I operated my funeral home from 1980 to 2013 and in that time period we increased prices every year.  I always looked for an average of about 3% but was able to increase my cremation prices more than that as cremation was growing in popularity.  And, it seemed that our price increases also increased margins as the inflationary rate of our costs, on average, were less than we increased prices.

As our number of services increased, so did our average margins, and profitability also did.  There is no doubt that as you set your budgets for 2026 growing margins may be somewhat difficult to realize when you consider the costs of your goods and services to operate your funeral home are continually rising.  According to Gemini artificial intelligence the average annual rate of inflation from 2000 to 2020 was about 2.2% annually. . . .meaning a 3% rise in prices would theoretically increase margins.  However, when asked the average inflation rate from 2020 to 2025 Gemini AI aswered “approximately 4.53%” to the same question. . . . .  That would make a 3% average increase in prices result in a loss of margin per case.

And of course, the traditional funeral home business is somewhat unique in that the choice of use and services consumers use is a one-time decision for each person.  So, if your highest priced and highest margin services are increased too much one ramification is that a consumer may choose a different service — such as direct cremation — to move their price point downward. . . . and with it, lower your margin on that case.  In the reality of this dynamic, setting price-points for your various services can be a difficult dance.

And at least for the short period of time I don’t see these inflationary costs going away anytime soon.  As you can read in this notice from the Bureau of Labor Statistics “The all items index rose 2.9 percent for the 12 months ending August, after rising 2.7 percent over the 12 months ending July.”  That means that in spite of our hopes of it receding, inflation was at a higher rate in August than it was in July.

I’ve also noticed in some articles, that I’ve linked below, predictions that other cost items will increase as well.  Items such as employer health care plans and commerical property insurance are expected to become more expensive moving forward.  Here’s some quotes from those articles:

 

• The total health benefit cost per employee is expected to rise 6.5% on average in 2026 — the highest increase since 2010 — even after accounting for planned cost-reduction measures. 

 

• Employers estimated that plan cost would increase by nearly 9%, on average, if they took no action to lower cost. 

 

• Based on the projections, 2026 will be the fourth consecutive year of elevated health benefit cost growth following a decade of moderate annual increases averaging only about 3%. 

 

• (a survey showed) 59% of employers will make cost-cutting changes to their plans in 2026 — up from 48% making changes in 2025 and 44% in 2024. Generally, these involve raising deductibles and other cost-sharing provisions, which can lead to higher out-of-pocket costs for plan members when they seek care.

 

• Employees are likely to see higher costs for their health coverage in 2026. 

 

• Employees could expect their paycheck deductions for health coverage to rise by about 6% to 7% on average. At the same time, because many employers will raise deductibles and copays to limit premium increases, higher out-of-pocket spending may also be a factor for some employees.  

 

• Commercial insurance rates in the US continued their upward trajectory in the first quarter of 2025, with the composite rate rising by 3%.  Umbrella and excess liability coverage, along with commercial auto, saw the most significant increases, both climbing by 6.7%. 

 

• Commercial property insurance premiums rose by 3.6%, with business interruption coverage seeing a similar increase of 3.6%.

 

Related Articles:

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  I would suggest that the least favorite responsibility that I had in operating a small business took place every October when I received the employee health insurance quotes from our providers and had to make a decision on how we would handle employee health insurance for the next year.

I also knew what I would take for insurance if I was making the decision simply for my family. However, in a small business every employee has a different situation and trying to make a decision that could please all of them was virtually impossible.  I don’t envy any of you having to make that decision.

And, the decision brings other decisions that are also difficult to make.  For instance, if you pick a plan that is quite a bit more expensive than the plan you had for the calendar year 2025 then you also have to figure the costs into your prices and try to figure out what the increased prices may do to your selected product mix (i.e. burial/cremation).

It’s a delicate balance between providing the best situation for your team members while also understanding that your fixed costs drive your price points and that the price points for differing types of services make a big impact on not only if consumers will use your firm but what services they will select.

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“A servant’s attitude guided by Christ leads to a significant life”

The stock of major health care insurer United Health has dropped from $594 per share in April 2025 to Friday’s close at $237 per share.  That’s about a 60% drop in value in a little over 3 months.  And, from the trends that I’ve been watching and some recent announcements I don’t think that stock drop bodes well for companies that will be paying premiums for employee health care in 2026.

United Health has had some non-revenue issues such as the CEO of one division being stalked, shot, and killed while attending a conference in New York City.  But the major issue is probably not even company related. . . . it is simply the cost and frequency of use of health services in the United States.

Here’s what was written about the company’s Earnings Report last week, “In its second quarter release, UnitedHealth stated that its lower earnings were because healthcare costs were rising faster than insurance pricing. . . . The company also said that it expected the cost and pricing trends to continue for at least the rest of the year. . . “

In other words, the combination of American health care service pricing and the frequency of use of health care by Americans is outpacing the ability to pay claims with the available premium dollars collected.  That’s a big problem for United Health, but also will become a big problem for businesses in America as they will soon be asked to increase their payment to their health care providers for the premiums they pay as an employee benefit.

And, the rise in health costs don’t seem to be ending anytime soon.  Another article on United Health had this comment “. . .  medical cost trends (are) expected to further increase from an estimated sum of 7.5% in 2025 to 10% in 2026”,

Those cost increases won’t just be for United Health clients, Medicare recently gave notice that they believe the annual premium paid by most Medicare recipients is expected to increase 11.6% for 2026 coverage. Still don’t believe me when I say you better look for premium increases?  Here’s another indicator — this article from MarketWatch indicates that those that receive health insurance from the Affordable Care Act (ACA) markets will see a median premium increase of about 15%.

So, as you start to do the work on your 2026 budgets it may be time to make some difficult decisions such as passing more of the cost of benefits on to the employees themselves.  However, as the labor market seems to be tightening up that decision could lead to disenfranchised employees and lead to more problems that you don’t want to be tackling.

In any regard, the sooner you can get health insurance quotes and the earlier you make these budgetary and personnel decisions the better off you will be.

Here’s a recent article from CNN titled “Here’s why you may be spending more on health care next year”.

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  Figuring out the benefits that our funeral home would offer our employees was one of my least favorite activities in operating a business.  I always knew what I would like for benefits but my needs and wants were different from my employees — and most of the team members had differing needs and wants. . . . .Younger employees wanted child care help and older employees preferred full payment of health care costs.

I eventually sat down with each full-time employee and talked to them about what would be their perfect benefit package.  Our business eventually came to a decision that we would offer a “Cafeteria plan” of options with a fixed amount of annual benefit dollars per employee.  That solved my dilemma of being the person that chose our benefit package and let each employee put money to their specific need. . . . .In that package we offered health insurance payments to our group plan, child care payment benefits, additional profit-sharing retirement money, other insurance options such as Aflac supplemental insurance, and some other items.

As to personal thoughts I have some opinions based on my time on the Board of the University of Minnesota where we operated a physicians group and had a partnership with a hospital group for the operation of the University hospital assets.  I will acknowledge that hospital operating costs have low margins but my opinion is simple, we have to find a way to drastically bend the curve of health care costs and utilizations or eventually America will not have the resources for business investment simply because we are putting so much of our economy into “servicing” the health needs of our citizens.

In 2023 the Gross Domestic Product (GDP) of health care services was 17.6% of the economic activity of the United States.  In 1960, the United States GDP percentage for health care services was only 5%.  That low percentage is one reason the 1960’s was a period where “U.S. private investment grew rapidly, especially in the first half of the decade, outpacing the growth rates seen in some later periods. This was fueled, in part, by a 106-month economic expansion, the longest in US history up to that point.”

That Genesis artificial intelligence generated statement ( the above quote) gives some indication to the potential lost “opportunity costs” that the United States is forgoing because we cannot get a handle on our rising health care costs.  It is my hope that this is one of the area’s where articifical intelligence can be harnassed to help with diagnostic issues and treatments knowing a patient’s DNA, medical history, family history, and current vital signs. . . . and do so by bending the cost curve downward.

On the other hand, one cannot look at the increased health care services costs (as a percentage of our GDP) of the past 60 years without acknowledging that life spans in the United States have increased from about 69 years in 1960 to 79 years in 2024.  That’s an extra 10 years of life the average citizen is getting on this planet. . . . .  What cost would one put on that?

However, it is probably time to get your health insurance quotes and make some difficult decisions on your budget for 2026.

Related Article —  “U.S. Life Expectancy 1950-2025  — Trends and influences over the Decades.”  North American Community Hub Stats

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“A servant’s attitude guided by Christ leads to a significant life”

Funeral Director Daily first reported on the “Funeral Coverage Act”, a proposed amendment to the Internal Revenue Code of 1986 to treat distributions from health savings accounts (HSA) for funeral expenses of the account beneficiary as qualified distributions last March.  (You can see that article here).  However, the bill never made its complete movement through Congress last session.

We have recently learned that the bill — HR 2436 — has been re-introduced.  You can follow the progress of the bill as it moves its way through Congress here.

The ultimate result of treating these monies paid to a funeral home from an HSA would be that they could be a tax-free payment for funeral expenses instead of a taxable distribution to the beneficiary(ies) or the estate.

According to the National Funeral Directors Association (NFDA) website:

“Like an IRA account, when a person sets up an HSA, they name a beneficiary. If the beneficiary is a surviving spouse, the unused portion of the decedent’s HSA passes directly to the spouse and becomes his or her HSA; there is no tax liability.

If the beneficiary is not the surviving spouse, the proceeds that pass to the beneficiary are taxed to the beneficiary as ordinary income. However, if the decedent died owing medical expenses, the proceeds in the HSA may be used to pay those medical expenses on a tax-free basis for up to one year after the death.

If no beneficiary is named, the proceeds of the HSA go to the decedent’s estate, and they are taxed as ordinary income on the decedent’s final personal income tax return.”

 

Related Article —  “Health Savings Accounts and Funeral Expenses:  A common sense solution for grieving families”.  NFDA

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  Don’t get me wrong — on a selfish note this bill would be great for funeral homes and for families that might struggle to pay for their death care costs.  It would give families another tool to stop some of them from taking on debt to pay funeral expenses. . . .And, that would be a good thing for those consumers.

However, there is, at least, two sides to every issue.  By allowing a “tax-free” distribution for this purpose, it eliminates the ability of our federal government to “take-in” a form of tax revenue.  And, there is a group that believes that revenue might be better used to pay down the nation’s debt than to give to families — some whom may have other ways to pay for the funeral costs.

Again, don’t get me wrong.  I’m not arguing against passing this bill — but this is how I learned to look at issues when I sat on the Board of Regents for the University of Minnesota.  I always had to look at both sides of the issue.  I learned that even when I had a personal viewpoint one way, voting the other way might be the best way for the University to move forward.  I’m just wondering if that is how members of Congress might see this issue.

So, while I am for this bill.  . I think that there will be challenges passing it moving forward because the net result is that it will add to the deficit and debt.

My Friday morning group:  During my winter in Florida I belong to a Minnesota Friday morning breakfast group.  We meet every Friday morning for breakfast and invite speakers to come to the event.  One of our speakers this winter was Congress member Rep. Michele Fischbach of Minnesota.  She is a member of the Ways and Means Committee and told us that her committee was already having these discussions about what will be in the, as President Trump calls it, “Big Beautiful Tax Cut” bill.  Congress member Fischbach explained the discussions are around exactly what I am talking about  —  “Maxium tax benefits to Americans versus the costs of decreased revenue to the National budget”.

HR 2436 – The “Funeral Coverage Act” was not introduced until March 15 — a period long after Congresswomen Fischbach told us that they were already considering what will be “in” and what will be “out” of the President’s proposed bill.

Related Article — Here’s an article Funeral Director Daily published in 2023 about this HSA/Funeral Cost idea well before it was introduced into Congress.

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“A servant’s attitude guided by Christ leads to a significant life”

December 23, 2024

Grief is a journey that no one wants to traverse, yet it is a path many will find themselves on when a loved one passes away. As we contemplate the profound impact of loss, it’s vital to recognize how we can reach out and support our friends during their times of sorrow. Understanding our role can foster connection and compassion, especially in a world filled with emotional challenges. When we think about navigating this sensitive subject, finding the right balance between offering support and respecting personal space is essential, particularly as families often seek services from adjacent resources, such as Rochester, NY funeral homes. Understanding Grief and Its Phases Before we can effectively support our grieving friends, we should take time to understand the grieving process itself. Grief is not linear and encompasses various emotions and phases: denial, anger, bargaining, depression, and acceptance. The upheaval following a loss can bring about tumultuous feelings, and it’s important to remember that your friend may oscillate between these stages throughout their journey. A critical way that we can help is by being present. Sometimes, your friend may need a listening ear more than they need advice. Allowing them the space to express their thoughts and feelings without judgment can be incredibly beneficial. It may be helpful to encourage them to share funny or touching memories they have of their loved one, a practice that can provide moments of solace amidst the turmoil. Offering Practical Support Helping a friend through grief also means offering practical assistance. Grieving can be an exhausting and overwhelming experience, leaving little energy for everyday tasks. Offer to help with simple chores—cooking meals, running errands, or helping keep things organized at home. Sometimes, just knowing someone is there, offering to shoulder some of life’s burdens, can alleviate the stress your friend is feeling. In addition to offering tangible help, suggesting options from local services can also ease the burden. For instance, if your friend needs support in navigating funeral logistics, it’s wise to mention reputable funeral homes, that they could consider, like Rochester Cremation. Knowing that compassionate professionals are available can bring reassurance and peace to their difficult journey. Creating a Comfortable Environment for Healing When it comes to helping a grieving friend, creating an environment that allows for open conversation is critical. While checking in on them is appreciated, remember to approach them sensitively. Each day might feel different for your friend, so the time you spend together should evolve based on their needs and feelings. Inviting your friend out for a walk—some fresh air can aid in emotional healing—might help distract them from their grief, although it’s essential not to force social interaction if they seem disinterested. The simplest gestures, like a text message to let them know you’re thinking of them, can go a long way, even if they don’t respond immediately. Respecting Boundaries and Understanding Signs of Need While offering support, it’s just as vital to acknowledge when to step back. Everyone’s process is unique, and not everyone is comfortable discussing their grief openly. Pay attention to their cues; if they seem withdrawn or if they indicate a desire for solitude, honor that choice. Encourage professional support if needed. Whether it’s suggesting a grief counselor or attending a support group together, prioritizing their mental health by finding professional help can be a game changer. Informing them about available local resources shows that you care and are looking out for their well-being. The road following a loss is fraught with challenges. Yet, knowing we can play a role in transforming a friend’s grief reality can inspire hope. In conclusion, as we support our friends during these heartbreaking times, let’s embrace compassion and understanding, remembering our larger community as we navigate the journey together. If you have questions regarding resources or services through Rochester, NY funeral homes, reach out for help. The existence of compassionate professionals at places like Rochester Cremation highlights that support is always within reach.

December 23, 2024

Grief is a journey that no one wants to traverse, yet it is a path many will find themselves on when a loved one passes away. As we contemplate the profound impact of loss, it’s vital to recognize how we can reach out and support our friends during their times of sorrow. Understanding our role can foster connection and compassion, especially in a world filled with emotional challenges. When we think about navigating this sensitive subject, finding the right balance between offering support and respecting personal space is essential, particularly as families often seek services from adjacent resources, such as Rochester, NY funeral homes. Understanding Grief and Its Phases Before we can effectively support our grieving friends, we should take time to understand the grieving process itself. Grief is not linear and encompasses various emotions and phases: denial, anger, bargaining, depression, and acceptance. The upheaval following a loss can bring about tumultuous feelings, and it’s important to remember that your friend may oscillate between these stages throughout their journey. A critical way that we can help is by being present. Sometimes, your friend may need a listening ear more than they need advice. Allowing them the space to express their thoughts and feelings without judgment can be incredibly beneficial. It may be helpful to encourage them to share funny or touching memories they have of their loved one, a practice that can provide moments of solace amidst the turmoil. Offering Practical Support Helping a friend through grief also means offering practical assistance. Grieving can be an exhausting and overwhelming experience, leaving little energy for everyday tasks. Offer to help with simple chores—cooking meals, running errands, or helping keep things organized at home. Sometimes, just knowing someone is there, offering to shoulder some of life’s burdens, can alleviate the stress your friend is feeling. In addition to offering tangible help, suggesting options from local services can also ease the burden. For instance, if your friend needs support in navigating funeral logistics, it’s wise to mention reputable funeral homes, that they could consider, like Rochester Cremation. Knowing that compassionate professionals are available can bring reassurance and peace to their difficult journey. Creating a Comfortable Environment for Healing When it comes to helping a grieving friend, creating an environment that allows for open conversation is critical. While checking in on them is appreciated, remember to approach them sensitively. Each day might feel different for your friend, so the time you spend together should evolve based on their needs and feelings. Inviting your friend out for a walk—some fresh air can aid in emotional healing—might help distract them from their grief, although it’s essential not to force social interaction if they seem disinterested. The simplest gestures, like a text message to let them know you’re thinking of them, can go a long way, even if they don’t respond immediately. Respecting Boundaries and Understanding Signs of Need While offering support, it’s just as vital to acknowledge when to step back. Everyone’s process is unique, and not everyone is comfortable discussing their grief openly. Pay attention to their cues; if they seem withdrawn or if they indicate a desire for solitude, honor that choice. Encourage professional support if needed. Whether it’s suggesting a grief counselor or attending a support group together, prioritizing their mental health by finding professional help can be a game changer. Informing them about available local resources shows that you care and are looking out for their well-being. The road following a loss is fraught with challenges. Yet, knowing we can play a role in transforming a friend’s grief reality can inspire hope. In conclusion, as we support our friends during these heartbreaking times, let’s embrace compassion and understanding, remembering our larger community as we navigate the journey together. If you have questions regarding resources or services through Rochester, NY funeral homes, reach out for help. The existence of compassionate professionals at places like Rochester Cremation highlights that support is always within reach.

Within the last week I received my health insurance plan 2025 rates and I also paid the property and casualty insurance on my lake cabin.  The health insurance premium was up 7.4% and my P&C cabin insurance also took a hike.  I also was at a funeral home seminar where I heard a commercial insurance agent tell all of us in attendance to expect commercial rate increases on our funeral homes in 2025.

It’s also no secret that property insurers are having more than ordinary claims due to weather incidents in Florida and other Southern and Southeastern states.

And, just to put some icing on the “rising costs” cake I noticed this recent article from CFO titled “Budgets for base salaries expected to soar again in 2025″.

So, even though we have had cumulative inflation of about 21.4% since the pandemic began in 2020, it also looks like some of the delayed costs that are associated with “historical results” such as insurance performance are now expected to continue that rise. . . and it may be that the rise in future premiums is no small number simply because of the recent history of losses in the insurance sectors.

Tom Anderson
Funeral Director Daily

In the funeral home business where most of the costs of doing business are fixed costs these increases eventually lower your margins and give you less money for other opportunities.

Couple that with the fact that many funeral home consumers may reach a Plimsol line of what they will pay for death care services and as your prices rise, they may choose to have fewer and less costly services.  That makes the rise of fixed costs, without great cost-containment efforts all the more crippling.

It’s important to note that your “Margins” are your Revenues minus your costs.  When it is difficult to raise revenues, such as times when lower-priced cremation keeps increasing in consumer choice, the best way to raise your margins is through cost-containment.  That does not simply mean to cut costs, but it calls for creative energy and thinking to look at other ways to do operational functions that may save costs — such as how you schedule staff.

In any regard, until one can get a handle on their costs I would use this time in the Fall of 2024 to take an itemized look at all of my expenses and try to imagine how I could do some things differently for 2025 that might reduce costs.  Being highly profitable takes effort and lots of thought. . . . I learned a lot by asking my staff for suggestions on how we could get more efficient. . . . and they usually pointed out really good suggestions that worked.

Related —  Recent Cost Related Articles

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“A servant’s attitude guided by Christ leads to a significant life”