Fall 2014
health. wealth. life.
Healthy Harvest
In Pursuit of What Matters Most.
Fall 2014 CO N T E N T S
A BREAK FROM SCHOOL FOR T H E H O L I D AY SEASON
PAGE 3 – A Letter from Terry Horan, President & CEO PAGES 4 & 5 – Regional School Districts Working Together to Shape the Future of Health Insurance
PAGE 6 – City of Piqua: Making Wellness Work in a Municipality PAGE 7 – The Impact of Medicare Eligibility on Your Health Savings Account PAGES 8 & 9 – Firm Overview Profile: Take Five with HORAN Capital Advisors PAGE 10 – Your Financial Planning Checklist PAGE 11 – The Use of ESOPs in a Business Succession Plan PAGES 12 & 13 - Our Four Levels of Education PAGES 14 & 15 – HORAN Employees Leading the Way in Their Communities PAGES 16 & 17 – Actively Supporting the Regional Community PAGES 18 & 19 – Client Spotlight: The Christ Hospital
Please join us in welcoming our new corporate clients! - Global Scrap Management — Altimet - Shook Construction Co. - 3 Sigma Corporation - TiER1 Performance Solutions - Stober Drives, Inc.
Cover: Every Tuesday a delivery is made to the HORAN employee kitchen. Our Harvest Cooperative delivers a dozen or more fresh produce boxes as a part of their Weekly Harvest Box program. HORAN employees select the size of their produce box (small, medium or large) and receive locally grown, seasonal produce on a weekly basis. Our Harvest also offers a variety of other local foods to add to the boxes including meat, cheese, honey and bread. Our Harvest sources their produce and other add-on products from regional farms, stretching from Waynesville, Ohio, to Lexington Kentucky. The Weekly Harvest Box program allows HORAN to support regional farms and benefit from the fresh, healthy produce delivered each week.
health. wealth. life.
After a full year of health, wealth and life seminars, HORAN had not yet finalized the 2015 Education Calendar at the time the Fall magazine was sent to press. Please be on the lookout for future educational opportunities on the HORAN website at horanassoc.com, in your email inbox and in the next issue of health. wealth.life. magazine.
Look for us online! Go to horanassoc.com and click on Education to find out more about upcoming educational opportunities as more seminars will be scheduled throughout the year. Also, visit our Newsroom to view the online version of health.wealth.life.
|2|
A letter from Terry Horan
In Pursuit of What Matters Most. Thanksgiving provides an occasion for reunions of friends and families. It also affords us the opportunity to express gratitude for the freedoms we enjoy as well as food, shelter and life’s many good things. HORAN is thankful for the clients and partners we are privileged to work with. We feature several in this issue. In the health section you will find an article about Southwest Ohio Organization of School Health (SWOOSH), a health and wellness consortium for our school district clients. The health section also features our client the City of Piqua and the extraordinary success they have had with their wellness initiatives. Our client spotlight this issue features The Christ Hospital, who has partnered with HORAN for its corporate retirement planning needs for over 30 years. The hospital is celebrating its 125th anniversary this year. HORAN is also grateful to be able to provide health, wealth and life educational opportunities throughout the year. Turn to pages 12 and 13 to learn more about HORAN’s four levels of education. Anna Pfaehler emphasizes the importance of educational tools in her role as HORAN’s Director of Financial Planning. Page 10 contains a checklist Anna created as an educational resource for financial planning. This issue we launch a recurring section in the magazine called Firm Overview Profile. We will spotlight each component of the HORAN organization in an effort to educate our readers about every aspect of our business. The first Firm Overview Profile is with HORAN Capital Advisors. HORAN is thankful for the opportunity to be a part of three dynamic communities. There are several briefs in this issue that highlight the wonderful leadership and volunteer work in which HORAN employees have been involved in Dayton, Northern Kentucky and Cincinnati. We hope you enjoy this edition of health.wealth.life. magazine. During the time you spend with friends and family this holiday season, we hope you have time to reflect on the things in your life for which you are most thankful. Wishing you and your family a happy holiday season.
Sincerely,
Terence L. Horan, CLU, ChFC President & CEO of HORAN TerryH@horanassoc.com
| 3 |
health REGIONAL SCHOOL DISTRICTS WORKING TOGETHER TO SHAPE THE FUTURE OF HEALTH INSURANCE R egional school districts have united to prove that working together towards a common goal can yield major benefits, particularly when addressing the challenge of rising health care costs. District leaders worked with HORAN in 2011 to create the Southwest Ohio Organization of School Health (SWOOSH), a health and wellness consortium for school districts and government agencies that come together to provide stability and quality access to health care and benefits to all eligible members. Initial savings helped motivate the school districts early on as the SWOOSH consortium has saved area districts more than $10.3 million in both medical and ancillary benefits. SWOOSH is comprised of seven regional school districts: • Forest Hills School District • Indian Hill Exempted Village School District • Lebanon City Schools • Milford Exempted Village Schools • Northwest Local School District • Southwest Local School District • Winton Woods City School District Beginning in January 2015, West Clermont Local School District will be a member of the SWOOSH consortium.
HOW SWOOSH WORKS SWOOSH’s core philosophy is flexibility within a framework. SWOOSH balances the needs of the school districts with efficiencies at a consortium level. It’s an all-for-one mentality with flexibility at the district level that creates the right balance.
health. wealth. life.
The consortium drives economies of scale by leveraging commonality of choices and its overall size. With more members on the plan, the consortium can leverage the larger scale of the entire group and work toward obtaining the most competitive rates while securing unique wellness offerings and additional investments to better manage long-term costs. The unique factor of SWOOSH as a consortium is the board’s level of involvement in determining how things are going to operate. SWOOSH is a districtcreated, board-driven consortium. The board members drive the direction and the decisions on where SWOOSH is going. SWOOSH has achieved a balance between receiving the benefits of being in a large pool with meeting the needs of each district. Some examples of this include each
service team that works at the individual district level on wellness strategy, open enrollment and ongoing engagement with district employees on elevated claims issues or questions they have.
ACHIEVING COST SAVINGS Another unique feature of SWOOSH is the extensive data analytics each district receives. Each district receives both aggregate data for SWOOSH and its own individual district-level data. The data helps the board determine renewal strategies that drive stability while rewarding individual districts for strong performance in a given year. Over the past few years, SWOOSH has had a renewal strategy of applying a tiering formula to an aggregate renewal. The tiering has been based on district plan performance and overall utilization. Access to aggregate
SWOOSH’s core philosophy is flexibility within a framework. SWOOSH balances the needs of the school districts with efficiencies at a consortium level. It’s an all-for-one mentality with flexibility at the district level that creates the right balance. district being able to have its own plan design, individual rates for plans based on performance and wellness plans geared to a district’s specific audience. The role HORAN serves is to drive the strategy and execution for the SWOOSH Board and provide both employer and employee engagement at the district level. HORAN has a dedicated SWOOSH team who works with the board on SWOOSH’s strategic direction, including data analytics, bylaws, operations, health care cost containment, full benefit offerings and growth of the consortium. HORAN also has a dedicated
and individual data has been key for each district to understand and explain the renewal strategy to key district personnel. “This formula rewards groups when they’ve had a good year and requires groups that had a bad year to compensate for the utilization. Over the long term, it allows groups to come closer in performance, which creates really broad stabilization,” said Tim Ackermann, SWOOSH Board President.
ADVANCEMENTS IN WELLNESS Each school district is required to have a
|4 |
SWOOSH ADVISORY COMMITTEE HELPS SWOOSH BOARD ADDRESS NEEDS OF DISTRICTS AND EMPLOYEES SWOOSH places a high value on the district and employee needs. As a result, an advisory committee was formed in order to act as an ambassador between the board and the school districts and employees.
SWOOSH Board - Back row (standing): Traci Rea, Tim Ackermann, Debbie Caudle, Randy Seymour and Chris Brown. Front row (seated): Dr. Andrew Jackson, Richard Toepfer, Tammy Carnahan, Julia Toth and Brian Rabe.
wellness plan and is given funding for its wellness budget. The plan includes the standards: biometric screenings, A1C testing, health risk assessments and leadership engagement. The districts are encouraged to go beyond the basics and customize the wellness strategy to the district’s needs. Recent data and benchmarking numbers indicate wellness is a driving factor for cost savings. Currently, 50% of SWOOSH plan members have received a wellness exam, which is 13% better than the peer group. Additionally, SWOOSH plan members have seen improvements from 2012 to 2013 in utilization (i.e., fewer emergency visits, fewer urgent care visits). SWOOSH has delivered a strong clinical performance, as shown by most peer group comparisons like wellness exams and cancer screenings. This emphasis on preventive care has led to much lower utilizations than for the peer group. Overall claims and claims in key diagnosis categories are down significantly over peers. SWOOSH’s next step in wellness is to drive cost and quality transparency to the
employee level. In order to accomplish this transparency, SWOOSH plans to provide a service for their employees called Castlight, a health care tool that gives employees the ability to research best-quality and best-cost facilities for over 140 services.
THE FUTURE OF SWOOSH SWOOSH is in the process of moving to a self-funding medical plan in order to further stabilize the pool and control costs. “HORAN is proud to have had the opportunity to work with our valued school district clients to create SWOOSH,” said Valerie Bogdan-Powers, Vice President of Employee Benefit Services at HORAN and the SWOOSH Board Secretary. “We are honored to have the opportunity to guide the consortium as they begin another chapter with the move to self-funding and continue to support SWOOSH with board-driven decisions, transparent data, wellness initiatives for cost containment and overall results.” SWOOSH is actively searching for likeminded schools, typically large districts with over 500 employees, that would like to be self-funded but aren’t in a position to do so on their own.
>> The HORAN SWOOSH team (pictured from left to right): Judi Meyer, Senior Vice President; Kristen Mumper, Account Manager; Caren Martin, Account Representative; Brian Fissinger, Financial Analyst; Tyler Dierkers, Financial Analyst; and Valerie Bogdan-Powers, Vice President of Employee Benefit Services.
The SWOOSH advisory committee’s role is to make recommendations to the board and to be an advocate for their districts as well as provide information back to the districts. Districts are able to have one to three members on the advisory committee. They are the voice back to the SWOOSH Board representing their districts in any key areas of concern. They bring back perspectives from the districts’ insurance committees and are involved in understanding the impact of health care reform and the move to self-funding. The committee is also beginning to be more involved in wellness and employee engagement. The committee is comprised of a wide range of district employees including teachers, treasurers, bus drivers, custodians, operations managers, building representatives, human resources employees and assistant superintendents. The advisory committee recently made the recommendation and reviewed the RFP results for all of the ancillary benefits lines that SWOOSH adopted including employer-paid life, voluntary life, voluntary vision and dental. The ancillary lines recommended by the advisory committee were a huge benefit for the districts at really strong pricing.
|5|
health
Wellness Works City of Piqua: Making Wellness Work in a Municipality
If you look back at the City of Piqua’s renewal numbers from 10 years ago, you would find increases as high as 20%. Today, seven years after beginning their wellness journey, the city is seeing single-digit increases or lower. In 2007, the City of Piqua saw the need for a change in their health benefits program. The modifications began by negotiating with the seven union contracts the city had in place. After working with the unions to address both concerns about switching from self-funded to fully-insured and aligning contract timelines, the City of Piqua switched to a High Deductible Health Plan and initially contributed 100%. Since that time, they have reduced the contribution percentage to 75%, and next year they will reduce the contribution to 50%. “Our employees understand that in order to lower our health care costs we have to be healthier as a group,” said Elaine Barton, Human Resources Director of the City of Piqua. “The employees have an opportunity to earn dollars back into their Health Savings or Health Reimbursement Accounts by completing certain wellness activities.”
City of Piqua Representatives pictured after winning Dayton’s Healthiest Employer award at the 2014 Dayton Healthiest Employer Celebration: Gary Huff, City Manager; Elaine Barton, Human Resources Director; and Cindy Holtzapple, Assistant City Manager/Finance Director.
Eighty-one percent of the City of Piqua’s employees with an HSA participate in the city’s wellness activities. The City of Piqua has seen a direct correlation between their workforce being healthier and the premiums they are paying.
Barton. “We are a service organization and our greatest asset is our employees. We encourage wellness and for employees to be healthy—that means they are at work and being able to do their job every day.”
The City of Piqua wellness program’s flagship initiative is the health activity reimbursement incentive. An employee may be reimbursed up to a maximum of $400 if on a family plan, and $200 for a single plan, each calendar year by completing wellness-related activities. This money is then put into either his or her Health Savings Account (HSA) or Health Reimbursement Account (HRA).
“Julie Tople (Account Manager at HORAN for the City of Piqua) has been a big help in keeping our premiums low,” said Barton. “She lets us know what is available, informs us about what is coming up and also tells us what is working at other organizations.”
Brian Dostanko, Human Resources Director at the City of Marysville, agrees with this perspective as an employee of a municipality, “Everything that a municipality does is paid for by taxpayers, so you have to be good stewards of that tax dollar. Our focus is on getting employees educated and changing the culture of wellness.”
The eligible reimbursement activities include attending biometric screenings, completing health risk assessments, working with a wellness coach, getting a flu shot, exercising 90 minutes per week, etc. “We use to get 35–40 employees to participate in the biometrics screening,” said Barton. “Now, since we have offered the incentive program, we had 100 employees participate in this past year’s screening.”
health. wealth. life.
In order to keep its employees interested in ongoing wellness activities, the City of Piqua strives to keep innovating. One of its most popular initiatives was its Bike to Work week, which extended into the community when the City of Piqua’s school district students joined in and rode their bikes to school. The Bike to Work week event was so popular that the city built a designated bike lane in the main business district. However, it is cautious with how it spends its wellness budget. “The city is funded by taxpayer dollars, and we need to be good stewards of that money,” said
The City of Piqua is currently seeking a community partner to join in its plans to build an onsite wellness facility, which would consist of building onto its existing exercise room and adding a medical clinic. “Wellness does pay off. You see it in your employees, your premium shares—you can truly see how it helps,” said Barton. “We just want people to come to work, be safe, be healthy and go home the same way. The way to do that is to offer these programs and continue to support them.”
|6|
THE IMPACT OF MEDICARE ELIGIBILITY ON YOUR HEALTH SAVINGS ACCOUNT A Health Savings Account (HSA) is a type of health insurance offered by an increasing number of employers. It combines a High Deductible Health Plan (HDHP) with a tax-free Health Savings Account to which the employee and the employer can contribute. Below are a few common questions that come up when an individual turns 65 and has an HSA qualified plan through his or her employer. Q. I have health insurance from my employer in the form of an HSA, but I’m told I can’t use it if I’m eligible for Medicare. Is this correct? If so, what can I do to keep this insurance if I continue working after age 65? A. IRS regulations state that you can’t contribute to an HSA if you’re enrolled in Medicare. You can draw on funds already in the account, but you can’t add to them. So it’s important to know how you can get around this rule if you have an HSA at work and want to continue working beyond age 65. If you’re eligible for Medicare but have not filed an application for either Social Security retirement benefits or Medicare, you don’t have to take action. As long as your employer has 20 or more employees, you have the right to postpone applying for Social Security and Medicare—and therefore can continue to contribute to your HSA—until you stop working. There is no penalty for this delay. When your employment ends, you’re entitled to a special enrollment period to sign up for Medicare. Q. How do I access HSA funds after turning age 65? A. Once you reach age 65 your funds can be withdrawn at any time and are only subject to ordinary income tax. However, you may avoid any tax by continuing to use the funds for qualified medical expenses. For those over age 65, premiums for Medicare Part A or B, Medicare HMO and employee
premiums for employer-sponsored health insurance can be paid from an HSA. Q. My spouse is covered by Medicare and my employer’s family HDHP with an HSA; what are my contribution limits? A. The account holder in this scenario has family coverage and is therefore eligible to contribute the family limit. He or she may also contribute the catch-up amount, if he or she is age 55. The spouse is an “ineligible individual” in the eyes of the IRS. The IRS allows married couples to assign the tax deduction to each spouse in whatever proportions they deem appropriate. As long as the tax deductions are allocated to the eligible spouse (a paper assignment for those filing jointly), the fact that one spouse is “ineligible” has no impact on the HSA contribution limits in this case. (IRS guidance 2004-50 Q&A 31, example 5, and Q&A 32) Q. Can I contribute to an HSA when I am receiving Social Security benefits? A. You cannot contribute to an HSA in any month you are enrolled in Medicare or Social Security. There is a pitfall inherent in that rule that you need to be aware of. If you’re already at least six months beyond your full retirement age (currently 66) when you sign up for Social Security retirement benefits, Social Security will give you six months of “back pay” in retirement benefits. It’s a generous gesture, but it means that your enrollment in Part A will also be backdated by six months. Under IRS rules, that leaves you to pay six months’ of tax penalties on your HSA. To avoid the penalties, you should stop contributing to your account six months before you apply for Social Security retirement benefits.
|7|
wealth
FIRM
VERVIEW PROFILE
TAKE FIVE WITH
HORAN CAPITAL ADVISORS HORAN Capital Advisors (HCA) is an independent, SEC-registered investment advisor, dedicated to adding superior value through comprehensive planning and intelligent portfolio construction.
HCA’S FIVE CORE TENETS OF INVESTING The team at HCA deeply believes that certain core tenets guide their clients for investment success. HCA incorporates these core beliefs, making sure that the firm discipline and processes are repeatable: 1. 2. 3. 4.
Valuations should drive investment decisions. Most risk is quantifiable and controllable. Diligent, fundamental research matters. Be opportunistic; the market provides opportunity to be proactive. 5. Successful investing is rewarded over years and decades, not days and weeks.
HCA’S FIVE CORE TENETS OF CLIENT SERVICE HCA takes great pride on the level of client service it provides to its respective clientele. Service is a core tenet of our business as we communicate regularly with our clients and focus solely on their
health. wealth. life.
needs. We have a high ratio of staff to clients and maximize a team approach and oversight when handling client accounts. 1. Relationships Matter. Building long-term relationships creates trust and continuity. This takes time, dialogue and a deep understanding of all client dynamics. 2. Communicate. Identify client objectives and tailor the portfolio/service model accordingly. Everyone has different circumstances, ways of learning and expectations regarding the client/advisor relationship. 3. Challenge One Another. Consistent agreement rarely leads to optimal results. We can’t fear changing perceptions or pushing one another for better outcomes. 4. Invest. Invest in good people. A strong team reflects positively on our organization but, more importantly, our clients. 5. Be Transparent. Our intent is to present our value proposition by articulating what we do, how we do it and all the expectations in between, i.e., frequency of communication, management fees, portfolio risks, etc.
FIVE FAQs FOR HCA 1. Who are your clients? Our clients are high-net-worth families and institutions. The families we work with generally have investable assets in excess of $1 million and are looking for a lasting relationship with highly qualified professionals. We work with these clients building durable portfolios to grow and sustain assets. We also work with them to create the most effective plan to protect and distribute assets to the next generation. Our institutional clients have a pooled investment account with assets in excess of $1 million. These accounts range from
|8 |
From left to right: Nicholas Reilly; Dale Wiethe; Michael Napier, CFP®; Anna Pfaehler, CFP®; Mark Bennett, CFA; Terence L. Horan, CLU, ChFC; Matthew Antenucci; David Templeton, CFA; and Michael Tragesser.
trustee-directed profit-sharing plans or defined-benefit plans to foundations, endowments and corporate accounts. We work with investment committees to develop investment policy statements, reduce fiduciary risks and create diversified portfolios. 2. What has led to favorable client outcomes? A team approach and thorough, repeatable processes. Our professionals at HORAN bring different levels of expertise. Although many clients gravitate to one point of contact, they meet with various portfolio managers throughout the year. Our clients also value our processes. We thoroughly gather the details of our clients’ lives, build financial plans and uncover their desire for the distribution of wealth. 3. In short order, describe a client portfolio to us. We leverage our best thinking for all our client accounts. Generally, our clients own many or most of the same securities, but position sizes will vary by the client’s risk appetite. There are occasions where clients have appreciated positions and many times we will keep those positions based on tax implications. We will describe a growth portfolio, for example. Today, our growth portfolio is about 60% in equities, 25% in fixed income and 15% in alternative investments. The core of the equity allocation is in large-cap individual stocks. We have the expertise to select individual positions and it is a real differentiator for our firm. Typically, we own 35–45 individual stocks. These stocks have a high-quality bias and excellent balance sheets. Beyond those stocks, we add funds to gain diversified access to U.S. mid-cap, U.S. small-cap and foreign equity markets. We also use funds for broad fixed-income allocations as well as alternatives. For larger client accounts we will buy individual bonds.
4. Where do you see markets going from here? We are pretty optimistic on equity markets but very mindful that we have not had a 10% pullback in the S&P 500 Index since 2011. We evaluate the fundamentals that drive long-term investment results. Broad economic data is good. Valuations are reasonable. Corporate America is in fine shape as well as consumer balance sheets. Confidence is growing. Specifically within the United States, this recovery has been slow but prolonged. Based on earnings expectations and related data, we do not see why U.S. earnings won’t continue to grow at 6-8% a year. Fixed income (bonds) is another story. After a 30-year bond bull market, we feel the risk to owning longer-dated bonds is not commensurate to the reward. Inevitably, interest rates will go up and bond prices will go down. The Fed has already sent the message that rates will rise in 2015 and beyond. We continue to own short-term, high-quality bonds coupled with some global, floating-rate and real estate fixed income securities. 5. What differentiates your portfolio management style? Our attention to risk and opportunism differentiates us. We build portfolios in the context of overall risk. Risk is evaluated at the asset-class level and at the security level. We are also opportunistic. The market presents opportunities and for those of us engaged in the research, we can take advantage of those opportunities.
This document is provided for general informational purposes only and is not intended to provide specific financial, investment or tax advice. The accuracy of the information, which is derived from many sources, is deemed reliable but cannot be guaranteed.
| 9|
wealth
Your Financial Planning Checklist You’ve likely seen the familiar warning to check with your physician before starting an exercise program. Financial fitness is much the same. On the road to financial health, a meeting with your financial planner is a good place to start. Like a physician testing blood pressure and cholesterol, I need to gather the facts that are necessary to make recommendations. Therefore, if your goal is to achieve financial fitness, your first step is to organize your information. Below are some items you should gather and consider before meeting with your financial planner. We’ve designed this page so that you may simply cut this checklist out of the magazine and use it for reference.
–Anna Pfaehler, CFP®, Director of Financial Planning
Net Worth – A net worth statement reflects your assets and your liabilities. It gives you a picture of your money at a certain point in time. What accounts do you have and what are the balances? Are your retirement savings spread in several accounts from former employers? Do you have an emergency fund that would see you through several months of unemployment? Do you have real estate or other valuable property? Do you have mortgages, student loans, car loans or credit cards?
Cash Flow – Old-fashioned budgeting is a hallmark of financial planning. Just knowing where your money is going can solve many financial problems. Your cash flow forecasts how your net worth will change over time. How much do you make each month? Each year? How much money do you spend on essentials such as housing, utilities, groceries, gas, insurance, medical expenses and child care? How much money do you spend on discretionary items such as eating out, entertainment and vacation? How much are you saving each month for retirement? How about education funding? A rainy day? How are you paying down your debt?
Investments – Without investing, your savings will be eroded by inflation. It is important to make your money work for you by investing it. A properly invested portfolio depends on your goals, time horizon and risk tolerance. How do you intend to use your accounts? Are they for retirement or do you want to leave them as a legacy? When will you need this money? How easy is it to get cash? How much risk does your portfolio have? Is it too much or too little? Most importantly, can you sleep at night? Are your investments diversified? If any single company or sector does poorly, would it ruin your portfolio? Who is watching your investments and how closely? Are your investments tax efficient?
Retirement – Whether it is decades away or on the horizon, it is never too early or late to think about retirement. Just knowing what to expect, good or bad, can be a weight off the shoulders. When do you want to retire? Do you plan to continue working part time or volunteering? What benefits does your employer provide to retirees? Do you have any pensions? What income can you expect from Social Security? Note the Social Security Administration no longer sends annual statements. You can find these estimates online. How will you cover your health insurance needs?
Insurance – Insurance can provide the stability you and your family may need should something catastrophic happen. Generally, you want enough disability insurance to continue paying your expenses while staying on track for your other financial goals. You’ll want at least enough life insurance to provide for your survivors. What coverage does your work provide? Do you need additional life insurance? If you die, could your spouse pay off a mortgage? How about pay for your children’s education? Do you need additional disability insurance? If you became disabled, could you pay for your expenses? Could you save for retirement? Would an umbrella policy or long term care insurance be appropriate for you? Are your policies and provider “healthy”? How are they performing?
Estate Planning – Having the proper documents in place ensures your assets will be distributed the way you want, gives your family the ability to make health and financial decisions for you if you are unable, and provides your child(ren) with a guardian should you pass away. Do you have wills, living wills and powers of attorney for financial matters and health care? Have you named a guardian for any young children? Do you have a trust or need to create one? Where are your documents? Can someone find them if you are incapacitated? Are they up to date? Do you need to change an agent, executor or trustee? Have your goals or situation changed? Have you named beneficiaries on life insurance policies and retirement accounts? Who are your advisors? Who can your survivors turn to when you pass away?
SUBSCRIBE TO OUR BLOG
In the coming year, we plan to run a series on our financial planning blog to help you on your way to financial fitness. If getting your financial house in order is a goal of yours, we encourage you to read our blog.
health. wealth. life.
| 10 |
life
The Use of ESOPs in a Business Succession Plan HORAN partnered with Dinsmore, the largest law firm in Cincinnati with offices in 16 cities nationwide, to host a seminar for our corporate partners and advisors on the subjects of financing, protection and transition strategies for closely-held businesses. The seminar featured a panel of presenters that covered the following topics: Captive Insurance Companies, Employee Stock Ownership Plans (ESOPs) and Industrial Bonds. Ben Wells, Partner at Dinsmore, gave an overview of ESOPs and how to utilize these plans to create a legacy strategy for business owners. The HORAN health.wealth.life. magazine has discussed the importance of business succession planning in past issues. It is essential for business owners to develop a legacy strategy that best fits the organization’s future needs. An ESOP is a popular business succession planning tool for closelyheld corporations that want more liquidity but still want to preserve some degree of flexibility and control. An ESOP is a qualified retirement plan that is designed to own employer stock. ESOPs are allowed to borrow money to purchase employer stock. Once purchased, employer stock is allocated to accounts for individual participants. When they retire, participants can receive either cash or shares, which are then sold back to the company or to the ESOP. An ESOP is formed when the company establishes a trust with a trustee to hold stock of the company on behalf of the employees. Then the shareholders sell their stock to the elected ESOP trustee at Fair Market Value. The ESOP trustee pays cash to the selling
shareholders for their stock for it to remain in the ESOP trust to be allocated to eligible participants. By doing this, it allows the company to hand over the ownership of the company to its employees once the time comes. It not only benefits the employees, but also the selling shareholders and the company. The selling shareholders help preserve the legacy as a local independent company, and also help reward the individuals who have helped to make the organization successful. The key benefits of an ESOP to a business owner include the following: • Liquidity • Shareholder tax benefits • Control • Flexibility ESOPs have numerous tax benefits: stock contributions are taxdeductible, cash contributions are deductible, contributions used to repay a loan the ESOP takes out to buy company shares are tax-deductible, sellers in a C corporation can get a tax deferral, in S corporations the percentage of ownership held by the ESOP is not subject to income tax at the federal level, dividends are taxdeductible and employees pay no tax on the contributions to the ESOP. If you are interested in an ESOP, consult a CPA or an advisor experienced in ESOPs to see if it is the right solution for your company.
| 11 |
education
OUR FOUR LEVELS OF EDUCATION HORAN was founded on a commitment to education. Our employees are advocates for ongoing education for employers and employees. We are dedicated to educating on best practice strategies to support individual and business objectives across health, wealth and life. Our approach to education falls into four levels, each specifically tailored to a target audience. The four target audience levels include one-on-one, clients, partners & advisors and the community. Read on to learn about our approach for each level and the recent education opportunities made available for each audience.
1 2 3 4
ONE-ON-ONE
CLIENTS
One-on-one employee meetings allow HORAN to meet with our clients’ employees to review their specific situation. We provide personalized guidance that will help individuals understand their employer-provided benefit plan and the considerations that need to be taken into account when planning for the future. Our main priority is to give our clients’ employees the knowledge and confidence that will enable them to achieve a better quality of life now and in the future.
HORAN is committed to delivering outstanding value and service to our customers. We are an advocate for ongoing education for both employers and employees. Newsletters, compliance alerts, webinars and seminars and the HORAN quarterly magazine health.wealth.life. are provided to give further guidance to clients as a part of HORAN’s commitment to educate on best practice strategies to support individual and business objectives across health, wealth and life.
PARTNERS & ADVISORS
Our solid partnerships within the professional community are a fundamental element of the service we offer at HORAN. Additionally, over our many years in business, we have developed strong alliances with many top attorneys and accountants. We work closely with these professionals, functioning together as a team to help bring our mutual clients’ goals and objectives to fruition. As a part of our commitment to education, HORAN hosts a series of advisor seminars through the year as well as distributes electronic advisor alerts on a bimonthly basis.
COMMUNITY
We have a duty to give back. Accordingly, we are committed to improving the quality of life in the communities where we live and work. Individually and together we support initiatives that educate, enrich and heal. We serve our community with the same commitment we show our clients. We make financial contributions, and give our time and energies, to keep our region a place where businesses and families flourish. Conducting education seminars is one of the ways we help to enrich the community.
health. wealth. life.
| 12 |
HORAN Offers Educational Seminars in Areas of Health, Wealth & Life CHRIS MIHIN HOSTS MEDICARE SEMINARS AT HORAN AND BLUE ASH YMCA Chris Mihin, CBC, HORAN’s Individual Health and Medicare Specialist, partnered with the Blue Ash YMCA to host a series of Medicare seminars. Chris held two seminars at the HORAN Corporate Headquarters—on Tuesday, October 28, and Monday, November 10, as well as two seminars at the Blue Ash YMCA—on Thursday, October 30, and Wednesday, November 12.
OVER 200 INDIVIDUALS ATTEND HORAN’S HEALTH CARE REFORM SERIES SEMINARS HORAN hosted approximately 200 clients and friends of the firm for a series of health care reform seminars in September to prepare them for the upcoming counting requirements taking effect in 2015. The health care reform series included a seminar that was designed exclusively to discuss the requirements for school districts.
DOMINIC FRANCHINI DISCUSSES HEALTH CARE REFORM WITH COMMUNITY Dominic Franchini, CBC, Vice President, presented a health care reform seminar at both the Clermont Chamber of Commerce and Goering Center for Family and Private Business.
HORAN PARTNERS WITH DINSMORE TO HOST SEMINAR ON HOW TO HELP CLOSELY-HELD BUSINESSES WITH TRANSITION NEEDS
MICHAEL NAPIER HOSTS SEVERAL FINANCIAL PLANNING SEMINARS FOR CLIENTS AND COMMUNITY PARTNERS Michael Napier, Vice President at HORAN, presented at a Long Term Care & Estate Planning seminar hosted by the Council on Aging. Additionally, Michael was a presenter at a Social Security workshop at the United Way of Greater Cincinnati. Michael also held several financial planning seminars for the Cincinnati/Northern Kentucky International Airport’s employees to accommodate their varying work schedules.
HORAN partnered with Dinsmore to host a seminar for our corporate partners and advisors on the subjects of financing, protection and transition strategies for closelyheld businesses. The seminar took place at Kenwood Country Club on September 11, 2014. HORAN’s Greg Hoernschemeyer, Senior Vice President (pictured), and Dan McDonald, Estate and Business Planning Consultant, were presenters at the seminar.
| 13 |
leadership
S E E Y O L P M E N A
HOR
G N I D A E L
s e i t i n u m m o C ir
e h T n i y a W e th NATHAN DECKER ACCOUNT EXECUTIVE NORTHERN KENTUCKY CHAMBER GOLF OUTING — EVENT CHAIR
Nathan Decker, Account Executive at HORAN, served as the Chair of the 2014 Northern Kentucky Chamber Annual Golf Outing. The outing took place on Thursday, August 21, 2014, at Summit Hills Country Club. It is a significant fund-raising event for the chamber. The Northern Kentucky Chamber was founded in 1960 and is committed to developing strong businesses and a vibrant economy in Northern Kentucky and its surrounding region. HORAN was a hole sponsor at the event.
health. wealth. life.
ERIK FREUDENBERG VICE PRESIDENT, MARKET LEADER DAYTON SIGNATURE CHEFS AUCTION — EVENT CHAIR Erik Freudenberg, Vice President and Market Leader, and his wife Kelly served as the Co-Chairs for the Dayton Signature Chefs Auction. The event raises money for the March of Dimes to assist in preventing birth defects, premature birth and infant mortality. The event took place on Monday, October 6, 2014, at the Schuster Performing Arts Center. Ten of the finest local chefs prepared their exceptional cuisine with continuous entertainment. The event also featured a live and silent auction. HORAN was proud to serve as a sponsor of the event as well.
| 14 |
CHERYL MUELLER ACCOUNT EXECUTIVE LEADERSHIP DAYTON PROGRAM Cheryl Mueller, Account Executive at HORAN, was accepted into the Leadership Dayton program and will apply her talents to the Class of 2015. Leadership Dayton is the fourth-oldest continuously operating community leadership program in the United States. The premier program is designed to encourage a network of community leaders to serve the Dayton area. Selected participants learn through seminars, small work groups, panel discussions, direct interaction with community leaders and a variety of experiential activities.
DAN CAHILL, VICE PRESIDENT, MARKET LEADER LEADERSHIP NKY & ELECTED TO NKY CHAMBER BOARD OF DIRECTORS
HORAN MOVES UP ON LIST OF LARGEST MONEY MANAGEMENT FIRMS The Cincinnati Business Courier published the list of Cincinnati’s Largest Money Management Firms for 2014. The list is comprised of the top 25 largest money management firms in Cincinnati and is ranked by the company’s locally managed assets. In 2013, the Cincinnati Business
Dan Cahill, Vice President and Market Leader, was elected to the Northern Kentucky’s Chamber of Commerce Board of Directors. Dan will assist the chamber with connecting businesses to government, education and nonprofits in order to create and promote a strong business climate. Additionally, Dan was accepted as a member of Leadership Northern Kentucky. The nine-month program utilizes the community to cultivate leaders who positively serve the region.
Courier announced that HORAN was ranked 21st on the list. This year HORAN moved up two spots and was named the 19th largest money management firm in
VALERIE JACOBS ACCOUNT EXECUTIVE WE LEAD CINCINNATI
Cincinnati. HORAN has over $1.3 billion in assets under management and advisement, collectively. HORAN provides personalized solutions to grow, protect and
Valerie Jacobs, Account Executive at HORAN, was selected to participate in The Cincinnati USA Regional Chamber’s WE Lead program. The program provides leadership development for women who are advancing in their professional roles and community. During the 10-month program, she will enhance her leadership and communication skills through a personal strategic plan and connect with other progressing women leaders in the Cincinnati area.
transfer wealth. HORAN’s experts provide ongoing guidance, insight and investment monitoring with complete objectivity.
| 15 |
community
ACTI
Supporting the Reg
HORAN Sponsors and Attends Clermont Chamber of Commerce’s 2014 Gather on the Green HORAN was proud to support the Clermont Chamber of Commerce and its 2014 Gather on the Green. Members of the HORAN team attended the event that took place on September 15, 2014, at O’Bannon Creek Golf Course. Pictured: Valerie Jacobs, Account Executive (second from left); Julie Highley, Senior Vice President (center); and Julie Tople, Account Manager (second from right).
health. wealth. life.
HORAN Employees Participate in Variety of 5K Fund-Raising Events HORAN employees have found a way to combine staying active physically and staying active in the community. Employees have participated in several 5K and other race fund-raising events including the Warrior Run, the UC Blue Ash Dash, the Sycamore Junior High School Aviator Flight Fest and 5K as well as the Cincinnati Scurry (pictured above) which was hosted by TiER1 Performance Solutions and the Marvin Lewis Community Fund to benefit Learning is Cool. HORAN was proud to sponsor each of the events.
| 16 |
IVELY
gional Community
HORAN Supports Rotary Club of Mason and Deerfield, Ohio
HORAN Sponsors the 2014 All for One Golf Classic
HORAN sponsored the Rotary Club of Mason and Deerfield, Ohio’s annual Charity Golf Outing. The event was held on Monday, August 25, 2014, at Four Bridges Country Club. Approximately 100 golfers attended the event, including HORAN employees David Lohre, Vice President, pictured far left, and Julie Highley, Senior Vice President, pictured far right. The event raises money to go towards scholarships for high school graduates from Mason and Deerfield Township as well as other community service projects.
HORAN marked the 11th year as the title sponsor of the All for One Golf Classic on Monday, August 18, 2014, at the Kenwood Country Club and the Hyde Park Country Club. The event is a leading fund-raiser for the Xavier Athletic Department. The $180,000 raised at this year’s event will support Xavier Athletic programs and help studentathletes attain academic and athletic achievement. HORAN was also proud to support The Night of Excellence, which serves every year as the official dinner of the event, celebrating the success of Xavier athletics. It was held on Saturday, August 16, 2014, at the Cintas Center. | 17 |
clients Client Spotlight: The Christ Hospital
125 Years
of Clinical Excellence
“Founded in compassion and driven by excellence.” In 1888 these seven words served as James Gamble’s vision for what is now known as The Christ Hospital Health Network. 125 years later, the organization celebrates Gamble’s original vision and the clinical excellence that has taken place since 1889. In the late 19th century, Gamble and a group of his associates were concerned about the distressing conditions in the Greater Cincinnati area. In order to address them, they recruited a missionary on leave from India named Isabella Thoburn to focus on the social and economic conditions of the city. During Thoburn’s first year in Cincinnati, she came across a woman from Kentucky who had cancer. This woman was unable to get treatment from the local municipal hospital because she was from out of state. Thoburn shared this with Gamble and his other associates. They agreed to focus their scope on the health care needs of the community. Gamble contributed a 10-bedroom home in the West End on York Street, which became what was known as Christ’s Hospital in 1889. The Christ Hospital held a celebration on November 1, 2014, at the Duke Energy Center to celebrate the hospital’s 125th anniversary with the community. Mike Keating, current President and CEO of The Christ Hospital, has served the organization since 1991. Keating
1889
Christ’s Hospital is dedicated at 46 York Street in a home donated by James Gamble.
1902
First hospital to admit a female physician.
health. wealth. life.
served as a board member and the board chair for the hospital before taking his current role. Keating recognizes Gamble’s vision as the foundation for the hospital’s legacy of clinical excellence. “When you think about the purpose of our 125th anniversary celebration, it’s really to celebrate and honor James Gamble’s original vision founded in compassion and driven by excellence, and the sustaining value it has had over the years,” said Keating. The Christ Hospital has been a pioneer in the health care industry. The organization was the first to admit a female physician in 1902; The Christ Hospital physicians were the first to perform a ceramic hip replacement in the United States; and the Heart and Vascular Center originated many pioneering technology procedures and innovations, including the region’s first aortic valve replacement without open heart surgery. The Christ Hospital is a pillar in the community because of the organization’s clinical excellence and patient experience. “We have an exceptional staff of physicians; our nursing staff puts us among the 6% of the top hospitals in the country relative to nursing excellence; and we are among the top 5% nationally in patient experience,” said Keating. “There’s an old saying—people select physicians for the best outcomes, and they return for the experience. That has really been
1904
The name of the hospital is changed from “Christ’s Hospital” to The Christ Hospital.
1946
Patients are segregated on the basis of diagnosis for the first time.
our differentiator over time—our pursuit of clinical excellence and best outcomes tied to providing the best patient experience.” Deborah Hayes, RN, MS, MSN, NI, NEA-BC, Vice President and Chief Operating Officer, began her service to The Christ Hospital in 1987 as a student-nurse aide. She has taken on many stations in the organization including positions in the intensive care units, management and director roles as well as Chief Nursing Officer, a position she still holds until a replacement is found. “We have many people who are in this organization who have spent their lives in service to this community under the hospital’s mission,” said Hayes. “It really speaks to the way in which this organization offers opportunities to many.” Employees play a crucial role at The Christ Hospital and are the crux of the organization’s culture. Leadership understands that open communication is critical to sustain the hospital mission. “I get the most satisfaction working with the people,” said Keating. “We have an exceptional medical staff, outstanding nursing staff and very dedicated employees across the spectrum of responsibilities. That’s why Debbie (Hayes) and I spend so much time interacting with the employees because we learn so much on the front lines that we need to understand to drive what is a fairly large and complex organization.”
1962
The Christ Hospital opens an intensive care unit, the first of its kind in the area.
1969
The department of cardiac surgery is formed. A total of 13 open heart procedures are performed this year.
| 18 |
Ensuring employees have a benefits package that addresses all of their needs, including their financial security and retirement planning, is essential for The Christ Hospital. “HORAN does a fabulous job delivering corporate retirement plan consulting services and solutions. There isn’t a year that has gone by since I’ve been here that HORAN hasn’t been here multiple times, making themselves available to our employees to try to help them understand what long-term financial planning looks like to prepare for a successful retirement,” said Hayes. For over 30 years, The Christ Hospital has partnered with HORAN for its corporate retirement plan consulting needs. HORAN also provides The Christ Hospital with the following services: employee benefits consulting, life and voluntary life benefits, transition from group medical coverage to Medicare and executive benefits. The leadership staff understands the importance of reliable partnerships in sustaining an organization the size of The Christ Hospital Health Network. “We choose our partners by experience, knowledge and integrity, and I would say without question, Terry Horan and his team are that,” said Keating. “People want to deal with people they can trust with what is most important in their lives, and that typically deals with health-related matters including, benefits and financialrelated matters, which include your money.” The Christ Hospital is excited about their future plans for expanding their network. These plans include building an extension onto the Northern Kentucky– Fort Wright Outpatient Center, opening the Montgomery Outpatient Center and completing the The Joint and Spine Center on the Mt. Auburn campus, which will
1982
The first ceramic hip replacement in the United States is performed.
2000
The Christ Hospital is recognized as one of America’s Best Hospitals by U.S. News & World Report, and has been recognized each year since.
Deborah Hayes, Vice President and Chief Operating Officer, and Mike Keating, Chief Executive Officer, pictured in the library of The Christ College of Nursing and Health Sciences. HORAN contributes an annual scholarship to the school.
completely house all of the services that any patient would need related to orthopaedics, spine and sports medicine.
THE CHRIST HOSPITAL HEADQUARTERS Cincinnati, Ohio
The Joint and Spine Center will house both ambulatory care areas—physical therapy and occupational therapy and a pool for patients to do rehabilitation in a water environment— as well as 90 patient beds, 12 operating rooms and support services for surgical patients housed in one building. It will also contain physician offices.
Chris Bergman Vice President and Chief Financial Officer
Where does The Christ Hospital hope to be when celebrating their 150th anniversary?
Deborah Hayes Vice President and Chief Operating Officer
“In 25 years, our role in the community should still reflect James Gamble’s original mission of ‘founded in compassion and driven by excellence’, and we hope to be able to touch even more lives,” said Keating. “We started as an urban hospital and have since expanded. We have plans to continue to expand and reach further into other areas of the region to meet patient needs and to be where our patients need us.”
2003
The Heart Center of Greater Cincinnati opens for the most advanced cardiovascular surgery, procedures, tests and research.
2011
Physicians with The Christ Hospital perform the region’s first aortic valve replacement without open heart surgery.
KEY PERSONNEL Mike Keating President & Chief Executive Officer
Victor DiPilla Vice President and Chief Business Development Officer
NUMBER OF EMPLOYEES 5,300 YEAR FOUNDED 1889
2012
2014
Ground is broken on the largest campus expansion, which includes The Christ Hospital Joint and Spine Center.
The Christ Hospital celebrates its 125th anniversary.
| 19 |
PRESORTED FIRST CLASS MAIL U.S. POSTAGE PAID CINCINNATI, OH PERMIT NO. 394
4990 East Galbraith Road Cincinnati, Ohio 45236
Happy Thanksgiving from all of us at HORAN. May your celebrations be filled with joy and may friends and family surround you during this special season.
CORPORATE HEADQUARTERS 4990 East Galbraith Road Cincinnati, Ohio 45236 513.745.0707 800.544.8306
www.horanassoc.com
REGIONAL OFFICES 2480 Kettering Tower 40 North Main Street Dayton, Ohio 45423 937.610.3700
Columbia Executive Center 207 Grandview Drive, Suite 100 Fort Mitchell, Kentucky 41017 859.572.4500