Better Benefits Less Cost

I am often approached by people who say that say they are excited that in 2014 healthcare reform will provide better plans for less money. I assume that by better plans they mean more benefits.

When I hear that I simply scratch my head. Insurance is a risk pool, which means that lots of people put in a little amount of money to cover large expenses for a few. As far as health insurance goes I hear that only about 8% are the heavy users that account for over 90% of the costs.

The Affordable Care Act has already set the Medical Loss Ratio (the amount insurance companies can use to administer policies) at 20% for individual and small group plans and 15% for large groups plans. With that in mind, premiums are continuing to rise. And when you hear about rebates (normally in other states) they are far less that the annual premium increase. 

Then if you increase the benefits that are being paid out by the insurance company, what will happen to premiums? They have to go up.

The solutions are getting more healthy (not using benefits) people into the system or reduce benefits paid (reduced services or reduced payments to providers). We will discuss getting the healthy to buy insurance and reducing payments in the future blogs.

Who’s going to pay for health reform’s taxes?

Who’s going to pay for health reform’s taxes?

Here the taxes, who pays them, and when it goes into effect.

Higher Income Individuals & Families
Who pays: About 2.5 million households — individuals making more than $200,000 per year, couples $250,000.
How much: A 0.9 percent Medicare tax on wages above those threshold amounts; an additional 3.8 percent tax on investment income.
When: 2013

Artificial-sun worshippers
Who pays: The 28 million people who visit tanning booths and beds each year — most of them women under 30, according to the Journal of the American Academy of Dermatology.
How much: A 10 percent tax on the price of tanning.
When: Took effect in 2010.

'Cadillacs' coverage
Who pays: Insurance companies or businesses that provide plans with premiums of more than $10,200 per person or $27,500 per family, not including dental or vision coverage.
How much: 40 percent excise tax on any amount of premium that exceeds the threshold.
When: 2018

Health industry
Who pays: Insurers, drug companies, medical device makers. And some of their customers.
How much: More than $165 billion over 10 years
When: Began last year for drug companies; starts in 2013 for device makers, 2014 for insurance companies.
Comment: How will this reduce costs for consumers?

Flexible Spending Accounts
Who pays: People who set aside tax-free savings to pay for health care.
How much: About $33 billion over 10 years
When: Contribution limit begins in 2013.
Comment: if you are big user of these accounts, you will have use after tax dollars for these treaments.

Taxpayers who take write-offs
Who pays: People with big medical or dental bills who itemize deductions.
How much: Taxpayers have to spend more than 7.5 percent of their adjusted gross income on medical care to qualify for a deduction. The threshold will rise to 10 percent. So a household with income of $50,000 would have to spend $5,000 on health care before deducting amounts above that.
When: 2013 (delayed until 2017 for taxpayers age 65 or over)
Comment: Like the Flexible Spending Account reduction, people to use their plans (the sick) are unfortunately losing tax breaks. Why?

Information was obtained from the following article: http://Here the taxes, who pays them, and when it goes into effect. ?

Healthcare Reform Timeline

2010

• No Lifetime or Annual Limits – No lifetime or annual maximum limits on essential benefits.
• No Preexisting restriction for children – No children under 19 can be denied coverage for preexisting conditions.
• Tax Credits for Small Employers – Employers with fewer than 25 employees and average annual wages of less than $50,000 may be able to claim a tax credit on 2011 tax return.
• Preventive Service Coverage – Plans must cover preventive services without members sharing costs.
• Nondiscrimination Testing – Employer plans are barred from favoring highly compensated employees.
• Reinsurance for employers with retirees – Program for employers providing insurance to retirees over 55 not eligible for Medicare.

2011

• New Restriction in HSA, FSA and MSA Fund Use – Over the counter drugs can no longer be reimbursed and tax for non-medical is 20%.
• Wellness Grants for Small Businesses – Employers with fewer than 100 employees can tap into over $200 million in federal grants.
• W-2 Reporting – Employee’s W-2 must report health coverage that is excluded from employees’ gross income.
• Community Living Assistance – Assistance for those with limitation encouraging employers to auto enroll employees in program.

2013

• Administration Simplification – Rules established making payments, enrollment claims and authorization process simpler.
• Medicare Tax Increase - Part A tax rate on wages goes up from 1.45% to 2.3% for certain individuals.
• Employers Must Inform Employees of Health Options – Employers must provide info on employer plans, health exchanges, and subsides.

2014

• Individual Mandate – Everyone must have insurance or pay a penalty.
• Employer Mandate – Employers with more than 50 employees must provide coverage pay penalty if any employee receives a subsidy.
• Large Employers Auto Enrollment – employers with more than 200 full-time employees that offer coverage must auto enroll employees. Employees can not opt out.
• Health Insurance Exchanges – State must have exchanges up and running by 2014 or the federal government set it up.
• Wellness Incentives - Employers can offer rewards of up to 30-50% of premiums to employees who take part in wellness and meet health standards.
• No Preexisting Condition Exclusions – Coverage can not be denied for those with preexisting conditions.
• Comprehensive Coverage Requirement – Individual and small group plans must include essential benefits.
• Limits on Deductibles and Copayments – Group health plans deductibles are limited to amounts allowed for HSA plans.
• Ban on All Annual Limits – Plans may no longer impose any annual benefits limits.

2018

• Cadillac Plan Excise Tax – Tax on employer plans valued at over $10,200 for individuals and $27,500 for families.

Information provided by the Word & Brown Companies

Healthcare Tax Credits

Here is some of the basics of the healthcare credits available for small businesses (see linked article for more information http://www.lifeandhealthinsurancenews.com/News/2010/5/Pages/IRS-Releases-Small-Group-Tax-Credit-Examples.aspx?nul ):

For tax years 2010 to 2013, the maximum credit is 35% of premiums paid by eligible small business employers and 25% of premiums paid by eligible employers that are tax-exempt organizations,” officials write in a summary of the notice.

Employers with 10 or fewer FTE employees that pay annual average wages of $25,000 or less can qualify for the maximum credit.

Employers with 10 to 25 FTE employees that pay annual wages of $50,000 or less can qualify for a smaller tax credit.

ANTHEM BLUE CROSS RESPONDS TO QUESTIONS ON RATE ADJUSTMENTS

Here is Anthem Blue Cross response to their recently announced rate increases.

Anthem Blue Cross - Feb. 9: We understand and strongly share our members’ concerns over the rising cost of health care services and the corresponding adverse impact on insurance premiums. Unfortunately, the individual market premiums are merely the symptoms of a larger underlying problem in California’s individual market rising health care costs.

The increasing demand for medical services, the use of new prescription drugs, and demand for advanced technologies are driving up the cost of health care at an unprecedented rate. Anthem is investing in many initiatives to reduce the cost of care, promoting wellness and preventive care for our members and communities, as well as, working with providers to encourage high-quality, evidence-based care, which costs less over time.

In addition, our health plans offer members significant discounts through access to a large network of health care providers across the country. These efforts, however, cannot completely offset all the increases linked to the cost of care. The pricing structure of our individual products is a reflection of the medical risks and costs associated with this market. As the cost of care increases, premiums rise accordingly.

Anthem regularly evaluates its rate structure to make sure that the cost of claims incurred is offset by the premiums collected, and that we anticipate the cost of future, expected claims. At times, based on the cost of covering benefits, rates may be either raised or lowered. To assist members who are looking to explore alternative plan options, Anthem offers a team of licensed Health Plan Advisors. These advisors are dedicated to assisting members in finding solutions to meet the balance between their coverage needs and their budget, especially in these challenging economic times.

Regarding how often an adjustment is made to a member’s rates:

Anthem complies with all state regulations regarding rate increases and depending on the plan, we are required to provide members with a 30 day notice of any rate adjustment.

It is important to note that premiums are expensive because the underlying health care costs are expensive. Anthem offers a variety of health benefit plans, and we are dedicated to working with our members to find health coverage plans that are the most appropriate, and affordable for their needs.

We are more than happy to take a look at a member’s health benefit plan and review possible options to more closely meet the member’s current needs. This may include moving to a lower priced plan.

We are determined to support quality care for our members, we share their concerns about the upward rise in premiums and must adjust our rates as needed to cover the costs and risks associated with providing quality health care for all of our individual members.

Congress Extends COBRA Subsidy Program

Cobra subsidy program has been extended forinvoluntarily terminated workers. Please see article for details.

http://www.lifeandhealthinsurancenews.com/News/2009/12/Pages/Congress-Extends-COBRA-Subsidy-Program.aspx

Why do we vote for our representatives?

The link below for a youtube video makes me scratch my head. Our Congressmen and Congresswomen are suppose to have the responsibility to make wise decision for the voter of their districts but when it on Congressmen asked For a procedural effort that requires Senators to state that they have read and understand a bill that they will vote on, he is shot down.

Hummmm, I guess it is too much to ask for our Senators to read and try to understand 2000 plus page bill that will effect every America's health. I would like to ask a simply question, WHY?

The House did the same thing, they put together a 2000 + page bill and amendments and passed it less than a week. Again WHY?

Remember they are rushing to pass these bill that will not go into effect until 2014, WHY?

http://www.youtube.com/watch?v=Mz4sWdFxlmg&feature=player_embedded