retired government employee, I have a PPO plan with Blue Cross/Blue Shield.
The monthly premium is $190.28 for single coverage through CSRS (an older system before people were employed by the VA.in the newer system FERS -
Thanks you, Marcia. I stand corrected...but as your premium indicates, it is WELL BELOW the true cost of medical coverage that is not subsidized,
My guess is that you too were surprised that a family monthly premium for an employee under age 65 is close to $1,400 per month...and that number will increase substantially as a result of Obamacare.
Again, the reason for the comparisons was to show how most people are unaware of the true cost....and as a result, how much we be responsible for, should the board not alter what appears to be its "pay 100% of everything" approach.
To all of our readers who in any way construed I was criticizing federal or military retirees, let me once again reiterate...it was only to show how little you...and...others in the private sector, pay, compared to those in the open market, as a result of SUBSIDIZATION.
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From Laura Shapiro...to...Anthem Opinions
With regard to your article, Dick, I am completely disgusted and fed up with what's going with our Board and the decisions they are making.
The only ones who will suffer in the long run will be the residents of this community. This is something you read about happening to other communities, not ours. -
From Michelle Selby...to...Anthem Opinions
I have just read some information on Sun City Anthem's idea as to paying for the new general managers insurance and his families insurance. If this is true it will be a real issue in the future for all of Sun Cities residents.
Why is the board even considering this option?
It certainly will open a real can of worms for all is us!!!!!! -
From Reuben Horowitz...to...Anthem Opinions
Who is the individual that came up with all these goodies in addition to the salary that is being paid?
I was Assistant V.P. for one of the 10 largest Insurance Companies in the US. I
I was in charge of the Group Underwriting Department.
Never did I see a huge salary plus paid benefits given to an employee.
What is the employee going to do?
Also, the article is correct; if one employee is given health benefits, all full time employees must be offered the same.
Where are our GREAT attorneys to comment on this ? -
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From John Yocum...to...Anthem Opinions
Two comments about GM compensation.
1. The annual salary of $240,000 is way too high.
Should be much much lower with larger potential bonus if things go well and board is satisfyed with management.
I suppose we'd need to develop specific criteria for bonus.
Manager should write down goals for each year that are approved by the board.
If goal are met, the he gets bonus.
2. Sound like health insurance could be a problem.
We need to find out if the Obamacare law requires that you say requires we pay for all if we pay for one is real.
If it is, we need to require that all employees pay cost sharing for insurance and give the GM enaough to pay his share.
Sounds like $250K is more than enough! -
John, the law is specific regarding treating all employees EQUALLY. If you pay 100% for one, you MUST pay 100% for others. That includes employee and dependent premiums.
Regarding the issue of independent contractors, the concern regarding the benefits is that there are recently published federal guidelines that must treat independent contractors as employees for benefit purposes.
In researching what those requirements are, it appears that Sun CIty Anthem falls within them; and as a result, would be treated as such.
Here's the problem as I see it.
If a benefit plan is established and we pay 100% of the benefits for both employee and dependent, and if we take the position that we need not cover the contractors, should IRS come back and say we should have done so, the association would face a $3,000 fine PER INDIVIDUAL that should have been included.
Our association has already faced an IRS audit a few years ago due to former Board members not refunding excess dues payments. We were originally fined $1,000,000 by the IRS, but according to our "experts", on appeal ONLY (I loved their terminology), cost us $100,000 PLUS ACCOUNTING FEES. I prefer to refer to is as they COST US $100,000 due to their greed.
And...once you fact one IRS audit, that normally means that you are a target from that point forward for future ones.
As a result of these factors...not even considering the substantial financial impact, it would appear that a cost sharing formula is the only feasible manner in which to handle this situation.
Your final comment about providing additional compensation to pay the employee dependent coverage "may" work, but if IRS determines that the additional sum was paid for the sole purpose of DISCRIMINATION against others, that further enhances the problem. -
To conclude this series of comment, I personally received this comment from an UNNAMED individual from this email address:pghays@hotmail.com"Who the hell are YOU? Obviously a frustrated wanna-be executive. The Board is using a professional search firm to mitigate amateurism, so either stay out of management or run for the Board......."This was a first...obtaining something like this sent to my personal email address.My initial reaction was to merely ignore it, but in this particular case, I felt compelled to both reply and PUBLISH for all to see...for one reason....This is the type of individual who has in all likelihood been a supporter of the past decisions that have cost Sun City Anthem residents thousands of dollars due to this type of attitude...an attitude Anthem Opinions is committed ERASE from Sun City Anthem.I replied:Next time have the courage to use your real name.Pathetic...just pathetic...YOU ARE WHAT'S WRONG WITH SUN CITY ANTHEM.You are entitled to your opinions, but you should also know you are the SOLE derogatory comment that has written about Sun City Anthem commentaries from Anthem Opinions.I have no desire to fight with a coward, nor will I join your type of commentary...if you call how you write as commentary. Normal people would call it an insult.Let me give you some advice...Take your pent up frustration and anger to another blog where your type of comment thrives.We don't tolerate such tripe on Anthem Opinions...that's why we have between 1400 and 1500 people a day reading it.
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From Barry Goldstein...to...Anthem Opinions
Most of the residents in SCA are professionals from many different industries.
A knowledgeable leader engages the community expertise.
I have yet to meet an amateur that lives here.
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Being a financial advisor in our community, who also deals in the healthcare arena especially Medicare, I believe this board is making lame decisions without really investigating OUR costs. Also, I'm concerned about the "chosen one", since I have a feeling that there may be a relationship involved in all the perks. A GM is NOT a CEO.
Most corporations are encouraging participation in healthcare costs of not only the employee, but may also require up to 100% participation of the family care.
For the most part, you are correct in your assessment. There is no discrimination in healthcare, disability (unless it's a carve out) or 401(k)s. Everything must be provided to ALL employees, if provided to one.
Too bad we don't have a board as fastidious as you.
However, I see their point when it's so much easier to spend other people's money. But, it's too bad they don't see the consequences.
Too bad we can't pass an amendment to our bylaws to have them pick up all their shortfalls, as well as their mistakes. Maybe then they would be more conscientious.