If you have a private health plan for you and your family, you will probably receive a notice of plan cancellation shortly. Please don’t panic and understand that it is all part of the metamorphosis we are all going to be forced to take over the next year.
Remember that pledge: “If you like your insurance, you can keep it”? Well, that is a dream for most of the population in the real world. In reality, any policy written, rewritten or changed substantially since March 23, 2010 is considered NOT grandfathered and therefore will be cancelled and replaced with an ObamaCare approved plan. If you hear nothing else I write, hear this: Just because Obama approves it doesn’t mean you will. And you must review the plan details.
In the new world, choices will be reduced DRASTICALLY. Your new world will consist of cookie cutter plans with much smaller physician networks. In California, PPOs will be replaced widely with EPOs. Get used to that term because it is going to take hold. A PPO covers you if you use the a PPO physician while allowing lesser coverage if you don’t use a PPO physician. An EPO ONLY covers you if you use a network physician. If you don’t, you are not covered. This limitation along with a much reduced list of PPO physicians greatly reduces your choices in where you get care.
Why did my family costs go so high?
One of the MAJOR changes with ObamaCare is how a family rate is put together. In the past, a family could have 3 to 10 members and all be eligible for the same rate. Not so any longer. All family participants are now rated separately. Remember that 22 year old you put back on your plan just because you could? That adult child will now carry and adult rate to the table with them. Surprise!
Back to the cancellation letter you are about to receive. In essence, ObamaCare requires ALL non grandfathered individual policies to be cancelled 1-1-14. BUT, that doesn’t necessarily mean you don’t have coverage. Your carrier should move you to a plan closest to your current benefits or cost. Which benchmark they use is up to the carrier. If you don’t like where they put you, look at the options they give you. If you plan to make a change, don’t sit on it. You can only make a change during this national open enrollment and annually at future open enrollments. (Again, there are exceptions for qualifying events.)
To recap:
- You probably can’t keep your plan.
- Watch for changed family deductibles, higher out of pocket maximums, far higher specialty drug costs, and many hidden co-payments.
- You might not be able to keep your doctor.
- Don’t forget to take the time to inquire about the new physician list. IT WILL BE SMALLER.
- You aren’t going to be free to change whenever you want.
A guarantee issue market comes with limits. Rule vary case by case. This first Open Enrollment will run from October 1, 2013 to 3-31-14. In subsequent years, Open Enrollment will be the fourth quarter of every year for January 1 effective dates.
There will be new choices. Use a GOOD insurance agent to guide you. Look for years of experience and specialty in health care. Many newbies are picking up overnight expert designations and titles. Don’t fall for the scam. A good agent will have all the information available for private market and government subsidized plans through your State Exchange. If they don’t, use Find an Agent at http://www.NAHU.org.
Since subsidies are only available if you buy a cookie cutter plan through your State Exchange, you should advise the agent you would like to inquire about the Exchange. Any agent worth a nickel will be able to give you a good estimate of your subsidy.
Whatever you do. DO NOT go directly to an Exchange. They will be staffed with less educated and completely non accountable employees. Agents are free and will explore ALL of your options, so use them.
If you get to keep your plan and you like it, stay there and let the guinea pigs work out the kinks for a few years. I know I am holding on to mine!
Paula L. WIlson, RHU, REBC
http://www.paulawilson.com
paula@paulawilson.com
Leave a comment | tags: EPO, Exchange, health insurance, individual, New health plan options, obamacare, Paula Wilson, Plan cancellation, PPO, subsidies, subsidy, Temecula | posted in Covered Ca, Exchange, Health Care, Health Care Reform, PPACA
PPACA requires health insurers to maintain specific loss ratios. If an insurer spends more than 20% on non claims related expenses, they need to provide rebates to the insureds. (15% for large employers). Sounds great!
This portion of PPACA went into effect for premiums paid starting 1-1-2011. The deadline for calculating and returning your overpaid 2011 premiums is August 1, 2012. Many of you have already seen communications letting you know where your insurer stands on this issue.
FOR EMPLOYERS
Employers need to start thinking about how they are going to handle this refund check. For some employers this may not be a daunting task. For others, not so easy. You need to remember that premiums are plan assets and need to work for the member of the plans. The law does NOT allow the employer to pocket those premium refunds unless the employer paid 100% of the premiums with no employee contribution. Let’s consider some of the rules for the use of these rebates when any level of employee contribution is involved.
The employer has three options when dealing with the rebate. Simply stated, they can offer:
- A Cash rebate
- A Reduction in future employee contributions
- An Increase in future benefits
The DOL is discouraging Options 2 and 3 unless the cash rebate is just too expensive to process.
You aren’t going to cut everyone a check and be done with this. Premiums that were originally deducted from the employees paycheck on a pre-tax basis will be given back to them as a taxable event. If you use it to reduce future premium deductions, you will save that accounting step. Either way, it’s fairly easy for you to deal with.
The fun part for employers is going to be deciding how to divvy up the money. The money must be returned to the employee proportionally the way the premium was collected. Also, the money has to go back only to the employees that were participating in the plan that is providing the rebate. Let’s say you have two insurers in play and both of them give you a rebate. Of course the rebates won’t be the same. Your process needs to go like this, per carrier:
- Who will get a rebate? You will need to go back and see who was on the plan IN 2011. Don’t fall into the trap of looking at your current invoices. You have certainly experienced open enrollment and some employees have changed coverage.
- How were they covered? Were they in the same bracket all year? Did they add dependents? Did they experience an age change? You can’t look at one invoice to determine their annual contributions. You can’t even look at the payroll unless it specifies the insurer for each employee each month (if more than one insurer is in play).
- Terminated employee money does not have to be returned to the terminated employee. But, it does have to be evenly distributed the remaining employees still participating in that plan.
- How will you distribute this rebate to them? Cash or reduction in future payroll deductions.
The insane thing about this process is that rebates are expected to be very small. Even in States with really inept actuaries, average rebates are expected to average $44 per employee for small groups and $14 for large groups. That is a ridiculous amount of work for the benefit. But employers must rebate the money.
FOR INDIVIDUALS
Individual policyholders have to pay a bit of attention as well? If the individual paid for their health insurance with post tax dollars, there is nothing to discuss. Cash the check. But if the you wrote off your health insurance premiums, you will now need to pay tax on the returned premium. Again, a ridiculous exercise for a small amount of money.
As the June 25th SCOTUS expected opinion date looms closer, employer must continue to plan as if everything is staying in place. PPACA’s impact on employers and the added responsibility to follow numerous new regulatory hurdles is not something you want to be scurrying around for this fall. Be prepared, pay attention and be prepared to act.
In our next blog we are going to review what we already know about the W-2 regulations that will be in effect for all W-2’s issued after 1-1-13. (for 2012 tax year)
Paula L. Wilson, RHU, REBC
Elections have consequences!
Leave a comment | tags: 2012, agent, benefit advisor, california, Employee Benefits, employer, employers, Health Care Reform, Insurance Agent, insurance agent Temecula, MLR rebates, obamacare, PPACA, premium, rebates, reform, supreme court decision, Temecula, updates | posted in Health Care, Health Care Reform, PPACA, Uncategorized
No one seems to want to talk about it. But it is almost here and you will be affected by it. It is time to seriously start paying attention.
For Everyone: There are reports from all directions that confirm what I keep saying: Health Reform isn’t going away. Many states are just waiting to enact Plan B. Just this week Peter Lee, the Executive Director of the California Exchanges said: “The shape and speed and nature of that effort may change a little. We need to see, how do we adjust course after that decision.” As a matter of fact, there is talk around Sacramento that the State just might go ahead and write their own individual mandate. And why not? Massachusetts did it and there isn’t any law on the books in California stopping them. If the entire Federal Law gets thrown out in the severability issue, employers better not take a deep breath. California would be the one State you could bet on to go after the employers. After all, someone needs to fill up these insured pools with money so the claims can get paid.
For all Employers: Employers who continue to ignore the reality of the situation are going to be unpleasantly surprised. Even if the Individual Mandate is struck down by SCOTUS, the Employer Mandate will remain. Large employers will have to make some decisions. They may be inclined to pay to the $2,000/$3,000 fine per employee to un or underinsure, but they should be considering the entire picture when making those decisions. Even small employers will be affected. They are going to be inundated with employees looking for answers. Who else are they going to ask? Small employers not subject to the employer mandate will be analyzing which way to go with their benefits in the future. They aren’t just going to lose all of their employees to the competition without some consideration.
Between the employees and HR, employers better have a benefit agent with some knowledge and history of being on top of benefit legislation knowledge. Determining how to keep employees while rationally taking advantage of the individual and group subsidies will take some finessing. Avoiding regulatory hurdles from the IRS, HHS, DOL and the new slew of agencies is going to be fun for all.
For the Average Consumer: If the Individual Mandate fades away, rates are going to rise. And they are going to rise like there is no tomorrow. Does this sound like it’s going to end well? When all is said and done PPACA is going to be the death knell of the current system. A death that was premeditated by the U.S. Congress over time. Forbes did a great article on the incidents leading up to the end desired result. For the good of my profession and general public, I really hope the professional insurance agent survives in a manner in which they can remain in business. I think the need for assistance is going to increase exponentially.
For Insurance Professionals: Insurance agents making a living sells on rates and not taking this profession seriously are going to be in a world of hurt. You can wish all you want, the California Exchange isn’t going away. And remember, for an individual to get a subsidy, they have to purchase their insurance from the Exchange (If and how you can sell it remains to be set in stone). Mr. Lee went on to say, “It’s misleading and not productive to just look at all of the ‘what-ifs,'” Lee said. “California will address the needs of Californians. And that includes the exchange.” There is one “what-if” we don’t hear them talking about. “What-If” national leadership changes and the Federal Funding to the States goes away.
Now, anyone with any institutional knowledge knows how well the State can compete with the private market in the absence of Federal Funding. Mr. Lee can hope all he wants, unless they get the Federal Funding to support the premium subsidies…….well, game on.
Paula Wilson, RHU, REBC, Southern California Insurance Agent and Benefits Consultant
Leave a comment | tags: 2012, agent, california, california exchange, Employee Benefits, employers, forbes, health care, Health Care Reform, increase, Insurance Agent, insurance agent Temecula, mandate, obamacare, peter lee, PPACA, premium, reform, scotus, updates | posted in Health Care, Health Care Reform, PPACA, Uncategorized
While PPACA is simmering in the Supreme Court, the U. S. Treasury Department has been busy defining who will be the recipient of the Health Insurance Premium Tax Credits (HIPTC). These new regulations were published last week and can be seen in their entirety here.
Who gets the subsidy?
As PPACA outlines, individual and families with incomes from 100% to 400% of the Federal Poverty Level (FPL) are eligible for the credit. (In 2011 dollars, eligible incomes would fall between $22,350 and $89,400) A recent estimate from the Congressional Budget Office (CBO) puts the average credit in the area of $5,000. With the latest cost estimate for family coverage topping the $20,000 level this year, many will find this a welcome relief. (How are you doing so far?)
Eligibility will be determined by the difference between the “benchmark plan” and the amount your contribution is expected to be. Now stay with me on this. The “benchmark plan” will be the second lowest (or Silver) plan offered through the Exchange. Your contribution will be calculated between 2% to 9.5% of your annual income depending on where you stand on the FPL scale.
But what will it really cost?
It is hard for industry and non industry citizens to envision what this means because PPACA changes everything so radically that the rates you see today and the rates post-PPACA are a mystery. When you consider the complete lack of underwriting, an unenforceable mandate* and rating restrictions that limit the ratio in premium between an 18 year old and a 64 year old to 1 to 4……your guess is an good as mine. As soon as the rates are out they will be subject to change at the next legal opportunity. The effect of the shift in the demographic of the insured public and the dumping of employer sponsored coverage (directly or indirectly from the 9.5% AGI limit) is yet to be seen.
Employer Concerns
PPACA subjects employers to “shared responsibility” penalities if they don’t offer affordable coverage and this set of regulations suggests there are more penalties to come if the employer contribution toward the cheapest plan offered exceeds 9.5% of the the employee’s AGI. For employers who might pay into Health Savings Accounts (HSA) for their employees, you may be surprised to note that these regulations do state that the IRS will not include the employer HSA contributions into that calculation when determining if the employees coverage is affordable. This is because HSA contributions cannot be used to pay for group medical insurance premiums and therefore, cannot reduce the “cost” of the insurance for the employee.
As I read this 87 page document my head is reeling with questions of implementation. It’s almost like these people have never run a business or spent much time working with employers on the intracacies of providing benefits. Employers who run any kind of benefits program spend money on many health related items in addition to “Health Insurance Premiums”. Even employer expenses on Wellness Programs may not necessarily be counted as an employer contribution to the health plan.
What?
If you are asking yourself how in the heck the average Joe is supposed to follow all of this, think about how they get through it now and consider this.
Employee Benefits experts and consultants are going to need an entirely new set of expertise in their portfolio to assist employers in determining where to put their benefit dollars. The lifespan of the Health Insurance Agent is not only under direct attack from PPACA, but the day of the agent who provides “rates only” as a mode of service is over. Benefit Professionals like our agency will survive as long as we are welcome in the market and not regulated out of existence.
For the individual purchaser, things may get more impersonal. Government employed Exchange “agents” are going to spend more time calculating your subsidy than worry too much about advising you what is best for you and your family.
Well, it’s not all bad….you might get $5,000!
Paula L. Wilson, RHU, REBC
*subject to SCOTUS decision due in June, 2012.
1 Comment | tags: $5, 000 Health Insurance Subsidy, 2012, benefit advisor, cost, cost estimate, Employee Benefits, employer, employers, health care, Health Care Reform, health insurance, HIPTC, Insurance Agent, insurance agent Temecula, mandate, obamacare, PPACA, premium, premium subsidy | posted in Health Care, Health Care Reform, PPACA
Not really blogging today. Just passing on information many of you have been waiting for. The IRS has published the 2013 HSA limits. Understanding these limits and how they work is very important before purchasing a Qualified High Deductible Medical Plan. Please contact our office for a complete analysis of your options both within and outside of the Qualified Plan spectrum.
HSA contribution limits:
- Individuals (self-only coverage) – $3,250 (up $150 from 2012)
- Family coverage – $6,450 (up $200 from 2012)
HDHP minimum required deductibles:
- $1,250 for self-only coverage
- $2,500 for family coverage
Out-of-pocket maximum:
(Out-of-pocket expenses include deductibles, co-payments, and other amounts, but not premiums)
- $6,250 for self-only coverage
- $12,500 for family coverage
Under guidelines implemented in the Patient Protection and Affordable Care Act, over-the-counter drugs may only be reimbursed if they have a prescription. If a policyholder uses an HSA to pay for items or services that aren’t qualified medical expenses, the tax penalty is 20 percent of the HSA distribution.
Leave a comment | posted in Uncategorized
Changing names keeps this topic off the front page but it’s still lurking out there and EVERYONE will be impacted.
Originally, Obamacare(PPACA) called it the Federal Commission Coordinating Comparative Effectiveness Research (FCCCER). ObamaCare opposition leaders called it the Death Panels. Now it has been officially renamed the Patient-Centered Outcomes Research Institute (PCORI). The new name certainly sounds better and the acronym is certainly better when trying to say it on national television. Almost sounds like a private market think tank. I’m getting warm and cozy feelings just saying it now.
The purpose of the “Institute” (cozy again) is to determine where medical dollars are best spent as the inevitable tightening of the belt looms on the horizon. There research is supposed to provide insurers with information, not mandate levels of care. However, there is a time coming when we just won’t do expensive life saving surgeries on 90 years olds or otherwise terminal patients. Morbidly obese people aren’t going to get those knee replacements when they aren’t going to take care of them. Does everyone need an nice electric wheel chair? Maybe not. They will get what Canadians get now, univeral and cheap walkers. The Institute will be the panel determining your options in the future.
The purpose of today’s blog is to let you know who is paying for the “Institute”. The insane will tell you that those nasty thieves at the insurance companies are going to pay fees! The sane know that people pay all taxes, one way or the other. In this case, the Institute will be funded by a trust fund that is financed in part by fees from health plan insurers and self funded plan sponsors. Fees will be collected for plan years ending after September 30, 2012 and before October 1, 2019. (Anyone want to start betting on the date they raid the trust fund and extend this temporary “fee”?)
The fees look like this:
From 10-1-2012 to 9-30-2013 – The fee is equal to $1 per average number of lives insured.
From 10-1-2013 to 9-30-2014 – The fee is equal to $2 per average number of lives insured.
From 10-1-2014 to 9-30-2019 – The fee is equal to $2 per (adjusted for medical inflation) average number of lives insured.
I know it is just a couple of bucks, but they are YOUR bucks and my bucks. Large employers who fully self fund their own benefits even have to pay the fee. And by the way, it is a fee. Taxes are paid to government entities. This Institute was intentionally called a Nonprofit, NonGovernmental organization supported by a trust fund. The fact that it is created and mandated by federal law and supported by forced contributions from the general public doesn’t mean it’s Governmental! (Note: Medicare, Medicaid, SCHIP, VA and Indian Health are exempt)
You aren’t hearing about this anymore because they changed the name. It’s all about what you call it. FCCCER, Government Death Panels, Taxes have been replaced with cheery, non-instrusive, Patient-Centered, Non Profit, Fee based Institutes! Oh joy!
Paula L. Wilson, RHU, REBC is an insurance agent and benefits consultant in Southern California.
Leave a comment | tags: Death Panels, employer, insurance, insurance agent california, obamacare, PCORI, PPACA | posted in Health Care, Health Care Reform, PPACA, Uncategorized
It’s hard to find a family that has not been touched by the diagnosis of Autism. It’s epidemic spread not only causes devastating concern for families but the financial implications are extreme. Federal and State educational programs are only spread so thin before resources run dry for many. Even with Federal and State Mental Health Parity Laws, the insured public continues to fight on a daily basis for therapies to help their children.
As insurance agents engaged in this daily fight, we welcome this clarity of coverage. Our agency has always worked as an advocate for our clients to get the most out of their policies and to provide as much covered care as possible. Help is arriving in California on July 1, 2012 in the form of SB946. SB946 (aka. Mental Illness: Pervasive Developmental Disorder) will add coverage for Behavioral Health Treatment (BHT).
The technical definition of BHT is “professional sevices and treatment programs, including applied behavior analysis and evidence-based intervention programs that develop or restore, to the maximum extent practicable, the functioning of an individual with pervasive development disorder or autism.” Coverage must be prescribed by a licensed physician and pre-authorized by the health plan. It will cover treatment in non-institutional and home settings as well as in-office services.
In addition to mandating coverage for autism treatment, the bill requires the creation of the Autism Advisory Task force. Advocates for Autism issues will be well represented on this board. “Autism Speaks” Vice President, Lorri Unumb was named as a member of this important task force. “I am honored to serve on this task force and to contribute to making California’s autism insurance reform law one of the most effective in the nation,” said Unumb. “Autism Speaks welcomes this opportunity to work with the DMHC.”
California insurers will begin mailing notices to all policyholders over the next month to provide information on this important July 1, 2012 amendment. The bill also mandates that insurers provide adequate access to providers that will be able to provide these services. This will help to assure policyholders that covered services will also be made more available.
When an employee is dealing with this family issue they are very often pulled away from work. They may spend hours on the phone fighting for coverage approvals and provider access. Employers are paying the price for this lack of “presenteeism” in these employees. We look forward to educating employers and employees on the benefits of this new law and how proper Wellness and Employee Assistance Programs can work together to provide the best outcome when dealing with the issues affected by this new law.
Paula L. Wilson, RHU, REBC is principal of Paula L. Wilson, Inc., an Employee Benefits Firm. Employers are encouraged to contact Paula at 888-447-2852.
Leave a comment | tags: 2012, autism, Autism July 1, Autism mandate, Autism Speaks, Autism Task Force, California Autism Insurance, EAP, Employee Assistance Programs, Employee Benefits, insurance agent Temecula, presenteeism, SB946, Wellness | posted in Health Care, Health Care Reform
Employers with health insurance costs weighing heavily on their backs should enjoy a small sigh of relief as Buck Consultants released their recent survey results of 129 insurers and administrators. The results? For the first time since 2001 they estimate the cost increase for health plans to be less than 10%……..only 9.9% for 2012.
The survey goes on to explain the reduction in the rate of increase is primarily due to a correction in margins insurers had previously built in for health reform as well as a reduction in elective procedures by the insured public. During a time of such prolonged economic slowdown, people are just putting off what they consider to be elective.
Last year the trend was 11.2%.
Even at 10%, the result is a huge new nut to crack on top of already enormous numbers. It isn’t quite what employers were looking for in upcoming benefit budgeting. They still long for that time when rates remained relatively flat.
It is my opinion that employers and benefit professionals should continue to push everyone to take advantage of the preventive services now available on all non-grandfathered plans. Getting the right preventive care and continuing the expansion of Wellness Programs is vital in order to avoid the explosion of costs to follow if new disease is left undiagnosed or untreated due to cost concerns. Employers and their Benefit Advisors cannot to overlook the proactive role they must continue promote.
If you are interested in learning more about Health Care Reform, Wellness Programs or preparing for the upcoming mandates, please contact Paula Wilson at 951-694-1009.
Leave a comment | tags: benefit advisor, buck consultants, cost, employers, health care, Insurance Agent, PPACA, reform | posted in Health Care, Health Care Reform, PPACA
Employers getting overwhelmed with timelines and deadlines shortly after PPACA was passed are now confused with the slowdown on the action. Why? Because timelines change as the administration realizes they keep putting the cart before the horse and extend and amend deadlines. And so it is with the ominous Summary of Benefit and Coverages requirement. You know, the one that says people can’t possibly comprehend the benefits as outlined in the current Summary Plan Description, yet need twice the information carved into a 4 page cornucopia of information they still won’t read. Originally slated for March 2012, employers who were paying attention to these threats of non-compliance are worried about fines and fees…..are they behind the curve?
Well, we are currently receiving phone calls and inquiries regarding these PPACA regulations that were to go into effect on 3-23-2012. Specifically employers are asking us for directions on the required Summary Benefits of Coverage that, if not distributed, can result in $1,000 penalties per failure. Please note the following:
ON SUMMARY BENEFITS OF COVERAGE
- Refresher: PPACA (Obama Care) requires that ALL employers distribute a very specific 4-Page Summary of Benefits (not to be confused with the current Summary Plan Description).
- The original deadline for implementation of this requirement has been delayed, in general, to the first renewal after September 23, 2012. AKA: All effective or renewal dates beginning 10-1-12.
- The Insurer is responsible for creating this Summary for each plan offered. It applies to your health benefits only. (HSA and HRA information may be included.)
- It is the responsibility of the employer to make sure this is distributed to all of the employees and their dependents. It can be in paper or electronic form. (Caution: Electronic form must abide by current ERISA rules. In short, if your employees don’t log on to a computer daily to receive employer communications, that system will not pass. )
- These rules apply to COBRA beneficiaries as well. This is where you COBRA administrator will become very important. We are confident that every COBRA administrator we have installed will provide excellent support in this area.
- A penalty of $1,000 per failure applies to the Employer.
- This applies to our Self-Funded clients as well. We will negotiate with the reinsurance carriers for that SBC.
- There are very specific rules regarding continued distribution of this 4-page SBC as new employees are hired, benefits are change mid-year and upon request of any beneficiary.
ON PREMIUM REBATES
As you know, insurers must rebate excess premiums when they exceed the new MLR (minimum loss ratio) rules. We have just received details on how employers distribute rebates to employees. We are reviewing these regulations now regarding the taxability of these to the employees as well as other details. Since the first rebates are not expected until August 2012, we will be sure to present you with guidance long before they occur. We believe the taxability will depend on the method of deduction in the first place. (After tax vs. Pre-Tax via Section 125 Cafeteria POP Plan)
NOTE: California employers currently receiving rebates from Blue Shield should not confuse these current voluntary rebates with the upcoming MLR rebates.
Ongoing Support during PPACA Implementation
Please be assured that we continue to be very current on all of the implementation details of PPACA and will continue to monitor and assist our employer clients as if PPACA will survive the pending SCOTUS decision. Our library of details is very complete and we will get information to you on a timely basis.
We appreciate all referrals to your employer group friends and associates that may benefit from our services. Frankly, I rarely run into insurance “agencies” that know or care much about this challenge. We continue to be very hands on in order to assure that OUR clients receive the most timely and proper advice as the full implementation of this law approaches. Planning over the next year is critical. We are just 19 months away from the full implementation. HHS is rolling out more and more detail every week. The sooner we can build relationships with new clients, the better we will be able to guide them through the upcoming tsunami of regulations coming at them. Please feel free to forward this to your associates.
Paula L. Wilson, RHU, REBC PAULA@PAULAWILSON.COM 951-694-1009
Leave a comment | tags: california, coverage, employer, health care, health insurance, Insurance Agent, PPACA, premium, rebates, summary of benefits, updates | posted in Health Care, Health Care Reform, PPACA
2014 – Mandates, Exchanges and Executive Carve-Outs
Employers have come to me for years asking if they can write a health insurance plan for the Key Employees within their company and exclude the rank and file. Over the past 20 years there has been as many ways to accomplish that goal as there have been laws passed to prevent it all together. Therefore, employers that can still afford coverage, continue to offer reduced benefits to all employees and throw in ancillary products as good faith gesture.
Intrusion of government plans have continued to increase the price of group health insurance by eroding the participation. Healthy Families and expanded Medicaid opportunities drain these employer pools of the healthy young premium payers leaving the higher risk behind to push premium higher. The implementation of ObamaCare over the next few years is the Gorilla beating on the backs of my employer clients. The employer mandate and penalties are sending company planners running into the hills looking for cover.
Health Insurance agents desperate to keep agency commissions up are pushing voluntary benefits in hopes of staying in business when their base medical commissions erode or change to a direct-fee basis. There is nothing wrong with voluntary benefits if the employees can afford those extras in this economic environment. However, I want my clients and potential clients to understand that we have to work with what it given to us and there may be a workable and affordable solution to the future of their benefits.
The employer mandate has many facets but I would like to focus on just one here today. There is a penalty that affects employers who offer benefits but whose employee contributions exceed 9.5% of an employee’s adjusted gross income (AGI). This rule applies to employees that fall below 400% of the Federal Poverty Level (FPL). The penalty is $3,000 for every qualified employee that goes to the Exchange for coverage. The exchange will offer those low to mid income employee’s plans with highly subsidized premiums. If it benefits the employer to have the employee go to the Exchange, why not push them there?
Why not design a plan of benefits designed to attract those Key Employees and charge a premium that intentionally blows the mandate limit of 9.5% AGI at an income level of your choice? In the end, these employees receive low cost subsidized coverage of THEIR choice from the exchange and your key employees enjoy the plan that will keep them with the company. Finally, a management carve out plan built to suit!
Of course, all employees are important for any company to succeed. Those low cost voluntary plans currently on the market could easily become either partially or fully subsidized by the employer for a great set of benefits that every employee to hang their hat on. Ancillary benefits with a great interactive Wellness Program leads to healthier happier more productive employees.
Will this work for all companies? Maybe not this exact example, but as well informed educated agents we are here to explore the many ways this new law can be screwed together to make the best of the whatever survives the upcoming HHS regulation or Supreme Court decisions. Coming up with the perfect plan that will avoid the 2018 Cadillac tax and conforming to new market participation requirements will need to be properly finessed.
Large employers planning ahead should be looking for the right agents for the planning to be done. Slick marketing and new agents aren’t going to have the institutional knowledge to understand how the road ahead is going to change.
Paula L. Wilson, RHU, REBC
Paula L. Wilson, Inc.
A Professional Benefits agency since 1986
951-694-1009
Leave a comment | tags: agent, benefits, employers, exchanges, executives, Health Care Reform, health insurance, mandate, Temecula | posted in Uncategorized
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