Health Care Changes Beyond 2012

   Last week I wrote about the more immediate changes in health care plans for 2012. As you might imagine, the changes won’t end next year. While the new plans roll out, there are other things you want to keep in mind for the future.

   Barring the gutting or repeal of Obamacare, we can look forward to more restrictions beginning in 2014. While there are some benefits to the Patient Affordability and Care Act, the down side skews the equation in favor of problems for business owners, difficult decisions for people without health care insurance and the self-employed.

   On the positive side, insurance companies cannot consider a person’s health status when insuring them. Kaching…that was the sound of your premiums going up to begin paying for coverage of more unhealthy people. Now, for the record, I am all in favor of insuring everyone, regardless of health status. None of us want our families to live without health care coverage. The financial consequences can be devastating for families if someone becomes very ill. But we need a better plan for paying for all this coverage than what we see today and in the near future. In two years almost everyone will be required to have some form of health insurance. In order to force this on people, health insurance “exchanges” will be created to accommodate the varying income levels of people. It is not entirely clear today how these exchanges will actually work to the benefit of the insureds or the insurance companies.

   One of the criticisms of Obamacare is that it is a thinly disguised plan to force everyone out of private insurance and choice into these exchanges, which will be managed by some federal agency. Trying to understand the deluge of verbiage on this topic is like trying to nail Jello to the wall. The truth is no one seems to know how this would really work. In the breach, we already see companies adhering to new law to be by offering coverage extensions to children up to age 26 who are living at home with their parents. This raises more problems for companies who are trying to peer into the crystal ball to see what they’ll be on the hook for in two years.

   Many companies admit they might just drop health insurance benefits for their employees. Rising costs, more liability, and confusing laws and rules, guarantee more owners will throw up their hands in disgust and opt out of the system. The owners are also looking at options that help them force more accountability and self-care on their employees. These options include Accountable-care organizations, reference-based pricing and defined contributions.

   Accountable-care organization reward health providers who cut expenses while maintaining good performance. These organizations can be physician owned, physician and insurance company owned, or some other combination. Reference-based pricing lets the company declare what it is willing to pay for services. Employees are then responsible for finding health care providers willing to work for the amount offered. This price shopping still allows employees to choose a higher-priced provider, but the employee must pay the difference in prices. Defined contributions means the company gives employees a set amount of money to purchase plans where they wish. Any difference in prices must be absorbed by the employee. These plans are available on an exchange, so employees will have more choices in this plan.

   All this presumes employees will see the benefit in these changes. Most people have gotten used to some form of HMO, PPO, or other network system with predictable premiums, co-pays, deductibles and so forth. This future is starting to look like the wild west of health care and insurance exchanges. We will have to actually read the information from different companies, plans, and exchanges to decide where and how to best protect our families with health care. This could be a confusing time ahead.

   We need more information and education in order to make this complicated plan work. Or, better yet, we could scrap the plan before it fully vests and find a better way to insure Americans that allows doctors to practice medicine and keeps us all honest. Can someone please invent a better mousetrap soon?

Have a terrific day!

Patricia

Healthcare plans for 2012

   ‘Tis the season…for open enrollment in healthcare, from company benefits to Medicare. Unfortunately, most of us won’t be getting many sweets in our stockings this year. What we can expect to get is higher deductibles, higher out-of-pocket costs that will surely continue rising, fewer options in doctors or networks, more aggravation and longer waits.

   The impetus behind increased costs to employees is simple: increased costs across the board for everyone. Employers can not absorb the increased costs in health care. They are being pushed into a corner with expenses. The only viable solution is to pass on the costs and encourage their employees to manage their own health care in better ways.

   Some firms may offer financial incentives to stop smoking, start exercising, lose weight, what ever it takes to drop the increased risks of unhealthy living. If you are lucky enough to work for one of these companies, by all means, take advantage of everything you can to improve your wellbeing. After all, your boss will not be caring for you if you become unable to work from illness, you will have to manage yourself. You will be paying the costs for the consequences of living a sloppy lifestyle. To avoid calamity and unmanageable bills, take action now to prevent more problems. This is the message your employer will be sending.

   Some people were caught flat-footed when employers changed to high deductibles mid-year. It is very difficult for a family to swallow a deduction of several thousand dollars. This reminds me of when my children were young and we had to HMO in our town. Every medical visit, prescription, and procedure an required upfront payment and then we had to wait for the reimbursement of 80% or less. Strict budgeting is necessary for families with young children who might see a doctor more frequently than someone who is older. This is a system requiring tough choices for families. And for employers.

   People have to pay more attention to choosing their health care plans and reading the information on how the plan works. You might want vision insurance, but if your premiums are lower without it, leave it on the table. Unless you have serious eye problems, you can get an eye exam and glasses at discount retail places such as Eye Masters for less money than the premiums on vision insurance in most cases. This is not true for all people, but it behooves you to check it out. Do not waste precious premiums dollars on something you can buy for less elsewhere. The same is true of prescriptions: ask for generics, join a prescription plan at your pharmacy, or use a discount pharmacy. Be a smart consumer with health care!

   The news will continue to get worse. You can expect prices to rise next year. You will have to find out how you can use Flexible Spending Accounts or Health Savings Accounts to complement a higher deductible. Expect fewer options in the future. If you are wondering why the squeeze, consider the following. If employers are pummeled by health care costs, they might decide to eliminate health care benefits for all employees. This could be especially true of small businesses that lack sufficient income to offset rising costs. The new health care rules require everyone to obtain health care insurance. If employees can not obtain health benefits at work, they will have to look elsewhere. Cynics might say this is a great way to force people into a healthcare system under government control. If it looks like a duck and quacks like a duck…

 Have a terrific day!

Patricia

Entrepreneurs, real life solutions, and no government interference

   An article in the October 22 issue of the Wall Street Journal revealed the invention of new robots that let paralyzed people walk again. This isn’t science fiction…it is the result of work and research initiated and funded originally by the Defense Advanced Research Projects Agency (DARPA). The impetus may have come from the need to find ways to put injured soldiers back into the mainstream of life. The great news is that entrepreneurs are springing up to find ways to make the most efficacious and least expensive robot to sell.

   The robots resemble exoskeletons. A walking skeleton, if you will, that holds up a flesh and blood person. When strapped onto these robots, the person with paraplegia can walk again, move around, perform ordinary daily tasks of living. This is nearly miraculous in terms of integrating technology and solutions for people with debilitating injuries. Imagine someone with a spinal cord injury who was told he could never walk again getting up and walking around a room! This is a dream come true

   Companies world-wide are developing these robots, each wanting to take the pinnacle in the market place for providing and selling the robots. The good news is that creativity, innovation and entrepreneurship is alive in well on the planet. The bad news, you guessed it, some interference from the federal government.

   First the Food and Drug Administration has put up road blocks for these devices because, unlikely as it seems, they can’t control the robots. FDA requirements are more intrusive on these personal devices. This means robots made outside the United States experience difficulty getting FDA approval for imports to the US.

   The market potential for these devices is huge. But will we place the ability to control companies above need? If past experience is any indication, the answer is yes. The best way to ensure people who need help to walk again can get that help is for the feds to refrain from stepping on the toes of entrepreneurs and their companies. The future is here for new hope and life. We don’t want to see that hope squelched by excessive regulation.

Small Business Challenge: What Does Health Care Reform Require?

   Do you know what the heath care law requires of you, Mr. or Ms. Business owner? Do you know when these provisions and laws take effect? Your responsibilities are about to change, so you want to be on top of the new challenges to running your business. Here are some basic points about the Patient Protection and Affordable Care Act. This information comes from a quiz on the PPACA in the August issue of Employee Benefit Adviser magazine. It is a short take on a long bill, so it is not inclusive.

   Employers with “Cadillac” plans must implement their plans starting in 2018 and are responsible for the excise tax calculations on these plans. Most small businesses do not offer these plans. Cadillac plans are often offered in businesses with unions. Plans that not collectively bargained would not lose their grandfather status if there is a change in third-party administration, but they would lose the status if there is a change in cost-sharing, scope of benefits or insurance carriers. Many companies with the best Cadillac plans have sought, and received, waivers from the federal government to exclude them from the provisions of this law, stating the law is too onerous for them. Good luck trying to obtain an exemption for your business, however.

   Large and small employers will be allowed to offer insurance through state health exchanges, but the states will decide which employers can do so. Employers must offer health coverage for every employee working at least 30 hours per week. Beginning in 2014, employee waiting periods after enrollment can not exceed 90 days. In 2013 employee annual Flexible Spending Accounts (FSAs) will be capped at $2,500. These benefits must be used. If the money is not used it is lost to the employee. Expect to see some confusion about FSAs, Health Savings Accounts, Medical Savings Accounts, other cost-saving plans. Most of the changes in this Act will transpire in 2014, so we have a couple of years to figure out what to do.

   The Small Employer Tax Credit will cover businesses with fewer than 25 full-time employees. It is unclear what that could mean right now. Any business with more than 200 full-time employees is required to automatically enroll all new employees in a health plan. When companies are enrolling their people, they have to provide an “opt-out notice” at the same time. Employees will have the opportunity to decide if they will participate through their employers. If a company has fewer than 100 employees, it can establish a Cafeteria Plan. These plans are allowed under the Internal Revenue Service code, Section 125 plans. These plans can benefit employers and employees by saving on taxes paid while offering a variety of products that can be voluntary. Please see www.IRS.gov for more information on these plans.

   Some requirements of the plan state that chiropractic services need not be included as an essential service. The new rules allow families to choose a pediatrician as a primary care provider and dependent children must be covered until age 26. After January 1, 2014 no one can be excluded from coverage for a pre-existing condition. There is confusion about lifetime limits on the coverage provided. While not germaine to the problems of business owners as a group, your employees will need help to understand the rules. For instance, nonessential benefits have lifetime limits; some limits could violate the Americans with Disabilities Act (disabilities tend not to disappear over a lifetime) and state laws could prohibit certain benefits. Lifetime is a vague term, especially in legal contracts with providers and purchasers. If people start to life well into their nineties, lifetime benefits for all could become a Pandora’s box for the parties involved. The fun is just beginning in trying to decide what this means for you and your employees.

   These are just a few little teasers about what is part of the PPACA and your business responsibility. About 10 days ago the 11^th Circuit Court of Appeals in Atlanta ruled the Act unconstitutional. Conventional Wisdom, aka the pundits, are saying this Act will appear before the United States Supreme Court by next spring at the latest. This will prove to be an interesting fight. Meanwhile, back at the ranch, I will keep providing you with some essentials on the Act to keep you informed. You want good information to make good decisions. Stay tuned.

Have a terrific day,

Patricia

Health Care Reform Impacts on Small Business

   Last week I started writing about the consequences of Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act on small businesses. This week the focus is on a policy analysis report written by John L. Ligon and published by The Heritage Foundation on their website at www.heritage.org. As I wrote previously, beginning in 2014 new taxes will be levied on small businesses. The tax burden on business will be used to help pay for the insurance premiums of employees receiving health care through state sponsored exchanges.

   The Act relegates these taxes to companies with 50-199 employees. But smaller companies will be swept up in the taxation frenzy to meet the increased expenses. As more health insurance companies opt out of offering individual policies in states, more people who purchase their own health care will be forced into the state exchanges, forcing the tax increases.

   In addition to increased taxes, as business owners are forced to pay even higher rates to offset these expenses, they will be less likely to have the money to pay for additional hires, increased wages, and benefits for existing employees, expansion, and other costs incurred in running a business.

   Ligon points out five areas where the reform penalizes small business owners.

1. Higher health care costs. These pertain to businesses that provided group policies. Heritage analysts project in increase for employers and employees for help pay for the exchanges. Many smaller firms will drop their group coverage when it is impossible for them to purchase health insurance for their employees.
2. Ineffective Small Business Tax Credit. Businesses will not be able to absorb the additional costs and the tax credits won’t counteract the increased costs.
3. Higher Regulation Compliance Costs. Businesses are not prepared to meet compliance issues with current staff. Someone has to read and respond to all those new regulations.
4. Medicare Taxes on “Flow-Through” and Investment Income. Medicare taxes will increase, as well as business taxes paid outside of payroll tax. It is coyly termed the Medicare Investment Tax. Business owners will be paying into a fund from the money they earn, increasing their taxes yet again.

   Job creation cannot compete with tax revenues. If you are paying additional taxes for health care premiums and “investments” you won’t be creating new positions that put people to work.

   Please see the original article, complete with references, on the Heritage website. Stay tuned here for more information on Obamacare.

   Have a terrific day!

Patricia

Small Business and Health Care Reform

   First, a word of caution: wait. Wait and see what transpires in health care reform. Whatever I write today will probably change this year, next year, or the year after. The Patient Protection and Affordable Care Act, better known as Obamacare, is being challenged by most states. The latest kerfuffle was initiated by the Thomas More Law Center. It filed suit because the law stipulates that people who choose not to participate can be taxed under the Internal Revenue Code.

   Did you get that? If you do not want to engage in commerce, in this case the purchase of a product of insurance, the government has the power to tax and punish you. Not exactly freedom of choice, is it? The law was upheld in the Sixth Circuit, but one of the dissenting judges in the Sixth Circuit said, “If the exercise of power is allowed and the mandate upheld, it is difficult to see what the limits on Congress's Commerce Clause authority would be.” (Italics mine.)

   Indeed.

   In January 2011 federal judge Roger Vinson quoted President Obama declaring in 2008, “If a mandate was the solution, we can try that to solve homelessness by mandating everybody to buy a house.” Clearly the President uses flexible thinking when it’s his pet project. Nevertheless, 27 states have sued over the Act. At heart lies the right of states to determine for themselves what their citizens can do. Never before has anyone suggested that the federal government can force people to purchase something against their will.

   The egregious behavior only begins there. How would you like to be the enforcer of this twisted law? As a business owner, you would be. Here is the mechanism, as outlined by the Congressional Budget Office, that estimates revenues of $36 billion, yes billion, would be collected in a decade. You would have to deduct the penalty payments from your employees’ paychecks.

   Massachusetts uses a similar program now and the state discovered there are people who are more willing to pay the fine than are willing to be forced to purchase insurance they do not want.

   Those of us who sell insurance and financial services products and tell our potential customers that we will never try to sell them something they neither need nor want will find this impossible to swallow. Those of us who are business owners definitely do not want to become collectors of fines for the feds. No matter how you dice it, this is not what most of us signed on to. If you’re bothered by this, for any reason, make your opinion known. In the mean time, attorneys general in the states are filing suit. Health insurance is one thing; forcing people to engage in purchasing products against their will is something else. Today the issue is insurance. What will tomorrow bring?

Have a terrific day!

Patricia

Under a Blood Red Sky
   Chicken Little is famous for running about crying, "The sky is falling!" without any evidence to support the claim. Our current economic mess has produced a new crop of chickens crying about this and that. The truth is that our debts have grown so unwieldy we are like the sailers under a blood red sky...the storm is coming and we can only prepare for, not prevent, the changes.
   What can you do to make adjustments? Financial services and insurance products are changing and keeping track is dizzying. Make sure you find a trusted benefits advisor to help you discover choices that provide your employees with great options. Your benefits advisor is a consultant and educator. According to the May 2011 issue of Employee Benefit Adisor, 39% of American adults cannot read and understand the language used in insurance and financial services products. That is an astonishing number of people who are purchasing products they don't understand. People need help in finding the right products for their families.
   Your advisor can consult with your employees and recommend specific solutions to their problems. By bringing information to your employees, confusion and misunderstanding can be lessened or avoided. Voluntary benefits work in ways that are significantly different from major medical benefits and your employees need a good working knowledge of the difference. Few people have enough disposable income that they can afford to squander their dollars on inadequate or unnecessary products.
   Establishing a good working relationship with your advisor is essential. People trust you and your employees to do an excellent job on what you sell; you and your staff should be able to trust your advisor in the same way. That trust is doubly important now when enormous changes are taking place in major medical, voluntary, and elected benefits. As we encounter changes in tax laws, withholding, death taxes, and pre and post tax deductions, we need clear definitions and suggestions in our businesses and personal lives.
   Change is constant; chaos is the natural order of the universe. Being prepared for the road ahead is wise. Schedule an appointment with your advisor to discuss how you can prepare yourself, your business and your staff for the changes.
Have a terrific day!