by Admin. | Mar 4, 2013 | Health Care Reform, Health Exchanges, Individual Exchanges, PPACA, SHOP Exchanges, Small Business Group Health, State Exchanges, Tax
Pay or Pay Employer Guide
Pay or Play Employer Guide
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 clicking here.
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 Responsibility page.
Ask us about our Health Care Reform Compliance Audit Assessments. See Health Care Reform Timeline and Preparing for Reform by UHC.
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.
by Admin. | Feb 27, 2013 | Health Care Reform, HSA, Millennium Medical Solutions Corp, Small Business Group Health, Tax, Wellness
Is Emblem Leaving?
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 Business reflects 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 Cross issued 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 the MLR (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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by Admin. | Feb 12, 2013 | Health Care Reform, Health Exchanges, Individual Exchanges, individual health insurance, Small Business Group Health
Poor health plan for middle class?
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 quote on our site. Contact us at 1-855-667-4621 for more customized information.
by Admin. | Nov 12, 2012 | Health Care Reform, Health Exchanges, Individual Exchanges, PPACA, SHOP Exchanges, Small Business Group Health, State Exchanges
Crains Brokers’ Commissions Face Uncertain Future. A quick comment on our quote in Crains “Crains Brokers’ Commissions Face Uncertain Future” today. Insurers are indeed cutting back on services resulting in cost containement measures such as layoffs, outsourcing and significant broker commissions cuts.
A significant negative development is the NYS decision to not allow licensed Agents/Brokers in the Individual Exchange. Many States such as Massachusettes, the inspiration for Health Care Reform, use a Connector which is an Exchange or an independent state agency that helps Massachusetts residents find health insurance coverage and avoid tax penalties. Instead NYS will allow Agents/Brokers to only work in the Commercial Exchange known as SHOP. HealthPass is a good pre-cursor of the SHOP Exchange offering Small Businesses a Defined Contribution Health Plan of full options form Health Insurance, Dental, Vision to Term Life Insurance and Disability.
The Individual Exchange will work with an “Assitor” or “Navigator”. In NYS Government and Non-Profit Agencies will comprise the “Navigator” which will only be allowed to operate in the Individual Exchange. By design an income subsidy will only pass through this Individual Exchange an not on the SHOP Exchange. Example: a $50,000 Family Household of 4 can get approximately 80% credited.
The Federal Gov has already spent $2.2 Billion on State Exchanges. And this figures does not include remaining States as there are only 19 States working on an Exchange for 2014. The Exchanges will be built up for 2 years and then must be fully independent by 2016. If 88% of small groups coverage purchased by Brokers acc. to Bostons Wakely Report in research study- Role of Producers and Other Third Party Assisters in New York’s Individual and SHOP Exchanges the distribution infrastructure is already there. Access to care is not the difficulty in finding a plan its the very cost of the plan! Why then does NYS decide to spend on building up new infrastructures? AgentsBrokers can easily outreach and council to uninsured as well. In fact many small businesses such as construction, consulting services and dining have many uninsured that an Agent/Broker already has a relationship with.
Despite all this and the rapid changes in reshaping health care we remain optimistic and look forward to taking on a greater role in health care reform.
With more choice, our groups and their employees will need more direction, allowing brokers to take on more of a consultative role. Healthcare plans are not a simple purchase and one plan doesn’t fit all. By delivering the latest cutting-edge benefits technologies, continued consumer focus approach and leveraging our long time relationships with Benefits/HR/Payroll partners our role will be pivotal in being part of the solution.
Pulse Nov 2012 Quote MMS
by Admin. | Aug 31, 2012 | Health Care Reform, MEDICARE, Obamacare, Small Business Group Health, Tax
4 Questions Compare Ryan and Obama on Medicare
Published 2 hours ago by HealthCareIT News,
It may come as a surprise that President Barack Obama and GOP vice presidential nominee Paul Ryan are pushing the same target rate for controlling federal spending on Medicare. Each would set it at half a percentage point higher than the growth rate of the economy the gross domestic product after a phase-in period.
READ FULL ARTICLE
Youtube Video-Pros & Cons of the Health Care Reform Bill
Medicare Obama Romney comparsion chart
by Admin. | Mar 12, 2012 | Health Care Reform, healthcare, Hospitals, PPACA, Small Business Group Health
Out of Control Out of Network Charges
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 as pre-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.
Insurers such as Aetna are taking action – with lawsuits throughout the country such as Aetna sues 9 N.J. doctors for “unconscionable” fees. Another Aetna lawsuit is discussed extensively in a law blog: In New Lawsuit, Health Insurers Allege Fraud and Kickbacks Against Out-of-Network Providers Who Forgive Patients’ Financial Responsibility.
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″
