Health Insurance – Page 4 – Setnor Byer Insurance & Risk

Health Care Reform by the Numbers

As Health Care Reform makes its way through the health insurance landscape, many employers are finding it difficult to keep up. Unfortunately, the size and complexity of the Affordable Care Act (Act) doesn’t help. Nevertheless, a general understanding of the Act’s more significant provisions can help employers adjust to past changes and prepare for future ones.

Since numbers play a big part in determining how the Act will impact a particular employer, here are some figures that employers can use to see where they fit in the big picture.

0 Number of employers explicitly required by the Act to offer employee health care coverage

50 Number of full-time equivalent employees required to trigger the Act’s tax on employers

$2,000 Annual tax large employers must pay for each full-time employee (in excess of 30) if the employer does not offer health benefits to its employees

$3,000 Annual tax that large employers must pay for each full-time employee receiving a credit for purchasing health insurance from an Exchange if the employer offers health benefits to its employees

30 Average number of hours an employee must work to be considered a full time employee for purposes of determining large employer status

$0 Annual tax that large employers must pay for each part-time employee, regardless of whether the employer offers health coverage to employees

85% Minimum percentage of premium revenue that a large group health insurance issuer must spend on health care claims and quality improvement to avoid issuing a rebate to enrollees

80% Minimum percentage of premium revenue that a small group or individual market health insurance issuer must spend on health care claims and quality improvement to avoid issuing a rebate to enrollees

200 Maximum number of full-time employees that an employer may have before the Act’s automatic enrollment requirement is triggered

9.5% Maximum percentage of employee’s household income that the employee’s self-only health plan contribution may be to qualify as affordable under the Act

60% Minimum percentage of costs that must be covered by an employer’s health plan to be considered adequate under the Act

249 Maximum number of W-2 Forms an employer may file during the previous calendar year to avoid reporting the cost of coverage under an employer-sponsored group health plan on Form W-2

35% Maximum tax credit available to eligible small employers through 2013

24 Maximum number of full-time equivalent employees an employer may have to be eligible for the Act’s small employer tax credits

$49,999 Maximum average annual wages an employer may pay to be eligible for the Act’s small employer tax credits

50% Minimum percentage of employees’ premium cost for single (not family) health care coverage an employer must pay to be eligible for the Act’s small employer tax credits

100 Maximum number of employees an employer may have to be eligible to purchase insurance through Small Business Health Options Program (SHOP) Exchanges

TBD Number of newly insured Americans

TBD Affordability of health insurance under the Act

TBD Effect of Act’s provisions on employers and employees

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. 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.

New Health Insurance Notice Requirements for Employers

Thanks to the Affordable Care Act, the Fair Labor Standards Act (FLSA) is moving beyond its traditional role as the nation’s principal wage and hour law. In addition to establishing minimum wage, overtime pay, recordkeeping and youth employment standards, the FLSA now deals with health insurance.

Under the amended FLSA, employers must notify employees that:

Affordable Insurance Exchanges exist, along with a description of the services provided by Exchanges and how to request assistance from an Exchange
If their employer’s health plan pays less than 60% of allowed costs the employee may be eligible for a premium tax credit and a cost sharing reduction if the employee purchases a qualified health plan through an Exchange
If the employee purchases a qualified health plan through the Exchange, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer

Employers must distribute this notice to every current employee by March 1, 2013. Employees hired after this date must receive their notice upon being hired.

The precise form and content of the notice, as well as acceptable means for providing the notice, are not yet certain. The law states that employers must provide notice “in accordance with regulations promulgated by the Secretary.” Presumably, these regulations will clarify what should be included in the notice and how it can be provided to employees.

Despite the current lack of regulations, it is reasonable to assume that the FLSA’s broad definition of “employer” means that most employers will need to comply with the new notice requirement. Similarly, the FLSA’s broad definition of “employee” means that every employee, regardless of status, will likely be entitled to receive this notice.

Consequently, employers need to be ready to comply with the notice requirement by March 1, 2013, especially since the penalty for violating this requirement is unknown.

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 health care reform. 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.

Health Care Reform: What are SHOPs?

To help small businesses provide health insurance to their employees, the Affordable Care Act created Small Business Health Options Programs, or SHOPs. Starting in 2014, SHOPs will be available to eligible businesses with up to 100 employees—although states can limit participation to businesses with up to 50 employees until 2016.

Once up and running, it is anticipated that SHOPs will help small businesses by:

Simplifying Choices. SHOP plans will provide essential health benefits like those covered by a typical employer health plan. These plans will be placed in four “tiers” depending on the coverage provided. SHOPs will provide side-by-side comparisons of available plans, with information about benefits, premiums, and quality. SHOPs will also enroll employees and consolidate billing.
Expanding Options. SHOPs will allow eligible employers to offer a variety of Qualified Health Plans from several insurers. These employees will then be able to choose a plan that best fits their needs and budget.
Preserving Control. Small businesses will be able to decide whether and when to participate in SHOPs, to choose their own level of employee contribution and to make a single monthly payment to the SHOPs rather than to multiple plans.
Lowering Costs. SHOPs will be designed to save money by spreading insurers’ administrative costs across more businesses. Additionally, small businesses using SHOPs may be eligible for tax credits.

Since SHOPs will be a part of the Affordable Insurance Exchanges, states have flexibility in determining how they will be structured. Until decisions are made and Exchanges are implemented, we will not know if these SHOPs will accomplish everything they are designed to do.

What is a Health Insurance Exchange?

Change has been in the air since the U.S. Supreme Court ruled on the Patient Protection and Affordable Care Act (Act). Adjustments are being made to recent changes and preparations are being made for changes that are yet to come. Though opinions about the Act’s desirability and efficacy vary, many are experiencing a shared anxiety over one of the more significant changes on the horizon—Affordable Insurance Exchanges.

The Act calls for the creation of state-based competitive marketplaces where individuals and small businesses will be able to purchase affordable private health insurance. These new marketplaces, or Exchanges, are designed to make it easy for consumers and small businesses to compare health plans, get answers to questions, find out if they are eligible for various tax credits, and enroll in a health insurance plan that meets their needs.

The main functions of Exchanges, which are to be operation in 2014, include:

Certifying, recertifying, and decertifying health plans offering coverage through the Exchange, called qualified health plans;
Assigning ratings to each plan offered through the Exchange on the basis of relative quality and price;
Providing consumer information on qualified health plans in a standardized format;
Creating an electronic calculator so consumers can assess the cost of coverage after any advance premium tax credits and cost-sharing reductions;
Operating a website and toll-free telephone hotline offering comparative information on qualified health plans and allowing eligible consumers to apply for and purchase coverage;
Determining eligibility for the Exchange, tax credits and cost-sharing reductions for private insurance, and other public health coverage programs, and facilitating enrollment of eligible individuals in those programs;
Determining exemption from requirements to carry health insurance and granting approvals based on hardship or other exemptions; and
Establishing a Navigator program to assist consumers in making choices about health care options and in accessing their new health care coverage.

Though resources and support are available, Exchanges are to be run by the individual states. If, however, a state does not establish an acceptable Exchange, the U.S. Department of Health and Human Services (HHS) will assume that that state has elected not to do so, and the HHS will operate a federally-facilitated Exchange in that state.

To offer guidance, the HHS published rules setting forth standards to be followed by states when establishing and operating Exchanges. The framework provided by the HHS includes standards for:

Establishing and operating an Exchange;
Qualifying health insurance plans for participation in an Exchange;
Determining an individual’s eligibility to enroll in health plans and insurance affordability programs;
Enrolling in health plans through Exchanges; and
Determining employer eligibility for participation in the Small Business Health Options Program (SHOP).

Despite these standards, the HHS gave states some flexibility to meet specific needs. For example, each state can elect to structure its Exchange as a non-profit entity established by the state, as an independent public agency, or as part of an existing state agency. A state can also choose to operate its Exchange in partnership with other states through a regional Exchange and to operate multiple Exchanges that cover distinct areas within the state.

Despite this flexibility, Exchanges must have safeguards to prevent conflicts of interest and promote ethical and financial disclosure standards. Consumers utilizing Exchanges should enjoy easy access to information about plan choices and comparisons, protections to ensure fair marketing and enrollment practices by health plans, and appeals rights in case something goes wrong with Exchanges or health plans.

The Act provides that a state’s plan to operate an Exchange must be approved by the HHS no later than January 1, 2013. However, the HHS may provide conditional approval if the state is advanced in its preparation but cannot demonstrate complete readiness by January 1, 2013.

The prospect of conditional approval confirms that though the deadline draws near, much remains to be done. At this point, it is too early to tell how or if the Exchanges will do what they were designed to do. This uncertainty has no doubt been the source of anxiety for many. Unfortunately, those wanting confirmation that the Affordable Insurance Exchanges contemplated under the Act are in fact the wave of the future will have to wait until then.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the rapidly changing health care landscape. Be sure to check back with us periodically for future informational updates. In the meantime, if you have specific questions about health care reform or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, please contact us.

Clearing a High Health Insurance Hurdle: the Pre-Existing Condition Insurance Plan (PCIP) Program

There is a new option for those who are uninsured because of a pre-existing condition—the Pre-Existing Condition Insurance Plan (PCIP) program. Created by the Patient Protection and Affordable Care Act (the health reform law), the PCIP is designed to make health coverage available to those with pre-existing conditions. Importantly, the PCIP does not cost enrollees more just because of their medical condition.

The U.S. Department of Health and Human Services runs the PCIP program in twenty-three states and is contracting with a national insurance plan to administer the program. These states are: Arizona, Alabama, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Nevada, Nebraska, North Dakota, South Carolina, Tennessee, Texas, Vermont, Virginia, West Virginia, Wyoming, as well as the District of Columbia.

The remaining states are running their own pre-existing condition insurance plan programs. As a result, application procedures, costs and benefits for these state-run programs may differ not only from the federally-run PCIP, but also from other states.

Under the federally-run PCIP program, a broad range of health benefits are covered, including primary and specialty care, hospital care and prescription drugs. Benefits provided by these PCIPs are available even if they are used to treat a pre-existing condition.

To qualify for coverage under the PCIP program, a person:

Must be a United States citizen or legal resident;
Must have been without health coverage for at least the previous six months; and
Must have a pre-existing condition or have been denied coverage because of health a condition.

The PCIP program offers three plan options:

The Standard Plan;
The Extended Plan; and
The HSA Plan.

Each plan has its own premiums, calendar year deductibles, prescription deductibles, and co-payment requirements. However, all three plans pay for preventive care at 100%, with no deductible when a preventive diagnosis is indicated by an in-network doctor. Preventive care includes annual physicals, flu shots, routine mammograms, and cancer screenings. For non-preventive care, insureds staying in-network will pay 20% of their medical costs after satisfying the deductible.

Despite being a federally-run program, PCIP premiums may vary by state. For example, premiums are higher in Texas than they are in Florida.

In Florida, the monthly premiums for people 18 years old or younger are $118 for the Standard Option, $158 for the Extended Option, and $122 for the HSA Option. In Texas, the premiums are $133 for the Standard Option, $179 for the Extended Option, and $138 for the HSA Option. Similarly, those living in Florida ages 35 to 44 years old will pay $211 for the Standard Option, $284 for the Extended Option, and $220 for the HSA Option. In Texas, the monthly premiums are $239 for the Standard Option, $323 for the Extended Option, and $248 for the HSA Option.

Under this program, the first premium payment is due within 30 calendar days from the date an approval letter is received; otherwise the application will be cancelled. The effective date of coverage depends on the date the application and all supporting documents are received by the PCIP. If the documentation is received on or before the 15th of the month, coverage will be effective on the first day of the next month. If documentation is received after the 15th of the month, coverage will be effective on the first day of the second month.

If an application for coverage under the PCIP is denied, the applicant will receive a letter explaining the reasons for such denial. These applicants have 45 days to file an appeal of their denial, if they so desire. Otherwise, they are free to re-apply for PCIP coverage upon meeting the eligibility requirements.

The PCIP program is only available until 2014. This is because in 2014, insurance companies will be prohibited from refusing to sell coverage or renew policies because of a person’s pre-existing condition. Additionally, in 2014, individuals whose employers don’t offer them insurance will be able to buy insurance directly in a health insurance exchange.

For those who have been unable to get health insurance due to a pre-existing condition, the PCIP program may be the solution they have been looking for. However, given the disagreement and uncertainty surrounding health care reform, even after the Supreme Court upheld nearly every provision of the law, only time and experience will tell if the PCIP program is in fact what it was designed to be.

The Supreme Court’s Ruling on Health Care Reform: Is it All Good or All Bad?

On the last day before summer recess, the United States Supreme Court handed down its ruling in the much anticipated “ObamaCare” case. Despite being difficult to follow without the assistance of a roadmap, the result of the nearly 200-page ruling is that health care reform will proceed largely as planned. In the aftermath, many are left wondering, what now?

Ordinarily there is little disruption when the Supreme Court upholds a law because the status quo has been preserved. This is far from the case with the Patient Protection and Affordable Care Act (Act). The political excitement and division surrounding the Act left many unsure about whether looming changes to our health care system would ever become a reality.

Consequently, many are now desperately behind in terms of planning and preparing for the (apparently?) inevitable changes. In other words, it is crunch time for those who were expecting the Supreme Court to strike down ObamaCare.

To stay current, employers and individuals must become familiar with the changing landscape. Specifically, it is important to posses a minimum understanding of the current and future changes under the Act, such as:

the requirement that all individuals, with some exceptions, have health insurance;
the prohibition of lifetime benefits limits based on dollar amounts;
the prohibition of coverage rescissions or cancellations, except in cases of fraud or intentional misrepresentation;
the requirement that dependent insurance coverage continue up to the age of 26;
the prohibition of pre-existing condition exclusions for dependent children under the age of 19; and
the limitation on medical expense contributions to flexible spending accounts to $2,500 per year.

For individuals, many of the Act’s provisions require little or no preparation. The same cannot be said for employers, since various requirements under the Act require preparation, such as:

Mandatory Offer of Coverage: Employers with 50 or more employees may be assessed a $2,000 penalty (or tax, according to the Supreme Court) per full-time employee (in excess of 30 employees) if they do not offer coverage and if they have at least one employee who receives a premium credit through an exchange. Such employers offering coverage but having at least one employee receiving a premium credit through an exchange may face a $3,000 penalty for each full-time employee.
Automatic Enrollment: Employers with more than 200 employees are required to automatically enroll their employees into employer-offered health insurance plans; however, employees may be able to opt out of coverage.
Nondiscrimination Requirements: Under the Act, certain non-grandfathered group health plans (other than self-insured plans) cannot discriminate in favor of highly compensated employees in terms of benefits, eligibility or premium subsidies. Violations can result is severe penalties and taxes. (Note: Implementation of the nondiscrimination requirements has been delayed to allow for the issuance of additional guidance.)
Health Insurance Exchanges: Exchanges will provide marketplaces for individuals and small employers with up to 100 employees to directly compare available private health insurance options on the basis of price, quality, and other factors.
Tax Reporting Requirements: The Act requires employers to report the value of health care benefits on employee’s W-2 tax statements.

It is worth noting that not all of the Act’s provisions survived judicial scrutiny. For example, the Supreme Court limited the expansion of Medicaid by giving states some flexibility to not expand their Medicaid programs without paying the same financial penalties set forth in the Act.

Despite the Supreme Court’s landmark ruling, significant questions remain about how various provisions of the Act will be implemented, maintained and enforced. This makes it vitally important for businesses to maneuver through the developing law and stay ahead of the curve.

Those continuing to hold out hope for some kind of legislative or judicial relief from the Act should not delay their preparations any further. The time is now. Those needing to adapt their practices to comply with the Act should begin doing so immediately; otherwise, they may soon find themselves drowning in the coming sea of change.

Personal Injury Protection (PIP) Expenses: Is Your Insurance Company Paying the Correct Amount?

One purpose of the personal injury protection, or PIP, requirement in Florida’s Motor Vehicle No-Fault Law is to provide medical, surgical, funeral, and disability insurance benefits without regard to fault. Although the amount an insurance company is required to pay is set by law, recent court decisions may force insurance companies to adjust either their insurance policies or their reimbursement practices.

Under the PIP statute, insurers are generally required to pay 80 percent of all reasonable expenses for medically necessary medical services (Actual Amount). The statute, however, gives insurers the option of paying 80 percent of “200 percent of the allowable amount” under applicable Medicare Part B fee schedules (Medicare Amount). Thus, insurers can pay 80 percent of actual expenses or 80 percent of two times the amount authorized under Medicare.

If an insurance policy does not clarify which amount will be paid, can the insurance company limit its reimbursement to the Medicare Amount? Two Florida appellate courts faced with this question have said no.

The policies at issue stipulate that the insurance company “will pay in accordance with the Florida Motor Vehicle No Fault Law, as amended, to or for the benefit of the injured person…80% of medical expenses.” Despite this language, the insurance company paid the Medicare Amount, which turned out to be lower than the Actual Amount.

In both cases, the court held that the insurance company breached the insurance policy by paying the Medicare Amount rather than the Actual Amount. The courts noted that since the PIP statute gives insurance companies the option of paying the Actual Amount or the Medicare Amount, “it is important for the PIP insurer to clearly and unambiguously choose and identify its selected payment methodology” in the policy.

According to the courts, the policies clearly chose the Actual Amount option, failing to even mention the Medicare Amount option. Additionally, one court noted that a policy indicating that an insurer may distribute reimbursements according to one method without clarifying alternative methods or selection criteria is ambiguous. Since ambiguities in insurance contracts are resolved in favor of the insured, the court found another reason to rule against the insurance company.

Insurance companies are no doubt aware of these cases, and have adjusted their reimbursement practices or policy language accordingly. However, those insureds with similar language in their own policies who are currently dealing with a PIP claim may want to confirm the sufficiency of their medical reimbursement payments.

If you would like more information about PIP insurance, or if you would like to explore your insurance options, please contact us.

Healthcare Reform Prompts Many to Explore Alternatives to Health Benefit Programs

The passage and continued implementation of Healthcare Reform, as well as its uncertain political future, have placed employers in a precarious position with their health benefit programs. Nevertheless, employers continue to do their best to balance the need to attract smart and sophisticated employees by offering well-rounded health benefit programs with the costs of providing such programs.

It is important that employers succeed in their balancing act because health benefit programs remain pivotal in attracting and retaining top-notch employees. According to a study performed by MetLife, employees make the financial security and protection of their families a top priority, and many believe that this requires sound health benefit programs. According to the study, employees who are satisfied with their health benefit programs are more likely to remain satisfied with their jobs from year to year.

Research done by the Personal Group revealed that 40% of employers plan to review their health benefit programs, and that employers are beginning to explore the various options that will (or may) be available to their employees under Healthcare Reform. According to a Towers Watson’s 2012 HealthCare Trend Survey, in 2014, when healthcare exchanges are scheduled to become available, employers will begin to reconsider and redefine their role in providing healthcare benefit programs in light of the new options. Since healthcare exchanges will give employers an alternative to the traditional sponsoring of health benefit programs, many employees are beginning to view individual health care plans as a viable option.

At Setnor Byer Insurance & Risk, we have been successful in finding attractive solutions for those of our clients exploring new options. We would be pleased to have the opportunity to assist you in effectively navigating this transitional period, as well. Please visit our website at http://www.setnorbyer.com to view and compare our various health plan options.

Improving Patient Safety and Combating Abuse in Long-Term Care Facilities

In a move aimed at combating abuse and neglect in the nation’s long-term care facilities, the Centers for Medicare & Medicaid Services (CMS) awarded more than $13 million on October 6, 2010, to six states to design comprehensive applicant criminal background check programs for jobs involving direct patient care.

“Elder abuse and neglect is tragic and intolerable,” said HHS Secretary Kathleen Sebelius. “Workers with a history of abuse or neglect should be identified and prevented from ever working with residents of these facilities.

“The new health care law will help states identify the best, most effective ways to determine which applicants can be trusted with the health and safety of residents and which cannot,” said Donald M. Berwick, M.D., CMS administrator.

Created by the Affordable Care Act, the new National Background Check Program will help identify “best practices” for long-term care providers to determine whether a job seeker has any kind of criminal history or other disqualifying information that could make him or her unsuitable to work directly with residents.

The first round of states to participate in the program are: Alaska, Connecticut, Delaware, Florida, Missouri, and Rhode Island. They each will share a portion of $13.7 million.

An additional 11 states applied and may be funded beginning in October or November. CMS will also issue a second solicitation in October for those states that did not apply but may still do so.

The new law set aside $160 million for the program, which is to run through September 2012, an amount sufficient to enable all states to participate.

The national background check for each prospective direct patient care employee must include a criminal history search of both state and federal abuse and neglect registries and databases, such as the Nurse Aide Registry or FBI files.

Long-term care facilities or providers covered under the new program include nursing facilities, home health agencies, hospice providers, long-term care hospitals, and intermediate care facilities for persons with mental retardation, and other entities that provide long-term care services.

Questions about the National Background Check Program may be sent via e-mail to the Center for Medicare & Medicaid Services.

To learn more about conducting background investigations, click here.

Source: Department of Health & Human Services

Counting Employees for COBRA

If an employer has 13 full-time employees, each of whom works 40 hours per week, and 10 part-time employees, each of whom works 20 hours per week, can this employer qualify as a “small-employer plan” under the Consolidated Omnibus Budget Reconciliation Act (COBRA)?

Yes. After a qualifying event, COBRA gives certain former employees the right to elect temporary continuation of health care coverage at the employer’s group rates. COBRA’s continuation of coverage requirement does not apply to a small-employer plan, which is a group health plan maintained by an employer who normally has employed fewer than 20 employees during the preceding calendar year. Although all full-time and part-time employees are taken into account when determining whether an employer had fewer than 20 employees, each group of employees is counted differently. A full-time employee counts as one employee. However, each part-time employee counts as a fraction of an employee, with the numerator (the top number) of the fraction equal to the number of hours worked by the part-time employee, and the denominator (the bottom number) equal to the number of hours that must be worked on a typical business day to be considered a full-time employee.

Though this formula may sound complicated, it’s fairly easy to apply. In the situation at hand, the employer’s 10 part-time employees work 20 hours per week out of the 40 hours per week ordinarily worked by full-time employees, thus producing a fraction of 20/40, or ½. Therefore, each part-time employee is counted as ½ of an employee. Ten employees counted as “half” an employee equals 5 “whole” employees, which, when added to the number of full-time employees, 13, total 18 employees. Since this number is fewer than 20, this employer may qualify as a small-employer plan.