Letters

To The Editor: We were gratified to read Jack Bobo’s To the Point “IMSA Update” in the Jan. 8, 2007, issue.

Mr. Bobo rightly notes continuing concerns about inappropriate replacement activity. He also suggests that IMSA “could play a significant role” on the issue of replacements through developing replacement standards. In fact, IMSA recently issued new and heightened standards specifically related to replacement activity.

IMSA standards address this important issue by requiring IMSA-qualified companies to maintain monitoring programs to identify inappropriate replacements. The IMSA standards apply to both internal and external replacements. Through IMSA standards, a company is encouraged to consider how its commission policy regarding replacements complements its replacement policies and procedures.

IMSA-qualified companies make a commitment to offering producer training that clearly sets forth the company’s replacement policies and procedures and that provides guidance as to when replacements may be appropriate. IMSA standards also require companies to disclose information necessary to allow consumers to ascertain whether a proposed replacement transaction is appropriate.

In addition, IMSA-qualified companies maintain policies and procedures to review replacement activity. These should include a system for tracking, identifying and addressing deviations from the company’s replacement policies and procedures. Of course, IMSA standards require companies to comply with all laws and regulations applicable to replacement activity.

Brian Atchinson

President & CEO

IMSA

Bethesda, Md.

To The Editor:

Although Governor Rendell has many good ideas in his proposal, the plan has a disastrous flaw in the financing of health care reform. Recognizing human behavior, no one wants to do things that will cost them more money if they can avoid it. The 3% of payroll “penalty” is an incentive for businesses that currently do not have health insurance for their workers to continue to avoid coverage. As an example, 3% of a $30,000 salary is only $900 per year. This compares to providing a plan that will cost the firm $3,000 for single coverage or $10,000 for family coverage for a worker.

In addition, the design puts good employers at a competitive disadvantage. If they have been trying to do the right thing by providing coverage, they will think twice about continuing a plan. They could drop coverage, raise salaries and in 6 months, just have to pay 3% of payroll into the fund.