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Winter 2016
health. wealth. life.
Going Global In Pursuit of What Matters Most.
contents 3
A Letter from Terry Horan, President & CEO
EDUCATION
4 6 7 8 9 10 11
Wellness Works: HORAN Reveals Results of Wellness Best Practices Survey Q&A with Dr. David Katz
How to Be a Successful Fiduciary
The Big Risk to Your Retirement
Surrender, Sell, Exchange, Readjust Answers to Your Top Three Health Savings Account FAQs
HORAN Expands Scholarship Fund Offerings to Include Miami University HORAN in the Community
CLIENT FEATURE
14
Client Spotlight: Bonfiglioli USA
Please join us in welcoming our new corporate clients! - Presto Foods - Tri-State Healthcare Laundry - Clearcreek Township - Stagnaro, Saba & Patterson - Progress Supply Inc. - ARI Phoenix, Inc.
- The Cincinnati Zoo & Botanical Garden - Mercedes-Benz of Cincinnati - Grote Industries - Seapine Software, Inc. - Gaslight Property
Cover: The daily work at HORAN originates from a belief that three things matter most to our clients: access to quality, affordable health care; the ability to build long-term wealth; and the counsel to achieve financial goals and protect assets for a lifetime. For over 65 years, HORAN has developed plans to control costs, insure lives and protect wealth. This is the foundation of what we do. We deliver Health, Wealth and Life services to individuals, families and employers designed a round essential client needs. HORAN believes that our mission does not end at the borders of the United States. We are proud to support our clients of all sizes who conduct business in the United States and in more than 75 countries across the globe.
health. wealth. life.
March 10
Employer-Provided Clinics: Turning an Upfront Investment into Long-Term Savings
April 6
Utilizing Technology to Enhance Health Benefits Delivery
Grasping Market Volatility
COMMUNITY
12 13
HORAN EDUCATION SERIES
April 29
Business Succession Planning: Creating a Strategy to Protect the Future Growth of Your Business
May 5
Strategic Use of Qualified Retirement Plans for Beneficial Tax Purposes
May 19
Innovative Solutions to Positively Impact Health Care Cost Trends and Mitigate Risk
May 26
Economic & Market Update
Look for us online!
Visit the HORAN Newsroom at www.horanassoc.com to view the online version of health.wealth.life. |2|
™
A letter from Terry Horan
In Pursuit of What Matters Most. Our magazine is entitled Health.Wealth.Life. We believe if you are intentional and a wee bit lucky, you can have both health and wealth, and these will contribute to a full and meaningful life for you and your family. This issue highlights many fine articles and interviews dealing with health and wealth. HORAN organized its 2015–2016 Health Management Best Practices Survey. More than 100 organizations, spanning 13 industries and representing over 75,000 employees, participated in the region’s first comprehensive workplace wellness survey. You will find the survey’s key findings published in this issue. Additionally, we hosted Dr. David Katz to discuss wellness and its impact on the lives of our clients. His remarks are enclosed in a Q&A format. Dr. Katz is one of the world’s 100 most influential people in health and wellness. He is the Founding Director of Yale Prevention Research Center, President of the American College of Lifestyle Medicine and the Director of the Integrative Medicine Center. His website is www. davidkatzmd.com. You will also find two articles to help you navigate volatility in the stock market. These were written by Christopher Cook, CFP®, Vice President, and David Templeton, CFA, Portfolio Manager and Principal at HORAN Capital Advisors. Paul Carl, Vice President—Retirement Services, wrote an article that discusses the role of a successful Fiduciary. Anna Pfaehler, CFP®, Director of Financial Planning, points out the uses of a Health Savings Account. And I penned an article about the value of mature life insurance policies. We also spotlight the fine work of our client Bonfiglioli USA and their strong growth and global reach with Greg Schulte as their CEO and President. I know I want to visit Bologna, Italy, after reading about Bonfiglioli. So as we await the coming of spring, find a warm spot in your home or office and review our articles. We sincerely want you to enjoy all the benefits of physical and financial well-being. Most sincerely,
Terence L. Horan, CLU, ChFC President & CEO of HORAN TerryH@horanassoc.com
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education
“More than 100 organizations, spanning 13 industries and representing over 75,000 employees, participated in HORAN Reveals Health Management the region’s first Best Practices Survey Findings comprehensive HORAN released the findings from its 2015–2016 HORAN Health Management Best Practices Survey at a symposium held for clients, partners and friends of workplace wellness the firm on Tuesday, February 9. More than 100 organizations, spanning 13 industries and representing over 75,000 employees, participated in the region’s survey.” first comprehensive workplace wellness survey. Executive Summary
“The survey’s key findings will help employers understand how their wellness program compares to those of their peers,” said Terence L. Horan, CLU, ChFC, President & CEO of HORAN. “The results also identify the components that are essential for developing or modifying corporate wellness programs in order to improve the employee population’s overall health and the cost trend for health care.”
IMPROVING POPULATION HEALTH
The symposium began with a keynote address from Dr. David Katz, a world-renowned health and wellness expert. Dr. Katz is considered 76% participants have a wellness program in place. 67% one of the world’s 100 most influential people and wellness. He inisthe the Founding Director of Yale Prevention Center, STABILIZE HEALTH Research CARE COSTS of those who in do health not plan on starting a program President of the American College ofnext Lifestyle Medicine and the Director of the Integrative Medicine Center. 12 months.
Improving population health was the top program objective,
76% is considerably higher than the 62-68% that is
followedshared closely by thesurvey’s ability to stabilize health care During the program, HORAN’s Healthcommonly Management Christin and Scott Silver, the key findings andcosts. found in Directors, other wellnessBrandon related surveys. also explained how HORAN’s unique consulting model, the Health Management Way™, helps employers develop successful wellness Biometric programs. 49% of participants offer The key findings from the survey presented three common themes: an incentive to complete an annual preventive wellness takes time, health awareness is critical and participation physical matters. The survey data also revealed that the mostexamination. common
Screens & Health Risk Assessments
Preventive Physical Employee Assistance Examinations Program
Health Coaching
wellness program components were biometric screens (82.1% of 65% of participants with a wellness program offer employees an incentive to complete a biometric screen and health risk assessment.
health. wealth. life.
The most common elements included in a wellness program were recorded as: biometric screens and health risk assessments, preventive physical examinations, employee assistance program and health coaching.
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Wellness Takes Time.
Health Awareness is Critical.
Participation Matters.
survey participants), employee assistance programs (60.7% of survey participants), health coaching (51.3% of survey participants) and annual preventive screening programs (55% of survey participants). Other findings included: • 77% of participants had a wellness program in place. • The top two objectives for a wellness program were to improve the health and wellness of employees (95%) and to stabilize or reduce the cost of health care (83%). • 66% of survey participants had a fully-insured health care plan. • Primary challenges included how to increase participation, finding enough time and/or resources and how to better communicate about the program. HORAN recognized eight employers for having best-in-class wellness programs at the end of the program. The honorees were Cincinnati Eye Institute; Forest Hills School District; Gorilla Glue Company; Kadant Black Clawson Inc.; Montgomery County; RACO Industries, LLC; Standard Textile Co. Inc; and Stober Drives, Inc. More information about the HORAN Health Management Best Practices Survey can be found at www.horanassoc.com or by contacting Brandon Christin or Scott Silver at 513.745.0707. Pictured (clockwise): Dr. David Katz; Members of HORAN’s Leadership team and Health Management Directors pictured with Dr. Katz; Brandon Christin and Scott Silver, HORAN’s Health Management Directors, present the survey’s key findings; and Doug Miller, Executive Vice President at HORAN, and HORAN’s Health Management Directors pictured with the best-in-class wellness program honorees.
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education
Q&A with Dr. David Katz
Dr. Katz is considered one of the world’s 100 most influential people in health and wellness. He is the Founding Director of Yale Prevention Research Center and President of the American College of Lifestyle Medicine and Director of the Integrative Medicine Center.
Q: Why does wellness matter?
DK: You have a better life if you are healthy. The thing we all care about is the quality of our life. Wellness is the critical currency to purchase not only more years in life but more life in years.
Q: What are the main problems with health in America?
DK: We tend to mistake what we call health care for health. What America really has is a disease care system. Most of what we do in hospitals and clinics has very little to do with building health and a lot to do with treating disease. A second fundamental problem is that our culture doesn’t respect health as much as we should. We really ought to respect health as much as we do wealth. The third thing is that we tolerate cultural hypocrisy. On the one hand we say that breakfast is the most important meal of the day, but on the other hand we market to our children cereal with multicolored marshmallows, literally candy, as a healthy breakfast choice. We live in a culture that is collectively alarmed by the rates of diabetes in young people and yet have whole industries that are profiting from a market that is contributing to this behavior.
Q: It seems like new health improvement information comes out on a daily basis. Why is the state of health in America getting worse instead of better? DK: With so much information, competing claims and an unending parade of fad diet books, people don’t even know what they don’t know. We need to cut through the clutter. I am involved in an initiative called the True Health Initiative that brings together global leaders in health awareness and promotion who all agree on the fundamentals of living a healthy lifestyle.
Q: What should our goal be for health improvement?
DK: I would argue that we should set goals in health promotion based on the knowledge and technology that we already have. We already have enough knowledge to prevent 80% of all chronic disease. If we look at the aggregate of all heart disease, cancer, stroke, diabetes and dementia—eight times out of 10 that bad stuff doesn’t need to happen. Since that’s possible, we ought to establish it as a goal.
Q: How will we get there?
DK: We need a combination of individual action and collective action. We need to change our behaviors and to some extent that is up to each of us. It’s also up to all of us because the choices we make as individuals are subordinate to the choices all of us have. It’s not fair to ask people to eat well and give them a culture that makes junk food ubiquitous. It’s a combination of bottom up where every one of us does the best we can with what we know, and top down where we make some sweeping changes in our culture.
Q: When did your passion for health and wellness begin?
DK: I was 13 years old and tried out for the wrestling team in junior high. When I tried out for the team, the coach was saying how many chin-ups and push-ups we should be able to do. I couldn’t do that number. I think I’ve exercised every day in my life since. Then I started thinking more and more about the fuel needed for physical activity. I actually wound up transforming the dietary practices of my whole family because I started thinking that the fuel for our bodies mattered as much as the physical activity. This wound up translating into the career I pursued. I wound up becoming a beneficiary of my healthy living and I wanted to pay it forward.
health. wealth. life.
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How to Be a Successful Fiduciary Paul Carl Vice President–Retirement Services Paul is a key member of HORAN’s Corporate Retirement Plan Consulting organization. He works with corporations and individuals to deliver investment and retirement planning. In addition, he monitors investments, fees and providers for employer clients sponsoring retirement plans.
Congratulations on your promotion to Chief Financial Officer / Chief Operating Officer / Human Resources Director (choose one). Before settling into your new role, you review your job description asking, “What exactly is expected of me?” You meet with the CEO to review your responsibilities and his or her expectations for you. You discuss the future growth of the company, growth of personnel and growth of key fundamental operations. Near the end of the conversation, your new boss says, “You are also responsible for our benefits programs.” Congratulations on your new role as primary Fiduciary. Depending on how you look at the opportunity, you may consider your new Fiduciary role in one of two ways. 1. This could be your opportunity to positively impact the retirement income and future security of your fellow employees and their beneficiaries. 2. Or this could be a low-priority task and if not attended to in a proactive manner could result in the loss of professional credibility and your fellow employees’ retirement savings.
These rules and regulations effectively emphasize ethical, unbiased and appropriate operation of the entire plan. They include oversight of the plan’s hired service provider, regardless of the service provider’s role to act in a Fiduciary, co-Fiduciary or non-Fiduciary capacity.
The primary law governing retirement plans, the Employee Retirement Income Security Act of 1974 (ERISA), focuses on the behaviors of the fiduciaries responsible for the retirement plan(s).
Act Prudently Follow Plan Documents Ensure Diversification Among Investments
ERISA and its governing Ensure Only Reasonable regulations specifically Expenses Are Paid call for measures to ensure that Fiduciaries Avoid Transactions act solely in the interest Deemed To Be Prohibited of plan participants and their beneficiaries. Fiduciaries must act prudently, follow plan documents, ensure diversification among investments, ensure that only reasonable expenses are paid and avoid transactions deemed to be prohibited, all while focusing on the exclusive purpose of providing benefits to their plan participants and beneficiaries. The successful Fiduciary embraces these responsibilities and carries out duties focused on giving plan participants and their beneficiaries retirement readiness.
“Selecting the appropriate colleague(s) whose daily activity involves working on some aspect of the plan is just as vital as selecting the right advisor, third-party administrator or consultant whose specific functions will vary depending upon the role he or she plays for the plan.” The primary plan Fiduciary—whether designated by plan document, job description or by board or committee—is responsible to and for all plan participants.
Fiduciary Responsibilities
So what makes a successful primary Fiduciary? There is no magic formula. Each primary Fiduciary must independently determine what his or her roles and responsibilities are to the plan and the plan participants (and the beneficiaries).
Selecting the appropriate colleague(s) whose daily activity involves working on some aspect of the plan such as payroll and its corresponding employee contribution withholding and remittance is just as vital as selecting the right advisor, thirdparty administrator or consultant whose specific functions will vary depending upon the role he or she plays for the plan. In the end, the primary Fiduciary is often unpaid and unheralded, yet quickly held accountable for less-than-appropriate results.
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education
Grasping Market Volatility David Templeton, CFA Portfolio Manager & Principal David is a senior strategist and advisor at HORAN Capital Advisors. He has extensive experience in portfolio construction, security selection, development of investment policies and portfolio allocation strategies for individual and institutional clients.
Market pundits, already dizzy by January’s stock market sell-off, reference the word volatility often. It has been a challenging start to 2016, one of the worst Januarys on record and many asset classes are experiencing significant volatility. The word volatility carries a negative connotation as it is associated with a declining market. However, there is good volatility when investors enjoy market gains. As is human nature though, an investor’s reaction to market losses is more painful than the pleasure of market gains. Investment professionals evaluate a number of technical indicators that provide insight into the level of volatility in the market. These sentiment indicators include the CBOE Volatility Index (VIX), the CBOE Equity Put/Call Ratio and AAII’s weekly Sentiment Survey results. The general purpose of each indicator is to evaluate the level of fear within the market. Frequently, if any or all sentiment levels reach historical extremes, bearishness or bullishness may present oversold or overvalued conditions. Every period of volatility has a storyboard. The 2001 dot-com bubble brought volatility due to excessive company valuations, whereas 2008 was a confluence of events including financial leverage and real estate euphoria. Today’s volatility is driven by China’s growth fears and multiple geopolitical events around the world. The markets are also reacting to signals of a potential global economic slowdown and the repercussions of low energy prices. As investment managers, it is important to evaluate data that is short-term “market noise” and what data may change economic and company fundamentals. This past year was the first in four years to have a market correction greater than 10%. The market fell 12.4% through August 25 but rallied back in the fourth quarter. Although that kind of volatility is painful for many investors, it is more the norm of a typical market than not.
health. wealth. life.
In fact, since 1980 the average S&P 500 Index intra-year drop from peak to trough is -14.2%. When you remove big outlier years, such as 1987 (-34%), 2001 (-30%), 2002 (-34%) and 2008 (-49%), the average is still -11% (consequently, the median is also -11%). Most importantly, since 1980 the market has been positive 27 of 36 years; a 75% success rate. How do investors or investment advisors address portfolio volatility? Conventional wisdom and traditional means would argue through diversification, however, diversification seems to present challenges in stressful market conditions. Portfolio managers have observed the high correlation between asset classes during challenging economic times. This high correlation reduced helpful diversification properties in periods like 2008 and even 2015 when few asset classes performed well. Although diversification has its challenges, it still trumps the idea of concentrating assets within a portfolio. No matter how much conviction someone may have on an investment, particularly for those who cannot afford sizable losses, concentrations can destroy a portfolio with limited ability to recoup those losses. Risk can therefore be defined as the permanent impairment of capital. Our investment team has a clear focus on risk and portfolio volatility. We analyze volatility at the portfolio level and the individual investment level to help us understand where and when we should accept different investment risks. Without incremental risk, there are rarely higher returns. Measurements of volatility/risk such as standard deviation, value at risk (VAR) and downside capture give us critical data as to how investments may react in stressful environments. Absent this data, we focus on the characteristics of the investment. For instance, does a fund manager have a specific strategy or philosophy that historically protects capital in down markets? Are the characteristics of the investments higher quality and less volatile in troubled economic times? It is important to understand that market volatility presents opportunities. These opportunities include evaluating asset class exposure, finding investments that may be undervalued and dollar cost averaging for current investments. The familiar saying, “Stay the course,” is not acceptable when significant market shifts occur.
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The Big Risk to Your Retirement Christopher Cook, CFP® Vice President Christopher focuses on providing clients with comprehensive financial planning and accompanying investment strategies. As a CFP® and a Fiduciary, he assists individuals and families with retirement income analysis, tax planning, risk management and investment asset allocation.
Would you believe it’s possible for a retiree, who’s withdrawing modestly from his or her IRA each year, to run out of money over a period of 25 years where the market averaged 10.2% returns, but end up a millionaire when the market only averaged a 9.2% return? It’s true. What most investors don’t understand is that the volatility of the financial markets can have a profound effect on them during retirement. In fact, the early years of retirement are most critical and it’s during this time investors should work closely with their financial planners to help ensure success. You’ve probably been told that as long as you “stay invested for the long term” the stock market will perform well over time. While this statement is generally accurate, the truth is market volatility can affect recent retirees more than any other type of investor.
1953
−1.0%
1965
12.5%
1954
52.6%
1966
−10.1%
1955
31.6%
1967
24.0%
1956
6.6%
1968
11.1%
1957
−10.8%
1969
−8.1%
1958
43.4%
1970
4.0%
1959
12.0%
1971
14.3%
1960
0.5%
1972
19.0%
1961
26.9%
1973
−14.7%
1962
−8.7%
1974
−26.5%
1963
22.8%
1975
37.2%
1964
16.5%
1965
12.5%
1966
−10.1%
1967
24.0%
Scenario 2
Scenario 1
Let’s look at two different, but real-life 25-year periods of the stock market:
1976
23.8%
1977
−7.2%
1978
6.6%
1979
18.4%
1968
11.1%
1980
32.4%
1969
−8.1%
1981
−4.9%
1970
4.0%
1982
21.4%
1971
14.3%
1983
22.5%
1972
19.0%
1984
6.3%
1973
−14.7%
1985
32.2%
1974
−26.5%
1986
18.5%
37.2%
1987
5.2%
1976
23.8%
1988
16.8%
1977
−7.2%
1989
31.5%
1975
Average = 9.2%
Average = 10.2%
You’ll notice that the first scenario shows the rates of return of the S&P 500 from 1953 to 1977, while the second scenario shows the rates of return of
the S&P 500 from 1965 to 1989. Take note that in Scenario 1 the average rate of return was 9.2% and in Scenario 2 the average rate of return was 10.2%. Let’s look at two different investors: one investor is saving for her retirement (Susan), while the other investor is already in retirement (Brad). Susan is our first investor. She is currently working and saving for her retirement. Currently, she has $30,000 saved and invests $5,000 a year at the beginning of each year. She increases this amount by 3% each year for inflation and continues saving for the next 25 years. If Susan was saving money with the investment returns of Scenario 1 (9.2%), she would end up with around $723,000 after 25 years. But if the investment returns were the same as Scenario 2 (10.2%), she would end up with almost $960,000 by the end of 25 years. This makes sense because Scenario 2 averaged a higher average return. Brad is retired and is funding some of his retirement with his savings. He has saved $500,000 for retirement and decides to withdrawal $30,000 at the beginning of each year for the next 25 years. He increases this amount by 3% each year for inflation. Brad does well in Scenario 1 (9.2%); he ends up with almost $2,015,000 at the end of 25 years, even after withdrawing a total $1,032,000. During Scenario 2 (10.2%), Brad runs out of money after 23 years. This is solely because of the type of market volatility he experiences. Remember, over the 25-year period, Scenario 2 had a higher average annual return than Scenario 1 (10.2% versus 9.2%).
Volatility matters. The same market that propelled Susan’s retirement fund to $960,000 actually caused Brad to fall short of his retirement goals. How could that be? The answer is in the early stages of retirement, investors are extremely vulnerable to negative market returns if they must maintain a certain level of income. In Scenario 2 Brad faced negative returns in four of the first 10 years of retirement so he was withdrawing from his nest egg important sums of money that would not be available to grow as the markets recovered. The result is that his portfolio was reduced so dramatically in those early years that it was impossible to recover from the loss when the market performed better. The takeaway from this is to understand that the volatility of the financial markets affects retirees more than it affects people saving for retirement. Taking money out of the markets each year, rather than putting money in, creates more exposure to the negative impact of market volatility. This underscores the need for retirees to work closely with their financial planners to consistently monitor their portfolio’s performance and ensure they are withdrawing from their savings at a healthy, sustainable rate.
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education Surrender, Sell, Exchange, Readjust Terence L. Horan, CLU, ChFC President & CEO Terry leads an energetic and focused team to deliver the most current and comprehensive health, wealth and life services. HORAN’s professionals help solve the two greatest challenges facing Americans today: access to affordable health care through the bridge of insurance and managing assets to support a long retirement and transfer to the next generation.
•
Transfer the policy to an annuity. The transfer is tax free in most cases. The annuity payout, which is a combination of principal and interest, will be taxed in a favorable manner. When the exchanged policy is at a loss, the annuity can increase in value up to the cost basis before any annuity payments would be taxable.
•
Elect a tax-free transfer from a life insurance policy to a longterm care policy. Relatively new products exist in the market that combine life insurance and long-term care benefits. This type of policy is guaranteed and paid up with a single lumpsum premium.
•
Donate the policy to charity. You may be entitled to a tax deduction.
•
Take a reduced paid-up policy if the contract is a whole life policy. No additional premiums will be required, but some portion of the death benefit will continue in force for life.
•
Sell the policy. This option may be available if you are 65 or older and if the policy has a death benefit of $250,000 or more. An investor can maintain the insurance and be willing to pay you more than the cash value of the policy, or in the case of term insurance, provide a payout that would otherwise not exist.
•
Seek external financing to pay premiums. If you have a large insurance policy, you can negotiate with a bank to pay premiums in exchange for an assignment of a portion of the policy cash value.
•
Bank financing can be a good strategy when there is a policy loan at a fixed interest rate that is well above the rates offered by a bank. You may be able to markedly reduce the interest payments when exchanging a policy loan for a bank loan.
Winston Churchill had it right in some cases. When it comes to life insurance, the best advice may be: “Never surrender.” Many of us have life insurance policies that may no longer seem useful. A number of reasons lead to that conclusion: 1. The original purpose of the policy no longer exists (e.g., the children are grown and death is no longer an economic disaster or loan obligations have been repaid). 2. Policy loans have been an expensive drag on policy performance or the value of the policy would be of greater benefit to you now than at your death. 3. Permanent cash value life insurance policies are not performing as originally anticipated due to low interest rates and reduced dividend schedules. A common reaction is to cancel the policy and eliminate the insurance company’s obligation to ever pay out the promised death benefit. If the canceled policy has a cash value, that cash value will be paid to the policyowner less any policy loans.
The amount of life insurance surrendered each year is surprising. A 2008 industry study showed that Americans age 65 and older give up about $112 billion in life insurance benefits each year, either by surrendering their policies or by letting them lapse. Other options are sometimes more financially sound and should be considered: • Transfer the current policy cash value to a new life insurance policy with lower costs reflecting current mortality and perhaps more earnings potential and/or investment options. An exchange can offer the same or higher death benefit for a lower premium. This exchange can shield a policy gain from tax or preserve a policy loss to be used against future gains.
health. wealth. life.
When offered the German terms of surrender during the Battle of the Bulge, commanding General Anthony McAuliffe responded, “Nuts.” Make sure you are exploring all of your options before surrendering.
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Answers to Your Top Three Health Savings Account FAQs Anna Pfaehler, CFP® Director of Financial Planning Anna brings context and clarity to complex situations through comprehensive financial planning and unbiased objective advices so that clients can make informed decisions about their wealth. As a Certified Financial Planner her focus is to create a clear picture of the client’s financial health and identify strategies to service any discrepancies. Anna’s expertise includes high-net-worth planning, taxes and planning for unmarried couples.
Can you use an HSA to pay for long-term care insurance premiums?
1
Premium payments for qualified long-term care insurance, up to certain limits, are considered qualified medical expenses and can therefore be paid for from an HSA. In general, a long-term care insurance contract is qualified if it pays benefits for care when the insured is unable to perform two activities of daily living (i.e. bathing and feeding) or is severely cognitively impaired. The contract also must meet additional technical criteria. HSA funds can be used to pay premiums up to a limit based on the insured’s age. In 2016 these limits are: • Age 40 or under: $390 • Age 41 to 50: $730 • Age 51 to 60: $1,460 • Age 61 to 70: $3,900 • Age 71 or over: $4,870
What happens to your HSA when you die?
2
When you die, your HSA passes to your designated beneficiary. If this is your spouse, the account remains an HSA and your spouse can continue to use it as such. However, if the account passes to someone other than your spouse, such as your children, the account must be distributed in the year of your death and the balance is taxable income to the beneficiaries.
Can you give your HSA to charity?
3
Qualified charitable distributions apply only to IRAs, so you cannot make a distribution out of your HSA directly to a charity without including it in your income. However, you can bequeath your HSA to a charity by naming the charity as the designated beneficiary. Doing so avoids the previously mentioned income tax consequences.
If you fail to designate a beneficiary and the account passes to your estate, the value of the account is included on your final income tax return. You should try to spend down an HSA in retirement instead of preserving it for nonspousal heirs. If you can use your HSA for qualified medical expenses, there will be no income tax on your distributions.
HSAs have numerous benefits but are not without complexities. If you have any additional questions about HSAs, contact Anna Pfaehler at 513.745.0707.
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community
HWL • CLIENT FEATURE
HORAN Announces Expansion of Scholarship Fund Offerings to Include Miami University HORAN is committed to improving the quality of life in the communities where our clients and employees live and work. We believe we have a responsibility to serve our regional community as a good corporate citizen to create strong communities that increase the economic vitality and quality of our neighborhoods. As a company and individually, we support initiatives that educate, enrich and heal. Since 1997, HORAN has committed over $159,500 in scholarship funding to 78 deserving students representing more than 41 clients. This year HORAN is proud to announce the expansion of the HORAN Scholarship Fund to include Miami University. Miami University joins the list of current scholarships proudly awarded by HORAN to the following universities: • • • •
University of Cincinnati: Jack and Elaine Horan Scholarship Xavier University: HORAN Free Throw Scholarship University of Dayton: Miller/Kreber Scholarship Wright State University: HORAN Wright State University Scholarship • Miami University: HORAN Miami University Scholarship
“As our geographic presence continues to expand, so have our scholarship offerings. These scholarships were created to honor full-time students for their hard work, honesty and integrity. We are proud to be able to expand our support and create a scholarship fund for deserving students in our region,” said Terence L. Horan, CLU, ChFC, President & CEO of HORAN. The deadline for scholarship applications is April 1, 2016. All scholarship winners are chosen by the universities and are based on academic merit and financial need. If you have any questions, please feel free to contact Tyler Davis, Human Resources Generalist at HORAN, at 513.745.0707 or via email at Tyler.Davis@horanassoc.com.
health. wealth. life.
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Cheryl Mueller Leads Finance Committee for Boys and Girls Club of America in Dayton Cheryl Mueller, Vice President—Central Ohio at HORAN, currently serves as the head of the Finance Committee for the Boys & Girls Club of America in Dayton. The mission of the Boys and Girls Club of Dayton is “to inspire and enable all young people, especially those who need us most, to reach their full potential as caring, productive, responsible citizens.” Mueller is frequently asked to be a guest speaker at the organization’s events to share the impact that Boys and Girls Club had on her life.
“My sisters and I went to the Boys and Girls Club for several years as we were growing up. The staff at the club we went to loved us and took care of us in ways Cheryl Mueller that many of the children really need,” said Mueller. “I’ve always thought they were our guardian angels and I knew when I was young that someday I would give back and invest in this organization. I hope to inspire others to do the same.” Mueller joined the Boys and Girls Club of Dayton board in 2015 and will lead the Finance Committee during 2016.
Rob Brown Selected to C-Change Class 11 Rob Brown, Account Executive at HORAN, joins the 2016 C-Change Class 11, Cincinnati USA Regional Chamber’s year-long leadership development program. Rob joins a group of 55 other young professionals who hope to impact the Cincinnati area through their leadership and involvement in the community. C-Change is a product of HYPE (Harnessing Young Professional Energy), a chamber initiative to establish Cincinnati as a top destination for young professionals to live and work. HYPE offers programs and resources to engage, develop and retain young talent.
HORAN Sponsors Fourth Annual Northern Kentucky Wellness Challenge HORAN is a proud sponsor of the Fourth Annual Northern Kentucky Chamber Wellness Challenge alongside companies such as Cincinnati Children’s Hospital Medical Center and St. Elizabeth Healthcare. The challenge runs for eight weeks from January 18 through March 11, 2016. The Northern Kentucky Wellness Challenge is a community-wide initiative that encourages healthy worksites and celebrates progress made by company-based teams across Northern Kentucky and the Greater Cincinnati area. As one of the Healthiest 100 Workplaces in America, HORAN looks to promote healthy workplaces within our community by supporting programs like the Fourth Annual Northern Kentucky Wellness Challenge. The Northern Kentucky Wellness Challenge promotes physical activity as well as the consumption of water and nutritious foods. In addition, the challenge offers many benefits including an opportunity for employers to build teamwork within their organizations and compete for a good cause—healthy lifestyles.
Leadership programs like C-Change are important for the retention of talent in the Cincinnati community. Rob Brown
C-Change teaches individuals skills necessary for them to be effective and influential leaders in local businesses as well as the community.
Participants receive an eight-week complimentary gym membership to participating YMCA and Anytime Fitness locations.
Since 2006, C-Change has connected nearly 550 leaders across Greater Cincinnati.
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client feature
HWL • CLIENT FEATURE
Client Spotlight: Bonfiglioli USA
Up for Growth in a Global Market BONFIGLIOLI USA
WORLD HEADQUARTERS Bologna, Italy LOCAL HEADQUARTERS Hebron, Kentucky
KEY PERSONNEL Greg Schulte Chief Executive Officer & President Jeanie Phillips Human Resources Manager
INDUSTRY Industrial, Wind, Mobile & Photovoltaic Solutions NUMBER OF EMPLOYEES 105 YEAR FOUNDED 1999
health. wealth. life.
The European American Chamber of Commerce of Greater Cincinnati (EACC) went on a European mission to the world headquarters of the Bonfiglioli Group in October 2015. The EACC traveled with its Economic Development Investors which includes Dominic Franchini, Vice President at HORAN, and representatives from Frost Brown Todd, Bannockburn and Duke Energy. Sonia Bonfiglioli, Chairman of Bonfiglioli Group, hosted two seminars for Bonfiglioli suppliers as well as one of Italy’s largest industrial associations during the EACC’s time in Italy. The seminars focused on Bonfiglioli’s success in the US market as well as opportunities for growth and available resources in the Greater Cincinnati area. Clementino Bonfiglioli founded Costruzioni Meccaniche Bonfiglioli in 1956. Over the past 60 years, it has grown to its current global network comprised of 17 countries and 3,500 employees worldwide. Bonfiglioli USA, now located in Hebron, Kentucky, was established in 1999. Bonfiglioli USA designs, manufactures and supplies a range of gearmotors, drive systems, planetary gearboxes, inverters and photovoltaic solutions for four main business areas: industrial, photovoltaic, wind and mobile. The four business areas work in tandem to achieve Bonfiglioli’s incredible growth. The company skyrocketed from $3 million in 2002 to $142 million in 2015.
“We have four business units that leverage the ups and downs of the market. If growth is down in one business area, chances are it’s up in another,” said Greg Schulte, Chief Executive Officer & President of Bonfiglioli USA. “We have allowed our market segments to act as a balancing effect upon one another.” In order to achieve its tremendous growth, Schulte says the company taps into its global network.
“As a global organization, having partners all across the world creates a network within our organization that allows everyone to communicate,” said Schulte. “We are able to reach customers on a global level and communicate in a quick and effective manner to win business.” Schulte also credits the company’s growth to its focus on hiring the right employees. “The employees we bring on have an entrepreneurial spirit and drive to help take the company to the next level and be a part of our growth,” said Schulte. Bonfiglioli USA makes it a priority to share best practices with its global network. Many employees have had the opportunity to go to the Italian headquarters in order to train on new processes and industry best practices.
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“As you grow it’s important to continue to monitor your processes to ensure they are still working. Sometimes your processes have to change in order to be effective,” said Schulte. “We empower all of our employees to help with the innovation of new products and work to understand what the customer wants and needs.” In order to attract and obtain employee talent, Bonfiglioli USA works to make its employee benefits affordable and provides its employees with benefit education. “We want to keep options available for our employees that they are used to seeing. We used to be able to have a 100% covered plan, but the more you grow the need arises to adjust your plan offerings accordingly,” said Jeanie Phillips, Human Resources Manager at Bonfiglioli USA. “We work hard to keep our employee benefits affordable. Last year, we were able to reduce our employees’ out-of-pocket costs for our health insurance plan.” HORAN listens to Bonfiglioli USA’s evolving needs as they continue to grow in order to design benefit strategies. “The philosophy HORAN uses to go to market with its clients is very similar to Bonfiglioli’s,” said Schulte. “HORAN listens, they understand what the needs of the customers are and they tailor their solutions around their clients’ needs.” Schulte believes Bonfiglioli’s client-centric approach to innovation is contributing to its growth and success. “We are bringing back some of the things that the United States has lost, and we are doing it in an innovative way with new manufacturing styles and principles,” said Schulte. “I enjoy the fact that we are making an impact both globally and locally by investing in localized manufacturing.” Greg Schulte, Chief Executive Officer and President of Bonfiglioli USA.
Karen Mueller HORAN’s Relationship Manager for Bonfiglioli USA
Jessica Woodward HORAN’s Account Manager for Bonfiglioli USA
HORAN advocates for clients to maximize benefits, minimize costs and improve health. They work to identify and understand clients’ organizational challenges and then collaborate to put strategies in place that will achieve their desired outcomes. HORAN’s Client Service Model provides exemplary service and commitment. A dedicated team provides custom solutions to clients and their employees leveraging the deep experience, skills and expertise of the benefits team.
Employees who travel internationally create a complex benefits environment. The health care needs are unique, are frequently changing and require dedicated attention. Whether you are a small or large company, have one employee who travels abroad or many, the risks are the same. As an employer, you want your employees to have access to quality care, financial protection and peace of mind when they need it most. Additionally, you want to maintain global compliance and focus on cost containment and risk mitigation while ensuring your corporate goals are aligned to recruit and retain qualified employees. HORAN International Benefits can provide a customized solution to meet the specific needs for both your short-term and long-term travelers. Visit www.horanassoc.com to learn more.
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PRESORTED FIRST CLASS MAIL U.S. POSTAGE PAID CINCINNATI, OH PERMIT NO. 394
4990 East Galbraith Road Cincinnati, Ohio 45236
Explore. Dream. DISCOVER. —Mark Twain
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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