Health Insurance – Page 3 – Setnor Byer Insurance & Risk

What is a Certificate of Insurance?

Certificates of Insurance are documents provided by Agents to verify the existence of insurance coverage. They are commonly used when an agreement or contract requires a party to maintain specific types of insurance. For example, a Certificate of Insurance can be used when:

A general contractor wants to verify that its subcontractor has the statutorily required workers’ compensation insurance;
A mortgage lender wants to verify that the homeowner has sufficient property insurance;
A commercial landlord wants to verify that its tenant has all the insurance coverage required by the lease; or
A homeowner wants to verify that its lawn service company has general liability insurance.

Certificates of Insurance are issued to the certificate holder—the person or entity that needs to verify insurance coverage. Though common and relatively straightforward, there is quite a bit of confusion about what Certificates of Insurance do, and more importantly, do not do.

A Certificate of Insurance provides a superficial snapshot of insurance coverage that is in place at the time it is created. Contrary to what many believe, Certificates of Insurance:

Are NOT insurance policies.
Do NOT provide certificate holders with any rights under the insured’s policies. This means certificate holders cannot file a claim or request a defense under the insured’s policies.
Do NOT amend, extend or alter the coverage provided by the insured’s policies. This can only be accomplished with an endorsement, rider or amendment to the policy.
Do NOT create a contract between the insurance company and the certificate holder.
Do NOT guarantee that insurance coverages listed on a Certificate of Insurance will continue in the future. A Certificate of Insurance issued today may not be accurate tomorrow.
Are provided for informational purposes ONLY.

Though there are various Certificate of Insurance forms, those developed by ACORD (Association for Cooperative Operations Research and Development) are widely used to provide specific information about existing insurance coverage, such as:

the insurance companies issuing the policy
the policy numbers
effective dates
types of insurance (ex. general liability, automobile, workers’ compensation, property)
policy limits

These forms also provide a space to add additional comments or conditions. This is where problems may arise if an insured or certificate holder wants to add specific language to their Certificates of Insurance. For example, a certificate holder may want to state that there is an additional insured under the policy, or an insured may want the certificate to state that any obligation to indemnify the certificate holder is covered by the policy.

If such statements happen to be true, it is not because they were typed on the certificate. Remember that Certificates of Insurance do not affect, extend, or change the insurance policy, so any incorrect or contradictory statements are meaningless to the insurance company. They can, however, be grounds for a costly lawsuit, so an experienced insurance agent should be used when issuing or receiving Certificates of Insurance.

If you would like to learn more about dealing with Certificates of Insurance or how we can help, please contact us.

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Affordable Care Act’s Employer Mandate Delayed Until 2015

Shortly before the July 4th holiday, the U.S. Department of the Treasury announced that enforcement of the Employer Shared Responsibility requirement under the Affordable Care Act (Act) will be delayed until 2015. The employer mandate, which generally requires employers with at least 50 full-time or full-time equivalent employees to offer health care benefits or pay a penalty, was scheduled to go into effect on January 1, 2014.

Through a dialogue with businesses about the Act’s employer and insurer reporting requirements, the administration learned of concerns about the complexity of the requirements and the need for more time to implement them effectively. As a result, the administration decided to delay the Act’s mandatory employer and insurer reporting requirements.

According to the announcement, this delay is designed to:

Provide the administration more time to consider ways to simplify the new reporting requirements consistent with the law.
Provide more time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.

The administration recognized that delaying the Act’s mandatory employer and insurer reporting requirements will make it impractical to determine which employers owe shared responsibility payments for 2014. As a result, the administration decided to also delay enforcement of the employer mandate, stating that “these payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015.”

The Treasury says it will be publishing formal guidance regarding the delayed enforcement soon and that proposed rules will be published this summer. Once these rules have been issued, the administration says it will work with employers, insurers and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015.

So what should employers be doing now? The Employer Shared Responsibility provision is still the law, it just isn’t being enforced. Not surprisingly, talking heads are making predictions and debating whether it’s really speeding if nobody can pull you over. Unfortunately, the manner in which employer’s will be affected by the delay will not be known until additional guidance is issued.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the changing health care reform landscape. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

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New Deadline for Affordable Care Act’s Employer Notice Requirement

Under the Affordable Care Act (ACA), employers are required to give employees written notice about their options for purchasing health insurance through Affordable Insurance Exchanges (Health Insurance Marketplaces). Though the original March 1, 2013 deadline was delayed, the Department of Labor (DOL) recently announced the new deadline for employers to begin giving this notice.

Beginning October 1, 2013, employers must provide the required ACA notice to new employees at the time of hiring. In 2014, the DOL will allow employers to satisfy this requirement by providing the notice within 14 days of an employee’s start date. An employer’s current employees must receive their notice no later than October 1, 2013.

Notice must be given to each employee regardless of their plan enrollment status or their part-time or full-time status. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan. The notice, which must be understood by the average employee, may be provided by first-class mail or, in some instances, electronically.

The ACA’s notice requirement applies to employers covered by the Fair Labor Standards Act (FLSA). The FLSA generally applies to employers with one or more employees who are engaged in, or produce goods for, interstate commerce. Also the FLSA typically does not cover enterprises with less than $500,000 in annual dollar volume of business. However, the FLSA does cover specific entities regardless of their dollar volume of business, including hospitals, preschools, elementary and secondary schools, institutions of higher education, and federal, state and local government agencies.

To help employers satisfy their notice requirement, the DOL has prepared two model notices. There is one model notice for employers who offer a health plan to some or all employees, and another model notice for employers who do not offer a health plan. Employers may also use modified versions of these model notices as long as the required information is present.

If you would like to learn more about your obligations under the Fair Labor Standards Act, click here. If you would like information about insuring against FLSA claims, click here.

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Will business owners buy insurance online?

Insurance companies such as Geico and Progressive started selling personal insurance online over a decade ago. So is it safe to assume that business insurance can also be sold online?

We decided to explore this endeavour and we’re not the only ones. Plenty of insurance agencies offer business insurance, but very few can offer clients an online quote.

Just because the tool is out there doesn’t mean business owners will use it. Getting a quote for business insurance is significantly more complicated than obtaining a personal quote. Some of the other agencies that are offering business quotes are approaching it quite differently than we did.

Hiscox is targeting small business with a page on their site dedicated to explaining the various types of insurance coverage small business owners need. Apogee lists the types of insurance they can quote instantly and features a video tutorial of how to use their quoting tool. Our tool lists all the instant quotes we offer including Property and Liability Quotes, Professional Liability Quotes, Business Auto Quotes, and many more.

The introduction of this tool to our website also created the need for a complete redesign. We call ourselves a full-service independent insurance agency and creating this tool made us realize the possibility for an online marketplace. If clients can get quotes online they should be able to service their policies online as well. That’s why we also created a service page which allows clients to manage their policies online

If successful, online quotes for business insurance could be a big game changer. It will be interesting to see how many more agencies begin offering business quotes online. Get a quote and let us know what you think.

At Setnor Byer Insurance & Risk, we are committed to offering you a seamless insurance experience. Check back with us periodically for informational updates about insurance news. If you have specific questions about our instant quoting tool or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

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Health Benefits and Value under the Affordable Care Act

The Department of Health and Human Services (HHS) released final rules pursuant to the Affordable Care Act (Act) that are designed to help consumers shop for and compare health insurance options in the individual and small group markets. According to the HHS, these final rules will promote consistency among health plans, protect consumers by ensuring that plans cover a core package of health benefits and limit out of pocket expenses.

To make it easier for consumers to make apples-to-apples comparisons among health insurance plans, the final rules create uniform standards of coverage and value.

Essential Health Benefits

The Act provides that health plans offered in the individual and small group markets, including those available through Health Insurance Marketplaces (Exchange), must offer a core package of items and services known as Essential Health Benefits or EHBs, which must be equal in scope to those benefits offered by a typical employer plan. Under the Act, EHBs must provide:

Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use services, including behavioral health treatment
Prescription drugs
Rehabilitative services and devices
Laboratory services
Preventive and wellness services and chronic disease management
Pediatric services, including oral and vision care

To protect consumers against discrimination the final rules also:

Prohibit discriminatory benefit designs
Include special standards and options for coverage not typically covered by individual and small group policies
Include standards for prescription drug coverage

Actuarial Value

The final rules outline actuarial values of individual and small group plans to help consumers distinguish and compare plans offering different levels of coverage. Actuarial Value, or AV, is calculated as the percentage of total average costs covered by a plan. For example, if a plan has an AV of 70%, a consumer could expect to pay an average of 30% of the costs.

Beginning in 2014, non-grandfathered health plans in the individual and small group markets must meet certain AVs, which have been assigned the following “metal levels”:

A platinum health plan has an AV of 90%.
A gold health plan has an AV of 8%.
A silver health plan has an AV of 70%.
A bronze health plan has an AV of 60%.

To give health plans some flexibility, a plan can meet a particular metal level if its AV is within 2% of the standard. For example, a silver plan may have an AV between 68% and 72%. The final rules also provide flexibility, if necessary, for issuers in the small group market regarding annual deductible limits to achieve a particular metal level.

To streamline and standardize the calculation of AV for health insurance issuers, HHS is providing a publicly available AV Calculator. In 2014, this calculator will use a national standard population, but in 2015, HHS will accept state-specific data sets for the standard population if states choose to submit alternate data for the calculator.

According to HHS, these final rules will give consumers a consistent way to compare and enroll in health coverage in the individual and small group markets, while giving states and insurers more flexibility and freedom to implement the Act. Time will tell if these final rules will achieve their desired purpose.

At Setnor Byer Insurance & Risk, we are committed to guiding you through Health Care Reform. Check back with us periodically for informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

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The Affordable Care Act’s Individual Mandate

The Affordable Care Act’s Individual Shared Responsibility provision requires nonexempt individuals to obtain minimum essential coverage for themselves and any nonexempt dependents. Starting January 1, 2014, those failing to get the required health insurance will have to pay a monthly penalty.

Who is subject to the penalty?

The penalty, which is calculated monthly, applies to individuals of all ages, including senior citizens and children. An individual is liable for the penalty assessed against any other individual who can be claimed as a dependent for federal income tax purposes. If an individual files a joint return, that individual and their spouse are jointly liable for the penalty. Penalties will be paid by including them with an individual’s tax return.

What is Minimum Essential Coverage?

Minimum essential coverage generally includes:

Employer-sponsored coverage (including COBRA coverage and retiree coverage)
Coverage purchased in the individual market
Grandfathered health plans
Medicare and Medicaid coverage
Children’s Health Insurance Program (CHIP) coverage
Certain types of Veterans’ health coverage
TRICARE (Department of Defense health care program)

How much is the penalty?

The Individual Shared Responsibility penalty is calculated monthly by using a flat dollar amount or a percentage of household income, whichever is greater. Under the flat dollar amount method, each nonexempt individual is penalized a fixed amount. For individuals under the age of 18, the penalty is one-half the fixed amount. If an individual is responsible for multiple dependents, the total penalty cannot be more than 300% of the applicable fixed amount.

The fixed amounts used to calculate the penalty are:

$95 in 2014 ($7.92 per month)
$325 in 2015 ($27.08 per month)
$695 in 2016 ($57.92 per month)
$695 + cost-of-living increase in 2017 and beyond.

Under the percentage of income method, the penalty is a percentage of an individual’s household income, less specific deductions. To calculate household income, add the individual’s modified adjusted gross income to the modified adjusted gross incomes of the individual’s family members.

The percentages used to calculate the penalty are:

1% in 2014
2% in 2015
2.5% in 2016 and beyond.

For example, in 2014, the annual penalty will be $95 per adult and $47.50 per child, but no more than $285 (300% of $95) or 1% of the household income, whichever is greater.

Is there a maximum limit for the penalty?

Yes. The Individual Shared Responsibility penalty cannot be more than the national average premium for bronze-level (covering 60% of costs) qualified health plans offered through Affordable Insurance Exchanges. The Congressional Budget Office estimates that in 2016, the national average will be approximately $5,000 for individuals and $12,500 for families of four.

Are there any exemptions from the Minimum Essential Coverage requirement?

Yes. The following individuals are not required to obtain Minimum Essential Coverage:

Members of a religious sect that is legally recognized as being conscientiously opposed to accepting any insurance benefits.
Members of a recognized health care sharing ministry.
Individuals who are not U.S. Citizens, U.S. Nationals or lawfully present aliens.
Individuals incarcerated following disposition of criminal charges.
Members of a recognized Indian tribe.
Individuals with income below the threshold for filing a tax return.
Individuals whose required contribution for coverage exceeds 8% of their household income.
Individuals who have been certified as suffering a hardship.
Individuals with a gap in health insurance coverage of less than three consecutive months during the year.

Though proposed regulations explaining the Individual Shared Responsibility penalty have been published by the Internal Revenue Service and the Department of Health and Human Services, they are not final and may change.

At Setnor Byer Insurance & Risk, we are committed to guiding you through Health Care Reform. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

If you’d like to subscribe to our weekly newsletters please click here.

Department of Health Issues Final HIPAA and HITECH Act Rules

On January 25, 2013, the Department of Health and Human Services (HHS) published its omnibus Final Rule regarding the Health Insurance Portability and Accountability Act (HIPAA), the Health Information Technology for Economic and Clinical Health Act (HITECH) and the Genetic Information Nondiscrimination Act (GINA).

According to HHS, the Final Rule “greatly enhances a patient’s privacy protections, provides individuals new rights to their health information, and strengthens the government’s ability to enforce the law.” Here is a brief summary of some of the Final Rule’s provisions.

Breach Notification Standard

Previously, an incident involving the impermissible use or disclosure of protected health information (PHI) was generally not considered a breach unless an internal risk assessment revealed a significant risk of harm to those whose information was compromised. Under the Final Rule, an impermissible use or disclosure of PHI is presumed to be a breach unless an internal risk assessment demonstrates that there is a low probability that the PHI has been compromised.

Although the Final Rule keeps the risk assessment requirement, it is more structured and objective than before. It requires a covered entity to consider:

The nature and extent of the PHI involved, including the types of identifiers and the likelihood of re-identification;
The unauthorized person who used the PHI or to whom the disclosure was made;
Whether the PHI was actually acquired or viewed; and
The extent to which the risk to the PHI has been mitigated.

Modifications to HIPAA Required by the HITECH Act

The Final Rule implements previous proposed and interim rules regarding HIPAA modifications required by the HITECH Act. These modifications:

Make business associates of covered entities directly liable for compliance with various requirements of HIPAA’s Privacy and Security Rules.
Strengthen the limitations on the use and disclosure of PHI for marketing and fundraising purposes, and prohibit the sale of PHI without individual authorization.
Expand individuals’ rights to receive electronic copies of their health information and to restrict disclosures to a health plan concerning treatment for which the individual has paid out of pocket in full.
Require modifications to, and redistribution of, a covered entity’s notice of privacy practices.
Modify the individual authorization and other requirements to facilitate research and disclosure of child immunization proof to schools, and to enable access to decedent information by family members or others.
Adopt additional HITECH Act enhancements to HIPAA’s Enforcement Rule that were not previously implemented, such as the provisions addressing enforcement of noncompliance with HIPAA due to willful neglect.

Genetic Information

The Final Rule modifies the HIPAA Privacy Rule as required by GINA to prohibit health plans, but not long-term care policies, from using or disclosing genetic information for underwriting purposes. It also clarifies that “health information” includes genetic information.

The effective date of the Final Rule is March 26, 2013, and the compliance date for covered entities and business associates is September 23, 2013. Since much of the Final Rule merely implements previously issued non-final rules, many covered entities and business associates should find that they are already in compliance.

Covered entities and business associates should consider insuring against the substantial costs associated with a security breach. Various insurance products protect against privacy injuries resulting from security breaches, such as identity theft. Insurance may also help cover the significant cost of complying with applicable breach notification laws like those discussed above. Given the variety and complexity of these products, an experienced insurance agent should be consulted to ensure that proper coverage is obtained and that no gaps remain.

If you would like to learn more about insuring against data security breaches, contact us.

Additionally, clients of Setnor Byer Insurance & Risk enjoy access to various risk management services such as our affiliate’s HIPAA Standards Training which has been approved by the HR Certification Institute as well as the Florida Bar.

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Affordable Care Act Notice Requirement Delayed

To help individuals understand their health insurance options under the Affordable Care Act (Act), employers are required to give employees written notice about Affordable Insurance Exchanges. The Act’s March 1, 2013 deadline for employers to start giving this notice to all employees was recently pushed back by the Department of Labor (DOL).

Under the Act, the DOL is required to define the scope of the notice requirement and provide guidance on how the requirement can be satisfied by issuing regulations. Unfortunately, these regulations aren’t finished yet, and the DOL has taken the position that employers should not be required to comply with the Act’ notice requirement until the regulations are done.

According to the DOL, “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.”

So what is the reason for the delay? According to the DOL, efforts need to be coordinated with the Department of Health and Human Services and the Internal Revenue Service. The DOL is considering the possibility of including model, generic language in the regulations that could be used to satisfy the notice requirement and also allowing employers to satisfy the notice requirement by providing employees with an employer coverage template. Regardless of their final form, the DOL expects the regulations to provide employers with flexibility and adequate time to comply.

Until the Act’s notice requirement becomes effective, Setnor Byer Insurance & Risk can be your source of information about health insurance. Be sure to check back with us periodically for future updates. In the meantime, if you have specific questions about your health insurance or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, please contact us.

Finding Safe Harbor from the Employer Mandate

Under the Affordable Care Act’s Employer Shared Responsibility provisions, “large” employers with at least 50 full-time equivalent employees may be subject to an annual $2,000 or $3,000 penalty (tax) per qualifying employee. An employer may avoid the penalty by offering health coverage to at least 95% of its full-time employees (and dependents) under an “affordable” plan that provides “minimum value.”

A plan will generally satisfy the “minimum value” requirement if it covers at least 60% of health care costs. To be considered “affordable,” the employee’s required contribution for employee-only coverage cannot be more than 9.5% of the employee’s household income for the taxable year.

In the context of determining whether a plan satisfies the affordability requirement, the Internal Revenue Service recognized the likely inability of employers to ascertain the household income for each of its employees. As a result, the proposed regulations recently published by the IRS allow employers to take advantage of three safe harbor provisions.

Form W-2 Safe Harbor

Application of the Form W-2 Safe Harbor, which is determined after the calendar year on an employee-by-employee basis, takes into account the employee’s Form W-2 wages and the employee contribution.

An employer will not be assessed a penalty for an employee if the required annual contribution for the employer’s cheapest employee-only coverage plan is not more than 9.5% of that employee’s Form W-2 wages from the employer. If an employee is not offered coverage for an entire calendar year, the Form W-2 wages can be adjusted to reflect the period for which coverage was offered.

To avoid manipulation, the proposed regulations provide that the employee’s required contribution must remain consistent during the calendar year and that an employer cannot make discretionary adjustments to the required employee contribution for a pay period.

Rate of Pay Safe Harbor

Under the Rate of Pay Safe Harbor, an employer:

takes the rate of pay for each hourly employee who is eligible for coverage under the plan as of the beginning of the plan year; and
multiplies that rate by 130 hours (the benchmark for monthly full-time status) to compute the employee’s monthly wages.

If the employee’s monthly contribution amount for the cheapest employee-only coverage plan is not more than 9.5 percent of the computed monthly wages, then the coverage is considered affordable. For salaried employees, the monthly salary would be used to determine affordability.

The Rate of Pay Safe Harbor allows employers to prospectively determine affordability without having to analyze every employee’s wages and hours. However, it may only be used for those employees who did not have their hourly wages or monthly salaries reduced by the employer during the year.

Federal Poverty Line Safe Harbor

Under the Federal Poverty Line (FPL) Safe Harbor, coverage is considered affordable if the employee’s cost for the cheapest employee-only coverage plan is not more than 9.5% of the FPL for a single individual. Under the regulations, employers may use the most recently published poverty guidelines for the first day of the plan year.

These safe harbors are optional. Large employers may use one or more of these for all employees or for any reasonable category of employees, provided they are used uniformly and consistently for all employees in a category.

The IRS will be accepting comments on these proposed regulations until March 18, 2013.

At Setnor Byer Insurance & Risk, we are committed to guiding you through what is sure to be a bumpy ride. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

If you’d like to subscribe to our weekly newsletters please click here.

IRS Softens Affordable Care Act’s Penalty Provision

On January 2, 2013, the Internal Revenue Service published proposed regulations regarding one of the Affordable Care Act’s more controversial provisions–the Employer Shared Responsibility (penalty) provision. Under this provision, an employer may face an annual $2,000 or $3,000 penalty (tax) per qualifying employee depending on whether health coverage is offered to full-time employees.

Starting in 2014, a “large employer” may be subject to the Employer Shared Responsibility provision if:

the employer does not offer health coverage to at least 95% of its full-time employees, and at least one of the full-time employees receives a premium tax credit for purchasing individual coverage on an Affordable Insurance Exchange, or
the employer offers health coverage to at least 95% of its full-time employees, but at least one full-time employee receives a premium tax credit to help pay for coverage on an Exchange.

A full-time employ will typically be entitled to a premium tax credit if the employer did not offer coverage to that employee or if the employer’s coverage was either unaffordable to the employee or did not provide minimum value.

A “large employer” under the Employer Shared Responsibility provision employs:

at least 50 full-time (30 hours per week) employees, or
a combination of full-time and part-time employees that equals at least 50 full-time employees. For example, 40 full-time employees plus 20 part-time employees working15 hours per week are equivalent to 50 full-time employees.

The number of employees in a given year will be used to determine whether an employer will be considered a large employer for the next year. In other words, if an employer has 50 full-time employees in 2013, it will be considered a large employer for 2014.

Significantly, the proposed regulations give large employers a welcome margin of error. Citing the lack of flexibility or margin for error, the proposed IRS regulations provide that the penalty will not apply if large employers offer coverage to at least 95% of their full-time employees. Note that after 2014, the 95% requirement will apply to full-time employees and their dependents.

The IRS will be accepting comments on these proposed regulations until March 18, 2013.

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