In Time magazine’s March issue Bitter Pill: Why Medical Bills Are Killing Us Steven Brill gets to work on answering the ever elusive Why are Medical Costs So High? The 21,000 word article is longest article in Time Magazine history that can boiled down to simply there is no free marketplace in health care. We think everything in this country is a free market but is there a free market when one needs to got to an emergency room or a free market when one must take a cancer pill? According to Howard Dean the singular reason is to get away form the current fee for service system where providers get paid per procedure and not per patient.
Here’s an eye opener: “Insurance Companies are not really the problem they run pretty terribly. They process claims, a lot of us think they process claims and fairly consistently but they are increasingly at the mercy of hospitals which are consolidating buying a doctors practices. We should tax profits on so-called nonprofit hospitals and put that money back into the system. We should control all the prices for prescription drugs because if I have a monopoly a cancer wonder drug I can charge anything I want for them that’s obviously not a free market and it’s completely two different uses you see this article once you follow the money.”
Transcript of the video:
“This is not a free-market. You don’t get health care because you want it. You don’t wake up in the morning and gee I love to go down to the emergency room today. You enter that market and will you know nothing about the products of you being asked by no choice of those products. Hi I am Steve Brill I’ve got the cover story this week in TIME Magazine looking at the health care debate from a very different perspective. Everybody focuses on who should pay for the exorbitant cost of health care and that I decided to do was ask for more fundamental question which is why does health care cost so much.
I look behind the bills and trace the bills all the way back to who’s getting what money is making what profits and the results are really surprised one of the things I found that everybody in the healthcare industry knows about that that nobody else knows his something called the charge-master. The charge master is a internal listing each hospital of the thousands of different items that they charge and nobody could explain it to me. Indeed would be hard to explain for example why would you charge $77 for a box of gauze pads? You can buy for a dollar at the drugstore. why would you charge thousands of dollars for CAT scan it really isn’t cost you anything?
It’s emblematic if you will, of the irrationality of the higher healthcare system because no one can explain the cost no one tries to and the only people who are guaranteed surefire to pay to be asked to pay the charge-master prices are the poorest people who don’t have health insurance.
Real profit makers are way hospitals markup very expensive drugs that you get. If you have cancer to have pneumonia but they’re making thousands of dollars on these drugs and drug companies in turn making still more thousands of dollars.
Obamacare does very little to solve any of these problems and just probably why you got to Congress I’m it doesn’t do anything to control the prices of prescription drugs or medical devices CAT scan. In fact if anything it will increase the profitable the players in the market by making equal insurance and therefore more people are in the marketplace with the funds from insurance companies to buy all these products.
Insurance Companies are not really the problem they run pretty terribly. They process claims, a lot of us think they process claims and fairly consistently but they are increasingly at the mercy of hospitals which are consolidating buying a doctors practices. See Provider Consolidation Info-graph– “The proliferation of hospital mergers and hospitals’ appetite for buying doctors’ practices—in part to assure a steady stream of patients to fill hospital beds—could create local monopolies that raise prices without increasing efficiency. ‘Historically,’ says Deloitte’s Mr. Keckley, ‘hospital consolidation hasn’t reduced costs.’”
We should tax profits on so-called nonprofit hospitals and put that money back into the system. We should control all the prices for prescription drugs because if I have a monopoly a cancer wonder drug I can charge anything I want for them that’s obviously not a free market and it’s completely two different uses you see this article once you follow the money.”
The ACO (Accountable Care Organization) referenced in our post NYU Beth Israel Merger and ACOs are models encouraged in Obamacare in fact as examples of Provider capitated reimbursement that Howard Dean is in favor of. An ACOI cordiantes 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 Medicarebeneficiaries who are enrolled in the traditional fee-for-service program who are assigned to the ACO.
The fee-for-service system has evidentially driven costs by incentivizing volumes of added procedures. The ACO model is built on par excellence hospitals such as Mayo Clinic where there is team of providers are financially incentivized for patient care coordination outcomes and high quality of care. The ACO’s payment would be tied to achieving goals that improve health care and save money. Members of the ACO would divvy up that payment. Today’s payment system, investments in providing better care are doubly penalized. If a hospital hires a nurse to follow up with patients after they are discharged in order to reduce readmissions — for example, to help patients with diabetes improve blood sugar control — it must pay for the nurse, which is typically not reimbursed by insurance companies or Medicare, and it loses revenue by preventing the readmission.
Congress included ACOs in the health care law as a way to rein in Medicare spending. That federal program pays for health care for people 65 and older and the disabled. The federal government estimates ACOs could save the Medicare program up to $940 million over four years. Medicare recently began testing this system with 32 pilot ACOs in 18 states, including one in the New York City area – Bronx Accountable Healthcare Network.
Some have pointed to ACO Model just as a pro-merger supporting argument with the FTC. These significant mergers create market dominance and therefore limit competition and drive up health care dollars. And yet Hospitals operate on thin profit margins and cannot afford to lose market share therein lies is the conundrum.
Note: At time of this article MVP and Hudson Valley Health Plans announced a merger –Hudson Health Plans joins MVP. Hudson Health Plan, the Medicaid managed care organization based in Tarrytown, will join the MVP Health Care group of companies, the two nonprofit health plans jointly announced today.
“Size and diversity of offerings are important for health plans in the new world of the health insurance marketplaces. A 55-year-old person would like to join a health plan that can continue to cover him when he turns 65. Likewise, if someone is no longer eligible for Medicaid, she might prefer to buy a commercial product from that same insurer. Together, MVP and Hudson now can cover people through all of life’s stages and changing needs.
In the coming months, Millennium Medical Solutions Inc will host seminars and will share information you’ll need to know as the countdown continues to October 1st. Please contact us for immediate information on how to implement these initiatives for your group-specific needs at info@medicalsolutionscorp.com or Call (855) 667-4621.
Want to cook up a plan to keep your immune system in tip-top shape? Some experts believe that even slight deficiencies in certain nutrients can lower our defenses. hile an apple a day is a good start, it definitely takes a bigger — and brighter — cornucopia to boost your disease-fighting ability. Here below are natural best foods to boost immunity.
Quick, Don’t Get Sick! We’ve all been there: We feel a cold coming on, so we start popping megadoses of vitamin C. We’ve been doing it for decades even though there’s little evidence to suggest it will keep us from getting sick. According to the Cochrane Database of Systematic Reviews, which looked at 30 trials involving a total of 11,350 participants,vitamin Chad no effect on how often people caught colds. It did slightly reduce the cold’s duration — by 8 percent, or roughly 9.5 hours for a five-day illness — but only if taken before symptoms arose.
However, a Canadian over-the-counter pill (available in the U.S.) called COLD-fX, made from North American ginseng, has shown dramatic results. Healthy people reduced their risk of colds by 56 percent, the severity by 31 percent and duration by 35 percent. And in nursing home seniors, it reduced their risk of the flu by 89 percent. The only downside: You have to take it twice a day for the entire cold and flu season (four months).
Color of Health A healthy diet full of antioxidant-rich fruits and vegetables is a vital part of a well-functioning immune system. Antioxidants are food-based chemicals, such as vitamins and minerals, that neutralize free radicals in our bloodstream. Free radicals — toxic by-products of digestion, pollution and cigarette smoke — damage DNA, cause many types of cancer and suppress the immune system.
Eating fortified, processed foods, supplemented with a multivitamin, might get you all of the vitamins you need, but, explains Joel Fuhrman, MD, author of Eat for Health and Eat to Live, we’re depriving ourselves of thousands of micronutrients that we haven’t even discovered yet. “It’s very hard to duplicate Mother Nature,” he says. “More than half of the micronutrients in plants are phytochemicals, not vitamins.” Phytochemicals are compounds produced by plants to protect themselves from environmental stresses like UV damage. Research shows that by eating foods rich in phytochemicals, we can boost our health as well. According to Dr. Fuhrman, these chemicals keep our cells from aging, while some even cause cancer cells to self-destruct. A few of the heavy hitters you’ve probably heard of include lycopene (tomatoes), polyphenols (tea) and resveratrol (grapes). Broccoli and other cruciferous vegetables, like cabbage, brussels sprouts and cauliflower, contain some of the most powerful cancer fighters that we know of — actually shrinking tumors in laboratory experiments.
For the best protection, David Katz, MD, MPH, director of the Yale University Prevention Center, and Dr. Fuhrman recommend eating a wide variety of fruits and vegetables that cover the entire color spectrum. “Foods work together to maximize immune function, which then prolongs health and helps prevent chronic disease,” Dr. Fuhrman says.
Good Fat, Bad Fat To beef up your immune system, try to reduce the amount of red meat and saturated fat that you eat, and replace them with fish andomega-3 fatty acids, recommends Charles Stephensen, PhD, a research scientist with the USDA at the Western Human Nutrition Research Center. “Saturated fats activate the immune system, promote inflammation and are associated with increased cardiovascular risk,” Dr. Stephensen says.
Inflammation occurs when the immune system senses an intruder, so in a sense, these fats make the body think there’s an invader that has to be isolated and wiped out. Chronic inflammation can result in Alzheimer’s, diabetes, heart disease and arthritis.
“Omega-3s, on the other hand, seem to have the opposite effect on the immune system,” Dr. Stephensen says. Eating fatty fish or taking afish oil supplement (one to two grams a day) reduces levels of inflammation in the body.
D Is for Defense When we talk about boosting the immune system, what we’re really discussing is making it run optimally, Dr. Stephensen says. Once an infection or virus is gone, the immune system needs to be able to stop its attack. An overactive response can lead to autoimmune diseases, where the body turns on itself, attacking its own tissue as if it were a foreign threat. Some examples are rheumatoid arthritis, type 1 diabetes and lupus. According to Dr. Stephensen, it is now suspected that a vitamin D deficiency may increase our risk of flu and worsen the effects of autoimmune diseases. “Vitamin D can act directly on the immune system. It seems to be able to protect against bacterial infections and regulate our immune response. A deficiency allows an overstimulation of the system,” he explains.
Vitamin D is produced in our body when our skin absorbs the sun’s ultraviolet rays. Because it’s present in very few foods, and sunscreen blocks the sun’s effects, it’s very difficult to get your daily recommended dose. In fact, a recent study published in the Archives of Internal Medicine reports that 75 percent of U.S. teenagers and adults are vitamin D deficient. What’s more, Dr. Stephensen says that the recommended daily allowance, which ranges from 200 to 600 IU, depending on your age, may be too low. Thomas Morledge, MD, of the Center for Integrative Medicine at the Cleveland Clinic,recommends aiming for 1,000 IU daily. Although higher doses may be needed, this should be guided by your doctor. Good sources include fortified milk and fish; a 3.5-ounce serving of salmon contains 360 IU, while a glass of milk has about 100 IU. Ten minutes of sun (sans sunscreen) is also a good source of vitamin D. That said, Dr. Morledge recommends that everyone take a vitamin D supplementsince it’s unlikely you will get your required daily allowance through food and limited, unprotected sun exposure.
Many follow up questions on the postPay or Play Employer Guide have been raised. A Pay or Play FAQ hopefully adds some clarification.
Will I be required to offer health insurance coverage to my employees?
No. However, if you have at least 50 full-time employees, and you don’t offer coverage, you will owe a penalty starting in 2014 if any full time employee is eligible for and purchases subsidized coverage through an exchange. This penalty is called the “free rider” penalty.
We employ about 40 full-time employees working 30 or more hours per week and about 25 part-time or seasonal employees. So we are not subject to the employer mandate penalties, right?
You may be. The health reform law does not require you to provide coverage for employees working on average less than 30 hours per week (“part-time”). However, the hours worked by part time employees are counted to determine whether you have at least 50 full-time employee equivalents and therefore are subject to the employer mandate. This is done by taking the total number of monthly hours worked by part time employees (but not to exceed 120 hours for any one part-time employee) and dividing by 120 to get the number of “full time equivalent” employees. You would then add those “full-time equivalent” employees to your 40 full-time employees.
The hours worked by seasonal employees are also counted to determine whether you have at least 50 full-time employee equivalents and therefore are subject to the employer mandate. For purposes of determining whether you are a large employer, seasonal employees are workers who perform labor or services on a seasonal basis (i.e. exclusively performed at certain seasons or periods of the year and which, from its nature, may not be continuous or carried on throughout the year) for no more than 120 days during the taxable year and retail workers employed exclusively during holiday seasons. There is an exemption from the employer mandate that says you would not be considered to employ more than 50 full-time employees if:
Your workforce only exceeds 50 full-time employees for 120 days, or fewer, during the calendar year; and
The employees in excess of 50 who were employed during that 120-day (or fewer) period were seasonal workers.
Our workforce numbers go up and down during the year. How do we determine if we had at least 50 full-time employees on business days during the preceding calendar year?
For purposes of determining if you are a large employer, the formula requires the following steps:
1.Determine the total number of full-time employees (including any full-time seasonal workers) for each calendar month in the preceding calendar year;
2.Determine the total number of full-time equivalents (including non-full-time seasonal employees) for each calendar month in the preceding calendar year;
3.Add the number of full-time employees and full-time equivalents described in Steps 1 and 2 above for each month of the calendar year;
4.Add up the 12 monthly numbers;
5.Divide by 12. If the average per month is 50 or more, you are a large employer.
So if we offer coverage to our full-time employees, we will not have to pay a penalty?
Not necessarily. If you have at least 50 full-time employees and you offer coverage to at least 95% of your full-time employees, you are still subject to a penalty starting in 2014 if:
1.A full-time employee’s contribution for employee-only coverage exceeds 9.5% of the employee’s household income (Note: see below regarding a proposed affordability “safe harbor”) or the plan’s value is less than 60%; and
2.The employee’s household income is less than 400% of the federal poverty level; and
3.The employee waives your coverage and purchases coverage on an exchange with premium tax credits.
The penalty will be calculated separately for each month in which the above applies. The amount of the penalty for a given month equals the number of full- time employees who receive a premium tax credit for that month multiplied by 1/12 of $3,000.
We have more than 50 full-time employees so we are subject to the employer mandate penalties. How do we know which of our employees is considered “full-time” requiring us to pay a penalty if they qualify for premium tax credits at an exchange (if the employee has a variable work schedule or is seasonal)?
Through the end of 2014, for purposes of the employer mandate penalties, the guidance permits you to use a “look-back measurement period/stability period” safe harbor to determine which of your employees are considered full-time employees. You may use a standard measurement/stability period for ongoing employees, while using a different initial measurement/stability period for new variable and seasonal employees
How do the full-time employee safe harbors work for new hires?
They are generally based on the employee’s hours worked, or, the amount of hours the employee is reasonably expected to work as of their hire date.
New employee reasonably expected to work full-time (i.e. 30 or more hours per week)– If you reasonably expect an employee to work full-time when you hire them, and coverage is offered to the employee before the end of the employee’s initial 90 days of employment, you will not be subject to the employer mandate payment for that employee, if the coverage is affordable and meets the minimum required value.
New employee reasonably expected to work part-time (i.e. less than 30 hours per week)-– If you reasonably expect an employee to work part-time and the employee’s number of hours do not vary, you will not be subject to the employer mandate penalty for that employee if you don’t offer them coverage.
New variable hour and seasonal employees – If based on the facts and circumstances at the date the employee begins working (the start date), you cannot determine that the employee is reasonably expected to work on average at least 30 hours per week, then that employee is a variable hour employee. Because the term “seasonal employee” is not defined for purposes of the employer responsibility penalty, through 2014, you are permitted to use a reasonable, good faith interpretation of the term “seasonal employee”. The IRS has indicated that any interpretation of the term “seasonal” probably would not be reasonable if it included a working period of more than six months. Once hired, you have the option to determine whether a new variable hour or seasonal employee is a full-time employee using an “initial measurement period” of between three and 12 months (as selected by you).You would measure the hours of service completed by the new employee during the initial measurement period to determine whether the employee worked an average of 30 hours per week or more during this period. If the employee did work at least 30 hours per week during the measurement period, then the employee would be treated as a full-time employee during a subsequent “stability period,” regardless of the employee’s number of hours of service during the stability period, so long as he or she remained an employee. The stability period must be for at least six consecutive calendar months and cannot be shorter than the initial measurement period. If the employee then didn’t work on average at least 30 hours per week during the measurement period, you would not have to treat the employee as a full-time employee during the stability period that followed the measurement period, but the stability period could not be more than one month longer than the initial measurement period.
Example – Facts: For new variable hour employees, you use a 12-month initial measurement period that begins on the start date and apply an administrative period from the end of the initial measurement period through the end of the first calendar month beginning on or after the end of the initial measurement period.
Situation: Dianna is hired on May 10, 2014. Dianna’s initial measurement period runs from May 10, 2014, through May 9, 2015. Dianna works an average of 30 hours per week during this initial measurement period. You offer affordable coverage to Dianna for a stability period that runs from July 1, 2015 through June 30, 2016.
Conclusion: Dianna worked an average of 30 hours per week during her initial measurement period and you had (1) an initial measurement period that does not exceed 12 months; (2) an administrative period totaling not more than 90 days; and (3) a combined initial measurement period and administrative period that does not last beyond the final day of the first calendar month beginning on or after the one-year anniversary of Dianna’s start date. Accordingly, from Dianna’s start date through June 30, 2016, you are not subject to an employer mandate penalty with respect to Dianna because you complied with the standards for the initial measurement period and stability periods for a new variable hour employee. However, you must test Dianna again based on the period from October 15, 2014 through October 14, 2015 (your first standard measurement period that begins after Dianna’s start date) to see if she qualifies to continue coverage beyond the initial stability period.
Employee FT Testing Period Chart
As you can tell, there are many things to consider as you map out your plans for how your business is going to proceed with health care reform. Millennium Medical Solutions Corp hopes to be a valuable resource in the weeks and months ahead as you make these decisions. What about you? Do you have any glaring questions that we could answer for you about health care reform compliance?
For a FREE Affordable Care Act Guide leave your questions in the comments below or click the “Contact Us” button and we’ll do our best to answer your questions.
Please refer to the IRS Notice in the links below for more details and examples:
DISCLAIMER: We share this information with our clients and friends for general informational purposes only. It does not necessarily address all of your specific issues. It should not be construed as, nor is it intended to provide, legal advice. Questions regarding specific issues and application of these rules to your plans should be addressed by your legal counsel.
Health Insurance Mandates 2012. The Councel for Affordable Health Insurance in VA released their annual “Health Insurance Mandates in the States” for 2012 last week. While NYS did not crack the top 5 they did come close at number 7 this year.
NYS Mandates were discussed in our posting Empire Leaving Small Groups Nov 2011. ” 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 ERISA and not State. To the relief of of our struggling clients on subsidized Healthy NYthe State doesn’t play by their own rules and instead opts out of its very own mandates.”
According to the study CAHI Identifies 2,271 State Health Insurance Mandates “The sheer number of state mandates will make it difficult for states to deliver on one of the key promises repeatedly made by supporters of Obamacare: it would provide all Americans with affordable health coverage. The essential health benefit plan design was supposed to give states the flexibility to craft benefit packages which would be suitable and affordable for their unique populations. But HHS shackled the states to the full load of mandated benefits on their books, and the prices of next year’s offerings in the health insurance exchanges are going to bear witness to the free-wheeling mandate craze of the last twenty years. Recent studies have predicted double digit increases in health insurance premiums next year — the mandates are coming home to roost,” said Roy Ramthun, CAHI’s Director of Federal Affairs.”
The United Hospital Fun estimates that approximately 2.2 million New Yorkers lacked insurance coverage in 2009, (Health Insurance Coverage in New York 2009.)
The collective cost of paying for New York’s health insurance mandates equates to 12.2% of overall premium cost. Based on 2008 premiums, this translates into $1,538 expense per year for an average family policy and $566 per year for a single person policy. (Employer Alliance, NYS Mandated Health Insurance Benefits, 2003)
Higher health care costs increase the number of uninsured. In New York, it is estimated that for every 1% increase in premiums, 30,000 New Yorkers lose health insurance. (Barents Group, 1999)
Mandates have a cumulative impact on premium costs. It is estimated that the cost of the 12 most common mandates can increase the cost of health insurance by as much as 30%. (Milliman and Robertson 1996)
Rising health care costs have the biggest impact on the small business sector. For every 1% increase in premium costs, small business sponsorship of health insurance drops by 2.6%. (Morrisey et al., 1994)
The percentage of US small business workers receiving insurance through their employer declined 5% between 1996 and 1998 – from 52% in 1996 to 47% in 1998. (KPMG Peat Marwick, 1999)
Nearly one of every four uninsured Americans has no health care coverage as the direct result of state mandates. (Jensen, Morrisey, 1999)
Health insurance premiums for New York’s working families skyrocketed between 2000 & 2007
increasing by 80.7 percent. (Families versus Paychecks, Families USA 2008)
Since 1999, family premiums for employer-sponsored health coverage have increased by 131 percent, placing increasing cost burdens on employers and workers. (Kaiser Family Foundation and Health Research and Educational Trust. Employer Health Benefits 2009 Annual Survey. September 2009).
the HIT is actually a hidden tax on small business. PPACA assesses a tax on all health insurance companies based on their “net premiums” written. The tax will raise $8 billion starting in 2014, $14.3 billion in 2018 and more in later years. This is [aid for by fully insured health plans which are comprised mostly by small businesses.
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Map of State Exchanges Final. The final map of 2014 State Exchanges or health insurance marketplaces are now in.
States have had the option of either using Federal Grants to establish their own Exchanges or letting the Federal run their State’s Exchange. There is even a middle version, a Partnership Exchange Program. Under this arrangement, the State might oversee the selection and management of health plans and assisting people with enrollment. The federal government would have primary responsibility for the remaining marketplace operations, including managing the marketplace, their websites and call centers, accepting applications, and determining eligibility for premium subsidies.
Seventeen states and the District of Columbia have received conditional approval from HHS to operate a state-run marketplace in 2014. These states are: California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Utah, Vermont, and Washington.
This map is very close to last years blog we posted Map of State Exchanges Status May 2012 . For the most part this goes by partisan lines with majority of Federally Run State Exchanges located in GOP Governor States. An example of this is highlighted in our blog on NJ Exchange Chrstie Rejects State Exchange.
It is vital that as many uninsured’s get health coverage. Nationally approximately 30 million people are expected to gain coverage with 600,000 in States like NY.
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Tick! tick! tick! As the 2014 Employer Mandate to either pay or play gets closer the nation’s employers move a step closer to having to make a decision: Do I play or pay? This Employer mandate under Patient Protection and Affordable Care Act (PPACA) does not apply to smaller groups under 50 FTE (full time equivalent) employees. Many small groups such as food service industry, retailers, construction etc. in fact have many FTE and while they may work minimal hours can trigger the “pay or play” mandate.
The IRS has released recently guidance published in the form of a Notice of Proposed Rulemaking (NPRM), addresses a number of issues tightly linked to an array of practical considerations related to the employer mandate. These include defining a “large employer,” determining “full-time” status for employees, clarifying the meaning of “dependents,” and determining what constitutes “affordable” coverage.
The guidance also tackles several stickier questions such as how and whether to count foreign or seasonal workers, as well as how to calculate the full-time status of employees who work unusual hours, such as teachers or airline pilots.
Three safe harbors relating to the provision of “affordable” coverage to employees in order to avoid exposure to the mandate penalties are also included in the guidance. Transition relief is offered in recognition of certain employers’ needing time to bring their plans into compliance.
Still, there are several regs that the IRS is awaiting commentary and resolution on due on March 18, 2013.
A Q&A summary of the rule has been released by the IRS and is available by clickinghere.
Some employers assert that the play-or-pay mandate will raise their costs and force them to make workforce cutbacks. As a result, a number are considering eliminating their health care coverage altogether and instead paying the penalty on their full-time employees. While the “pay” option might be worth considering, there are strong reasons why employers should look carefully at all of their options and do their best to calculate the actual outcomes of each.
Other Key Issues Addressed in the Proposed Rules
Additional issues addressed in the proposed regulations include:
Determining which employers are subject to the “pay or play” requirements;
Determining who is a full-time employee, including approaches that can be used for employees who work variable hour schedules, seasonal employees, and teachers who have time off between school years;
Determining whether coverage is affordable and provides minimum value; and
Calculating the amount of the penalty due and how the penalty will be assessed.
When conducting a cost-benefit analysis, the key tax issues the employer should consider are:
Employer Tax Penalty for Not Offering “Qualified” Group Health
Not applicable for employers with less than 50 FTEs
$2,000 penalty per full-time employee (minus 30 employee credit)****
Employer Tax Penalty for Offering “Qualified” Health That is Not “Affordable”
Not applicable for employers with less than 50 FTEs
$3000 per employee receiving subsidy
Example:
Jungle Corp. has 100 full-time employees and is a leader in its market, using a talent differentiation strategy. Jungle’s family coverage costs $15,000, of which employees pay $3,000. Bob Smith, a highly skilled worker with a strong performance record, earns $50,000 and has family coverage through Jungle’s plan.
On Jan. 1, 2014, Jungle Corp. announces it is dropping its group health plan coverage and will instead pay the $2,000-per-full-time-employee penalty. On Jan. 2, Bob walks into HR and asks about receiving replacement compensation for the $12,000 that the business had been paying toward his family coverage.
Wanting to retain Bob in accordance with its strategy of maintaining market leadership with an experienced workforce, Jungle offers him another $12,000. But clever Bob points out that his share of Social Security and Medicare payroll (FICA) taxes will take a bite out of that $12,000, as will federal and state income taxes, so the HR manager agrees to make good on those amounts as well. Of course, the company will also have to pay its share of FICA taxes on Bob’s additional compensation. As a result, instead of paying $12,000 toward Bob’s family coverage using pre-tax dollars, Jungle Corp. now finds itself paying an additional:
Bob’s salary adjustment: $14,500
Employer’s share of FICA taxes: $1,109
Excise tax (penalty): $2,000
———————————-
Total: $17,609 (versus $12,000 currently)
Similar per-employee costs will be reflected across the company’s workforce. A move that seemed like a no-brainer, the consequences could make you look silly.
For More Information
Due to the complexity of the law in this area, and the absence of finalized guidance, employers are strongly advised to review their benefit plans to prepare for the changes ahead. Additional information regarding the penalty is featured on our Employer Shared Responsibilitypage.
In the coming months, Millennium Medical Solutions Inc will host seminars and will share information you’ll need to know as the countdown continues to October 1st. Please contact us for immediate information on how to implement these initiatives for your group-specific needs at info@medicalsolutionscorp.comor Call (855) 667-4621.
Is EmblemHealth (GHI formerly) leaving the small business market? Yes and no. The popular traditional EPO is slated to be chopped up for new business May 1 pending State approval. The remaining consumer driven health plans which have deductibles and coinsurance (a %) will stay in tact. With that Broker compensation commissions will be significantly cut as well. The family popular 2-tier rating is also phased out and new groups must submit everything clean within 30 days.
Our quote in todays Crains Health Pulse Crains EmblemHealth pulls small business plans Feb 2013 | Crain’s New York Businessreflects our deep concerns on market consolidations. “The unintended consequences of legislative changes has created a de facto single-payer system where Oxford is empowered to dictate to the New York market,” said Alex Miller, founder of Millennium Medical Solutions Corp. in Armonk, N.Y. To be fair Emblem has been steadily streamlining plans with in network only plan offerings and lowest HSA (Health Savings Account) family deductible starting out at $11,600. They are not the first insurer to do this as Empire Blue Crossissued a broader exit back in Nov 2011.
A healthy health insurance marketplace depends on competition as we all agree. From approximately 12 insurers 15 years ago we are today down to 2 active insurers Aetna and Oxford with Oxford claiming approx 2/3 of the small business marketplace. In NYS theMLR(Minimum Loss Ratios) are higher than any other state with additional state taxes. See NYS Surcharge on Health Insurance. The tight State Regulators allowing for razor thin margins while requiring insurers to maintain high reserves makes a burden many insurers are not excited. This resembles more of a utility company environment except ConEd realizes a 10% operating profit and do not have to have insurance reserves to prove solvency. Is there any surprise why there is no rush by outside insurers to compete here?
While on topic of ConEd we all know how customer care was in the aftermath of Hurricane Sandy. When was the last time an independent veteran consultant (not an ESCO) worked with you on your utility bill, servicing, negotiating, educating, and maximizing savings? Sure you can use a different supplier or ESCO but its still the local singular utility company that you are using. In comparison, same is happening in the health insurance field and the consequential exit of Health Insurance Brokers. Sadly, this is precisely the time when their training is most in demand and the most in need will be least likely to afford them.
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The AHIP infograph provides visually a great infograph describing how provider consolidation increases costs. According to Wall Street Journal Article this week –Four Key Questions for Health-Care Law “The proliferation of hospital mergers and hospitals’ appetite for buying doctors’ practices—in part to assure a steady stream of patients to fill hospital beds—could create local monopolies that raise prices without increasing efficiency. ‘Historically,’ says Deloitte’s Mr. Keckley, ‘hospital consolidation hasn’t reduced costs.’”
If we as a society ask our hospitals to behave as industries then size matters in achieving economies of scale. However, the important question we must then answer are we operating in a true free market economy when someone gets sick?
An interesting NYT article today “Slower Growth of Health Costs Eases U.S. Deficit” describes the good news that actual spending has been reduced by 15% or $200 Billion than projected 3 years ago. New data also show overall health care spending growth continuing at the lowest rate in decades for a fourth consecutive year.
Its any ones guess to the exact cause of this good news I will venture to say a good part of is the severe escalating out of pocket costs. With average office copays $50 and $200 for ER and many replacing these plans with high deductibles is it any wonder there is lower utilization? One might argue are poor health plans the cause for middle class leading to lower usage? To get an updated picture of todays NY Small Business rates once can get instant quote on our site and implement strategies in “How to Reduce My Health Care Costs“. In some instances people are turning to self insured Health Savings Accounts carrying deductibles as high as $5000 Individual and $10,000 Family.
In 2014 Individual Health Exchanges will offer a subsidized rate for lower income. For example, a $25,000 Individual filer would get approximate 80% subsidized rate and pay approx. $100/month. However salaries are not geo-sensitive and the average NY Middle Class Household will not see this subsidy. There are a number of questions outstanding such as the quality of the network. Also some Governors such as Christy Has Rejected Exchange is capable of running this Exchange version.
On the higher end according to CBO “tax expenditures disproportionately benefit the most well-off. As Figure 2 shows, the most affluent 20 percent of Americans receive 66 percent of all tax expenditure benefits (the richest 1 percent alone getting 24 percent of the benefits), while the middle 60 percent of households received just 31 percent of the benefits. In contrast, the middle 60 percent of households receive a proportionate share (58 percent) of the benefits of entitlement programs on the spending side of the budget (see Figure 3). The poorest fifth of households receive 32 percent of these benefits.”
But the greatest looming concern are costs. is behavior changing? Are people initiating preventive care more readily? Are they enrolled in wellness programs, managing chronic conditions, seeking Urgent Care vs. ER, using generics vs brands? Is technology playing a greater role such as mobile devices in managing care? Are modern medicine efficiencies such as avoiding testing redundancies and EMR helping?
No one argues that medical costs are a drag on the economy and are directly linked to our prosperity. “Slower cost growth would have ramifications far beyond the deficit. According to calculations by White House economists, slowing the annual growth rate of health care costs by 1.5 percentage points might increase economic output by 2 percent in 2020 and 8 percent in 2030. It might also lead to higher wages for workers and more room for productive investments in the budget.”
The hope is medical care is becoming more efficient. Whether or not the rate is subsidized it is still being paid for by someone. With this new finding it does offer hope but unless there are added incentives such a preventive medications under an Health Savings Account card covered without a deductible the concerns are Middle Class families will be reluctant to access care and we all end up paying for this.
You can self quoteon our site. Contact us at 1-855-667-4621 for more customized information.
Oh no its snowing!! For the lucky ones not going into work or school today you are likely hunkering down waiting for the 18 inch NY blizzard to pass. Unlike hibernating Bears, Mother Nature does not give you the gift of slowing down your metabolism.
How can snow and wellness go together? How to to prevent cabin fever and weight gain?
1 Water sport in winter. Water guns can be a fun winter activity in the snow as well. Simply mix some kool-aid or food coloring with some water and fill the guns with the liquid dye. Spray the snow with the water guns to create pictures and words. This is a fun project for multiple people, and it will prove that water guns are fun all year round.
2. Work out in front of TV. Just 15 minutes of sit-ups, jumping jacks, push-ups and squats can burn 200 calories.
3. Play video games. No not the sedentary kind you’re thinking. Hit the Wii or X-Box Kinect virtual motion games that get you going such as Dance Revolution, Kinect Sport, Punch Out, andWii Fit Plus.
4. Vitameatavegamin. Lucy Ricardo was onto something, using foods and vitamins play a role in mood.
Boost Vitamin D, the “sunshine vitamin”, with light therapy, 20-30 min of sunshine 3 -5 days a week or daily Vitamin D supplements.
Animal Protein – increasing depression fighting tryptophans found in lean meats such as poultry, eggs and wild seafood.
Selenium – low levels of selenium are also associated with an increased risk of depression. Serve Brazil Nuts at the next Football party.
5. Altruism – Volunteer for Meals for WheelsYes helping others chemically changes neurotransmitters associated with positive feelings, decreasing anxiety and worry, and making people feel stronger and more energetic.
1 cup milk
1 egg, well beaten
3/4 cup sugar
1/4 tsp. salt
clean snow
Beat egg; add milk, sugar and salt. Mix together well. Add enough snow to make it thick.
Shorter, darker days can cause winter blues but evidentially snow and ice cream bring smiles. Now if I can only get up to doing push-ups to Downtown Abbey.
