Filed under: Administrative Fix, Affordable Care Act, Health Insurance, Important Notice, Obamacare, PPACA, Reform
As many have heard, Obama has offered a “fix” to many of the people that have gotten notifications of their insurance being canceled. I believe that this report, gives a good picture of it and I want to point out a few things before people start popping the cork and celebrating:
- Obama said that carriers “could” offer the plan for 1 more year…
- Obama pushed the ultimate decision over to the States and the Carriers…so far California, Idaho, Virginia and Kentucky have said no to this fix.
- If the carrier choose to offer to extend, then they are going to have to send the customers a comparison that shows the differences between their plan and all the Exchange Plans that they are offering, what this translates to is more work when we are already 45 days out, and the carriers do not have the extra time on their hands right now.
- The carriers do not have an actuarial value of any of these plans since they are not in their plan offerings and I believe that this would result in even higher prices as they would have to put in more man hours to reincorporate these plans.
If you have gotten a cancelation notice, I encourage you to call your carrier and see if they are going to pony up and continue to offer your plan, but don’t be shocked if you end up being one of many that they tell no.
Filed under: Employer Requirement, Health Insurance, Important Notice, National Healthcare, Reform
Pretty much all employers will need to provide their employees with written notice that includes information regarding the Exchange (now called the Health Insurance Marketplace). The deadline to provide the notice is fast approaching; the notice must be provided to each employee not later than October 1, 2013. Regardless of the size of your company and even if you currently do not offer coverage to your employees you *SHOULD* send this information out. The reason we say should instead of MUST is because as of last week, this has been another penalty that has been delayed and they haven’t told us when it will come back. Originally it was speculated a $100 fine for every day you have not complied with the request. We still encourage everyone to comply now as then when / if the penalty goes into effect you are all in compliance.
Click below to view the English version of the notices that you can provide to your employees:
English notice if you DO offer coverage
English notice if you DO NOT offer coverage
I had a client that sent me this article and then asked if it was true, that if someone makes $1 more that the family would be paying $9,355 more annually.
I know there are a lot of confusing articles out there right now and this was written with a shock factor to get you to read the article, and for my client….it worked! He read it, and he contacted me to be his “BS Meter” as he put it.
Here is an example to further explain why this article is saying what it is say:
Ok, so let’s say it is a family of 4.
400% of the federal poverty level is around $95,000 for a family of four in 2014. If they are making $95,000, then with their subsidy aka discount they will get in the Exchange / Marketplace they cannot spend more than 9.5% of $95,000 on healthcare. Which translates to $9025 annually = $752 per month (just as a barometer, most family coverage in NY starts at around $1200 per month for a very watered down plan).
If the person makes $95,001, then they won’t get that discount and they’d be paying the full premium, so in my example $1200 x 12 = $14,400 annually, which translates into $5375 more annually if you make $1 more.
I’m not sure where they came up with that magic number of $9035 but it’s really not that far off if you start looking at richer benefit plans!
Filed under: Health Insurance, National Healthcare, Reform | Tags: Individual Health Insurance, National Healthcare, NY Healthcare Costs
We have been getting numerous emails with this article being referenced by our clients along with excitement that when they wake up on January 1st, 2014 that their insurance bills will now be cut in half. I would like to draw your attention to a few items in this article and give you a bit of a reality check.
Point 1: “Individuals buying on their own will see their premiums tumble next year in New York State as changes under the take effect, Gov. Andrew M. Cuomo announced on Wednesday.” The first thing that Groups need to look at is the first word….”Individuals”, this is not talking about Group Insurance, this is talking about the Individual Market in New York State that has been extremely expensive in the past. For example, one carrier that currently has an Individual Plan, the rates are coming in around $2000 per month for an Individual. Even with a 50% reduction, that is a $1000 premium for an Individual, which is still well over the average rate under Group Coverage in the State of New York.
Point 2: “Beginning in October, individuals in New York City who now pay $1,000 a month or more for coverage will be able to shop for health insurance for as little as $308 monthly.” I believe that this is very misleading, this is giving you the lowest price that is going to be in the Exchange aka Marketplace without a Subsidy (tax credit for being under 400% of the Federal Poverty Level). This price references what is being called “Young Invincible” Plan meaning, that to get this plan, you must be under 30 years old and you are looking at having more of a catastrophic plan which would cover Preventative Care and then you would have a minimum of a $6000 Deductible before anything else would be covered. Currently, New York does not offer any plans with this type of watered down coverage.
Point 3: “With federal subsidies, the cost will be even lower. (than $308 monthly)”. This will be ONLY if you as an Individual qualify for a Subsidy. This means that as a single person, to get ANY type of price break in the Exchange / Marketplace you must make under 400% of the Federal Poverty Level, which translates into making under $45,960 annually. If you do not make under that, then the plans you can get in the Exchange / Marketplace are going to be the exact same costs that you can get outside the Exchange / Marketplace
Things we are excited about in this article:
1. That for Individuals that have struggled with the high cost of health insurance will get to see some relief.
2. Department of Financial Services say they have approved 17 insurers to sell individual coverage through the New York exchange, including eight that are just entering the state’s commercial market. Currently there are only a handful, so more choices will be better for everyone! Keep in mind some of these may just be Medicare networks that only the lower income individuals will qualify to be a part of.
What else to keep in mind:
1. Be looking for “Borough-centric” plans, meaning that carriers are going to come out with plans that limit the network dramatically in order to get the cost down. A great example of this has been with Aetna’s NYC Community Plan, these plans have typically been under $400 a month in premium but they are an HMO plan where you must get a referral and they only have doctors in the 5 Boroughs. The smaller NYC Community Network they are utilizing is about 40% of the size of the normal Aetna Network. So be looking for these type of plans to be coming out In and Out of the Exchange / Marketplace.
2. Brokers will be allowed to sell inside and outside of the exchange and there will be no difference in cost. Be weary of signing up through a Navigator because as it stands right now, they are going to be glorified Enrollers that since they are not licensed, they cannot advise on Insurance, they can only present to you the plans and have you draw your own conclusions. Also, 6 months down the road if you have a question about the benefits you bought or you are having a claims issue, you cannot go back to the Navigator, you’ll be dealing with the carrier directly and not have someone as your advocate as you would if you had got your plan through a Licensed Broker that is more qualified to help assist you with your needs.
3. Be on the look out as groups to be getting hit with more taxes on your group plans, this is going to help to pay for the cost reduction for the Individual Plans.
The Treasury Department announced on July 2, 2013 that the Obama Administration will provide an additional year before the mandatory employer and insurer reporting requirements under the Affordable Care Act begin. This delay is intended to allow the Administration to look into ways to simplify the new reporting requirements and to provide time to adapt health coverage and reporting systems while employers move towards making health coverage affordable and accessible for their employees.
The Administration has promised formal guidance on this transition in the very near future. We also expect proposed rules this summer implementing information reporting. Once those rules are published, the Administration will encourage employers, insurers and other reporting entities to voluntarily implement this information reporting in 2014. Since this transition relief will make it difficult to determine which employers owe employer penalties, the Administration is extending this transition
relief to the employer penalties – the penalties will not apply until 2015.
The transition relief does not affect the opening of the Exchange, scheduled for October 1, nor the individual mandate.
Some of you wondering if you are going to get hit with a penalty come 2014, the above picture is the best want to have a “quick check” on if you will or not. For more details, keep reading….
For the purposes of this provision fulltime is defined as an average of 30 or more hours per week.
Solely for the purposes of determining group size, the employer must calculate the number of FTEs or fulltime equivalent employees by including the employees working less than 30 hours into the equation.
For months beginning after December 31, 2013 an employer with an average of at least 50 FTE (full time equivalent employees) on business days in the preceding calendar year who fails to offer coverage to fulltime employees and their dependents (nothing is said about employer contribution) will pay an assessment of $168/month or $2,000/year for each fulltime employee who is able to obtain a premium tax credit or subsidy through an exchange (minus the first 30 employees).
Example: 60 fulltime employees- 30= 30 full time x $2,000 = $60,000 assessment.
Employers who do offer coverage but that is not minimally essential or unaffordable (meaning the employee contribution exceeds 9.5% of W-2 income for the lowest tier single premium) will pay $3k per FT employee who is able to obtain a premium tax credit or subsidy through the exchange. The assessment is limited to a maximum of $2k per FT employee minus the first 30.
Note subsidies are only available through a state or federally run exchange and are only available to individuals who are not eligible for Medicaid and who earn less than 400% of the FPL.
Example: -Income is $50k -Single annual premium is $600×12=$7,200 -9.5% of $50k = $4,750 (max to avoid penalty) -Employer must pay $7200-$4750 or pay the assessment
DETERMINING LARGE EMPLOYER STATUS:
The proposed regulations provide some transition relief for the determination of large employer status in 2014 that is aimed primarily at employers near the 50 full-time equivalent employee threshold. The transition relief allows employers to determine whether they are large employers based on a period of six consecutive calendar months as chosen by the employer in the 2013 calendar year, rather than based on the entire 2013 calendar year.
NON CALENDAR PLANS:
Relief was afforded to large employers who maintain a non-calendar year plan. If the employee is offered coverage that meets the law’s affordability and minimum value standards no later than the first day of the 2014 plan year, then no IRC §4980H penalty will be assessed with respect to that employee for the period prior to the first day of the 2014 plan year.
Note: Affiliated company rules changed with the proposed IRS rules of 12-28-2012.
AFFILIATED COMPANIES:
Example
Facts: Corporation A owns 100% of Corporation B. Corporation A employs 40 full-time employees in each calendar month of 2015. Corporation B employs 35 full-time employees in each calendar month of 2015. For 2015, the IRC §4980H(a) excise tax for a calendar month is $2,000 divided by 12. Corporation A does not sponsor an employer-sponsored plan for any calendar month of 2015, and receives a certification that at least one of its full-time employees has acquired health care coverage on an Exchange with the benefit of a premium tax credit. Corporation B sponsors an eligible employer-sponsored plan under which all full-time employees are eligible for minimum essential coverage that is affordable and meets the minimum value standard.
BIG change here. Standards will be applied separately to each entity that is a member of the controlled group comprising the employer (referred to in the rule as a “large employer member”) in determining the liability for and assessment of any tax penalties under IRC §4980H. (In this document, reference to “large employer member” means a member of a controlled group and also an employer that is a single entity and not part of a controlled group of corporations. If one entity of a controlled group is assessed, only the FT employees of the ONE entity is assessed, not the entire group.
Penalties and deduction of the first 30 employees therefore will be allocated to each separate entity based on its share of the total.
Conclusion: Corporation A and Corporation B are members of a controlled group that employs 50 or more full-time employees and, therefore, are large employers subject to IRC §4980H; however, the excise tax liability is applied separately. Under these facts, Corporation A is subject to an assessable excise tax under IRC §4980H for 2015 equal to $48,000, which is equal to 24 x $2,000 (40 full-time employees reduced by 16 (its allocable share of the 30-employee offset ((40/75 x 30 = 16)) and then multiplied by $2,000. Corporation B is not subject to any assessable excise tax under IRC §4980H for 2015
– an offer of coverage must be made to full-time employees and their dependents. Dependents, for purposes of IRC §4980H, is defined as children under age 26. Large employers will not face tax penalties for not offering coverage to spouses,
DEFINITION OF DEPENDENT :
The proposed regulations define “dependents” for purposes of IRC §4980H as an employee’s child under age 26. Employers will not face tax penalties for not offering coverage to spouses, who will be able to seek a federal premium tax credit to purchase health insurance in an Exchange if other minimum essential coverage is not available. This definition of dependents does not apply for purposes of any other section of the Code.
Note: FTE means fulltime equivalents, NOT fulltime employees.
Filed under: Health Insurance | Tags: Copay, Deductible, Health Insurance 101, How does a deductible work, Insurance Glossary, Insurance Terms, Out of Network, Summary of Benefits & Coverage
So many times we are asked to explain health insurance terms to our clients and their employees. Thought we would share the most commonly used terms and explain how it works!
Health Insurance Glossary
Prescription Drugs:
Drugs come in 3 tiers, below are the details:
A tiered formulary offers its lowest copay for generic drugs (Tier 1), charges you a little more for brand-name drugs (Tier 2) still under patent (that is, you have no option but to take them if you need them) and a lot more for what formularies call “non-preferred” drugs or non-formulary brand named drugs (Tier 3) most often, they are brand-name drugs you choose to purchase in spite of available generics), and new drugs whose cost is higher than alternative therapies (though these may eventually become tier two drugs).
Deductible: The deductible is the amount an individual must pay for health care expenses before insurance (or a self-insured company) covers the costs. Often, insurance plans are based on yearly deductible amounts. For Prescription Drugs, you have a one-time annual Deductible that has to be satisfied for Tier 2 and Tier 3 Drugs only.
Major Medical In Network:
Deductible: The deductible is the amount an individual must pay for health care expenses before insurance (or a self-insured company) covers the costs. Often, insurance plans are based on yearly deductible amounts.
Coinsurance: refers to money that an individual is required to pay for services, after a deductible has been paid. By definition it is the split between the Insurance Company and the Insured. Coinsurance is always specified by a percentage. For example, the employee pays 20 percent toward the charges for a service and the insurance company pays 80 percent.
Out-of-Pocket Maximum: The dollar amount of claims filed for eligible expenses at which point you’ve paid 100 percent of your out-of-pocket and the insurance begins to pay at 100 percent. Stop-loss is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance.
Copayment: is a predetermined (flat) fee that an individual pays for health care services, in addition to what the insurance covers. For example, some plans require a $30 copayment for each office visit, regardless of the type or level of services provided during the visit.
DXL: Stands for – Diagnostic X-ray and Lab, when you see this, it will give you the amount of the copayment associated with these services.
Lab Fees: The copayment associated with lab fees.
Hospital Benefits In Network:
Hospital In-Patient: Copay associated with hospitalizations where you are admitted for overnight stays.
Hospital Out-Patient: Copay associated with hospitalizations where you are admitted, but you do not have an overnight stay.
Emergency Room: Copay associated with Emergency Room visit, this is waived if you end up being admitted.
Surgical Benefits In Network:
Surgical In-Patient: Copay associated with an in hospital surgical procedure where you are going to be admitted for an overnight stay.
Surgical Out-Patient: Copay associated with an in hospital surgical procedure where you are admitted, but you do not have an overnight stay.
Mental Health & Substance Abuse In Network:
Mental Nervous In-Patient: Copay associated when admitted to a facility for overnight stays.
Substance Abuse In-Patient: Copay associated when admitted to a facility for overnight stays, aka rehab.
Mental Nervous Out-Patient: Copay associated with visit aka therapist visit
Substance Abuse Out-Patient: Copay associated with visit aka Out Patient Program
Out of Network Services:
All Out of Network are treated the same, the deductible has to be satisfied first, then a percentage of the Allowable Charges are covered until an Out of Pocket Maximum is reached, then 100% of the Allowable Charges are covered. Keep in mind, if you go to an Out of Network Doctor that charges over the Allowable Charge Amount, then you will be balance billed.
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