In Brief

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LAST CHANCE This is the last year you can use the "five-year-averaging" rule to lower the taxes on lump-sum distributions on retirement plans. Next year such distributions will be taxed as income or as a capital gain. A 10-year tax option will still be available but only to those born before 1936. These rules don't apply to an IRA or 403(b), and not everyone is eligible. Unless you need the cash immediately, you're better off rolling it over into an IRA.

$100,000 LUMP-SUM DISTRIBUTION
$15,000 in taxes using 5-year averaging
VS.
$28,000 in taxes for those in the 28% bracket

HMO WATCH Last week Aetna and Humana got slammed with class actions for failing to disclose bonuses given to doctors and claims reviewers who kept costs down by restricting patient care. More cases are expected, particularly if Congress allows malpractice suits against HMOs. Meanwhile, HMOs are planning to raise their premiums an average 11% next year, following this year's 6% increase, according to a Sherlock Co. survey. Although HMOs usually scale back these increases, why such a big initial hike? HMOs cite higher drug costs, for one thing, not to mention lawyers' fees.

PARTS IS PARTS? In the wake of last week's verdicts against State Farm, totaling $1.2 billion, the insurance company is temporarily suspending its policy of requiring body shops to repair cars by using generic bumpers, hoods and fenders. The no-names are cheaper but could end up costing more down the road. When Consumer Reports conducted 5-m.p.h. crash tests on a Taurus, the Ford-made bumper suffered minor damage that cost $235 to repair. A generic bumper shattered, causing $1,350 in damages. Until last week, State Farm made consumers pay the difference if they insisted on using original parts. Allstate will pay if you make a fuss; Hartford and Travelers steer clear of most generic parts.