Lehigh Valley Employee Benefits Journal

Health Care Reform: One Year Anniversary

2011-05-24T11:39:00.001-04:00

Well, we've past the one year mark of the landmark passage of sweeping health care reform legislation know as the Patient Protection and Affordable Care Act and I'm not sure a whole lot has changed since. Most of the clients that I visit with are still experiencing double digit renewal increases and they're not certain about what the future holds. Indeed, most of the more costly aspects of PPACA have already been implemented last fall and all of the carriers have to comply with the provisions that effect their plans like no annual limits on most procedures, no lifetime maximums, no co-pay for routine preventative care and covering dependents up to age 26. All of these measures had the impact of increasing the cost to the carriers and then, in turn, to you the consumer. The only aspects left to implement are the requirements on the states such as health exchanges and expanding the Medicaid eligibility roles. That's exactly where this legislation becomes a bit more dicey and uncertain.

Most states are having a difficult time meeting their current funding obligations, let alone, finding the cash to implement these massive new government bureaucracies. Which is why some 21 states have filed lawsuits in federal court challenging the constitutionality of the legislation. All this fosters more uncertainty about the state of our health care industry then ever before.

I don't think that repealing PPACA is likely but I do hope that many in Congress, as well as, the President will take a "drop back and punt" strategy with the remaining aspects of this legislation yet to be implemented. There are some common sense reforms that are needed and could be addressed rather quickly but PPACA was painted with such a broad brush that it's hard to see that happening anytime soon. Email me your thoughts at bknauss@employeemployersolutions.com or visit me on the web at www.employeemployersolutions.com

Affordable Care Act: Non-discrimination Provisions Applicable to Insured Group Health Plans

2011-05-24T11:33:00.001-04:00

The days of being able to carve out a certain employee population group to provide richer benefits are numbered and in fact will carry some heavy fines and penalties for companies who engage in such practices. The additon of Section 105(h) ammends the internal revenue code which provided guidance to self-insured health plans to prohibit discrimination treatment to highly compensated employees in the past to now include all fully insured plans as well. A summary of the rules are as follows:

Among the many health insurance and benefits law changes made by the Patient Protection and

Affordable Care Act (PPACA, P.L. 111‐148) is a new requirement for fully insured health/medical plans to comply with nondiscrimination benefit rules that previously only applied to self‐funded employer plans.Effective for plan years beginning on or after September 23, 2010, fully insured group health plans now must comply with the nondiscrimination requirements for self‐funded plans, including rules that the plan does not discriminate in favor of highly compensated individuals as to eligibility to participate. In addition, the benefits provided under the plan may not discriminate in favor of participants who are highly compensated individuals. This does NOT apply to “grandfathered” health plans.

Though compliance regulations are expected from the Department of Labor, IRS and other federal agencies, rules similar to those for self‐funded plans are expected to be applied to insured group health plans, including rules for eligibility, benefits, and controlled groups. Unlike discriminatory self‐insured plans, for which highly compensated employees get taxed, the PPACA does not tax highly compensated employees covered by discriminatory fully‐insured plans. It appears likely that the tax consequence of any violations would be similar to the HIPAA group health plan $100/day excise tax, not taxation of benefits. The PPACA, Sec. 1001 as amended by Sec. 10101 (new Public Health Service Act Sec. 2716) provides that a group health plan shall satisfy the requirements of section 105(h)(2) of the Internal Revenue Code (relating to prohibition on discrimination in favor of highly compensated individuals). Rules similar to the rules contained in paragraphs (3), (4), and (8) of section 105(h) of the Code shall apply, and the term “highly compensated individual” has the meaning given such term by section 105(h)(5). Non‐Discrimination Rules and IRC Sec. 105(h) for Self‐Insured Plans Internal Revenue Code (IRC) Sec. 105 and Sec. 106 permit employers to offer certain health benefits on a tax‐free basis. However, these rules can be different for highly compensated employees (HCEs) if the health plan is self‐insured and eligibility for benefits or benefits payable to the HCE is discriminatory. For purposes of IRC Sec. 105(h), an HCE (determined in the plan year for which the reimbursement was made) is:

• One of the five highest‐paid officers;

• A shareholder owning (actually or constructively) more than 10 percent of the company’s stock;

• Among the highest paid 25 percent of all employees.

These requirements are not mutually exclusive. The five highest paid officers may also be among the highest paid 25% of all employees. However, if one of the top five officers is not in that pay range, that officer still needs to be included in the highly compensated individual category. IRC Sec. 105(h) applies to all employment‐based health plans (medical, dental, and vision) in which the risk has not been shifted to an insurance company, including administrative services only (ASO) and cost‐plus arrangements, possibly minimum premium plans, and medical reimbursement plans provided through an IRC Sec. 125 plan (collectively referred to as “self‐insured health plans”). 1 Sec. 1001 of the PPACA as amended by Sec. 10101; new Sec. 2716 of the Public Health Service Act If such a self‐insured health plan discriminates in favor of HCEs, the affected HCEs must include some or all of the value of the benefits received in their taxable income. This imputed income is subject to federal income taxes (but not to Social Security or Medicare taxes), and state tax liability if such liability is calculated pursuant to federal rules.

Eligibility Test—For a plan to be considered nondiscriminatory with respect to eligibility to participate, it must pass one of the three coverage tests:

• Seventy percent of all employees benefit under the plan;

• The plan benefits 80 percent of eligible employees and 70 percent of all employees are eligible;

• The plan benefits a nondiscriminatory classification of employees.

The IRS regulations indicate that the plan must provide the same benefits for both highly compensated and non‐highly compensated employees. If a plan provides different benefits to different groups of employees (e.g., differences in waiting periods), each benefit structure is treated as a separate plan for purposes of the eligibility test described above.

A self‐insured health plan discriminates as to benefits unless all benefits provided for participants who are HCEs are also provided to all other participants. All benefits for dependents of HCEs must also be available on the same basis for the dependents of all other employees. The self‐insured health plan will also be considered discriminatory as to benefits if it covers HCEs and the type or amount of benefits subject to reimbursement is offered in proportion to compensation. The nondiscrimination test is applied to the benefits subject to reimbursement under the medical program and not to the actual payments or claims made. Further, a self‐insured plan is not considered discriminatory just because HCEs utilize benefits to a greater extent than other participants.

If there are optional benefits available (e.g., vision and dental), these benefits will also be considered nondiscriminatory if all eligible employees can elect any of the benefits and either there is no required premium by the employee or the premium charged is the same for all employees.

Certain employees may be excluded from the eligibility tests, including:

• Those who have less than three years of service at the beginning of the plan year;

• Those who are younger than age 25 at the beginning of the plan year;

• Part‐time or seasonal employees;

• Those who are covered under a collective bargaining agreement;

• Nonresident aliens who receive no income from a U.S. source.

In addition to the eligibility rules, all benefits provided to highly compensated employees must be

provided to all other participants.

Since the discrimination rules for self‐funded plans were issued in 1980, employers have adopted fully insured plans to provide executives and key employees with tax‐free reimbursements for out‐of‐pocket medical, dental, and vision expenses. The new PPACA prohibitions against discrimination in fully insured plans will compel employers to consider other methods in compensating higher earning employees.

Year-End Health Plan Renewals: Are You Ready?

2010-10-13T20:21:00.000-04:00

It's hard to be in the company of any small business owner today and not have the discussion of health insurance crop up. Much of that discussion seems to be centered around a high level view of the Patient Protection and Affordability Care Act, enacted into law earlier this year. Many of those major provisions went into effect on September 23rd and missed the radar screen of many small business owners in the Lehigh Valley. Many of those provisions are part of the consumer protections that the President proudly touts as its major accomplishments. At the pinnacle of the problem, in my view, is that so many employers are just putting their head in the sand and taking the posture that we'll wait until 2014 when the full breadth of this legislation takes effect. That will be too late!

Many insurance carriers estimate that the direct cost of this initial compliance with PPACA with be around 3 to 4 percent increase in premiums - that's aside from any natural increase that will occur from medical claims throughout the year. After many discussions with average business owners about what there level of knowledge is regarding this huge legislation, the response is surprisingly very little. Employers don't have the luxury of just waiting until 2014 to see how this will impact them. They need to act now in light of all the penalties and new taxes that will result for non-compliance. My strong recommendation is to make sure that you're with a health broker that you're confident in there ability to help you wade through the maze of complexity. The role of a trusted health insurance advisor will be more important than ever. Here are some practical tips to help you better prepare for your health insurance renewal:

Give yourself plenty of time before your actual effective date. Don't let your broker dictate that pace. Your insurance carrier may take a little longer this year to get out renewal rates because they've been busy complying with PPACA but it's still wise to start discussion about potential tweaks to your plan or identifying other carriers that might suite your needs better.
Your plans deductible is the only real way to make significant impact on your monthly premiums so start discussions about what would be palatable for your employees.
With the prospect of raising deductibles, discuss with your broker what suite of supplemental/voluntary benefits would best fill the gaps left by larger deductibles.
Start looking for a broker and an insurance carrier that has a robust health and wellness component to their plans. The unhealthy lifestyles of your employees will continue to be the largest contributing factor to escalating health premiums so you need to take a proactive approach to stem that tide.
Discuss implementing a defined contribution plan versus a defined benefit plan. So, for example, the single rate on your plan is $250 per month. If you establish a policy going forward that you will hold that contribution steady at $250, your cost becomes a fixed instead of a variable. Now, having said that, you do have to be careful of one possible pitfall. Most group health plans require the employer to pay a minimum of 60% and up towards the single rate. So, you have to monitor going forward that you don't violate that provision.
Depending on the size of your group, consider researching self-insured plans for both medical and dental. Many of the new health reform compliance provisions don't apply to self-insured plans.

I trust that this information has been helpful. For these tips and more, register to attend my free seminar by clicking http://tenbenefitstrategies.eventbrite.com If you only see your broker once a year around renewal time and there's no strategic planning discussions about the future and direction of your companies employee benefits then maybe it's time to look into someone else. I'd be glad to speak with you by contacting me at bknauss@employeemployersolutions.com visit my website at www.employeemployersolutions.com or call my office at 484-892-3314. Thanks

Promoting Health & Wellness in Health Care Reform

2010-06-21T16:45:00.002-04:00

I must admit, there's not a whole lot in the over 2,000 page piece of health reform legislation that I do like - except for one area. It happens to be in the area of promoting health and wellness. There is a provision in this bill that allows for grants to be doled out to small businesses who set-up and encourage health and wellness programs at the worksite. The thing I like most about grants versus loans is they don't have to be paid back.

I firmly believe that, if we do nothing else while implementing this huge new entitlement program, we must get a handle on healthy lifestyle choices for our employees. Just by way of example, obesity health care related costs in this country have reached a staggering 146 billion dollars a year. If we make health insurance available and affordable for all Americans and don't do anything to address controllable health issues - we're just throwing good money after bad. This bill allows for grants to start flowing in 2011 and continuing for 5 years. The specifics haven't been revealed yet but there's another dimension to this provision that is well worth mentioning. For employers who implement health and wellness programs and for the employees who participate in them - there is a percentage reduction in the amount of premium paid in the form of reward or incentive.

Never before, that I can remember, is there a process that says if you do this you receive a discount on your premiums. We don't yet know what the benchmarks or criteria will be but I am very encouraged about the possibilities of creating healthier lifestyle choices for American workers. We will all benefit from that - not just the participants in the program. Here are some of the highlights of this initiative:

Provide grants for up to five years to small employers that establish wellness programs. (Funds appropriated for five years beginning in fiscal year 2011)

Provide technical assistance and other resources to evaluate employer-based wellness programs. Conduct a national worksite health policies and programs survey to assess employer-based health policies and programs. (Conduct study within two years following enactment)

Permit employers to offer employees rewards—in the form of premium discounts, waivers of cost sharing requirements, or benefits that would otherwise not be provided—of up to 30% of the cost of coverage for participating in a wellness program and meeting certain health-related standards. Employers must offer an alternative standard for individuals for whom it is unreasonably difficult or inadvisable to meet the standard. The reward limit may be increased to 50% of the cost of coverage if deemed appropriate. (Effective January 1, 2014) Establish 10-state pilot programs by July 2014 to permit participating states to apply similar rewards for participating in wellness programs in the individual market and expand demonstrations in 2017 if effective. Require a report on the effectiveness and impact of wellness programs. (Report due three years following enactment)

If you would like to take advantage of implementing a health and wellness initiative at your company then email me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com

10 Creative Employee Benefit Strategies: Part 1

2010-06-21T16:34:00.007-04:00

I grew up in the Lehigh Valley, lived and worked here my whole life. I can remember a time when Blue Cross Blue Shield was the only option for health insurance and it was great coverage. The best part about the plan, back then, was the employer typically picked up the entire premium cost and the employee deductible was very small or none at all. Well, fast forward, the coverage is still great, the deductibles are still fairly low but the cost is just unsustainable. So much so that companies are faced with the possibility of dropping coverage all together. Well, it's not just the Blue's that has this challenge. It's really any insurance provider that offers very low-deductible plans. Companies just cannot afford these extremely benefit rich plans anymore. Employees love these plans because they have minimum, if any, out-of-pocket exposure.

If you're one of these Lehigh Valley businesses desperately trying to hold on to this type of plan structure - you simply have to consider increasing the deductible on the plan. There's no other component that will get you where you need to be. You can entertain increasing co-pays and co-insurance to the existing plan but none of those options will make a significant financial impact.

Now that you've made the tough decision to raise the deductible - now what? There are some very practical things that you can do in conjunction with raising your deductibles that will lessen the impact on employee morale, as well as, cultivate more employee engagement with your companies employer-sponsored health plans. Over the next several months, of this 10 part series, we will look at some creative ways to accomplish these goals. Look for part 2, The Value of a High Deductible Health Plan, next month.

In the meantime, email me questions or concerns at bknauss@employeemployersolutions.com, visit my website at www.employeemployersolutions.com or just call our office at 484-892-3314.

Mandating Losses

2010-06-21T16:26:00.001-04:00

Imagine with me, if you will, someone requiring you and your business to take on more losses. It seems inconceivable I know but just play along for a moment. Let's take your business for example. Suppose you happen to carry a 95 percent collection rate on your entire receivables. That would be great - wouldn't it? This would mean that you only have to write off 5 percent as bad or uncollected debt. I'm just choosing round numbers and I have no idea if that's good or bad. Now, suppose I came into your business, with the full weight and might of the U.S. federal government and I said that a 95 percent collection rate was way too good. You need to bring on more bad debt. You'd think I was crazy. Right? You'd bemoan that this isn't how a free market system is supposed to operate - not mention, it would have the effect of eroding your profit margins. You'd also have to pass that increase cost on to your customers. No business owner likes to do that. You might also have to lay off some people as a result of this added burden. Yet, this is exactly what the federal government is mandating to health insurance companies by having them carry a minimum loss ratio of 80 percent on individual policies and 85 percent on group policies.

An insurance companies minimum loss ratio (MLR) is nothing more than the amount of all premium collected subtracted by the amount of claims for all of their policies. The amount that's left over goes to things like overhead, salaries, administrative expenses and commission paid to brokers like me. So, in normal profit making ventures the object is simple; grow revenues of the business and keep expenses in line to maintain a reasonable profit. I use the term "reasonable" loosely because I'm a free market guy and I don't want companies to be punished for managing their finances well. However, that's exactly what's taking place in this new mandate that health insurance carriers take on a minimum loss ratio. So, if I'm currently carrying an 80 percent loss ratio on group business, I'm now going to be forced to increase my losses by 5 percent across the board. Who do you think will feel the weight of that new mandate? That's right, you, in the form of higher premiums. It's no different than our example earlier with the small business who now has to write off more bad debt.

Look, let's for a moment put aside our natural inclination to want to see the "big guys" get what's coming to them. This will end up hurting you as much as it will hurt them. After all, how much do you really think is left over for a health insurance carrier after all premium is collected and all the claims are paid? Not as much as you would think. Maybe a couple of points. Let's also not forget that these so called "evil insurance carriers" employ tens of thousands of employees in this country. They're huge employers. How do you think an increase in the cost of doing business will impact their jobs?

I welcome your viewpoint, especially if you think this is a good thing. Email me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com

Small Business Health Insurance Credit

2010-05-18T15:12:00.000-04:00

The Internal Revenue Service has come out with guidelines for small commercial and nonprofit employers that want to take advantage of a new health insurance tax break. PPACA and a companion act, the Health Care and Education Reconciliation Act, are part of what federal agencies have dubbed the Affordable Care Act(ACA). This year, the new ACA small business tax break will offer small employers a tax credit equal to at least half the cost of single coverage, if the employees earn average wages of less than $50,000 per year. The tax credit is not available to ordinary government employers, but it is available to small businesses, small tax-exempt employers, and government-affiliated tax-exempt employers that can be described as section 501(c) organizations. Here are some of the highlights of this provision:

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.
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.

For the full review of this new IRS Section 45R and to see whether or not you qualify for this new tax credit CLICK HERE. I highly recommend that you speak with your employee benefits broker/consultant for expert advise on what you're entitled to or if you're not currently working with a broker email me at bknauss@employeemployersolutions.com or visit me on the web at www.employeemployersolutions.com

Health Reform Timeline

2010-05-18T14:58:00.007-04:00

The federal health care reform legislation, known as the Patient Protection and Affordable Care Act, signed by the President on March 23, 2010, and the Health Care and Education Reconciliation Act approved by Congress, signed by the President, will expand the availability of health care coverage to millions of Americans. While some of the measures will be implemented this year, many do not take effect until 2014 and some extend out to 2020.

Below is a high-level overview of the time line. It is important to note that many of these reforms and their effective dates are subject to the rules and regulations process both at the state and federal levels – which could alter the intended timing of implementation.

2010

New Programs:
* Temporary retiree reinsurance program is established
* National risk pool is created, small business tax credit is established
* $250 rebate for Medicare members who reach the ”doughnut hole”

Insurance Reforms:
* Prohibits lifetime benefit limits – based on dollar amounts
* Allows restricted annual limits on the dollar value of certain benefits
* Coverage rescission's/cancellations are prohibited (except for fraud or intentional misrepresentation)
* Cost-sharing obligations for preventive services are prohibited
* Dependent coverage up to age 26 is mandated
* Internal and external appeal processes must be established
* Pre-existing condition exclusions for dependent children (under 19 years of age) are prohibited
* New health plan disclosure and transparency requirements are created

2011

Insurance Reforms:
* Uniform coverage documents and standard definitions are developed
* Minimum medical loss ratios are mandated

Medicare Reforms:
* Medicare Advantage cost sharing limits effective
* Medicare beneficiaries who reach the doughnut hole will receive a 50% discount on brand name drugs
* A 10% Medicare bonus will be provided to primary care physicians and general surgeons practicing in under-served areas, such as inner cities and rural communities.
* Medicare Advantage plans would begin to have their payments frozen.

Other:
* Employers are required to report the value of health care benefits on employees' W2 tax statements.
* Annual industry fee for pharmaceutical manufacturers of brand name drugs.
* Voluntary long term care insurance program would be made available to provide cash benefit for assisting disabled individuals to stay in their homes or cover nursing home costs. Benefits would start five years after people begin paying a fee for coverage.
* Funding for community health centers would be increased to provide care for many low income and uninsured people.

2012

* Hospitals, physicians, and payers would be encouraged to band together in "accountable care organizations."
* Hospitals with high rates of preventable re-admissions would face reduced Medicare payments.

2013

* Individuals making $200,000 a year or couples making $250,000 would have a higher Medicare payroll tax of 2.35% on earned income —up from the current 1.45%. A new tax of 3.8% on unearned income, such as dividends and interest, is also added.
* Medical expense contributions to flexible spending accounts (FSAs) limited to $2,500 a year—indexed for inflation. In addition, the thresholds for claiming itemized tax deduction for medical expenses rise from 7.5% to 10% of income.
* Medical device manufacturers would have a 2.9% sales tax on medical devices; devices such as eyeglasses, contact lenses, and hearing aids would be exempt.
* Eliminates deduction for expenses allocatable to Medicare Part D subsidy for employers who maintain prescription drug plans for their Medicare Part D eligible retirees.

2014

Coverage Mandates and Subsidies:
* Individual and employer coverage responsibilities are effective.
* Individual affordability tax credits are created and small business tax credits are expanded.

Health Insurance Exchange & Insurance Reforms:
* State individual and small group health insurance exchanges operational.
* Guaranteed issue, guaranteed renew-ability, modified community rating and minimum benefit standards (“essential benefits” plan) effective.
* Lifetime and annual dollar limits are prohibited for essential benefits.
* Pre-existing condition exclusions are prohibited.

Taxes and Fees:
* Addition of new taxes on health insurers

Medicaid and Medicare Reform:
* Medicaid expanded to cover low income individuals under age 65 up to 133% of the federal poverty level—about $28,300 for a family of four.
* Minimum medical loss ratio of 85% required for Medicare Advantage plans

2018

Taxes and Fees:
* Tax (“Cadillac tax”) imposed on employer sponsored health insurance plans that offer policies with generous levels of coverage.

2020

Medicare Reform:
* Doughnut hole coverage gap in Medicare prescription benefit is fully phased out. Seniors continue to pay the standard 25% of their drug costs until they reach the threshold for Medicare catastrophic coverage.

Creating a Culture of Health and Wellness

2010-05-18T14:52:00.005-04:00

I deal mainly with small-to-medium sized employer groups and every time I broach the subject of creating a company culture that promotes the health and wellness of their employees - I usually get the same response. It goes something like this; "Are you kidding? It's not good enough that I provide a good paying job with a great employee benefits program, now you want me to promote healthy lifestyles for my employees? Forget it!" Coincidentally, my response is always the same. "As long as you [the employer] have a fiduciary responsibility for your companies health plan, meaning, it's your name on the plan and you're the one they ultimately look to for payment - then you have an incumbent responsibility to shield your company finance's against premium increases. Think about it for a moment. If the majority of your employees are living unhealthy lifestyles (ie. they're over-weight, they smoke, live sedentary lives) then you'll be bearing that burden in the form of higher health insurance premiums year after year.

It's not just higher premiums that become the negative outcome. It's also the fact that unhealthy employees tend to be more unproductive than their healthy counterpart employees. They have a higher absenteeism rate and they have a tendency to be less productive even when they're at work. Ignoring a robust health and wellness component to complement your employer-sponsored health plan just doesn't make good business sense.

Here are some chilling facts:

A recent analysis of data from the National Health and Nutrition Survey (NHANES), which is conducted regularly by the National Center for Health Statistics, warns that middle-aged individuals may be at greater health risk than anyone anticipated. In comparing the results of two large-scale studies of the U.S. population in 1988 to 1994 and in 2001 to 2006, the report shows that the number of people aged 40 to 74 adhering to healthy lifestyle habits has seriously declined.

The percentage of surveyed adults with a body mass index greater than 30 has increased from 28 percent to 36 percent *

Physical activity 12 times a month or more has decreased from 53 percent to 43 percent *

Eating five or more fruits and vegetables a day has decreased from 42 percent to 26 percent *

Moderate alcohol use has increased from 40 percent to 51 percent *

Smoking rates have not changed (26.9 percent to 26.1 percent) *

*The Vitality Group " CREATING A NEXT-GENERATION HEALTH AND WELLNESS PROGRAM: Why employers should take the lead, and how to do it

While it's true that Americans are living longer today (life expectancy for males is 75 years and for females it's 80 years), it's also true that more Americans suffer from chronic and debilitating diseases such as diabetes, hyper-tension, acid reflux, heart disease, mostly stemming from too many Americans being obese. In fact, it's estimated that obesity alone accounts for 147 billion dollars a year in health care related costs. Now, I'm not an economist by any means but I can figure out that if we created a culture of health and wellness in this country that seeks to stem the negative affects of obesity, we wouldn't need the government to get involved with health care at all.

Business owners, maybe it's time to make some radical changes in your workplace like, don't just ban smoking in the building but eliminate the 35 smoke breaks that take place throughout the day. After all, if I came to you with a request to go into the break room to eat something every 30 minutes you would probably
suggest that maybe this jobs not for me - and you would have every right to suggest that! Studies have shown that it's well worth the investment with ROI's sometimes being $3.27 reduction in medical costs for every dollar spent on health and wellness, as well as, reducing absenteeism costs by $2.73 for every dollar spent. Just some healthy food for thought.

If you would like to learn more about how to cultivate a culture of health and wellness at your company; email me bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com Don't forget to subscribe to my blog and follow me on twitter at: http://mployebenefits.com

What Does Health Care Reform Mean To You?

2010-04-27T16:20:00.004-04:00

Well, the ink is dry on our nations most sweeping piece of Health Care legislation to come out of Washington since Social Security and now it's time for the experts to figure out what it all means. There's only one problem, the folks in Congress who voted for it aren't quite sure what's in the over 2,500 page mammoth bill but there are some significant changes as a result of passage that we can outline here. With that in mind, we won't know the true extent to which this law with alter the way we do business for months to come. The things that no one is in disagreement about in this Bill is that it's riddled with new mandates, taxes, penalties, compliance requirements, price fixes, Medicare cuts, Medicaid expansion and administrative burdens that will forever change the face of business.

There are various time-lines and important benchmarks set forth in this legislation that can lend to a great deal of confusion. So, with that said, let's look at some FAQ's:

Will employers and individuals see premiums increase as a result of health care reform?

In compliance with the guidelines and requirements of the new health care law required by September 23, 2010, insurance carriers will modify policyholder benefits accordingly. With these adjustments to policy benefits, it is probable that an increase in premium costs will occur. Beginning in 2014, premium prices cannot be based on a customer’s gender or health status. Until then, current premium pricing will apply.

Are there annual or lifetime maximums on coverage under the new law?

Effective September 23, 2010, there are no lifetime maximum limits on coverage. In addition, there will be no annual limits on group plans. For individual plans, annual limits may be allowed based on what Health and Human Services deems reasonable. This information is not yet available.

When are employees able to have their dependents covered until they are 26?

Effective September 23, 2010, the law states that customers will be able to have dependent coverage for their married AND unmarried children up to the age of 26. The requirement is applicable even if the child is not a tax dependent. The law does not specifically include spouses of married children. There is no requirement to cover children of covered dependent children (i.e., grandchildren).

Under the new law, do pre‐existing conditions no longer matter?

Effective September 23, 2010, insurance companies cannot limit coverage for children on individual or group policies with pre‐existing medical conditions. For adults with individual policies, this provision goes into effect in 2014.

Under health care reform, what happens to rescission?

Effective September 23, 2010, rescissions will occur only in cases of customer fraud or intentional misrepresentation.

Is it true that anyone who applies for coverage will be issued coverage?

Under the Guarantee Issue provision, effective in 2014, anyone who applies for coverage must be issued coverage.

How will this new law affect MSAs/HSAs?

At this point, the only change we are aware of is the tax penalty increase from 10 percent to 20 percent for “non‐qualified” expense withdrawals.

If you would like to find out more about how Health Care Reform effects you and your business email me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com Thanks

Lehigh Valley Business Owners Speak Out On Health Care Reform

2010-03-22T13:34:00.002-04:00

It seem like every day we're bombarded with some sort of poll. On the topic of health care reform, there's been literally hundreds of polls over the past twelve months. Many of those polls have varying questions to test the poll takers perception of health care reform on many different levels, as well as, gauge the overall validity. However, one thing is certain about the results, they've been pretty consistent in showing that a majority of Americans aren't in favor of a government-run option for health care reform. So, I decided to put together my own poll of Lehigh Valley owners and entrepreneurs to see where they fell in relation to these national polls. Some of the results did, in fact, surprise me. However, by-and-large the results were in line with what I suspected.

Now, before I get into the individual results, a little bit of a disclaimer. I'm not proposing that this sampling is scientific or even broad-based in it's application to be representative of all Americans. However, I do feel the results of local Lehigh Valley owners of small businesses are pertinent and valuable to share. Here's how the numbers shape up: 614 individuals were sent the email to take this survey and out of those, 44 actually took it with about a 14% participation rate. Not scientific by any means but helpful overall.

For example, when asked whether or not they favored reforming the existing health insurance industry or replacing it with a government run option similar to Medicare, an overwhelming majority (88.64%) chose - reform the existing insurance industry. I found this very helpful because when you listen to those in Washington who are trying to sell this to the American people, they do it with demagoguery and attacks of evil health insurance companies. However, this survey question illustrates that Lehigh Valley business owners trust the existing system enough to want to create reforms from within. This is a more constructive way to go about reform; building upon the strengths and reforming what's not working. Make no mistake, there's a lot of good in the current system. When respondents were ask to further clarify this by answering the question of who they felt more confident in managing and overseeing the health insurance industry, government or the private insurance carriers, overwhelmingly they chose the private sector by a margin of 80.95%.

Finally, when respondents were asked to identify the single biggest factor affecting health care today, pre-existing conditions, cost containment, malpractice liability, access to health insurance or affordable health insurance, none (0) chose access as being an issue at all. Doesn't this surprise you since all we've heard for over a year is that Americans are denied access to health insurance? Now, affordable health insurance did top the list at 38.64% of respondents. The important take away from this is that access and affordability don't necessarily go hand-in-hand.

As you review the results of this survey, you come away with a pretty clear picture that Lehigh Valley small businesses would rather not scrap the health insurance industry altogether but rather change what's not working. Share your feelings on health insurance reform by emailing me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com

Typical Washingtom Mistake: Asking The Wrong Question

2010-03-04T13:21:00.005-05:00

I had the unusual opportunity, because of inclement weather, to watch much of the recent health care reform summit. After all, I do have a vested interest in the outcome. I listened intently from both sides about positions that, quite frankly, to the more than casual observer like me, are nothing new. However, I was struck by the presupposition which has become the basis for the entire discussion on health care reform. That is, what part of the current legislation President Obama has put forward can they find common ground on? At first blush, it's sounds like a perfectly reasonable strategy. Then it struck me! We're asking the wrong question entirely. The question in Washington shouldn't be what do the Republicans like in the current proposal that they can support and find common ground on. Instead, the question should be. What, in our current health care system can we agree is good and, therefore, worthy of building upon? A natural follow-up question to that would be. What's broken that needs fixing? Democrats would argue that they are doing exactly that - fixing what's broken. However, their proposal is too far reaching, overly intrusive and would upset the delicate balance between proper government oversight and the free-market system.

Most, if not all Americans believe that our health care system is one of the best in the world - if not the best! So why should we take the approach that the whole system needs to be scraped in favor of a government-run alternative. There are many areas in the current health care system that are flawed and in need of change and restructuring so why not build on that framework for true effective reform? I'm always struck when an important foreign dignitary announces that they will be flying to the United States to have some sort of medical procedure done. That's not an accident by any means. They know that there best chance of medical success lies in their treatment in the United States. Indeed, our very Congressman and Senators take full advantage of all our amazing medical technological advancements. You don't see any one of them requesting to get treatment in another country. No, I'm afraid this is more about power and making history for the Democrat party rather then real, substantive change for all Americans. That's really a shame because we do have the ability to make significant change.

If you're genuinely concerned about obtaining affordable health insurance for you or your family then email me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com

President Obama: Acme Health Plans

2010-03-04T13:09:00.004-05:00

In the recent health care summit that the President presided over, he made mention several times to "Acme Health Plans' when referring to High Deductible Health Plans (HDHP). This is just further evidence of Washington's elitist attitude toward health care options that don't conform to their view of the way the world should operate. Furthermore, his plan would all but do away with the incentives for Health Savings Accounts, therefore, rendering them a thing of the past. And for good reason. In order to pay for this massive cash cow, he has to take away the tax advantages associated with Health Savings Accounts. Instead, he should be revising the tax code to allow for individuals to deduct the amount of out-of-pocket medical expenses they incur throughout the year for co-pays and the like. Right now, the tax favor-ability only applies to individuals with Health Savings Accounts and employer-sponsored health plans.

I personally have many clients who have made the choice of going to a higher deductible plan because it made sense for them and their families. Therefore, I find it offensive to make this characterization! To somehow suggest that individuals that choose to take a higher deductible to lower there monthly premium are actually buying "Acme Health Insurance" is just plain wrong and disingenuous on the part of the President and those who support their plan. There are many Americans that want the comfort of knowing that catastrophic medical claims would be taken care of under a high deductible health plan but don't mind paying for the smaller expenses such as office visits and prescription drugs out-of-pocket. Especially, if the expenses are paid for out of a tax-free savings account. To some individuals, prescription drugs may be a very big expense so a plan with a richer Rx component would be better for them.

There's a basic principal at work here that those in Congress are incapable understanding because they don't know health care and that is, the higher the deductible the lower the monthly premiums. Conversely, the lower the deductible the higher the premium. Those that choose higher deductible health plans would rather see the savings in monthly premium because that don't use the health care system that heavily. However, if they do have a catastrophic claims it's covered - many times at 100% with lifetime limits in upwards of 5 to 8 million dollars. All of these plans are provided by reputable, well-known companies like Aetna, United Health Care, Assurant Health, Health America, Capital Blue Cross and many more. It's just pain ignorance to imply that these plans are "Acme Health Plans". They are, in fact, a legitimate health care cost-reduction driver. The President and Democrats seem to be talking out of both sides of their mouths when they highlight how many Americans claim medical bankruptcy because of so-called catastrophic claims, while at the same time, look down upon a plan that allows for this very coverage for individuals to actually avoid bankruptcy.

If you'd like to understand more about how High Deductible Health Plans with Health Savings Accounts might benefit you or your company then email me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com

Confidence In Our Goverment To Manage Health Care?

2010-03-04T12:43:00.003-05:00

I listened very intently as the President made his passionate plea for Congress to act on and pass the current health care legislation. He spoke of the plight of millions of people who are currently without health insurance. He also spoke about those that have serious medical conditions that either prohibit them from getting coverage or are in jeopardy of loosing coverage. There's no doubt that these stories tug at the heartstrings of every American. The President also made a statement that really hit me in a very profound way. He said that the American people are waiting for them [the federal government] to act. Moreover, that our future, yours and mine, depends on whether or not they act.

With all do respect, Mr. President, I think it's terribly arrogant to think that you, and those in Washington, can somehow take better care of my family then I can. After all, you don't even know me or anyone in my family. Aside from the few Americans you've spoken to about their plight with the current health care system, you really don't know anything about the rest of us. And what in the federal governments history of implementing programs and services can you point to that is an overwhelming success, and therefore, warrants pursuing your proposal? Isn't that what you're really saying, that the federal government is the only mechanism to bring about effective reform? It seems to me that the federal government has a long-standing history of exactly the opposite - complete failure regardless of the party in charge!

Don't take my word for it, let's look at some simple facts. Over the last 70 years, the federal government has tried it's hand at many different business endeavors such as, transportation (AMTRAK), package delivery (USPS), health care (Medicare), welfare, food distribution (Food Stamps), the auto industry, retirement planning, financial institutions and many more. Let's examine just a few that many Americans would be very familiar with.

First, we have the nation-wide package delivery system called the United States Postal Service. The USPS hasn't actually generated any sort of profit for years and the recent announcement of canceling Saturday deliveries came as no surprise. The fact is, that long before the popularity of email, the USPS was in financial peril. If it weren't for a constant stream of funding from Congress - they would have to close their doors completely.

Secondly, we have the federal governments attempt at providing transportation in - Amtrak. Again, if it weren't for the constant stream of operating capital supplied by Congress, this form of transportation would be gone. I happen to believe that a high-speed rail system is vital to the growth of our nation and our economy but I don't have faith in the governments ability to make it happen. If you look at how we rank around the world with respect to well operated high-speed rail systems we are at the bottom of the list.

Lastly, let's look at the federal governments fifty year plus experiment with a health care delivery system called Medicare. Ladies and gentlemen, I don't care whether you're a Democrat, Republican or Independent. We can all look to the current system of health care for seniors and consider it a failure on so many levels. The President himself points out the need to provide massive funding to keep Medicare solvent for only another 10 years. Most seniors are grateful to have the kind of coverage they have with Medicare but most cite the unending barrage of red tape, changes in regulations, cost and coverage as some of the biggest problems with the system. The rules governing Medicare are so enormous that brokers like myself are required to go through a separate certification process just to be able to offer Medicare Advantage Plans. After going through it, I understand why.

I haven't yet mentioned one other huge factor with all these Federal Government attempts at private sector ventures, they become huge political footballs for those who find themselves in power. You need to ask yourself, is that what I really want for my health care? Polls overwhelming show that the American people want some sort of health insurance reform. But I think an even better question to ask the America people is, do they have complete faith in our federal government to run and manage the health insurance industry? Or would they rather it be left to the health insurance carriers like Aetna, Health America, United Health Care and Capital Blue Cross? The over-whelming response has to be - no to the federal government! Base your decision on history - not on sound bites or talking points. I do believe that there is a healthy combination of government and private sector reforms that would bring about meaningful change. If you're interested to find out what those ideas are - email me.

Whether you agree or disagree with me I'd like to hear you make your case as to why or why not the Federal Government is better suited to run our health care system by emailing me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com Thanks

Drive-Thru Health Care

2010-01-11T18:53:00.016-05:00

With all the negative talk about the health care industry these days it's easy to overlook some very important, highly positive aspects - namely, advances in medical technology.

Americans are living longer today than anytime in our history. Advances in modern medicine have made the seemingly impossible - possible. Technology has improved laboratory testing; allowing for the development of CT scans, MRI's, and PET scan imaging to improve diagnosis accuracy. New advancements in treating heart disease have made it possible to treat a potential heart attack within minutes rather than hours. Hospitals have highly trained and technologically savvy medical professionals available a round-the-clock to treat patients. Cure rates for critical illnesses are up. The pharmaceutical industry has produced a myriad of new drugs to effectively treat anything from high cholesterol to reducing the effects of clogged arteries. There are drugs for treating impotence, depression, high blood pressure, osteoporosis and anxiety. Successful organ transplants and joint replacements have increased the quality of life for countless Americans. These are all some amazing advancements that each one of us should be grateful for.

However, these modern miracles have created an unhealthy level of expectation with so many Americans that wrongly think we can have our cake and eat it to. It's gotten to the point where Americans act as though they're going up to the drive-thru window to order their health care. It might sound something like this, "may we help you sir/madam?" "Yes, I'll have one upper GI and a lower GI, I'd like 5 different inhalers to improve my lung function so I can continue to smoke. I'd also like to order an MRI and why don't you throw in a CAT scan while you're at it! Let me get the gastric by-pass surgery to. One knee replacement and my usual 30 day supply of high blood pressure meds, anti-depressants, anxiety medicine and my purple pill for acid reflux - to go please". "Will that be all sir/madam?" "That will be all for now".

I don't mean to sound flippant about such important matters. Really, I know how vital these advancements are to changing the lives of some many. However, we're under some kind of illusion that we can have such a high demand for all these amazing wonders in medical science and not have costs spiral out of control. Our Government is making a promise that they just can't keep. We can't possibly stay on our current course and be able to effectively reduce health care costs. Furthermore, if we stifle advancement in the medical community by a massive government takeover then the only result will be to reduce the level of advancement.

The other myth that we fall prey to is that we can reduce the cost of health care without making any personal sacrifices to our current lifestyle choices. If we don't become a national that values health and wellness again we can forget about making any real and sustainable impact on our nations health care costs. Obesity, for example, is related to so many controllable and preventable medical conditions. We need to take more personally accountability for our own health and well-being and stop looking to the government or the medical profession to take care of us from cradle to grave and start with making right lifestyle choices today. No one will look out for you better than you!

My mission is to make the complex world of employee benefits understandable. Please reach out to me at bknauss@employeemployersolutions.com, visit my website at http://www.employeemployersolutions.com/ or twitter me at http://twitter.com/mployebenefits

The Year of the Broker

2010-01-08T10:24:00.005-05:00

With all the changes to health care being talked about in Washington today, the consensus seems to be that employer groups are going to be more likely to seek out the expertise of a professional employee benefits broker. In the past, employer groups have been largely split on the value and benefits they derived from dealing with a professional. Some, have been under the false assumption that if you go through a broker your premium will go up to compensate for commissions being paid out - that's just not the case. Rates are the same regardless of whether or not a broker is involved. The same is true for the individual market, yet still, many people try to got it alone on-line to secure the right health care coverage for their family. Here are some interesting facts:

Plan Sponsor's Current and Future Use of Benefit Brokers

Currently use a broker/consultant - 83%
Use of broker/consultant will increase in the next five years - 17%
Use of broker/consultant will stay the same in the next 5 years - 64%
Use of broker/consultant will decrease in the next five years - 8%
Don't know how use of broker/consultant will change - 11%

* source Benefits Selling Magazine January 2010 edition

Regardless of where you stand on the whole idea of overhauling our entire health care system, it doesn't negate the fact that managing employee benefits going forward will not be reduced in the level of complexity but only increased. Underscoring the need to deal with a professional benefit broker. If you don't currently work with a broker/consultant or you're not happy with the level of service you've been getting from the one your with than we should chat. It's very easy to switch. I can be reached at:

email: bknauss@employeemployersolutions.com
website: http://www.employeemployersolutions.com/
twitter: http://twitter.com/mployebenefits

Medicare Changes For 2010

2009-12-14T15:56:00.003-05:00

Section 102: Currently, Medicare outpatient mental health services require beneficiaries to pay a 50% co-payment under Part B. Other physician services under Part B require only a 20% co-payment. A phased reduction in this co-payment for outpatient mental health services begins in 2010. In the actual statute, the current co-payment amount is not described as “50%”. Rather, it defines what counts as incurred costs in such a way that the result is a 50% co-payment. So, the current statute counts incurred costs at 62.5% and this results in a 50% copayment for beneficiaries. In 2010, instead of incurred costs counting at 62.5% as they do now, they are counted at 68.75%. Once the definition of incurred costs reaches 100%, there is parity.

Section 112: Currently, the Medicare Savings Programs (QMB, SLIB, QI-1) have countable resource limits of $4000 for an individual and $6000 for a couple. This provision increases the amount of allowable resources for applicants to these programs so that it is the same as the resource limit for the full low-income subsidy individuals in 2010. The full low-income subsidy program has higher resource limits that increase based on a formula every year. Therefore, this change should result in an enrollment increase into these Programs, which can provide much needed assistance in Medicare cost sharing.

Section 113: Beginning January 1, 2010, SSA shall have in place a system for electronically transmitting information from an LIS application to the appropriate state agency that accepts Medicare Savings Program applications. Transmittal will only 4 occur with consent of the beneficiary. The information will be used to complete an application for the Medicare Savings Programs.

Section 115: Under the current Social Security statute, states are allowed to collect from the estates of deceased individuals any items or services under a state Medicaid plan that were provided to the individual when he or she was 55 or older. This Section amends the statute to eliminate that authority to collect from Medicare cost-sharing (the Medicare Savings Programs) beginning in 2010.

Section 116: With respect to applications filed on or after January 1, 2010, the value of a life insurance policy and in-kind support and maintenance will not be considered as income or resources for LIS determinations.

Section 118: This provision requires the Secretary provide the application for the Medicare Savings Program in the 10 languages (other than English) most commonly used by applicants for Medicare hospital insurance to states and the Social Security Administration. Such applications must be provided by January 1, 2010.

Section 176: Beginning with the 2010 plan year, the Secretary is required to identify categories of drugs and require that all drugs in those categories that are Part D covered drugs be included on all plan formularies. Such classes must meet specific criteria. It is generally expected that the current 6 protected classes would meet this criteria. The Secretary is also allowed to establish exceptions to this requirement for particular drugs within the class, including allowance for benefits management tools. However, any of these exceptions must meet particular criteria and can only be allowed after notice and comment.

Section 187: A report is due no later than two years of the date of enactment (July 15, 2010) that will describe the extent to which providers and plans are complying with Title VI prohibition against national origin discrimination affecting limited English proficient persons and the Office of Minority Health’s Culturally and Linguistically Appropriate Services (CLAS) Standards. This report shall also make recommendation on improving compliance and enforcement of CLAS Standards.

For more information on Medicare and Medicare Advantage Plans email me at bknauss@employeemployersolutions.com visit us on the web at www.employeemployersolutions.com or Twitter me at http://twitter.com/mployebenefits

7 Creative Benefit Strategies For 2010

2009-12-02T09:19:00.007-05:00

Whether it's the debate raging in Washington about health care reform, small businesses dealing with the ever-increasing premiums for employee benefits or individuals trying to secure health insurance for themselves - health insurance is on everyone's mind these days. Well, I don't know where any legislation will end up in Washington so let's discuss some very practical ways to deal with the challenges relating to health care today. If you're like most average small business owners in the Lehigh Valley with just three or four employees, you're wondering if there's any real impact you can make on your companies employee benefits structure. The answer is most definitely yes and I'm going to offer 7 very easy ways to accomplish that task.

Increase plan deductibles - For so many years the Lehigh Valley has been dominated by extremely low deductible very rich health plans that are great for the employees but are choking the business financially. The days of $500 individual deductibles are over.
Consider implementing a High Deductible Health Plan(HDHP) with and HSA component - So, if you're going to ask your employees to pay a greater portion of their health expenses, why not do it with an individual health savings account that is tax-free going in and coming out to pay qualified medical expenses. Oh, and by the way, the money continues to grow with interest.
Combine a higher deductible plan with an Accident Policy - Accident policies are very inexpensive and pay a lump sum to the individual in the event of an injury as a result of an accident. (Example: increasing deductible to $1,500 and implementing a $2,000 accident policy on each employee. With the savings realized in the premium reduction you can more than afford the policy. If the employee is injured because of an accident they will get a lump-sum payment of $2,000 to cover expenses).
Establish or convert to a defined contribution health plan model - This strategy is nothing more than encouraging your employees to obtain individual coverage that you will help reimburse them for in a fixed amount. There can be some inherent pitfalls with this model as it relates to pre-existing conditions.
Consider switching insurance providers - The Lehigh Valley has long been dominated by the "Blues" which offer outstanding coverage and expansive networks of provider care but typically have the highest premiums in the market. I'm not knocking the "Blues" because I sell those plans to - it just may be time to shop the market.
Consider self-funding for benefits like dental coverage - Dental is one benefit that functions relatively smooth and it offers a pretty predictable expense model that makes self-funding attractive for some employers to set-up. This will also reduce your dental premiums significantly.
Don't just look to renew your existing plan this coming year but instead sit down with your broker and talk through some of the strategies that I've outlined here. That's our job!

If you haven't heard from your broker since last years renewal then maybe we need to talk. Or, if you don't have a broker to help you through some of these very challenging employee benefit waters then please reach out to me at bknauss@employeemployersolutions.com, visit my website at www. employeemployersolutions.com or Twitter me at http://twitter.com/mployebenefits

Consumer Driven Health Plans

2009-11-16T15:03:00.010-05:00

The term, Consumer Driven Health Plans, has been gaining a lot of momentum over the last couple of years with the cost of health insurance premiums spiraling out of control. There's been discussion for some time in small business circles about shifting more of the responsibility for health care needs to the employees rather the employer. Business owners of all walks of life are quickly coming to the realization that they are ill-equipped to manage and administer the complexities of employee benefit plans. Aside from that, they also know that the days of low deductible health plans are all but a thing of the past. The premiums for these low deductible plans are chocking them financially. The biggest, and maybe, the only way to make a significant impact on health insurance premiums, is raising the deductible thresholds that employees are responsible for meeting before the plan covers expenses. Many employers are reluctant to pursue this necessary strategy to get a handle on their cost but it's completely unavoidable in today's economy.

So, it begs the question. What can an employer do to lessen the impact of employees being responsible for meeting higher deductibles? The answer is; doing it in conjunction with a Health Savings Account(HSA) for each of their employees. Each employee has this HSA set-up in their name for the purpose of making tax-free contributions into their account to ultimately cover the qualified medical expenses they're now responsible for with a High Deductible Health Plan. This gives the employee greater control and flexibility over making their own health care decisions. The IRS regulates the type of health plans that qualify for an HSA, as well as, how much money the employee can contribute to their HSA's.

Whether, it's the increasing trend toward higher health care premiums or the Federal and State regulations (COBRA and Mini-COBRA) of certain health plans - business owners are now faced with the very real task of shifting the responsibility for health care to the employees. Experts predict that Consumer-Driven Health Plan enrollment will spike in 2010 Read Full Article

For more information on Consumer Driven Health Plans, HSA's or how to effectively shift more of the burden for health care to your employees, email me at bknauss@employeemployersolutions.com visit us on the web at www.employeemployersolutions.com or twitter me at http://twitter.com/mployebenefits

2010 Health Savings Account(HSA) Changes

2009-10-27T15:22:00.008-04:00

For those of you that have a Health Savings Account(HSA) in conjunction with your High Deductible Health Plan (HDHP), you should already be aware that the minimum deductible amounts, as well as, the maximum that an individual can contribute to their accounts are changing for 2010. The changes are as follows:

The minimum deductible amount must be $1,200 for self-only coverage and $2,400 for family coverage; increased from 2009 requirements.

The out-of-pocket maximum must be no higher than $5,950 for individual or $11,900 for family coverage; increased from the 2009 requirements.

The HDHP must be set-up with a combined medical/pharmacy deductible. This deductible must apply to the out-of-pocket maximum; no change from the 2009 requirements.

All medical and pharmacy services must be subject to deductible and out-of-pocket maximum except for preventative services.

The annual contribution limits are being raised to $3,050 in 2010 for individual coverage; increased from $3,000 in 2009. For family coverage the maximum is increasing from $5,950 in 2009 to $6,150 in 2010.

If you don't already have a compatible Health Savings Account component to your HDHP then it's time you switched. You're already having to ask your employees to pay a greater share of their health care expenses out-of-pocket; why not pay them with tax-free dollars. With a full court press of government takeover of health care just around the corner; you better make the switch now while you still can.

For more information on this and other employee benefits related matters; email me at bknauss@employeemployersolutions.com visit my website at http://www.employeemployersolutions.com/ or twitter me at http://twitter.com/mployebenefits

The State of Employee Benefits

2009-10-09T14:22:00.003-04:00

If you're the average small business owner today, trying to wade through the complex maze of employee benefits, then you're not alone. I thought it would be valuable to share some market perceptions of other small business owners just like you. I'm generally not obliged to overwhelm you with a bunch of meaningless statistics but here are just a few that I think are valuable:

64% of small business owners are not confident picking a health insurance policy that fits their budgets and their employees' needs.*
Furthermore, 60 percent said they are not confident they understand the tax implications of paying for a portion of their employees' health insurance premiums.*
Only 27 percent say they understand all the factors that can affect their small group health premiums.*
Employer-sponsored health plan costs are going to see a 10.5% spike on average over the next year. (side note; that percentage of increase is on a declining trend)*
10% of employers surveyed indicated they reduced or eliminated retirement benefits as a cost-cutting measure in the past 12 months.*
74 percent of Americans have a less than complete understanding of their retirement plans.*

* source for these statistics October 2009 issue of Benefits Selling Magazine

These figures seems to indicate that the overall broker/agent community hasn't done a real good job taking the time to understand the needs of their clients and what it is they're buying. That's why I specialize in the small business community of the Lehigh Valley. It's a market that has been completely under served and in large part ignored by the brokerage community. If you're a business owner that can relate personally to some of the statistics then maybe we should have a productive conversation. You can always email me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com or follow me on Twitter at http://twitter.com/mployebenefits

Employee Benefits - Do More Without Spending More?

2009-10-02T15:12:00.008-04:00

Many businesses are in the same boat today - trying to figure out the paradox between doing more with less. The arena of employee benefits is no different. Try suggesting to a small business owner the prospect of expanding his/her benefits package for their employees in today's economic climate and you're likely to get booted right out the door. Well, there is some daylight on this particular topic and the answer seems to be in a very hot trend right now in area of employee benefits and that is - Voluntary Benefits. If I were to ask you if you would like to expand your companies benefit offering without it costing you one more dime, you'd probably think I was trying to pull a fast one. Well, this is one "to good to be true" proposition that really is legit. The voluntary benefit market is one marked with very low-costs, low maintenance, very little administration and high pays high dividends on employee morale. You see, with the current climate of higher deductibles, co-pays and less coverage for existing health insurance plans, the voluntary benefit market is a welcomed sight. Disability and Hospital Confinement policies help with covering higher deductibles that employees have to pay. They also help with unanticipated expenses for extended hospital stays or long periods of being unable to work like groceries, transportation and child care expenses.

There are a full range of voluntary benefits that can be 100% employee paid such as dental, vision, limited-medical benefit plans, disability, cancer and critical illness policies, life insurance, accident and hospital confinement plans. That best part is, many of the plans are portable for the employee. That's right they can keep the coverage no matter where they go. Here's just a small sampling of some of these voluntary benefits:

Disability Insurance – An individual supplemental short-term
disability income product that replaces a portion of income if
someone becomes disabled due to a covered accident or
covered sickness. There are plans that cover on and off-job or
off-job accidents/sicknesses and a wide choice of benefit
periods and elimination periods. This product features total
and partial disability, portability, worldwide coverage and
waiver of premium.
Accident Care/Public Sector Accident Care –
A composite-rated, guaranteed renewable accident
product that provides indemnity benefits for on and off-the-
job, or off-job only accidents. Stand alone coverage
for employee, spouse and dependent child may be
purchased. Features include the same benefits for
employee, spouse and dependent child; worldwide
coverage and portability. Optional riders, such as disability,
are available.
Cancer – An individual specified-disease product that
pays a cancer screening benefit for specified screening
tests. Upon diagnosis of cancer, provides benefits for
treatments and resulting costs that individuals may
require to care for their cancer.
Critical Illness – An individual specified-disease product
that can help individuals pay out-of-pocket expenses
associated with home health care, caregivers they may
require for home, automobile modifications, mortgage
payments, utility bills, other everyday living expenses and
travel costs to and from treatment centers.

For more information about adding voluntary benefits to your existing benefits package, or even if you don't have a benefits package, email me at bknauss@employeemployersolutions.com or visit my website at http://www.employeemployersolutions.com/

Defined Contribution Health Plans

2009-09-15T10:04:00.012-04:00

Are you asking yourself, what in the world is a "Defined Contribution Health Plan"? I'm sure it's not a term that most of you are aware of or even know that it could be a viable option for you, the small business owner, to implement for your workforce. It's really a fancy term for a health plan that is established by the employer but the method of paying for the monthly premiums are based on a fixed contribution made by the employer toward paying for health insurance. Okay, I've got you confused. Sorry! So by way of comparison, a regular employer-sponsored plan is one in which the employer offers its employee groups of 2 or more but the ultimate legal guardian of the plan is the company. Things like the payment monthly premium, renewing the plan each year, being responsible for the administration of the plan and finally being in compliance with federal and state laws governing them (eg. COBRA). This type of health plan is also know as a "Defined Benefit Health Plan". The employees simply opt in or out of the plan. If they opt in, the employer has an established pre-determined amount that the employee has to contribute each month toward covering their dependents and such. This amount is usually deducted from the employees paycheck every pay cycle. Sometimes the employer has the deductions set-up on a pre-tax basis to add tax savings for both the employer and employee. This is typically the way most group health plans are set-up.

However, this is not necessarily the best advise for the small business who is struggling with the mounds of administrative responsibility now incurred, not to mention, the continued escalation in health insurance premiums every year. There is a better way - Defined Contribution Health Plans.

The defined contribution concept can manifest in numerous ways. The ideologically purest model is one in which employers remove themselves completely from administering health benefits by either giving the employees cash (as a separate payment or increased wages) or a voucher that they can use in the market to purchase coverage. At the other end of the spectrum is a defined-choice model in which employers continue to offer a range of health-benefit options at varying price levels. The employer provides a specified premium dollar contribution (perhaps tied to the lowest-cost plan), and the employee pays for any premium difference above the contribution level. Between the two end points, there are numerous permutations. Some of these “in between” models rely on a combination of an employee personal health care account with contributions from employers, employees, or both (which can roll over annually), and major medical coverage with a deductible above the cap of the personal account. For a copy of this free report go to: http://hcfo.net/pdf/definedcontribution.pdf

This is the absolute best option for small businesses in the Lehigh Valley trying to find ways to reduce cost and liabilities, as well as, get out of the health insurance business. For more information on establishing a defined contribution health plan at your company please email me at: bknauss@employeemployersolutions.com or visit my website at http://www.employeemployersolutions.com/ Now go take on the day!!

46 Million Uninsured Americans

2009-09-02T12:21:00.017-04:00

Wow, August just flew by but there's been a lot going on in the news cycle these days. I've tried for the longest time not to weigh in on the political battle currently being waged in Washington centered around health care but it hits home too closely for me to be silent anymore. There's so much misinformation out there and flat out ignorance that I feel the need to set the record straight on a few points of contention. The first is, the figure of 46 million uninsured Americans currently in the United States. Let's just take it on face value that this number is somewhat accurate (it's not because it includes many young and wealthy Americans who choose not to have health insurance as well as illegal immigrants). However, for the sake of this discussion, let's say it's true. The debate is expressed two-fold in terms of the need to get those who are uninsured access and the affordability of health care for all. Let's just talk about the accessibility aspect of this debate first. Access to health insurance for these uninsured people is available right now to anyone. In fact, insurance companies are standing by waiting to sign them up with their own individual health policy that's completely portable to take with them from employer to employer. In fact, they can call directly to the insurance carrier or shop on-line to access this health insurance without even getting an agent involved.

The second issue, affordability, is a little bit more complicated because it's a relative term. The real question is, how much can they afford. On this note, the variety of options are absolutely endless. I know for a fact that an individual can get a limited-medical benefit plan for less than 100 dollars in monthly premium or an individual comprehensive major medical plan in upwards of 200 dollars in premium per month. So affordability isn't completely the issue either. So what is it really?

Ahhh, I think I know what the real issue is - pre-existing conditions. That's the real sticking point in the whole health care debate. It's the real reason why employer-sponsored group plans continue to see average increases of 20 plus percent each year. You see with employer plan the insurance carrier typically can't exclude pre-existing conditions, so, they therefore have to accept everyone in the plan at the same rate - healthy or not. Now, you're probably saying, "so, what's wrong with that"? The answer is, nothing, if you're the employee. To the employer and the health insurance carrier, it means everything.

Let's take the employer first. The basis on which the insurance carrier uses to adjust employer plan rates is what type of claim exposure they've had. If employees are becoming a heavy burden on the health care system then they have to increase the premium every year at renewal time.

To the insurance carrier, it doesn't give them the ability to properly assess rates on an individual basis. Now, before you start shouting to me, "that's not fair". I want you to first consider another type of insurance that we're all familiar with - Auto Insurance. Just imagine if I came to you and said that your auto insurance premium was going way up because there's been a rash of auto accidents and DUI's in your area. You would be extremely upset at me and rightfully so. Why should you be punished for someone else's reckless behavior. You don't and that's the point. Somehow we've taken the health insurance concept into an entirely different realm where no one wants to pay more because they may have a certain disposition to sickness for one reason or another.

Now, I now our present system is in need of some changes - not an overhaul. There are some things we can do to address pre-existing conditions and get a handle on the overall cost. However, we must not exclude equally weighty matters such as personal choices about our individual lifestyles and wellness and be a bit more open to the reality that if you're a heavy user on the health care system you may need to pay more than others who aren't. I don't know how the finale of this current debate will end up legislatively but I can say this. As a benefit specialist, I'll personally commit to signing up as many of those 46 million uninsured who find themselves left out of an employer group as possible to get them into their own individual option. Those of you in Pennsylvania - I can help. I'd like to hear your opinions on this and other health care related matters at email at bknauss@employeemployersolutions.com or by visiting me at my website http://www.employeemployersolutions.com/. Thanks

Vacation Time

2009-07-31T13:23:00.003-04:00

Well, we're in the midst of summer and vacation planning is well underway. It's a time of year that we all look forward to. Visions of sandy beaches, blue water, historical landmarks and much more preoccupy our minds. I bet that most of us don't think of something very important when we travel - especially internationally. That is, what would happen if we got sick or injured while on vacation in another country? Most of us think about the standard travel insurance that is typically offered by every travel agent when flying outside the country. In addition, most of us naively think that our domestic health insurance benefits will cover us for injuries or sickness when outside our home country. In most cases, that's not true. I don't know about you but when I'm in a foreign country the thought of being cared for by a local doctor or hospital scares me to death. The quality of health care in many popular travel destinations throughout the world are primitive at best.

Travel medical insurance should be the ticket on everyone's mind who will be vacationing outside the country this summer or anytime of the year for that matter. A good travel medical policy is relatively inexpensive and covers things like doctor's visits, hospital stays, surgery and most of all, repatriation and emergency medical evacuations. I know that for most of us, we don't want to consider those types of things along side dreams of fabulous countryside scenery but I guarantee that it would be well worth the investment to guard yourself against substandard health care.

For more information on travel medical insurance email me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com

COBRA In Pennsylvania

2009-07-22T16:21:00.004-04:00

It wasn't all that long ago that I was exploring the benefits of being an employer with fewer than 20 employees. One of them being the exemption for COBRA laws. What a difference a few weeks can make. That's no longer the case in Pennsylvania - thanks to Governor Rendell. For all you proponents of "big government" takeovers - here's what you get. Here's an overview of the new regulations for small businesses:

On June 10^th Governor Rendell signed into law the state’s Mini COBRA legislation. Employers who employ 2-19 employees will now be required to offer health insurance continuation post employment and also will be obligated to comply with the Federal subsidy of COBRA under the American Recovery and Reinvestment Act (ARRA).

This law becomes effective on July 10, and will mirror the federal COBRA regulations in many ways. Highlights of the Mini COBRA provisions:

Requires employers who employ 2-19 employees and offers health insurance to offer COBRA
Only applies to Medical Plans (does not include HRAs, FSAs, dental, or vision)
To be eligible, an employee must have been on the employer’s insurance for at lease 3 months prior to the qualifying event
COBRA qualifying events remain the same as those under Federal regulations
Eligible for COBRA coverage lasting up to 9 months
Employers (or their designated administrator) are responsible for notification to eligible individuals
Assistance Eligible Individuals are included in State COBRA
Employers may charge up to 105% of the medical premium
Timeline for getting out notices differs from federal COBRA

The state plan lacks the lookback feature of the federal COBRA Subsidy program in that only individuals terminated on or after July 10th will be eligible to participate. The federal program, enacted in February, allowed participation of individuals separated back to September of 2008.

For more information on this and other government regulations on employee benefits email me at bknauss@employeemployersolutions.com

Healthy Employees Are Productive Employees!

2009-06-09T12:43:00.013-04:00

Small businesses constantly struggle with the rising cost of health care premiums to cover their employees. I've talked in recently blogs about some of the very effective short-term fixes such as higher deductibles, implementing "Health Saving Accounts" on qualifying plans and the onslaught of great voluntary benefits designed to fill in some of the gaps left by higher deductibles. These solutions are, however, short-term and in and of themselves don't provide a long-term solution. So what's the answer? Employee wellness! That's right, there's no current solution to get us out of this health care mess other than promoting employee wellness. I liken this to the analogy of fixing a car. If your car is leaking oil, one of the short-term fixes would be to add more oil as needed. Very inexpensive and easy to do. However, we would all agree that this isn't a long-term solution that gets down to the root of the problem. To do that, you need to go to a professional, spend a lot more money then just adding oil but you're on your way to providing a more lasting solution. The health and well being of our valued employees is really no different. Until your employees make long lasting life changes about their own health and well being they will continue to be a drain on an already over-burdened health care delivery system. As the employer, you have an obligation to try and facilitate that healthy lifestyle because it will benefit you as well. This is definitely an example where the old saying, "a healthy employee is a productive employee" is true. Think of all the lost productive time being saved on employee absenteeism! How much happier and eager are healthy employees to want to come into work everyday?

I know what some of you business owners are saying, "it sounds very time-consuming and difficult to implement for a small business". Well, it's not at all. In fact, many times either health care or network providers offer it as a free service to participating businesses. Take Valley Preferred of example. They're a local health network of doctors and hospitals in the greater Lehigh Valley area. They offer to participating members a comprehensive employee wellness and education program called BeneFit. BeneFit offers a comprehensive range of health screenings (through corporate health fairs), worksite wellness programs, health awareness profiles and more to help Valley Preferred clients promote better health among employee populations.

Employee Wellness - the only way to create lasting reductions in you company's health care premiums. For more information on implementing an employee wellness program in your company email me at bknauss@employeemployersolutions.com or visit my website for a "Free Report" on employee wellness at www.employeemployersolutions.com/free_report.html

Tax-Free Health Premium Dollars

2009-06-02T17:15:00.007-04:00

Many small businesses aren't yet familiar with something called Section 125 or Premium Only Plans. It's a section in the IRS code that allows employers to set-up employee paid payroll deductions for their health care on a pre-tax basis. This plan is basically a "no-brainer" if your anything like me and want to pay as little taxes as possible to Uncle Sam. There are very few provisions to getting the plan set-up and many insurance carriers actually provide the administration part of the plan for free. The only restriction is, once you've signed up for the pre-tax plan you must keep it in effect until the open enrollment period starts. This is because of the lowering of your taxable income by being in the plan. You can get out of the plan mid-stream only if you've had a "major life change" as defined by the IRS. There is a formal 5500 form that needs to be filed with the IRS to administer the plan. That's why having an expert handle it for free makes all the sense in the world.

Here's a simple example of how the plan works:

Weekly Gross Pay $500.00
Weekly payroll deduction for Health Benefits $100.00
My weekly taxable amount (for FICA tax) $400.00

A tax savings of ($100 * 7.65%) $ 76.50

For more information on how you can set-up your employees payroll deductions for health benefits on a tax free basis email me at bknauss@employeemployersolutions.com or visit me http://www.employeemployersolutions.com/

Reducing Health Care Premiums! How?

2009-05-28T10:07:00.006-04:00

Every year small businesses grapple with health premiums continuing to go up. The renewal paperwork comes from their health insurance agent [whom they have seen since this same time last year] and it has a 20%, 30% or even 40% increase in premium for the same policy. So the business owner is left with some hard decisions that have to be made. Most employers are extremely reluctant to reduce benefits. So, what left to do? Well, they can pass along the entire increase to the employees which never goes over well. They can absorb the entire increase themselves but that will erode an already fragile profit margin. The typical employer tends to opt for some happy medium option whereby the employer is absorbing some of the shock and the employee picks up the rest. One of the ways to have the employee pick up a portion is by increasing the co-pay amount that's built into the plan design. The problem with that approach is you're never going to make up the gap in the premium increase by adjusting the co-pay for office visits from $25.00 to $40.00. The only thing that left is increasing the deductible that the employee has to meet before benefits kick in. Employers typically go kicking and screaming to implement this but it's the only way to make a real impact.

There is hope though! By increasing the deductible you may be able to qualify for a Health Saving Account where the employee is paying for out-of-pocket expenses out of a tax-deferred medical savings account that bears interest. In addition, now that the employee has to pay more out-of-pocket expenses then before, the employer can offer a myriad of supplemental coverages that help fill in the gaps. For example, a hospital confinement policy is very inexpensive and pays the employee directly a lump-sum benefit daily for a hospital stay. There are also Limited-Medical Benefit plans that cover such things as doctors visits and preventative care. Again, typically the covered amount is paid directly to the employee. These are actually individual plans that the employer can help fund or the employee pays the full amount of the monthly premium. The advantage to the employee of an individual policy is that it's portable - they can take it anywhere they go. In either case, the monthly premiums are very affordable and will help cover some of the new expenses employees have to pay as a result of an increase in deductibles.

For more information on this and other ways to reduce health premiums such as wellness programs and lessen the impact on your employees email me at bknauss@employeemployersolutions.com.

Too Small for a Group Plan?

2009-05-18T17:33:00.011-04:00

Many small businesses struggle with wanting to provide benefits to their few faithful employees but just can't seem to make it happen. They have 2 or 5 employees and can just never get to the 75% percent participation requirements set by most insurance carriers for group plans. Maybe it's just that the business owner can't afford to cover the single rate on each eligible employee required by most carriers as well. So, what's left for the business owner to do? Sit back and watch good employees leave and go to a company that does provide some sort of benefits plan. Fortunately, if you find yourself in this position, you do have options. One option is actually very attractive and makes a lot of sense.

The answer is - individual health insurance policies for your small group of employees. Why not? Before you discount this idea out-of-hand - hear me out. We already know you can't qualify for a group plan. You either don't have the minimum participation needed or you can't afford your employer portion of the cost. Having each of your employees set-up their own individual plan solves many of those problems. No, it can't be an "employer sponsored" plan, which means the employer can't have it set-up in the company name and pay the monthly premium. They can, however, encourage their employees to get their own plan and contribute to their monthly or weekly pay in the form of additional income to help cover some of the expenses. Check with your accountant about the tax ability of such additional income. The employer can pick what that amount would be, so there's flexibility. I would caution against varying amounts by employees. Establish one flat amount for all those participating and incorporate into your company handbook. You could also set a flat amount for single coverage, family coverage, etc. You get the idea. There are many advantages of this strategy for both the employer and the employee:

Employer Advantages:

Being able to have employees covered for health benefits.
Increased retention.
Individually underwritten so no adverse risk associated with a group.
Flat amount for reimbursements enable employers to control costs.
Able to attract quality employees.

Employee Advantages:

The plan is portable. It goes with the employee where ever they go.
Premium isn't adversely affected by group plan members.
You control what insurance carrier and plan you go with. You're not locked into one single option. Plus, if you and your family are in relatively good health, you can shop it every year if you wish.

For more information about how I might be able to assist you on establishing an employee benefits program email me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com.

Thanks

Out of Work and Out of Insurance??

2009-05-11T14:58:00.005-04:00

Unfortunately, one of the many casualties of this new economy are lots people out of work and struggling to figure out how to keep their health insurance - even with the recently changes to COBRA. In fact, many workers being left go work for employers that don't even have to comply with COBRA (having less than 20 employees). Well, there are some very practical ways to cover your families most basic needs at an affordable monthly premium.

Short-term or Limited Medical Benefit plans, as they're called, are just a few practical solutions for someone who finds themselves out of work for the foreseeable future. As the names imply, they're designed to provide coverage for a short range of time such as 6 or 12 months,as well as, benefits for hospital confinement or some routine procedures. Typically they come with a choice of deductibles and lifetime maximums. They're not designed to cover catastrophic claims or be in place for the long-term. They cover such things as doctors visits, hospital benefits, emergency room care, outpatient services and much more. The premium is very affordable and you can be approved in a day or so.

Here are some situations that Short-term or Limited Medical Benefits make sense:

Between jobs - For about half the cost of COBRA, Short-term Medical offers next day coverage.
Waiting for Employer Benefits - New employers often impose a waiting period before you're eligible for health benefits. With Short-term Medical, you stay insured and can choose the length of your plan.
Temporary or Seasonal Employees - When your employment schedule is unpredictable, it's hard to maintain health coverage, Short-term Medical provides flexibility.
Newly Independent - Young adults and recent graduates may no longer be eligible for health insurance through a student plan or their parents plan. Short-term Medical is an affordable way to fill the gap.

Highlights:

Coverage as soon as the next day.
You may keep your own doctors.
Access doctors 24/7/365 - from your phone.
Low monthly premium.