Tag Archives: health care

May 30, 2012

Health Care Reform Is Here To Stay (And YOU better plan on it)

By Paula L Wilson, RHU, REBC

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

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May 23, 2012

$5,000 Health Insurance Subsidy…for you?

By Paula L Wilson, RHU, REBC

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.

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April 16, 2012

Lowest Cost Projection since 2001

By Paula L Wilson, RHU, REBC

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.

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April 13, 2012

Employer’s Getting ready for more PPACA

By Paula L Wilson, RHU, REBC

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

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