As people age—or due to a life-changing event such as a stroke—the ability to live inde- pendently may change. Over 44 million Americans spend time caring for family members or friends who can no longer live on their own without assis- tance.1 Often a family member or friend steps in to help the person with the activities of daily living such as bathing and dressing, everyday chores, or preparing meals.
Over time, the need for assis- tance often increases, which in turn increases the time commitment from family
and friends. Individuals often desire to remain in their own home, even though they need more help to stay there. It is frequently at this point that caregivers must begin to look at sources beyond the family to assist with care.
Few healthcare changes have been more impacted than the out of control out of network charges billed to patients. The health care reform bill known as PPACA has for the most part been insignificant in the Northeast, in particular, as many state laws have already addressed issues such aspre-existing conditions, contraception, coverage rescissions and maximum loss ratios (MLR).
Instead, the market forces are reshaping the medical field into significant insurance & provider consolidation, larger hospital groups and flattening provider reimbursements. The problem is pointed out in Out of Network Medical Costs Affecting NY State Across investigation report commissioned by Governor Cuomo recognizing the unexpected out-of-network claim problem. Officials say that this is now “an overwhelming amount of consumer complaints.” Some examples cited in the report An Unwelcome Surprise – “a neurosurgeon charged $159,000 for an emergency procedure for which Medicare would have paid only $8,493.” Another example: ” a consumer went to an in-network hospital for gallbladder surgery with a participating surgeon. The consumer was not informed that a non-participating anesthesiologist would be used, and was stuck with a $1,800 bill. Providers are not currently required to disclose before they provide services whether they are in-network.” The average out-of-network radiology bill was 33 times what Medicare pays, officials say.
To make matters worse, Health Insurers have reduced their out of network recognized charges from private industry index UCR (usual customary and reasonable) to the Medicare Index known as RBRVS( Resource Based Relative Value Scale ). Insurers moved away from UCR after then-NYS D.A. Mario Cuomo in 2009 forced Unitedhelatcare Group (owners of Inginex) to settle $50 Million in a conflict of interest allegation. D.A. Cuomo future hopes for UCR were to that it be overseen by a non-profit entity. So much for best laid plans.
Today, 90% of SMB members have in network only benefits but the few remaining consumers are paying for eroding out of network benefits with little transparencies and necessary protection from new out of network billing practices. The NY Dept of Financial services is calling for providers in non-emergency situations to disclose whether or not all services are in-network, what out-of-network charges will be and how much insurers will cover.
In an ominous statement” “Failure to recognize this historical out-of-network avalanche will result in shocking financial disasters, as experienced by so many hospitals in 2003″
Some good news for small businesses owners on Medicare Part B. The IRS is permitting for the 1st time self-employed people to deduct their Medicare Part B healthcare premiums.
What is Part B? Part B helps cover medically-necessary services like doctors’ services, outpatient care, durable medical equipment, home health services, and other medical services. Part B also covers some preventive services. The costs for Medicare part B have substantially risen form a modest $54 to a $99.90 minimum and now indexed for income.
Table 1: Part B Monthly Premium
Beneficiaries who file anindividual tax return with income
Beneficiaries who file a joint tax return with income
Prior to the 2010 tax year, the IRS did not permit the deduction to seniors who paid Medicare Part B health insurance premiums, according to a Bloomberg report. Strangely the IRS did not release of this announcement but the deduction is on line 29 of the new 1040 tax form and applies to people who do not claim a tax deduction.
Anyone who is self-employed, regardless of age, may deduct the premiums paid for health insurance, under certain conditions such as insurance established under the business or in the name of the person who runs the business.
This posting is not necessarily tax advise and it is recommend to check with you accounting professional before filing 2011Tax returns.
Empire’s Small Group “simplification” did indeed cause groups to escape Empire’s rate increases and reduced plan selections. Additional, not mentioned in the article was that groups are facing plan modifications such as Rx changes switch to % from fixed $ copay and loss of Walgreen/Duane Reades chains. By being the largest insurer on the block heavy provider negotiations have been de rigieur as evidenced by loss of Westchester Medical Center for 14 months and counting.
Groups have been fortunate to find comparable alternatives despite these changes but we see little public evidence of concern form NYS legislature. We are not seeing the long term vision to open up markets to strong national insurance competitors. On the contrary we have deep concerns of allowing the past 2 non-profits of GHI and HIP merger and latest talks of going for profit.
Lastly, the article makes mention of possible “Health Exchanges” entering the market and lowering rates. Where is there evidence of this decrease? I’m not seeing why an insurer working in an oligopoly environment with price controls would be motivated to lower rates. Would Con Ed or Blue Bell lower rates in the 70s because now SMB can shop online??
In a pleasant surprise, Empire will delay their April 2012 decision to “simplify” small group plans 1 more year from April 2012 to April 2013 instead. The Nov 4th Empire announcement to leave the NY Small Group Businesswas truly shocking after being in business for 75 years and insuring 35% of the market.
What this means for consumers is that insured members will now breath a sigh of relief and keep their contracted plan at least until their renewal. Evidentially, Empire was allowed to abruptly do a “hard shut down of their plans” for April and not allow a group to complete their 12 month contract. The negative consequence would have affected many unfairly as most members today have some kind of annual deductible and/or coinsurance on Rx plans, hospitalizations and surgeries. Example: a member signs up for a plan Oct 1 and has already met their deductible responsibilities would suddenly have to now change plans on April 2012. and start all over again.
A point needing further explanation is are they or they not exiting? Empire is stating that they are not in fact leaving but merely simplifying their offering to 6 plans but this is actually a red herring as the plans offered are not market friendly and allows Empire to stay within the market without having to really exit. Example: Their HMO monthly rate is $675/single when you can get the same plan from a leading competitor for $465/single.
So why be in the market without actually being in the market? The state’s regulation would not permit an insurer to re-enter for 3 years. With Health Care Reform changes in the subsequent years there are variables that may help NYS such as add’l federal funding. Additionally, it is an election year and with many unknown Health Care Reform variables still evolving such as Supreme Court hearing on individual mandate by June 2012 – WSJ Supreme Test for Health Law.
Either way this is welcome news to our existing clients and for the marketplace at large however short term it is.
As per todays Crains article, Empire Blue Cross will be exiting the majority of small group health plans effective April 1, 2012. The news was swirling earlier this week with official Empire communication going out today.
This affects 1/3 of New York Small Businesses as defined by 50 or less FT and eligible employees. Since with large group market the insurer is allowed to rate a group based on true census and make up of a group’s sex, age and family status as well as claims experience of the prior year. In NY State where the small group market is Community rated and independent of census this becomes an important point that I will get back to.
As healthcare has become regulated by MLR(Max Loss ratios) or revenue controls its not surprising that insurers are unhappy but why does it seem that in NYS regulations run deeper than in other states? We are licensed in multiple states and we are not seeing the same pattern this quickly. Numerous companies have already exited such as CIGNA, HealthNet, Horizon, Guardian not to mention M&A of HIP/GHI, Oxford/UnitedHealthcare and Aetna/US Healthcare/NYLCare etc. I can go on.
In NYS the insurance regulations go beyond Health Care Reform (PPACA) with higher MLR than the national one. The Federal level is 80% for small groups and in NYS its 82%
There are new NYS price controls where insurers must anticipate risk a year in advance and ask for larger rate increases to protect on anticipated uncertain risks. With so many unknown variables its almost like asking one to predict who’s going to win the Super Bowl in 2013. Rate increase of 15-20% requests must be higher than usual since after all there are no State protection on the loss side. Furthermore, increases of 10%+ must now require public hearings 60 days prior.
Today, we have so many State mandates that many of the mandates(overage dependents coverage, preventive care, pre-existing for kids) in PPACA didnt even affect NY since they were already in place. Mandates account for approx 17% of the costs of which Small Businesses pay more than fair share. Large corporations and Unions can self insure and avoid some mandates as they are governed by ERISAand not State. To the relief of of our struggling clients on subsidized Healthy NY the State doesn’t play by their own rules and instead opts out of its very own mandates.
So what happened with Empire? The tipping point evidently was rate increase denials of 5 consecutive quarters and that Empire quite frankly got caught with great pricing and products just when healthcare reform came around. Many insurers raised their rates in advance of the law. Emblem (GHI) raised rates 25% on average and even as high as 60% on HSA. Granted they have also removed many plans recently.
Much like in the 70’s its a regulaed oligipoly with insurers too too big to fail. Our clients will have access to only 3 insurer – Aetna, Emblem and Oxford. Just imagine how high your Auto Insurance would cost in the same scenario? This remarkable in a 25 million metropolis like NYC. Insurers do not have to be in NYS, no new carrier is looking to enter the NY market. After 75 years in business and insuring 4 generations of small businesses this should be a shock to the system and a wake up call to every politician.
We ask for greater oversight on Mergers and Acquisition of health insurers,providers and hospitals. Its begining to dawn on everyone that a too big to fail environment is poison and will be the tail that wags the dog. I can only imagine what the other remaining insurers must be thinking whats in store for next year.
Importantly, the community rating ought to be dropped as most states such as NJ, CT are census based. With Health Exchanges coming in 2014 individuals will be able to purchase health insurance on their own which will make Community Rating less relevant. This will be a positive step in allowing great competitors like Humana to enter the market.
If this is not a wake up call for small businesses to have a seat at the table I dont know what is. Anyone in for an Occupy Albany?
Yes! it has begun Medicare Open Enrollment Period which opened Oct 15th – Dec 7th is in full swing. This is year 1 of Baby Boomers Generation applying for Medicare Benefits. This couldn’t come at a better time with all changes in the market place. Many businesses are now sponsoring Individual Medicare Plans for their senior employees and retirees. No other segment in the population can get similar benefits today. This is becoming a no brainer for many businesses as avg. rate increases are below 4% & benefits are superior.The most frequently purchased plans are Medicare Supplemental Plans (medigap). Example, the richest option Plan F + Plan D is only$295/month which allows members to:
Keep Original Medicare indemnity with the freedom to go to any provider
$0 cost for Medicare providers
No referrals
Medicare Advantage Plans can provide lower monthly premiums ranging from $0 – $89. They come in the form of Medicare PPO or HMO and is run by private health insurers.
We represent leading companies such as such as AARP Secure Horizon and Empire’s Mediblue. Both insurers are good options with unique programs such as AARP UnitedHealthcare’s $2 Prescription Drug Program. Importantly check the network of providers and wether or not your Rx is on their formulary.
In order to apply please call us to review first if your Doctor takes the plan and if your medications are on the formulary. The form’s take only 10 minutes to complete.
People with Medicare, their families and other trusted representatives can review and compare current plan coverage with new plan offerings, using many proven resources, including:
Visiting www.medicare.gov, where they can get a personalized comparison of costs and coverage of the plans available in their area. The popular Medicare Plan Finder tool has been enhanced for an efficient review of plan choices. Spanish Open Enrollment information is available.
Calling 1-800-MEDICARE (1-800-633-4227) for around-the-clock assistance to find out more about coverage options. TTY users should call 1-877-486-2048. Multilingual counseling is available.
People with Medicare who have limited incomes and resources may qualify for Extra Help paying for their prescription drug costs. There is no cost to apply for Extra Help, also called the low-income subsidy. Medicare beneficiaries, family members, trusted counselors or caregivers can apply online at www.socialsecurity.gov/prescriptionhelp or call Social Security at 1-800-772-1213 (TTY users should call 1-800-325-0778) to find out more.
Medicare Supplements or Medigap are private insurance policies designed to cover the gaps in Medicare coverage. It is important to research and shop for the best rates in your area. All plans are “standardized” and must offer the same level of coverage dependi ng on which policy you choose. You may find substantial price differences between each insurance company. Our representatives will help you by providing you with a plan comparison from the various companies so that you can make an informed decision.Example: If you choose a Plan F Medicare Supplement plan you will receive the same exact benefits regardless of the company you enroll with. In this case it may be wise to choose the company that has the lowest premium.
In most states Medicare Suplement plans are seperated into 12 categories Plans A-L. As of July 2010 Plan N And M were added. Each plan has a different level of coverage and you should choose depending on your specific needs. Eligibility and enrollment periods may vary depending on the state where you live.
Medicare is a Federal program and insurance plans are regulated by individual States. You will need to find out which specific plans are available in your area. Each County has different plan offerings. If you need help or enrollment details or assistance you may call us ay 914-207-6161.
Choosing A Medigap Policy
There are several ways to save money when choosing a Medicare supplement policy. It may be best to use the assistance of a licensed broker or insurance agent to guide you through the process. The first objective will be finding the correct plan to fit your individual needs. It may be overkill to purchase a policy with more coverage than you actually need. This will result in higher premiums for benefits that you may not even use.
You can choose a policy with a higher deductible. This method is used for many who are relatively healthy and don’t visit the doctor very often. At the same time you will be covered for emergencies and protected against catastrophic costs. You will save a great deal of money on your monthly premium expenses and can use the extra cash to enjoy your retirement.
Many insurance companies will give you a discount if you pay yearly. There are also discounts available if you sign up for the electronic bank transfer payment option. There are a few companies however, that will charge you a one time application fee. You should avoid these plans since most do not charge this fee.
A few companies will offer a discount for a husband and wife combination. This can be convenient and save you money as well but make sure that the overall cost is comparative to other plans. Sometimes you will find policies with the overall lowest price even without any discounts. To compare pricing you may call our toll free number or Request A Free Plan Comparison
Medicare supplement insurance is an excellent option for those who travel frequently. Supplement plans offer the most comprehensive Nationwide coverage. There are no networks to worry about and no referrals are needed. Any provider that accepts Medicare can accept payment from a supplement policy.
Although the monthly premiums are higher, this may be a good choice for some. If you are looking for maximum freedom of choice then this would be a good type policy to choose.
As reported by Crains, the Healthy NY program will be undergoing significant cuts. Beginning January 1 2012, the high deductible health plans (HDHP) option will only be offered by Healthy NY.
With rates averaging 30% below market and reasonable benefits such as $20 Office Copays this was an important safety net for NYS Small Businesses. Since its inception 10 years ago the program has enrolled approx.180,000 members covering small groups, sole proprietors and working individuals. The program is not Medicaid and allows members to keep their Doctors and enroll in private insurance EPO/HMOs such as Empire Blue Cross, Oxford, Emblem GHI etc. One of the reasons the program is 30% less expensive is that the state has a pooled stop loss fund that reinsures health care companies. This fund has been underfunded with rapid growth and stagnant funding the past 3 years.
Currently, the less expensive Healthy NY HIgh Deductible Plan is $1200/single and $2400/family. Outside of preventive care, members must self insure on the entire deductible including Pharmacy. The good news is that this plan is a qualified HSA (Health Savings Account) and can be reinsured by members. For healthy members the HSA unspent money is not use it or lose and can be rolled over year to year.
Existing Healthy NY groups can still keep their plans as long as long they qualify. However, Healthy NY only allows 1st of the month effective date with only an 11.1.11 and 12.1.11 still available to prospective new groups looking to lock in the regular Healthy NY.
To view current Healthy Benefits and rates click here. For more information or to enroll Contact us today.
The goal of the Healthy NYprogram is to promote and provide affordable insurance coverage to eligible small businesses that are not currently offering health insurance coverage to their employees. It is also available to eligible uninsured working individuals and sole proprietors. Listed below are some frequently asked questions by small employers about the Healthy NY Program.
This program does not allow employers to participate if they have “provided” group health insurance to their employees in the past year. Under what circumstances is my business considered to have “provided” group health insurance?
An employer is considered to have “provided” health insurance if the employer arranges for group health insurance and contributes more than $50 (or $75 if the business is located in the Bronx, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, and Westchester counties) per month per employee towards the premiums for coverage. If an employer has merely arranged for health insurance coverage for employees but has not contributed more than the previously noted amounts, then the business may still be eligible for Healthy NY.
What if my business has provided other health insurance during the past twelve months, but the insurance had limited benefits?
If your business has provided other insurance during the past twelve months, but the coverage included only limited benefits (for example – only medical benefits or only hospital benefits, but not both) then your business may still be eligible for HNY.
What if my business has not provided group health insurance coverage in the past twelve months, but some of the employees have been covered through other sources, like their spouse’s employer plan?
The coverage of individual employees through other sources does not affect a small employer’s eligibility to participate in the HNY program.
I have 5 employees. One is enrolled in Medicare and two others receive health insurance through a spouse. The remaining two employees wish to enroll in Healthy New York. Is my business eligible?
Your business would be eligible because the three employees who have other coverage count towards satisfying the minimum 50% participation requirement.
Why is this program available only to small employers who did not provide insurance during the twelve months preceding application? Doesn’t this penalize the “good guys” who struggled to maintain coverage for their employees over the past few years?
HNY was designed to target those individuals who were completely uninsured. These so called “crowd out” provisions of the legislation are also designed to ensure that employers and individuals do not drop existing coverage in favor of this new product.
If my business offers family coverage through Healthy NY, does my business have to contribute towards the cost of the premiums for my employees’ dependents?
No. Employers are encouraged to share in the cost of the Healthy NY premium for their employees. However, there is no requirement that the employer contribute towards the cost of dependent coverage.
Can my business offer Healthy NY coverage to my employees’ families?
Yes, the employer may choose to offer coverage for dependents through the HNY program. Qualifying dependents include dependent children up to age 19 and full time students up to age 26. However, it may be financially beneficial to employees to obtain health insurance coverage for their children through New York’s Child Health Plus program, rather than Healthcore. For more information about Child Health Plus, contact New York’s toll free hotline at 1-800-698-4543.
Is there a re-certification process?
Yes. On an annual basis, employers participating in the HNY program are required to submit a re-certification that attests to their continued eligibility for the Healthcore program. The employer’s health plan will notify participating employers of when this re-certification is due and will provide them with the necessary forms.
What if my business qualifies for HNY and things change? What if I hire more employees and it brings my workforce total over 50? What if some of my employees drop coverage and my business no longer satisfies the 50% employee participation requirement? Would the coverage then be terminated?
Mid-year fluctuations in group size, wage levels and employee participation will not result in immediate termination of HNY coverage. However, HNY requires an annual re-certification process at which time your business’ eligibility would be reevaluated. If your business does not meet the eligibility criteria at the time of re-certification, you will be unable to continue to participate in the program. Please note that the wage levels set forth in the eligibility criteria for the HNY program are increased annually to account for inflation.
Can my business offer coverage to part-time and seasonal workers?
Yes, employers may offer coverage to part-time and seasonal workers who work less than 20 hours weekly, but they are not required to do so. If they choose to offer coverage to these employees, the employer may choose to contribute toward the cost of their premium but is not required to do so.
Can I count the wages of part-time and seasonal workers in determining if my business is eligible for participation in the Healthy NY program?
Yes, the annual wages of part-time and seasonal workers may be included for the purpose of determining an employer’s eligibility if the employer also extends coverage to part-time workers.
Which employees must be offered Healthy NY coverage?
Small businesses must offer HNY to all employees working more than 20 hours weekly and earning $40,000 or less annually.
My child just graduated from college and will no longer be eligible to remain on my policy. Would my child be eligible for Healthy NY?
Students who are graduating from high school or college who are aging off a parent’s policy may be eligible for HNY if they meet the other eligibility guidelines of the program.
If I do not qualify for Healthy NY, are there other affordable health insurance products available?
Yes, there are several other affordable options available to individuals, sole proprietors and small businesses. For a list of other programs, contact information and general eligibility requirements, please visit Millennium Medical Solutions Corp.
As reported byCrains, the Healthy NYprogram will be undergoing significant cuts. Beginning January 1 2012, the high deductible health plans (HDHP) option will only be offered by Healthy NY.
With rates averaging 30% below market and reasonable benefits such as $20 Office Copays this was an important safety net for NYS Small Businesses. Since its inception 10 years ago the program has enrolled approx.180,000 members covering small groups, sole proprietors and working individuals. The program is not Medicaid and allows members to keep their Doctors and enroll in private insurance EPO/HMOs such as Empire Blue Cross, Oxford, Emblem GHI etc. One of the reasons the program is 30% less expensive is that the state has a pooled stop loss fund that reinsures health care companies. This fund has been underfunded with rapid growth and stagnant funding the past 3 years.
Currently, the less expensive Healthy NY HIgh Deductible Plan is $1200/single and $2400/family. Outside of preventive care, members must self insure on the entire deductible including Pharmacy. The good news is that this plan is a qualified HSA (Health Savings Account) and can be reinsured by members. For healthy members the HSA unspent money is not use it or lose and can be rolled over year to year.
Existing Healthy NY groups can still keep their plans as long as long they qualify. However, Healthy NY only allows 1st of the month effective date with only an 11.1.11 and 12.1.11 still available to prospective new groups looking to lock in the regular Healthy NY.
To view current Healthy Benefits and rates click here. For more information or to enrollContact us today.
“Almost everything–all external expectations, all pride, all fear of embarrassment or failure–these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.”
Steve Jobs US computer engineer & industrialist (1955 -2011 )
I started on the Mac in HS and College and was forced to wander the corporate dull Microsoft PC Valley until Vista. The Vista operating system broke our back as a Small Business with endless malfunctions and slowdowns. That monstrosity led me to MAC out our office completely 4 years ago never to look back again.
His genius is humbling and inspiring. In a small way we have try to live to our lives by taking chances with love and passion in everything we do.
In another downsizing move of the Health Care Reform ACT – Patient Protection and Affordable Care Act (PPACA) the office responsible for the new Long Term Care Act claus have been reassigned. This portion of the law is known as CLASS (Community Living Assistance Services and Supports) that was intended to make private Long Term Care Ins more affordable and available through the work site.
There are Long Term Care concerns as less than 10% of the US Consumers carry a LTC policy. Part of the disparity is obvious costs and part is the feeling that Public Gov will take care of this. In order for Medicaid to pay for Nursing Homes though ones assets with some exceptions are liquidated. The other is not realizing that LTC does cover Home Health Care.
Under the CLASS provision “the Secretary shall designate a benefit plan no later than October 1, 2012.” However, with this week’s action of “reassigning” 8 members of the CLASS unit go is another step in diminishing the act. Also, politically before an election year it would of given too much fodder for the Republican Party. To have CLASS succeed, HHS would have to make it affordable, but, because the CLASS Act plan would be a voluntary plan, the plan would could face enormous risk of adverse selection, with only unhealthy workers signing up. Critics contend that the program managers would have to raise premiums substantially over time to keep the program solvent, and that, over time, the program would fall into a costly deathly spiral. The program has become a favorite target for Republicans.
There may be political winners and losers but sadly who can calculate the amount of time + resources wasted to land back to square 1?
Today’s WSJ reports UnitedHealth Buys California Group of 2,300 Doctorsmay be a signal of future trends in healthcare where there is blurring of the lines between insurers and providers. The article goes on to to mention that United Healthcare has stated that providers acquired by Optum will not work exclusively with United’s health plan, and will continue to contract with an array of insurers.
The article goes on to state that “the potential complications that might ensue, Monarch is currently in an arrangement with United competitor WellPoint Inc. to create a cooperative “accountable-care organization” aimed at bringing down health-care costs and improving quality.”
In the aftermath of Health Care Reform, insurers profits will be curtailed. New price limitations imposed by MLR (Maximum Loss ratios) where 85% of large group premiums collected must be spent on healthcare services(claims) and health quality improvement . New state tax surcharges such as New York’s 82% of above MLR applies to small groups. In fact in NY the cost of doing business is a staggering 16%+ added to the usual corporate tax. See The NYS Surcharge.
Additionally, the industry as a whole will be paying an annual tax to help pay for PPACA(Patient Protection Affordability Care Act). This tax rises from $8 billion in 2014 to $14.3 billion in 2018 and in later years, even higher according to a complex index. See Kaiser Bill Summary .
While its unglamorous to defend insurers they are clearly paying their share and like it or not they are good at health care management. Unlike foreign HQ tax loop holes taken advantage by companies such as G.E. , an insurer cannot place patent rights in Zug, Switzerland and take advantage. Each of these taxes is increased regularly by the State and contributes significantly to annual increases in rates. The competition in the health insurance industry is already at a dangerous low levels. Negotiating with insurers has become an overwhelming challenge in the large group market. Hospital groups have merged to mirror this Oligopoly trend and contractual issues are the new normal. See Empire & Stelllaris Reach pact.
So what to do other than to find profits elsewhere? Many issues and questions will abound as to the antitrust nature of this action. A similar issue appeared in the 90s Merck-Medco merger between a pharmaceutical and mail order PBM. The conflict of interest claims will abound, how do you negotiate one provider group owned by United-Healthcare as opposed to one owned by HealthNet? Will insurer share competitive insights with other practices? Are small independent Dr. Groups completely left out of the loop and feel pressured to be bought out? Will the insurers medical group have unfair advantage in buying out the smaller physician practice? Perhaps in the same vein of the Merck-Medco analogy the health insurer shareholders will do well for a decade and then simply split up?
Its all too early to tell but this much is clear, there aint no money in running a health insurance management company today.
Ever Wonder why in a Metropolis of 25 Million there are maybe 5 insurers left?
New York Taxes – As published with the NYS Insurance Dept.
New York adds more insurance taxes than any other state in the country. These consist of both direct taxes and a number of “hidden” taxes amounting to a total of over $4.1 billion in taxes passed on to our customers in the form of higher premiums. These taxes include:
• NYS Premium Tax- this 1.75% tax is on all HMO and insurance contracts and is projected to raise $353 million for the State in 2010. Empire alone pays $103.9 million to the State in premium taxes (this amount includes a special surcharge for customers in the MTA service area).
• Covered Lives Assessment- this “hidden tax” is a charge on all fully and self insured “covered lives” and raises, statewide, projected to raise $1.16 billion for the State in 2010. Empire alone will pay about $296.2 million in covered lives assessments in 2010. The purpose of the Covered Lives Assessment is raise funds for a variety of state programs and for the state Budget. The Assessment is included in claims costs for purposes of calculating the MLR.
• HCRA Surcharge- this is a 9.63% surcharge on all hospital discharges projected to raise $2.33 billion in 2010. Empire alone will pay approximately $379.4 million to the State in HCRA surcharges in 2010. The purpose of the HCRA Surcharge is to raise funds for a variety of state programs and for the state Budget. The Assessment is included in claims costs for purposes of calculating the MLR. NYS Insurance Department “332” Assessment- while this assessment is legitimately intended to fund the cost of the Insurance Department’s regulatory activities there is a “hidden tax” whereby a large portion of the revenue generated by the assessment is used to fund other programs funded not directly related to insurance regulation and is projected to raise $270 million from New York’s health insurers and HMO’s in 2010. Empire will pay the state $57.9 million in 332 assessments for 2010.
Each of these taxes is increased regularly by the State and contributes significantly to annual increases in rates. The competition in the health insurance industry is already at a dangerous low level. Negotiating with insurers has become an overwhelming challenge in the large group market.
After balancing the budget and announcing $2.4 trillion in government spending cuts over ten years, politicians and media pundit are insisting that it is only the beginning of the attack on health care, pensions and other social programs.
So why is balancing the budget and cutting medicare so bad for the Privately Insured? After all, the Democrats have made sure the automatic cuts leave Medicare benefits untouched, and the Republicans have blocked any new taxes.
Everyone is content right? Or so it seems. But the truth is that cutting payments to Medicare providers will mean some Americans are going to pay more. It may not be called a tax, but if you’re covered by private health insurance, money will be coming out of your pocket nonetheless.
Here’s how cuts in Medicare affects the rest: If a hospital provides a service that costs $1,000,000, and the government elects to pay just $980,000, the $20,000 gap doesn’t disappear. The hospital has to cover it somehow. It will likely do so by shifting the costs to commercial insurers, which eventually means higher premiums. This cost shifting is nothing new-it’s been happening for years-but more cuts will just make it worse.
NY Hospitals in particular have felt Federal Funding cuts for teaching hospitals over the last decade. This has been a contributing factor to St. Vincents declaring bankruptcy last January. Many surviving hospitals however have the size to negotiate effectively with private insurers to make up that funding short fall.
So guess who makes up that difference? The fact remains, if you don’t deal with underlying costs, you’re not fixing the problem, you’re just covering it up.
Under Health-Care Reform Insurance Coverage for Contraception Is Required – NYT; The Health Resources and Services Administration (HRSA), an arm of HHS, developed the women’s services package to implement the preventive health services provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA).
Federal recommended that major medical plans should include coverage for:
well-woman visits
contraception
screening for the viruses that cause AIDS and human papillomavirus
breast-feeding support in the basic package of preventive health services benefits.
Health plans must roll this out by Aug 1, 2012. These are in accordance with the preventive care provisions enacted in the Reform Law. Agencies are determining what falls into this category and have amended this provision, see here. While states such as NY already have these benefits built into their plan at no charge the medications are presently not free.
The contraception coverage requirement applies to drugs and devices approved by the federal Food and Drug Administration.
Exemption to religious organizations will be made available. This can be done at renewal time by groups’ broker. Unfortunately, non group individual policies will not allow for this exemption.
While this is a noble reccomendation, this is not as significant to NY and neighboring states. Some argue that the costs will indeed rise even in our region since the Rx will be free. Also, some consumers who currently purchasing supplies over the counter will tap into this free benefit.
Conclusion, not exactly a cost cutting decision as promised by the President to lower medical expenses but he did win over half the voters in time for next election!
Hello. It’s been awhile, hope you’re all well. To all who have inquired, my thanks for your concern, but all’s good. Hectic, but good. Lot’s going on and an awful lot of travel. I’ve had a chance to meet and talk with with insurance carriers, Health Human Services, Trade Groups, Broker panels and most importantly customers with spirited opinions such as yourselves. It’s been a great time to learn, recharge and stay a bit too busy to write any meaningful posts. While staying busy appears to be the new constant, I’ll try to find something worthy to share on a more regular basis. Before I get into it some news at MMS Corp:
Check our new 360peo.com this summer. We began the redesign and update of our web site to make it more user friendly and features packed with the following:
1-Quoting Module – The quoting engine will offer cross leading plans based on your location, income and employee total. Not all plans and carriers will participate and it is recommended that you get in touch with us. 2-Health Care Reform Section-this tab is dedicated to the new PPACA law. 3 Instant Chat – Scheduled Fall 2011 4. Social 2.0- Find us on Facebook, Linkedin and Twitter. 5. HR Log In- For clients only. Some of you have already begun using this online HR Kiosk. We’ve deployed this in partnership with HR Connect Technologies to offer employers tools for common HR tasks such as Benefit Plan Admin, Forms for new hires, terminations, work-site postings and employee record keeping. HR-Connect is a secure, HIPAA-compliant, Internet driven system designed to simplify your human resource department. Employees can review their own personal information, but not other employee’s data. Click Video Demo here and just ask us to set it up for your business at no charge!
Lastly, we have been appointed earlier in 2011 to the Empire Broker Advisory Council which consists of top 10 of 5000 brokers that meets throughout the year to discuss relevant topics such as market insights, health reform changes and input on future plan designs. We take this opportunity seriously in giving voice to our clients and shaping a more consumer friendly plan. To Empire’s credit, they have been indeed listening and have taken suggestions seriously. New plan options released in the Fall will be examples of this.
For now, however, let’s play some catch-up:
Latest new is that US Court of Appeals has ruled that the Affordable Care Act is constitutional. The ruling is online here. The ruling stated that this is in synch with the commerce clause of interstate commerce. Furthermore, since Congress can force someone to buy health insurance because even if they don’t need insurance today they will at some point in their life. While this ruling is impactful and could influence future rulings, this is expected by many to go to Supreme Court. They have been loudly silent on this touchy topic thus far.
Regardless, this Individual Mandate has little teeth with penalties @ $95 or 1% for 2014, $325 or 2% in 2015 and $695 or 2.5% in 2016. In other words if one can still buy health insurance, face little penalties and no pre-existing condition whats stopping someone form buying insurance when they’re in the hospital?!
To date, many key provisions have already been enacted. Some of those are:
Extending the age of adult children eligible for coverage under their parents’ health care plan to age 26
Prohibiting individual and group health plans from placing lifetime limits on the dollar value of coverage
Preventing health insurers from rescinding coverage (except in cases of fraud)
Prohibiting health insurers from imposing pre-existing condition exclusions for children
Mandating coverage for recommended immunizations and preventive care
PPACA items that died in 2011.
1. The non-discrimination provision for Group Health Plans have been delayed. The short answer is that IRS needs more funding to enforce this as well as additional guidance. See blog here
3. W2 Reporting delayed- the IRS said employers who file fewer than 250 Forms W-2 in 2011 will not be required to report the cost of health care coverage prior to January 2014
Items that have funding delays:
1. Free Choice Voucher Program Takes a Hit- The program would have provided funding of vouchers for lower income employees to subsidize the employer contribution. Under this provision, plan sponsors of employer-based plans (including self-funded benefit plans) would have been required to offer vouchers to employees who fall below a pre-defined income threshold, while the state-based exchanges would credit the employee the amount of the voucher that exceeded their monthly premium.
2. No Health Co-Ops- The goal of the program was to spur the creation of qualified nonprofit health insurance issuers that could offer health plans for individuals and small businesses in states where insurance issuers are licensed to offer them. The program also would have provided loans and grants to fund start-up and maintenance costs for these plans.
This is a bit disappointing as we looked to the highly rated Seattle-based Group Health Cooperative program as a successful at managing costs and offering consumer centric care, click here for more info.
3. Wellness Funding for Small groups- no updates as of yet on the $750 Million funding. This was forward thinking incentives for small groups to afford a a Wellness Program for smoking cessation, diet/nutrition, gym etc. Typically large groups have had these programs as their rates are directly linked to “experience” of their members. In small market the rates are spread over thousands of other small groups. This is a first come first serve funding that we are closely monitoring to help our groups.
We are partnering with Wellness Companies and Health Insurers on establishing a program for small groups. The ROI on this is typically 1.6 :1. If you think your group could benefit please drop us a note at info@medicalsolutionscor.com.
The biggest news really will be the Health Exchanges schedule to open by 2014. NYS in particular than most states has enjoyed 2 rounds of Federal seed capital with almost $30 million for this effort. Each state has to set up an exchange, or marketplace, where small employers and individuals whose employers don’t provide coverage, or who can’t afford the employer plans, can purchase insurance. About 2.7 million New Yorkers are uninsured.
Sponsors say it should also result in one statewide, online, streamlined system for enrolling and renewing enrollment in government-supported Medicaid, Child Health Plus and Family Health Plus programs.
Each state can implement their own version. Several states have rejected funding and do not want to participate in the exchange. By discounting health plan rates based on income its unclear of how much will fall as a state burden?
Florida is one state that has decided not to implement a state health insurance exchange altogether. That state is seeking to shift virtually all of its Medicaid population from government coverage into private plans starting in July 2012.
Two states, Massachusetts and Utah, each have existing state exchanges that differ fundamentally. The Massachusetts exchange is considered an “active purchaser” model, has a large organization and a sizeable budget. The state’s model does not allow all licensed insurers to participate in the exchange. The Utah model, on the other hand, is an “all-comer” model that allows any licensed health insurer to participate. Utah’s exchange initiative is much smaller in scope with only two full-time employees and a limited budget. Currently, the Massachusetts state exchange is suffering major cost overruns.
Rebecca Vesely, writing in Business Insurance, makes this clear in her article describing how two states, Vermont and Florida, are taking strikingly different paths in addressing health care reform. Vermont has taken the first step toward creating a single payer system by 2017. Legislation to set up a five member board to move the state in this direction has already been enacted. And while many details need to be worked out (funding, to name one) and Vermont will need to obtain a waiver from the Centers for Medicare and Medicaid Services to put the package together, the state is further down the road to single payer than any other.
With healthcare becoming a hot issue for 2012 both parties are entrenched. Democrats are promoting Medicare as an effective low cost plan that provides insurance for millions of people. The fact that it is imploding is seemingly lost. Republicans, on the other hand, are touting touting free enterprise system but the Medicare Part D law enacted by Bush in 2003 had been under estimated by half! Along with Medicare Advantage plans that have cost the Gov in excess of what was expected.
Rita Redberg, UCF professor of medicine writes an amazing editorial in NYT “Squandering Medicare Money”. While this war of words by both parties goes on no one is really minding the issues. There are things that can be done right now while Washington tries to get its own house in order. An honest appraisal of Medicare Advantage shows that the program doesn’t deserve a fatter payday; it demands a serious crackdown.
Limitations on funding both at the federal and state levels will need to be addressed to avoid a rise in government deficit levels. In the short term, PPACA will continue to face significant political and legal hurdles. Nonetheless, implementation will continue, with more provisions and offices becoming established under the law.
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As more information becomes available, MMS Corp is committed to keeping you up-to-date in a timely manner. Coming soon 360peo.com to view past Legislative Alerts in the “Newsroom” section. Or, you may visit alexmiller.wordpress.com for blog posts, polls, surveys and numerous resources. If you have any questions, please contact us. Thank you for taking the time to read through this important notification.
Although employers continue to use cost shifting to control health insurance expenses, many companies are also making wellness programs part of the overall strategy to keep costs down by keeping staff members healthy. “Our entire health care system is organized around treating diseases after they occur, not preventing them before they occur. We need a paradigm shift that places prevention at the center of our health priorities.” – Lynn C. Swann, Chairman, President’s Council on Physical Fitness and Sports[/box]
One survey of 365 companies found that 62 percent have implemented wellness programs as a long-term investment to improve employees’ health. Of these companies, about two-thirds cited rising health care costs as a “major factor” in the decision to sponsor a program, and the other third responded that finances played “some role” in the decision.
In another survey, 80 percent of business executives said the best way to reduce health care costs is to provide financial incentives for employees to lead healthier lifestyles.
At the top of the list of wellness initiatives are health risk assessments, followed by smoking cessation programs. The surveyed companies also offered:
Health risk assessments – 61 percent
Smoking cessation programs – 56 percent
On-site workout facilities – 50 percent
Employee diet groups – 48 percent
Adding healthier foods to the cafeteria menu – 48 percent
Subsidized gym programs – 43 percent
Allowing employees to use time during the workday to exercise – 27 percent
Diet counseling – 27 percent
Other initiatives, such as free flu shots, healthier vending machine choices, wellness Web sites, and on-site massages – 32 percent
Almost half of the companies with wellness programs offered employees incentives to participate, such as cash payments, reduced medical co-payments, rebates on wellness program costs, gift certificates and prizes.
While the surveys cited above focused on large companies, small and midsize businesses are also offering wellness initiatives. The National Federation of Independent Business reports that more than 80 percent of businesses with 50 or more employees have implemented some type of wellness program.
Most companies acknowledge that the payoff won’t come immediately. Employers were asked, “Do you believe that helping employees lead healthier lifestyles will make a noticeable difference to the company’s health care costs?” Eighty percent of respondents said “Yes, but it will take a while to see results.” Only four percent expected immediate improvement. Another 14 percent thought an impact on health care costs was a possibility, but said they had other reasons for participating.
The actual financial savings a company will realize from a wellness initiative is impossible to predict. It depends on the type of program and extent of employee participation. Of course, participation can be affected by factors such as incentives to join, awareness of the initiatives, and how the employer supports the program.
Keep in mind that wellness programs can do more for a company than just contain health insurance costs. Healthier employees are likely to be more productive, have fewer absences, and have better attitudes towards their jobs. Sponsorship of wellness programs can also enhance a company’s recruitment efforts and improve its image in the community.
Small Business Tax Credit. From our blog http://alexmillers.wordpress.com/2011/04/18/president-kills-new-1099-reporting-of-ppaca/
More small businesses are providing health insurance to their employees in 2011 as a result of the tax credit of up to 35% and 25% for non-profits offered through PPACA starting in 2010. Several insurers have reported significant increases in small group enrollments. Coventry Health Care added 115,000 small group enrollments, representing an 8% increase; and Blue Cross Blue Shield of Kansas City saw a 58% jump, 38% of which had never offered health benefits to employees before.
Further information can be found at http://www.irs.gov/newsroom/article/0,,id=223666,00.html. In addition, we have a simple work sheet that can determine exactly how much the credit is worth to you. Importantly, the Tax Credit will increase to 50% for small businesses by 2014!
Please contact our office for further guidance on your group’s plan.
Accountable Care Organization (ACO) – These organizations coordinate patient care and provide the full range of health care services for patients. The health reform law provides incentives for providers who join together to form such organizations and who agree to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to the ACO. Annual Benefit Limit – In the past, some insurance plans have placed a limit on the dollar amount of claims they will pay in a given year for an individual. Beginning in 2010, annual benefit limits on certain “essential health benefits” are restricted on a graduated basis, and annual limits will eventually be prohibited in 2014. Basic Health Plan – Beginning in 2014, states will have the option of creating a basic health plan to provide coverage to individuals with incomes between 133 and 200 percent of poverty instead of enrolling in the health insurance exchange and receiving premium subsidies. The federal government will provide states that choose to offer this plan with 95 percent of what it would have paid to subsidize these enrollees in the health insurance exchange. Benefit Package – The set of health services, such as physician visits, hospitalizations, and prescription drugs, that are covered by a member’s insurance policy or group health plan. Capitation – Under a capitation system health care providers are paid a set amount for each enrolled person assigned to that physician or group of physicians, whether or not that person seeks care. Case Management – The coordination of medical care for patients with specific diagnoses or high health care needs, performed by case managers who can include medical directors or nurses. Catastrophic Coverage – A coverage option with a limited benefit plan design accompanied by a high Deductible. The plan design is intended to protect primarily against the cost for unforeseen and expensive illnesses or injuries. These plans are attractive to young adults in relatively good health. CHIP – The Children’s Health Insurance Program (CHIP) is a program administered by the United States Department of Health and Human Services that provides matching funds to states for health insurance to low income families with children. The program was designed with the intent to cover uninsured children in families with incomes that are modest but too high to qualify for Medicaid. Chronic Care Management – The coordination of health care and supportive services to improve the health status of patients with chronic conditions, such as diabetes and asthma. The goals of these programs are to improve the quality of care and manage costs. COBRA – Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) applies to employers who generally employ 20 or more full time equivalent employees. Employees who lose their jobs are able to continue their employer-sponsored coverage for a set period of time. For example, employees are typically entitled to extend coverage for 18 months, however if they are deemed disabled by the Social Security Administration, coverage may continue for up to 29 months. Co-insurance – The amount or percentage of the reimbursed amount of covered expenses a plan member must pay for health services after the Deductible has been met. Community Living Assistance Services and Supports (CLASS) Program – The CLASS program establishes a national voluntary long-term care insurance program for the purchase of non-medical services and support necessary for enrollees who have paid premiums into the program and become eligible (due to disability or chronic illnesses). Enrollees would receive benefits that help pay for assistance in the home or in a facility in future years. Enrollment begins January 1, 2011 (targeting working adults who can make voluntary premium contributions through payroll deductions or directly). The first benefits will be paid out to enrollees in 2016. Community Rating – A method of pricing health insurance plans, where all policyholders are charged the same premium, regardless of health status, age or other factors. “Modified community rating” generally refers to a method where health insurers may vary premiums based on specified demographic characteristics (e.g. age, gender, location), but cannot vary premiums based on the health status or claims history of policyholders. Comparative Effectiveness Research – Research is federally sponsored to compare existing health care interventions to determine which work best for which patients and which pose the greatest benefits and harms. The research also aims to improve the quality of care and to control costs. Consumer-Directed Health Plans – These health plans seek to increase consumer awareness about health care costs and provide incentives for consumers to consider costs when making health care decisions. These plans usually have a high Deductible accompanied by a savings account for health care services. There are two types of savings accounts – Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs). Co-payment – A fixed dollar amount paid by an individual receiving a health care service covered by the member’s plan. Cost-Sharing – Health plan members are required to pay a portion of the costs of their care. Examples of these costs include Co-payments, Co-insurance and annual Deductibles. Deductible – The dollar amount that a plan member must pay for health care services each year before the insurer begins to reimburse for health care services. Beginning in 2014, deductibles for small group insurance plans will be limited to $2,000 for individual policies and $4,000 for family policies. Disease Management – The coordination of care for the entire disease treatment process, including preventive care, patient education and outpatient care in addition to inpatient and acute care. The process is intended to reduce costs and improve the quality of life for an individual with a chronic condition. Donut Hole – A gap in prescription drug coverage under Medicare Part D, where beneficiaries pay 100% of their prescription drug costs after their total drug costs exceed an initial coverage limit until they qualify for a second tier of coverage. Under the standard Part D benefit, Medicare covers 75% of drug costs below the initial coverage limit ($2,830 in 2010), and 95% of spending within the second tier level ($6,440 in 2010). The “donut hole” specifically refers to the range between these two levels. Health care reform also provides a $250 rebate for all Medicare Part D enrollees who enter the donut hole in 2010, increases discounts in subsequent years and completely closes the donut hole by 2020. Dual Eligibles – A term used to describe an individual who is eligible for Medicare and for some Medicaid benefits. Electronic Health Record/Electronic Medical Records – Computerized patient health records, including medical, demographic, and administrative information. These records can be created and stored within one organization or shared across multiple health care organizations and sites. Employee Retirement Income Security Act of 1974 (ERISA) – Enacted in 1974 to provide minimum Federal standards for welfare benefit plans in private industry, and protect the interests of employee benefit plan participants and their beneficiaries by requiring the disclosure to them of financial and other information concerning the plan; by establishing standards of conduct for plan fiduciaries; and by providing for appropriate remedies and access to the Federal courts. Employer Mandate – Beginning in 2014 pursuant to the health reform law, employers meeting size or revenue thresholds will be required to offer minimum essential health benefit packages or pay a set portion of the cost of those benefits for use in the Exchanges. Episode of Care – Refers to all the health services related to the treatment of a condition. For acute conditions (such as a concussion or a broken bone), the episode includes all treatment and services from the onset of the condition to its resolution. For chronic conditions (such as diabetes), the episode refers to all services and treatments received over a given period of time. Some payment reform proposals involve basing provider payment on episodes of care instead of paying on a Fee-for-Service basis. Essential Health Benefits – The health reform law placed certain coverage requirements on essential health benefits, and provides a broad set of benefit categories that would be considered essential to a health benefits package — including hospitalization, outpatient services, emergency care, prescription drugs, maternity care, preventive services and other benefits. The Secretary of HHS will, in the future, define what constitutes “Essential Health Benefits” and this will be guided by the current scope of benefits provided under a typical employer plan. For plan years beginning in 2010 the only requirement for “Essential Health Benefits” is that if they are included in the plan they may not be subject to a lifetime limit and until 2014 can only be subject to a “restricted annual limit”. Exchange or Health Insurance Exchange – The health care reform law creates Health Benefit Exchanges (competitive insurance marketplaces) in each state, where individuals and employers can shop for health plans. External Review – Health care reform requires all health plans (except Grandfathered plans) to provide an external review appeal process that meets minimum standards. With the exception of a few state processes currently in existence, external review has typically been limited to appeals of clinical decisions. The health reform law has expanded the scope of external review for self-funded health plans to non-eligibility administrative appeals as well. Administrative appeals deal with such issues as benefit exclusions, benefit limits and disputes over member financial responsibility for payments such as Co-payments, Co-insurance and Deductibles. Fee-for-Service – A traditional method of paying for medical services where doctors and hospitals are paid a fee for each service they provide.
FTE – Full Time Equivalent -The percent of time worked is based on a standard of 100% or 1.0. For example, an employee who is working 60% and employee who is working 40% of the time would equal 100% or an FTE of 1.0.
For example, a firm has 35 full-time employees (30+ hours). In addition, the firm has 20 part time employees who all work 24 hours per week (96 hours per month). These part-time employees’ hours would be treated as equivalent to 16 full-time employees, based on the following calculation: 20 employees x 96 hours / 120 = 1920 / 120 = 16
Grandfathered Plan – A health plan that was in place on March 23, 2010, when the health reform law was enacted, is exempt from complying with some parts of the health reform law, so long as the plan does not make certain changes (such as eliminating or reducing benefits, increasing cost-sharing, or reducing the employer contribution toward the premium). Once a health plan makes such a change, it becomes subject to other health reform provisions (e.g., appeals and cost sharing restrictions on preventive services).
Group Health Plan – Health insurance that is offered by a plan sponsor, typically an employer on behalf of its employees. Guarantee Issue/Guarantee Renewability – Beginning in 2014, the health reform law requires insurers to offer and renew coverage to non-Grandfathered plans, without regard to health status, use of services, or pre-existing conditions. Health Insurance Portability and Accountability Act of 1996 (HIPAA) – This law sets standards for the security and privacy of personal health information. In addition, the law makes it easier for individuals to change jobs without the risk of extended waiting periods due to pre-existing conditions. Health Maintenance Organization (HMO) – A health plan that provides coverage through a network of hospitals, physicians and other health care providers. HMOs usually require the selection of a primary care physician who is responsible for managing and coordinating all health care. Usually, referrals to specialist physicians are required, and the HMO pays only for care provided by an in-network provider. Health Reimbursement Account (HRA) – A tax-exempt account that can be used to pay for qualified health expenses. HRAs are usually paired with a high-Deductible health plan and are funded solely by employer contributions. Health Savings Account (HSA) – A tax-exempt savings account that can be used to pay for qualified medical expenses. Individuals can obtain HSAs from most financial institutions, or through their employer. Both employers and employees can contribute to the plan. To open an HSA, an individual must have health coverage under an HSA-qualified high-Deductible health plan which has Deductibles of at least $1,200 for an individual and $2,400 for a family in 2010. High-Deductible Health Plan – These health insurance plans have higher Deductibles and lower premiums than traditional insurance plans. High-Risk Pool – The health reform law expands upon the current state-based high-risk pool system. The law requires the government to establish or issue contracts to establish a temporary high risk pool (through 2013) to provide coverage for eligible individuals with pre-existing conditions by appropriating $5 billion to subsidize premiums. Eligibility is limited to individuals who have been uninsured for at least six months prior to applying for pool coverage, and who have a pre-existing condition. Individual Mandate – A requirement that most individuals obtain health insurance or pay a penalty beginning in 2014. Massachusetts was the first state to impose an individual mandate that all adults have health insurance. Interim Final Rule (IFR) – A final rule that has the full force and effect of law; thus, affected parties have an obligation to comply with its requirements. An IFR allows interested parties to submit comments during a public comment period and prior to issuing revised guidance. Internal Review – An internal review of an adverse claim determination. Lifetime Benefit Maximum – A limit on the amount an insurer will pay toward the cost of health care services over the lifetime of the policy. Health care reform prohibits lifetime dollar limits on “essential health benefits” effective for plan/policy years beginning on or after September 23, 2010. Long-Term Care – Services needed for an individual to live independently in the community, such as home health and personal care, as well as services provided in institutional settings such as nursing homes. Many of these services are not covered by Medicare or private insurance (see also the Community Living Assistance Services and Supports program defined above). Managed Care – A health care delivery system that seeks to reduce the cost of providing health benefits and improve the quality of care. These arrangements often rely on primary care physicians to manage the care their patients receive. Mandatory Benefits – A state or federal requirement that health plans provide coverage for certain benefits, treatment or services. Medicaid – A federal and state funded program that provides medical and health related services to certain low-income Americans. The health reform law expands Medicaid eligibility to non-Medicare eligible individuals with incomes up to 133% of the Federal poverty level, establishing uniform eligibility for adults and children across all states by 2014. Medical Loss Ratio (MLR) – The minimum percentage of premium dollars a commercial insurance company must spend on the reimbursement of certain medical costs. The health reform law requires insurers in the large group market to have an MLR of 85% and insurers in the small group and individual markets to have an MLR of 80% (with some waivers granted to states to reduce the threshold for certain markets). Medicare – A federal program that provides health care coverage to people age 65 and older, and to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other special criteria such as end-stage renal disease. Eligible individuals can receive coverage for hospital services (Medicare Part A), physician based medical services (Medicare Part B) and prescription drugs (Medicare Part D). Medicare Advantage – Also referred to as Medicare Part C, the Medicare Advantage program allows Medicare beneficiaries to receive their Medicare benefits through a private insurance plan. Out-of-Pocket Costs – Health care costs that are not covered by insurance, such as Deductibles, Co-payments, and Co-insurance. Out-of-pocket costs do not include premium costs. Out-of-Pocket Maximum – An annual limit on the amount of money individuals are required to pay out-of-pocket for health care costs, excluding premiums. The health reform law, beginning in 2014, prevents an employer from imposing cost sharing in amounts greater than the current out-of-pocket limits for high-Deductible health plans ($5,950 for an individual policy or $11,900 for a family policy in 2010). These amounts will be adjusted annually. Patient Centered Medical Home – A term defining a health care setting where patients receive comprehensive primary care services, have an ongoing relationship with a primary care provider who directs and coordinates their care; and have enhanced access to non-emergent care. Patient Protection and Affordable Care Act (PPACA) – Also referred to as the “health reform law,” this Act begins the implementation of a staged set of rules with an initial effective date of March 23, 2010. The law is intended to increase access to health care for more Americans, and includes many changes that impact the commercial health insurance market, Medicare and Medicaid. Pay for Performance – A payment system where health care providers receive incentives for meeting or exceeding quality and cost benchmarks. Some systems also penalize providers who do not meet established benchmarks. The goal of pay for performance programs is to improve the quality of care over time. Pre-existing Condition – An illness or medical condition for which a person is diagnosed or treated within a specified period of time prior to becoming insured in a new plan. The heath reform law prohibits the denial of coverage due to a pre-existing condition for plan and policy years beginning after September 23, 2010 for children under 19, and for all others beginning in 2014. Preferred Provider Organization (PPO) – A type of managed care organization that provides health care coverage through a network of providers. Plan members typically pay higher costs when they seek care from out-of-network providers. Premium – The amount paid, often on a monthly basis, for health insurance. The cost of the premium may be shared between employers or government purchasers, and individuals. Premium Subsidies – A fixed amount of money, or a designated percentage of the premium cost, that is provided to help people purchase health insurance. The health reform law provides premium subsidies to individuals with incomes between 133% and 400% of the federal poverty level who purchase policies through the health insurance Exchanges, beginning in 2014. Preventive Care Services – Health care that emphasizes the early detection and treatment of disease. The health reform law requires certain health plans (excludes Grandfathered plans) to provide coverage without member cost-sharing for certain preventive services. Primary Care Provider – A provider, usually a physician, specializing in internal medicine, family practice, or pediatrics, who is responsible for providing primary care and coordinating other necessary health care services for patients. Qualified Health Plan – Insurance plans that are sold through a Health Insurance Exchange must have been certified as meeting a minimum benchmark of benefits (i.e., essential health benefits) under the health reform law. Rate Review – Review by insurance regulators of a health plan’s proposed premium and premium increases. Rates are reviewed to ensure they are sufficient to pay claims, are not unreasonably high in relation to the medical claim costs and the benefits provided, and are not discriminatorily applied. Reinsurance – Insurance purchased by insurance companies and employers that self-insure their employees’ medical costs, to limit liability or exposure to high claims or increased cost trends. The health reform law includes a temporary federal reinsurance program for employers that insure early retirees over age 55 who are not eligible for Medicare. Rescission – Refers to a practice where an approved policy is voided from its inception by the insurer, usually on the grounds of material misrepresentation or omission on the initial application. Under health reform, rescissions are prohibited except in cases of fraud or intentional misrepresentation. Risk Adjustment – The process of increasing or reducing payments to health plans to reflect higher or lower than expected spending. Risk adjusting is designed to compensate health plans that enroll a sicker population as a way to discourage plans from selecting only healthier individuals. Section 125 Plan – These plans are otherwise known as a “cafeteria plan” offered pursuant to Section 125 of the Internal Revenue Code. Its name comes from a set of benefit plans that allows employees to choose between different types of benefits, similar to the ability of a customer to choose among available items in a cafeteria, and the employees’ pretax contributions are not subject to federal, state, or Social Security taxes. Self-Insured Plan – The employer assumes the financial responsibility of health care benefits for its employees in a self-insured or self-funded plan. Employer sponsored self-insured plans typically contract with a third-party administrator to provide administrative services for the plan. Small Business Tax Credit – The health reform law includes a tax credit equal to 50 percent (35 percent in the case of tax-exempt eligible small employers) for qualified small employers that provide health coverage to their employees. The tax credit is available to employers with 25 or fewer employees with average annual wages of less than $50,000. Small Group Market – Businesses with typically 2-50 employees, or eligible employees depending on applicable state law, can purchase health insurance for their employees through this market, which is regulated by states. Tax Credit – An amount that a person or business can subtract from the income tax that they owe. If a tax credit is refundable, the taxpayer can receive a payment from the government to the extent that the credit is greater than the amount of tax they would otherwise owe. Tax Deduction – An amount that a person can subtract from adjusted gross income when calculating the taxes that they owe. Generally, people who itemize deductions can deduct the portion of medical expenses, including health insurance premiums, that exceeds 7.5% of their adjusted gross income. Under health reform, the threshold for deducting medical expenses increases to 10% in 2013 (this increase is waived for individuals 65 and older for tax years 2013-2016). Value-Based Purchasing – A payment reform which provides bonuses to hospitals and other providers based upon their performance against quality measures. Wellness Plan/Program – An employer program to improve health and prevent disease
HDHP Minimum Annual Deductible (No change from calendar year 2011):
Single – $1200
Family – $2400
HDHP Out-of-Pocket Maximum:
Single – $6050
Family – $12,100
HSA Maximum Contribution Limit:
Single – $3100
Family – $6250
HSA/HDHP Market Growth
HSA holders own the assets in the accounts and can build up substantial sums over time. Enrollment in HSA-compatible insurance plans has increased to 10 million earlier this year, from 1 million in March 2005, according to, America’s Health Insurance Plans (AHIP), a trade group.
HSAs were authorized starting in January 2004. Since then, AHIP has conducted a periodic census of health plans participating in the HSA/HDHP market.
• Between January 2009 and January 2010, the fastest growing market for HSA/HDHP products was large-group coverage, which rose by 33 percent, followed by small-group coverage, which grew by 22 percent.
• 30 percent of individuals covered by an HSA plan were in the small group market, 50 percent were in the large-group market, and the remaining 20 percent were in the individual market.
• States with the highest levels of HSA/HDHP enrollment were California, Ohio, Florida, Texas, Illinois and Minnesota
HSA Advantages:
Opportunity to build savings – Unused money stays in your account from year to year and earns tax-free interest. The HSA also gives you an investment opportunity.
Tax-free contributions and earnings – You don’t pay taxes on contributions or earnings.
Tax Free Money allowed for non traditional Medical coverage– As per IRS Publication 502, unused moneys can be used for dental,vision, lasik eye surgery, acupuncture, yoga, infertility etc. Popular Examples
Portability – The funds belong to you, so you keep the funds if you change jobs or retire.
Our overall experience with HSAs have been positive when employer funding is at minimum 50% using either the HSA or an HRA (Health Reimbursement Account-employer keeps unspent money). Traditional plans trend of higher copays and new in network deductibles has also led to the popularity of an HSA.
For more customized information and how to navigate this please contact us: