R&R Insurance Blog

A recent survey of insurers estimates that pemiums will almost triple for a 27 year-old man in 2014 as a result of the federal health reform law. Those in the health insurance industry would like to see those restrictions loosened making insurance more affordable for younger adults.

The facts: it costs six times as much to insure a 64 year-old than an 18 year-old. Simply tripling the insurance cost for an 18 year-old to help subsidize older individuals will be unaffordable and thus they will elect to be uninsured (not helping subsidize for the older age pool).

The Patient Protection and Affordable Care Act (PPACA) regulates the health insurance market in three ways:

1. All Americans must secure health coverage.
2. Because everyone must carry coverage, the law requires insurers to sell policies to whomever wants to buy them. There is also "guaranteed issue" meaning insurance carriers cannot deny coverage because of health status or history.
3. In an attempt to control the cost of coverage, there is "community rating": the law prevents insurers from charging older individuals more than three times what they charge younger individuals.

Providing a perspective from health insurance underwriters, Janet Trautwein, CEO of the National Association of Health Underwriters, has outlined the affects of health care reform: How to Help with Healthcare "Sticker Shock".

For questions on how PPACA affects the State of Wisconsin, please contact knowledgebroker & WAHU President Pete Frittitta.

When shopping for health insurance, businesses receive more advantages. Companies typically purchase insurance for an entire group thus giving more room for negotiating to keep costs down. This is a direct correlation as to why 63% of Americans were satisfied with coverage provided by their employer - it is affordable.

Today, the money an employer spends on health insurance is untaxed. So every dollar an employer spends, the employee receives a dollar's worth of benefits. However, individuals buying their own health insurance do not receive such tax breaks. They are paying for their own insurance AFTER taxes and NOT receiving a dollar's worth of benefits.

The Patient Protection and Affordable Care Act (PPACA) is starting to change the employer-paid coverage landscape. Providing a perspective from health insurance underwriters, Janet Trautwein, CEO of the National Association of Health Underwriters, has outlined the affects of health care reform: Preserving What Works: The Perks of Employer-Provided Coverage.

For questions on how PPACA affects the State of Wisconsin, please contact knowledgebroker & WAHU President Pete Frittitta.

Individual market claims costs, and in turn insurance costs, will soar as a result of Health Care Reform! Research sponsored by the Society of Actuaries predicts health care reform-driven changes in individual market composition could drive up underlying claims costs by an average of 32 percent nationally by 2017. The research also predicts high variability among states, with as many as 43 states experiencing a double-digit claims cost increase.

Check out what’s predicted for the Wisconsin individual market and in other states.

We welcome you to join in the conversation with our LinkedIN group dedicated to discussions for business owners on Obamacare: Strategies for Business To Survive. Read articles, download documents, join the conversation, and add your expertise!

I though that this was only something that insurance companies did? Et tu, CMS? What makes anyone think that health care reform is going to deliver a better, more affordable health care reality? You don't have to "wait and see" for the federal government to build the house when the foundation they have been laying is already cracking! I am comforted to learn, though, that the government is doing everything it can "to avoid running out of money." Welcome to the risk business! That's why the states have insurance regulators! Who's regulating you?

Link to full article to Obama Administration Cuts Benefits to Those in High Risk

Medications have side-effects; so do health care laws. Is California's scramble to find a solution to the overwhelming provider access issue a sign of things to come? California may be different in many respects and the same could be said of any of the other 49 states, but on this issue, they do not stand alone. Their "solution", however, may create some new side-effects of its own.

The LA Times article cites the following:

Problem: There aren't enough doctors to treat a crush of newly insured patients.

California Lawmakers' Solution: Fill the gap by redefining who can provide healthcare. They are working on proposals that would allow physician assistants to treat more patients and nurse practitioners to set up independent practices. Pharmacists and optometrists could act as primary care providers, diagnosing and managing some chronic illnesses, such as diabetes and high-blood pressure. Read more...

(1/23, Nussbaum, Tracer - Bloomberg) reports that in an interview, National Association of Insurance Commissioners (NAIC) president Jim Donelon said that "President Barack Obama may need to delay his health-care overhaul or risk 'chaos' when subsidized insurance plans go on sale in October." He explained that "It's unclear how well the federal government or any of the participating states will perform on Oct. 1, when millions of Americans are supposed to begin shopping at online markets created by the law," and that "while the administration has shown no sign of seeking a delay, it may be in the president's best interest." Read full article.

On Jan. 24, 2013, the Department of Labor (DOL) announced that employers will not be held to the March 1, 2013, deadline. They will not have to comply until final regulations are issued and a final effective date is specified.

EXCHANGE NOTICE REQUIREMENTS
In general, the notice must:

• Inform employees about the existence of the Exchange and give a description of the services provided by the Exchange;
• Explain how employees may be eligible for a premium tax credit or a cost-sharing reduction if the employer's plan does not meet certain requirements;
• Inform employees that if they purchase coverage through the Exchange, they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of this employer contribution may be excludable for federal income tax purposes; and
• Include contact information for the Exchange and an explanation of appeal rights.
  This requirement is found in Section 18B of the Fair Labor Standards Act (FLSA), which was created by the ACA. The DOL has not yet issued a model notice or regulations about the employer notice requirement.

WHEN DO EMPLOYERS HAVE TO COMPLY WITH THE EXCHANGE NOTICE REQUIREMENTS?
Section 18B provides that employer compliance with the notice requirements must be carried out "in accordance with regulations promulgated by the Secretary [of Labor]." Accordingly, the DOL has announced that, until regulations are issued and become applicable, employers are not required to comply with the exchange notice requirements.

The DOL has concluded that the notice requirement will not take effect on March 1, 2013, for several reasons. First, this notice should be coordinated with HHS's educational efforts and IRS guidance on minimum value. Second, the DOL is committed to a smooth implementation process, including:

• Providing employers with sufficient time to comply; and
• Selecting an applicability date that ensures that employees receive the information at a meaningful time.

The DOL expects that the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges.

The DOL is considering providing model, generic language that could be used to satisfy the notice requirement. As a compliance alternative, the DOL is also considering allowing employers to satisfy the notice requirement by providing employees with information using the employer coverage template as discussed in the preamble to the Proposed Rule on Medicaid, Children's Health Insurance Programs and Exchanges.

Future guidance on complying with the notice requirement under FLSA section 18B is expected to provide flexibility and adequate time to comply.

"This information is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. © 2013 Zywave, Inc. – republished from Zywave."

President Barack Obama has been re-elected for a second term in office. Obama’s re-election, along with last summer’s Supreme Court decision upholding the health care reform law, cements the Democratic Party’s dedication to the legislation.

What do employers have to do next?

With the landscape of employer-provided health care potentially changing over the next few years, employers should consider their future plans related to their role in employee health care. They may have to make some big decisions about whether to continue providing coverage to their employees. The “pay or play” penalties provide some incentive for employers to continue coverage, since they will be at risk for significant penalties if they do not. However, employers may decide that paying the penalty is more cost-effective than continuing to pay the ever-increasing costs of health care for employees and their families.

On the other hand, uncertainty among employees about the quality and cost of individual health coverage continues to make employer-provided health coverage an attractive recruiting and retention tool. Because of these advantages, most employers plan to continue offering coverage for now. The additional uncertainty for employers, with compliance obligations hinging on court decisions and the political process, has made many companies hesitant to make any large-scale changes. 

Whatever their future decisions may be, employers that will continue to sponsor group health plans for the near future must prepare for upcoming deadlines. Significant health care reform provisions with looming effective dates include:

• Summary of Benefits and Coverage. Health plans and issuers must provide an SBC to participants and beneficiaries that includes information about health plan benefits and coverage in plain language. The deadline for providing the SBC to participants and beneficiaries who enroll or re-enroll during an open enrollment period is the first open enrollment period that begins on or after Sept. 23, 2012. The SBC also must be provided to participants and beneficiaries who enroll other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees) effective for plan years beginning on or after Sept. 23, 2012.
• 60-Days’ Notice of Plan Changes. A health plan or issuer must provide 60 days’ advance notice of any material modifications to the plan that are not related to renewals of coverage. Notice can be provided in an updated SBC or a separate summary of material modifications. This 60-day notice requirement becomes effective when the SBC requirement goes into effect for a health plan.
• $2,500 Limit on Health FSA Contributions. The health care law will limit the amount of salary reduction contributions to health flexible spending accounts to $2,500 per year for plan years beginning on or after Jan. 1, 2013.
• W-2 Reporting. Beginning with the 2012 tax year, employers that are required to issue 250 or more W-2 Forms must report the aggregate cost of employer-sponsored group health coverage on employees’ W-2 Forms. The cost must be reported beginning with the 2012 W-2 Forms, which are issued in January 2013.
• Preventive Care for Women. Effective for plan years beginning on or after Aug. 1, 2012, non-grandfathered health plans must cover specific preventive care services for women without cost-sharing requirements. Calendar year plans must comply effective Jan. 1, 2013.
• Employee Notice of Exchanges. Effective March 1, 2013, employers must provide a notice to employees regarding the availability of the health care reform insurance exchanges. HHS has indicated that it plans on issuing model exchange notices in the future for employers to use.
• Additional Medicare Tax for High-wage Workers. In 2013, health care reform increases the hospital insurance tax rate by 0.9 percentage points on wages over $200,000 for an individual ($250,000 for married couples filing jointly). Employers will have to withhold additional amounts once employees earn over $200,000 in a year.

What guidance will we see?

Regulations on a number of issues remain outstanding. The regulatory agencies responsible for implementation and enforcement of the health care reform law—the Departments of Labor, Treasury and Health and Human Services—began issuing additional guidance once the Supreme Court upheld the law. Additional guidance is expected now that the election is over.

Issues that will likely be addressed in future guidance include:

• Employer Pay or Play Mandate. The agencies are expected to, and have indicated that they will, issue more guidance for employers to help them determine how to comply with the shared responsibility provisions of the law.
• Automatic Enrollment. The Department of Labor is required to issue regulations implementing the rule requiring large employers that offer health coverage to automatically enroll new employees in the health plan (and re-enroll current participants).
• Nondiscrimination Rules for Fully-insured Plans. Under health care reform, non-grandfathered fully-insured plans will not be able to discriminate in favor of highly-compensated employees with respect to their health benefits. The IRS delayed the effective date of this rule for additional regulations, which have yet to be issued.

State governments may also take further steps to establish the health insurance exchanges required by the health care reform law. The federal government will step in and set up exchanges for states that fail to establish their own exchanges. Many states have delayed implementation and will need to accelerate their efforts if they want to run their own exchanges.

Challenges for implementation:

As we get closer to full implementation of the health care reform law, questions linger about whether the framework is in place for all pieces to be operational by their deadlines. Insufficient staffing of the responsible agencies is one potential issue, along with employer and state government hesitation or inability to implement certain parts of the law. Compliance efforts are likely to pick up now that the election is over.

R&R Insurance Services' Benefits Practice Group will continue to monitor progress of the health care reform law and its implementation and will keep you informed of important developments.

This information is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
© 2012 Zywave, Inc. - republished from Zywave.

The Internal Revenue Service released final guidance for small employers eligible to claim the new small business health care tax credit for the 2010 tax year. This includes a one-page form and instructions small employers will use to claim the credit for the 2010 tax year.

New Form 8941, Credit for Small Employer Health Insurance Premiums, and newly revised Form 990-T are now available on IRS.gov. The IRS also posted on its website the instructions to Form 8941 and Notice 2010-82 , both of which are designed to help small employers correctly figure and claim the credit.

More information about the credit, including a step-by-step guide to claiming the credit and answers to frequently asked questions, is available on the Affordable Care Act page on IRS.gov.

A recent survey by the National Business Group on Health reveals that large U.S. employers predict their health care benefits costs will rise an average of 8.9 percent in 2011 (up from 7 percent in 2010).

Top strategies employers plan to use to control costs include:

• Raising employee contributions (63 percent)
• Raising out-of-pocket maximums (46 percent)
• Raising in-network deductibles (44 percent)
• Raising out-of-network deductibles (40 percent)
• Raising copay/coinsurance for specialist care (21 percent)
• Raising copay/coinsurance for primary care (6 percent)

One of the most common cost-controlling tactics cited by employers was offering a consumer-directed health plan (CDHP). In 2011, 61 percent of employers plan to offer a CDHP, while 20 percent will offer it as their only plan option (up from 10 percent in 2010).

Other survey trends include:
In 2011, 5 percent of employers will drop retiree health benefits, while 60 percent are considering doing so. Many employers will offer premium discounts for completing health risk assessments (41 percent) or participating in tobacco cessation programs (22 percent).

A quarter of respondents will raise their copay/coinsurance for retail pharmacy prescription drugs, and 21 percent will do the same for mail order pharmacy benefits.