PPACA offers expanded coverage to the currently uninsured by subsidizing the cost of health insurance plans from the private market (via Exchanges) and by expanding MediCaid. Low-income employees currently covered by their small business group insurance plan, are now seeking affordable coverage for their dependents through these new avenues.
These insured employees reaching out to the Exchanges for subsidized dependent coverage are quickly finding out their family is ineligible for federal help solely due to the existence of their employer group insurance plan. Once clamoring for employer based group health insurance, the employees are now demanding the employer plan be canceled so that Exchange subsidies can be accessed for their entire family.
Many employers may see this as an easy out of the benefit business. With no barriers to the individual market, the employer may see this as an option for everyone. Could it be that easy? Low-income subsidy-eligible employees and their families head to the Exchange while the rest of the group hits the guaranteed coverage options within the individual market? The answer is not so straightforward. Any professional benefit agent could point out the obvious problems.
Everyday issues that might be considered include:
- Employees age 65 and over need time to prepare for a switch to Medicare and all it entails.
- Employees with household incomes below FPL levels of 250%-150% need to understand their private Exchange policy will not be issued as applied for.
- Everyone needs to know new policies both in and out of the Exchanges will be providing substantially reduced provider lists.
- Those seeking subsidies might get more than they asked for. Part or all of the family may find they have fallen into a MediCaid plan (MediCal in CA) with no way back to the private market.
- Individuals, especially those with specific needs, have no guarantee that providers, services, therapies and drugs will be available to them.
- Employers need to understand the tax consequences of such a move.
Individual needs aside, the markets inside the Exchanges are a mess at best. Quoted benefits and costs are merely estimates. Benefits outlined are merely a promise of coverage written on a government spreadsheet. Most States haven’t even produced specimen policies for the professional to inspect for detail.
The private market is functioning, but only as fast as the State will approve plans for sale. It could be December before we get a glimpse of what the breadth of private options really looks like. Do we really want to make decisions based only on what can be seen today?
Before any employer writes that cancellation letter, they need to remember why they had the group plan in the first place. Canceling coverage and dropping people into an unknown myriad of issues is not going to further your goal to attract and retain quality employees.
Leave a comment | tags: canceling coverage, employers, Exchange, exchanges, group insurance, Insurance Agent, obamacare, ObamaCare help, Paula Wilson, PPACA, subsidies | posted in Covered Ca, Exchange, Health Care, Health Care Reform, PPACA, Uncategorized
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.
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.
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.
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.
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
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
Maybe the American health care system of the past, where people were to be treated as individuals and doctors were allowed to consider each patients personal needs is inefficient. It is certainly too inefficient to be allowed to go on, so say the academics trying to change a system they know nothing about. Certainly all aspects of the American health care system are under attack, but the rubber hits the road when you turn into a number and your doctor won’t even be allowed to consider you anything more than a statistic that needs to be pushed to the next column. Maybe Ford was on to something when he invented the assembly line.
John Goodman of the National Center for Policy Analysis, posted this blog at the NCPA website where a physician is describing what it is like to work within an ACO. Accountable Care Organizations, the panacea of efficiency for Medicare patients under PPACA.
I am a Board-certified general internist. I worked for many years for…an Accountable Care Organization. It was factory work: we were interchangeable cogs in a vast machine. The people who saw patients, especially “primary care providers” like me, were at the base of the pyramid and the bottom of the pecking order.
The future is clear. The management of the ACO — professional administrators, and physicians who see few if any patients — will schedule every moment of every primary provider’s day, critique every decision, continually scrutinize and evaluate every aspect of one’s practice. At my ACO, yes, we were on teams, but given no time to communicate with one another. We were forced to complete clunky electronic records we had no time to read. Despite years of training and experience, we had no input to the system that controlled our lives. We were not respected as professionals. It was demoralizing.
The health policy elite appears to have concluded that the crux of the problem is primary care practitioners, internists included, who are largely ignorant, lazy, and indifferent to their patients’ welfare, and oppose change of any kind. We do not know or care that a diabetic’s hemoglobin A1C should be below 7.
Therefore, we need tight supervision, complex systems of financial incentives and penalties, and frequent “feedback” about our deficiencies. We need electronic records to remind us that our female patients are due for mammograms that we should advise smokers to quit. And we must reach our goals efficiently, using the minimum number of those expensive tests, and managing large panels of patients. (So we can’t spend much time with anyone.)
I highly advise everyone to set down the burger and fries, get to the gym and plan to be healthy until you drop. It’s a wonder why we are starting to feel the effects of a primary care physician shortage. Obamacare isn’t going to do anything to make medical practice any more attractive to our best and brightest. The best and the brighest that would normally be attracted to Primary Care medicine don’t want to be part of an assembly line. For that matter, neither do I.
Leave a comment | tags: Accountable Care Organization, ACO, Health Care Reform, Insurance Agent, Primary Care Physicians, Temecula | posted in Health Care