Tuesday, December 22, 2009

Downtime




I'm off on vacation, see you again in the new year.

Happy Holidays

Friday, December 11, 2009

Got Liability Insurance?



I, like many professions out there, am required to hold current Errors and Omissions or Liability Insurance. If I sell a policy to a client and I made a mistake which causes the policy not to pay out I could be liable for damaged in the amount of the policy. If I sell a million dollar Life Insurance policy you can bet I am going to have a million dollars of E&O to protect my butt in case I get sued. My E&O insurance costs are about a thousand dollars a year, not a small investment by any means. If you are like me, you want to protect yourself and your company from liability. If so, here is a strategy you need to look into, and it won’t cost you a dime.

If your company were to be sued, it doesn’t really matter why, any assets held in the company are up for grabs. Many business owners keep retained earnings in their company for any number of reasons, tax sheltering, rainy day fund, float for large purchases or payday from a profitable project. Whatever the reason, retained earnings held in a bank account are vulnerable to creditors. Retained earnings are an asset of the company and therefore, up for grabs. Some business owners keep their life savings in their company, talk about a huge liability problem.

The solution to this problem is actually very simple. Life Insurance, or more specifically Segregated Funds. A Seg Fund is like a mutual fund, or other investment they can hold stocks, bonds, or even just cash. But segregated funds are also a form of Life Insurance, and life insurance under Canadian law, is creditor protected and exempt from seizure due to bankruptcy or lawsuits.

By depositing your retained earnings into a segregated fund policy, rather than a bank account or savings account your retained earnings are protected. For the even more paranoid, you can designate an irrevocable beneficiary of the funds, say a spouse. When you designate an irrevocable beneficiary, you need the beneficiaries signature and permission to do ANYTHING to the policy, include freeing up funds. As soon as a irrevocable beneficiary is named the company and the business owner now have no control of the policy, they couldn't liquidate it if they wanted too. Any changes to the Seg Fund policy have to be signed off by the irrevocable beneficiary, as long as the beneficiary isn’t a shareholder, the money is essentially untouchable. I hope you trust your spouse.

There is a disclaimer however, (when is there ever not?) this only works if there is a papertrail and proof of regular contributions to a segregated fund. If you have evidence that you have been using this strategy for legitimate purposes, IE: self funded life insurnance, you are safe and the protection will hold up under scrutiny. If on the other hand, you know of an impending lawsuit and you frantically liquidate all of your assets and slam them into a brand new seg fund policy you are NOT safe. There have been court cases where this fraudulent avoidance in the face of a lawsuit have been overruled by a judge, and the creditor protection rendered null and void.

As long as you are playing by the rules and are not obviously trying to scam the system, your money is safe. If you already pay for liability insurance why not take out an extra policy for free? Protect your capital from potential creditors or lawsuits.

TL;DR – Got money in your company? Don’t wanna loose it in a lawsuit? Stick it in Segregated Funds.

EO&E

Monday, December 7, 2009

Pharmacy Dispensing Fee's in BC

Telus Health (formerly Emergis) has published a report showing average dispensing fee's from various pharmacies across BC from January 2009 through June 2009. PDF availible HERE





As is evident from the Table, the average dispensing fee across BC is $9.09 the least expensive pharmacy's are located, shock and awe, at Costco and Wal-Mart.

If your benefits plan uses paper reimbursment the plan is paying for all of the dispensing fee charged by the pharmacy. If your plan has a drug card with no dispensing fee deductible, then again the plan pays for the whole fee. If on the other hand, the drug card has a dispensing fee deductible, the plan member pays the cost of the pharmacy fee.

Using a dispensing fee deductible encourages members to shop where the fee's, and often drugs, are the cheapest. However, members can only be savvy consumers if they know where to shop. Social engineering is going to be the next frontier in benefit plan cost control. Encouraging members to be savvy shoppers, getting them to change their prescription purchasing habits and eventually lifestyle habits. Simply convincing members to shop at one pharmacy rather than another can result in savings of thousands of dollars in unnecessary costs.