A Bit of News About "Covered California"

California has moved ahead in creating an exchange and named it "Covered California". It has received nearly $1.5 billion in Federal and Private Grant funding to have it operational by October 1, 2013 for a January 1, 2014 effective date. It will primarily focus on individuals but will also offer plans for small employer groups. One of the key elements of the exchange will be to administer a Federal Health Insurance Premium Subsidy for individuals and a Federal Health Insurance Tax Credit for small businesses.

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Five Answers To Your Health Care Reform Questions

From: Real Health Care Reform

When talking about health care reform, there are still areas about the law that are filled with uncertainties.  Below are the five commonly asked questions about the Affordable Care Act: 

1.    What is the individual mandate?

The individual mandate by the health care reform law requires every American to have a health insurance plan in place by 2014 or pay a penalty.  The annual penalty is $695 or up to 2.5 percent of your income (for 2016 and beyond).

2.    Could I have a waiting period before employer coverage is available?

Companies subject to the employer mandate of the health care reform law (those with 50 or more full-time employees) will have a grace period of 90 days before offering new hires minimum essential coverage without incurring any penalties starting January 2014. On day 91 onwards, failure to offer affordable and adequate employer-sponsored healthcare coverage would mean paying a per person penalty.

3.    What if employers offer coverage that’s unaffordable? 

Employers with 50 or more full-time employees offering unaffordable health care coverage to their workers with at least one full-time employee getting health insurance via the exchange would still have to pay a penalty.  Employers will be fined an annual penalty of $3,000 per full-time employee (the first 30 workers will be excluded).

4.    How does household income determine if a plan is affordable?

Coverage is said to be unaffordable if the employee have to contribute more than 9.5 percent of their family income to employer coverage.  According to the IRS, an employee’s household income will be verified using your tax filings.  For individuals with income levels below 400 percent of the federal poverty guidelines, you’re qualified to get federal premium subsidies in the form of tax credits or free choice voucher.  Under the law, the health insurance exchange will be ready by January 1, 2014.

5.    What is a free choice voucher?

If your employer offers adequate coverage but is not affordable, you can request a free choice voucher from your employer to get health insurance coverage through the state-based health insurance exchange. The amount of the voucher is equal to the amount contributed by your employer for an individual or family plan. The voucher would still be tax deductible for employers.  Take note that you can choose either the premium tax credit available via the exchange or get the free choice voucher from your employer.  You cannot get both at the same time.

The Employer and the Affordable Care Act

What are the Employer Shared Responsibility provisions?


Starting in 2014, employers employing at least a certain number of employees (generally 50 full-time employees and full-time equivalents, explained more fully below) will be subject to the Employer Shared Responsibility provisions under section 4980H of the Internal Revenue Code (added to the Code by the Affordable Care Act). Under these provisions, if these employers do not offer affordable health coverage that provides a minimum level of coverage to their full-time employees, they may be subject to an Employer Shared Responsibility payment if at least one of their full-time employees receives a premium tax credit for purchasing individual coverage on one of the new Affordable Insurance Exchanges. 

To be subject to these Employer Shared Responsibility provisions, an employer must have at least 50 full-time employees or a combination of full-time and part-time employees that is equivalent to at least 50 full-time employees (for example, 100 half-time employees equals 50 full-time employees). As defined by the statute, a full-time employee is an individual employed on average at least 30 hours per week (so half-time would be 15 hours per week).

Too Bad That My Prediction is Coming True.

Health Insurance Premiums Rise Nationwide. NBC Nightly News (1/8, story 7, 2:20, Williams) reported, "Now to an unwelcome surprise for millions of Americans this new year, health insurance premiums that are causing sticker shock, double-digit increases in some places, suddenly a whole lot of families are watching this happen in the era of the so-called Affordable Care Act, better known as Obamacare." NBC (Myers) added, "Some insurance companies in California including Anthem Blue Cross, Aetna and Blue Shield of California are proposing rate increases of 20% or more for some individual customers. ... And it's not just California. In Florida and Ohio, insurers have instituted double-digit rate increases. New York, which unlike California has power to roll back rates, has generally held increases below 10%. Overall, medical costs are projected to rise only 7.5% this year, so some experts are puzzled by the double-digit premium increases, and question whether it has something to do with the Obamacare law, which will bring big changes next year."

Your Business and Health Care Reform

Does Your Business Face Health Care Reform Penalties?
From: Real Health Care Reform

1. How do you know if your business is subject to the employer mandate?

The threshold for compliance can be determined with this formula, which you calculate on a monthly basis:

Take the number of employees working full-time (those who average more than 30 hours a week for the month) and add that to the number of hours part-time employees worked during the month plus 120 hours. That’s how to figure the full-time equivalence or FTE for employees who don’t work at least 30 hours a week.

2. How much will it cost to meet the new coverage requirements?

That can differ depending on your operation, as well as how minimum coverage is defined through the regulatory process.

3. What is the premium tax credit?

There is a federal subsidy to be used by those earning an amount up to 400% of the federal poverty level to help them afford coverage. The tax credit is available through the state health insurance exchanges, which play a vital role in certifying whether people are eligible for the premium tax credit.

4. Do all small businesses have to provide coverage?

No, only some do.  Employers who have less than 50 full-time-equivalent employees cannot be subjected to the employer tax penalties.

5. Does the new law require part-time workers to be covered?

No, not necessarily. Part-time employees (those working an average of less than 30 hours per week) are counted only to determine whether a small business owner meets the 50 full-time equivalent threshold that’s required under the law. The employer responsibility section of the law does not require employers to provide health care coverage to part-time employees, or to pay health care penalties.

6. Who will have to pay a penalty for not providing health care coverage?

That will fall on employers whose business meets that 50 full-time equivalent standard. Those employers may opt not to provide health care coverage to full-time employees, but it could result in a penalty. If at least one employee uses a premium tax credit to get coverage at a state exchange, the employer will be subject to pay a penalty of $2,000 per full-time employee per year (or $167 per month).

Small business owners may exclude the first 30 full-time employees when calculating this penalty. For example, let’s say an employer has 60 full-time employees and does not offer health insurance coverage, but one or more employees use a premium tax credit on the state exchange.  That employer could face a yearly penalty of $60,000, assuming a constant workforce.  That would be figured as 60 total full-time employees minus the 30 full-time employees excluded from the calculation.  The result would be 30 employee times the $2,000 penalty giving a $60,000 penalty.  And, it should be noted that the penalty is computed and assessed on a monthly basis.

7. What type of health coverage would need to be offered to full-time employees?

Business owners who employ more than the 50 full-time equivalent of employees need to provide affordable “minimum essential coverage” with at least a 60-percent actuarial value in order to meet what the law requires. “Minimum essential coverage,” however, is still being defined through the regulatory process.



Health Care Reform and Your Business

How Will Health Care Reform Affect My Business in 2013?

From:  Real Health Care Reform


2013 is here!  How will the mandates of health care reform affect your business, and what do you need to change about the way you provide health care benefits? Here are answers to some of the most commonly asked questions to help you decide.

1. What’s my deadline for complying with health care reform?

For businesses with 50 or more full-time employees, you have until 2014 to provide “adequate” and “affordable” health care coverage or face penalties. If your business employees less than 50 full-time workers, you are exempt from penalties, but you are still required to carry personal health insurance.

2. Will I be required to provide health care benefits to all employees?

You are required to provide affordable “minimum essential coverage” to workers if you have 50 or more employees working full time beginning in 2014. Failure to do so would mean paying a $2,000 “per person” penalty (although the first 30 workers are not included in that).

For part-time employees, you are not required to provide health care coverage, but remember there is a full-time equivalent of part-time workers.

3. How do I figure the full-time equivalent?

To get the FTE, determine the number of employees who work 40 or more hours weekly.  Then, add up wages paid to part-time employees, and divide the total by 2,080. The FTE is equal to the number of full-time employees and full-time equivalent part-time employees, and the total is rounded to the lowest whole.

4. Is my business eligible for small business tax credits, and when do those start?

Certain small businesses with up to 25 full-time-equivalent (FTE) workers that contribute to employees’ health insurance are eligible to get tax credits.  That began January 1, 2010. To learn more, you can visit the IRS website http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers.

5. Are health benefit costs reported on W-2 forms taxable?

Health benefit costs reported on the W-2 are not taxable.

6. Are my two companies each considered as separate employers?

Not necessarily. Check with your tax advisor if you are defined as a single employer under the “Common Control” clause found in the tax code [IRC Sections 414 (b), (c), (m), (o)]. If you’re considered as a single employer, all your full-time employees in both companies will be combined together. If the number totals 50 or more, you will have to provide affordable coverage with minimum essential benefits.

Health Care Reform News for those Under 30.

Under 30?  Here's What You Need To Know On Health Care Reform

From: Real Health Care Reform

The health care reform law, according to the Congressional Budget Office (CBO), tends to increase health insurance premiums for people who are young and healthy. According to the CBO, health insurance premiums will rise ten to thirteen percent, unless you qualify for the subsidy, while you’re still shy of 30.  I predict that for most, it will unfortunately be much ore than that.

The CBO estimates about 57 percent of customers will receive federal tax credits that will cover almost two-thirds of their total premiums. This could reduce costs below what is being charged for such policies now, depending on your income level. The law has set up four levels of health benefits: bronze, silver, gold and platinum. Tax credits are intended to cap health insurance premiums at between two percent and 9.5 percent of your income, based on the cost of the silver option.

New Special Rules For Young Adults

If you’re under 30, you have an option that’s not available to older people under Obamacare. High-deductible plans that aren’t generally available will continue to be for young adults. That’s true, in part, because it’s anticipated that most of them will require less health care than older individuals who develop chronic, expensive health problems. And, since high deductibles equate to lower premiums, the writers of this law are hoping this will convince healthy young people to invest in coverage.

Even though the state health insurance exchanges, which will start operation in October, will be offering catastrophic health plans with minimal coverage for persons under 30, tax credits won’t be available to offset the price of premiums. Catastrophic coverage prices are typically on the low end, anyway.

Existing Rules That Remain In Force

Like all other plans, these policies will completely cover recommended preventive health care services even when the deductible has not been met if: (1) you go to an in-network doctor, and (2) the services are billed by the provider as preventive, instead of diagnostic.

Once someone reaches age 30, they will be required to purchase a more expensive, lower deductible plan.



Important News on Your Health Insurance Premiums!

Will Your Health Insurance Premiums Be Higher in 2014?

From:  Real Health Care Reform

Today, you have access to plans catastrophic plans with high deductibles, but many such plans will disappear in 2014. Fortunately, catastrophic plans with more limited benefits will still be available for people under age 30. According to a senior fellow at the Urban Institute, Linda Blumberg, adding more benefits is tantamount to premium hikes. Premiums will also increase on younger people, because they will be subsidizing older insureds.  Young men will also be subsidizing the premiums for women, so they can expect the largest rate increases.

The health care reform law also mandated a lot of added health care benefits that are responsible for some of the increases in health insurance premiums. The removal of underwriting starting in 2014 will also result in much higher claims, and are expected to further drive costs up.

And, that’s not all that’s changing in 2014.  Preventive care services are already covered with no out-of-pocket costs, but people are treated quite differently once they get sick. If they have to buy their own policy on the individual market, applicants with pre-existing conditions may find their application is denied.  That’ll change as of 2014 and they’ll have guaranteed acceptance then. But, insurance companies will increase premiums in
order to cover added claims.

For those who find it impossible to pay for health insurance, the Affordable Care Act provides federal subsidies. Tax credits will be provided to individuals with incomes below 400 percent of the federal poverty level if they get health care coverage via a state exchange. According to the Department of Health and Human Services, compared to the cost of health insurance under the current rules, the tax credits could help a family of four with an income of $33,525 save $14,900.

How to Save on Health Insurance Right Now

Of course, with 2013 just rolling into view, you have opportunities to save on your health insurance right now.  We offer our Annual Comprehensive Policy Review to see if a plan is available that has either a lower premium or more comprehensive coverage than your current plan.  This is a free service and it comes with no obligation. December is one of the best times to compare health insurance.  That’s because companies hand out rate hikes for Jan. 1.  If you find a plan with 2012 rates this month, you can probably avoid switching to higher premiums for a whole year.

If you qualify, we can also help you establish a Health Reimbursement Arrangement.  This can enable married self-employed people to legally run all their medical and insurance expenses through the business, saving potentially thousands in taxes every year.


Exciting News for Baby Boomers

New Devices Help Baby Boomers Stay In Their Homes.

The Detroit Free Press (12/26, Erb) reports, "From talking pill dispensers to tracking devices tucked inside tennis shoes to digital medical scanners that can transmit vital signs to the doctor, today's gadgets help seniors stay in their homes and can give relief to loved ones and caregivers." Now, "the new gadgets - once available only to hospitals and the wealthiest consumers - are accessible now to more modest-income homes."

US Mental Healthcare Examined

Newtown Tragedy Provides Impetus To Examine US Mental Healthcare.


NBC Nightly News (12/17, story 5, 1:25, Williams) reported, "This tragedy in Newtown, Connecticut has already ignited a national conversation about guns, as we have just seen." However, mental illness has been a "component...in all the serious gun crimes we have covered. One in 17 Americans lives with a serious mental illness, that's according to the government, and their symptoms range in severity, of course. But fewer than a third of them receive treatment." Chief medical editor Nancy Snyderman, MD, explained, "Less than 10% of our healthcare dollars are spent on mental healthcare." While well-to-do people can pay for care and the poor may get some care through Medicaid, other people fall through the cracks.

Lawmakers Call For Conversation On Mental Health Issues. CQ    (12/18, Attias, Subscription Publication) reports, "Lawmakers in both chambers are calling for Congress to start a conversation about mental health issues in the wake of last week's deadly shooting at a Connecticut elementary school, with one goal of ensuring adequate funding for services for those who need treatment." Even though "much of the discussion since last week's shooting has focused on gun policy, several members are also emphasizing the role mental illness has played in many national tragedies." But, "beyond a broader policy push, the shooting in Connecticut could also make it more difficult for Congress to allow spending reductions for mental health services as part of the fiscal cliff, deficit reduction efforts or the appropriations process next year."

Businesses and Health Care Reform

One Thing Health Care Reform Did Not Change For Your Business
From: Real Health Care Reform

Under federal regulations, businesses are prohibited from directly paying for employees’ individual health insurance premiums and medical expenses without the use of an HRA (Health Reimbursement Arrangement), or another tax-free arrangement that is IRS/HIPAA/ERISA qualified.

The two main reasons for this are that 1) Such payments make it would look as if the company is endorsing an individual health insurance policy, and 2) These direct payments would be taxable income to employees.

By paying directly for workers’ individual health plans, according to federal law, a company is treating the policy as if it’s part of an employer-sponsored plan that is regulated by ERISA (Employee Retirement Income Security Act).  The problem here is that your company can be out of compliance with the act because many policies fail to meet the minimum ERISA requirements for group plans.

Your company can also be in violation of HIPAA-privacy requirements because employers are not permitted access to their staff’s HIPAA-protected medical cost details.  That includes the medical expenses covered by health insurance.

The federal government has developed guidance explaining how companies can avoid ERISA and HIPAA regulation violations.  And, to ensure your company does, set up an HRA that is HIPAA and ERISA compliant.  With an HRA, your company can legitimately reimburse employees for medical costs and for health insurance premiums.

Even though, this is the very last month of the year, businesses still have until December 31 to set up an HRA for 2012. This can allow the business to reimburse for the entire year’s health insurance expenses.  Small business owners can see how to establish an HRA, which may help cut health insurance expenses in half, at 105 HRA Plans for Small Business Owners. An HRA is also an option for certain sole proprietors, who can learn more about this at 105 HRA Plans For The Self-employed.

Once established, very minimal administration is required to maintain an HRA.  And, employers have a lot of flexibility in how they wish to structure arrangements.  Employees can also be easily added or removed from HRAs, and because these are reimbursement plans, little upfront funding is