Medicare Part B premiums increasing up to 30%.

May 12, 2015 by Frank West

When the Medicare Access and CHIP Reauthorization Act of 2015, commonly known as the “doc-fix” legislation, becomes law, some Medicare participants will pay 30% more for their Part B premiums. The legislation, which was decisively passed by the House on March 26 and the Senate on April 14 is expected to be signed by President Obama soon.

The bill replaces the current physician Medicare reimbursement schedule with payment increases for doctors for the next five years. It will be financed by higher Medicare Part B premiums for individuals whose income exceeds specified thresholds beginning in 2018.

Lower to moderate income households unaffected

Medicare Part B covers doctor and outpatient visits. Premium amounts are determined using modified adjusted gross income, or MAGI, per one’s federal income tax return two years prior to the current year. MAGI is adjusted gross income plus tax-exempt interest.

There are currently five MAGI brackets. Each of the married filing joint bracket amounts is double the corresponding single bracket amounts. Annual premiums range from $1,258.80 to $4,028.40 per person depending upon your bracket.

Individuals in the first two brackets, that is, those whose MAGI doesn’t exceed $107,000 using single filing status or $214,000 filing joint, will continue to pay the premiums they’re paying now.

New income bracket

The third MAGI bracket, which is currently $107,001 up to $160,000 for single individuals, with an associated annual Part B premium of $2,517.60, will be split into two brackets with a premium of $3,272.40 for the fourth bracket per the table below. Per the table, single individuals with MAGI between $133,501 and $160,000 will pay an additional $754.80, or 30%, for their Medicare Part B premiums beginning in 2018.

An annual premium of $3,272.40 is currently paid by single individuals whose MAGI is between $160,001 and $214,000. Beginning in 2018, those who fall into this bracket will pay $4,028.40. This represents an increase of $756.00, or 23.1%. The top premium of $4,028.40 is currently paid by single and joint filing status individuals whose MAGI exceeds $214,000 and $428,000, respectively.

Medicare Part D prescription drug premiums

The new Medicare Part B income brackets will also apply to Medicare Part D prescription drug premiums beginning in 2018. Once again, single individuals with MAGI between $133,501 and $214,000 will be affected as will joint filers with MAGI between $267,001 and $428,000.

The Part D premium increases for individuals whose income falls into the foregoing ranges will vary depending upon the specific Part D plan. While the monthly amounts are less than those for Part B, the percentage increases for affected individuals will be as much as 61%.

Income brackets not adjusted for inflation

Individuals who are impacted by the income bracket changes and associated higher premiums will initially be in the minority. More people will be adversely affected each year going forward, however, since the new legislation includes no provision for income bracket inflation adjustments.

Narrower brackets that would result in significantly greater numbers of individuals paying higher Medicare Part B and D premiums are a distinct possibility in the future. Had a bipartisan committee proposal been enacted, the top end of the lowest MAGI bracket would have been reduced for single and joint filing taxpayers from $85,000 and $170,000, respectively, to a maximum of $45,000 and $90,000, respectively. The other MAGI brackets would have seen similar reductions.

Look for planning opportunities

Given the fact that Medicare Part B and D premiums are determined by one’s income, it’s important to be aware of the various income thresholds and plan accordingly. Any reduction in Medicare premiums should also result in a reduction in income tax liability since both are income driven.

Finally, given the fact that 2016 MAGI will be used to calculate 2018 premiums, it isn’t too early to start planning. This includes individuals who are turning 62 in 2015 since they will be eligible for Medicare in 2018.

What Medicare Does and Does Not Cover.

May 12, 2015 by Frank West

Introduction

Medicare pays for many of your health-care needs and expenses—but not everything. Knowing what’s covered and what isn’t can help you plan for unexpected costs and budget for your annual health-care expenses.
What Does Medicare Not Cover?
Medicare coverage doesn’t provide:
- long-term care (also called custodial care), such as nursing home stays or stays in an assisted-living center
- routine dental or eye care
- dentures
- cosmetic surgery
- acupuncture
- hearing aids and exams for fitting them
What Does Part A Cover?
Medicare Part A covers your inpatient hospital stays.

You pay a deductible and no co-payment for days one to 60 each benefit period.

You pay a co-payment for days 61 to 90 each benefit period.

You pay a co-payment per “lifetime reserve day” after day 90 each benefit period (up to 60 days over your lifetime).

You pay all costs for each day after the lifetime reserve days.

Inpatient mental health care in a psychiatric hospital is limited to 190 days in a lifetime.

What Does Part A Cover? Continued

Medicare Part A will cover an inpatient stay in a skilled nursing facility—after you have stayed a minimum of three days in the hospital.

You pay nothing for the first 20 days each benefit period.

You pay a co-insurance per day for days 21 to 100 each benefit period.

You pay all costs for each day after day 100 in a benefit period.

Hospice care facilities

You pay nothing for hospice care.

You pay a co-payment of up to $5 per prescription for outpatient prescription drugs for pain and symptom management.

• You pay five percent of the Medicare-approved amount for inpatient respite care.

Home health-care services

You pay nothing for covered home health-care services.

Blood transfusions

You pay for the first three pints of blood if the hospital treating you had to buy the blood. It’s free if the blood was donated to the hospital or to you.you pay 20% of the Medicare-approved amount for durable medical equipment.

What Does Part B Cover?

Doctor’s appointments, including specialists. You pay 20 percent co-insurance.

Outpatient care, including outpatient hospital, medical, urgent care, tests, therapies, outpatient mental health, emergency, and ambulance services. You pay 20 percent co-insurance.

Home health services. This is limited to medically necessary part-time care. You pay 20 to 25 percent co-insurance.

Durable medical equipment. You pay a 20 percent co-insurance for items like oxygen, wheelchairs, and walkers.
Preventive and screening services. You pay 25 percent co-insurance for some screenings.

Preventive and screening services covered by Medicare Part B

Preventive and screening services covered by Medicare Part B

abdominal aortic aneurysm ultrasound

bone mass measurement (bone density)

mammograms

cardiovascular disease behavioral therapy

cervical and vaginal cancer screenings

colorectal cancer screenings

diabetes screening

glaucoma tests

hearing and balance exams

flu shot

hepatitis B shots

HIV screening

obesity screening and counseling

prostate cancer screenings

tobacco cessation therapy

yearly wellness visits

Emergency Services Covered by Medicare Part B

Medicare Part B covers ground ambulance transportation when you need to be taken to a hospital or emergency medical center. Medicare may also pay for emergency transportation in an airplane or helicopter if you need immediate and rapid transportation. You may have to pay a co-insurance payment on this service.

Supplies Covered by Medicare Part B

diabetes self-management training

diabetes supplies

kidney dialysis services and supplies

transplants and immunosuppressive therapy

Filed Under: Medicare Supplement Plans, Medigap Insurance Tagged With: Medicare Insurance Plan, Medicare Supplement

Is Your Business Aware of Disability?

May 12, 2015 by Frank West

Is Your Business Aware of Disability?

I recently received an email that May is national Disability Insurance Awareness Month. My initial reaction was, “What, people don’t know they can become disabled?” We’ve all seen situations where an unexpected disability disrupted or even destroyed a family or business. Upon further reflection, I realized the issue is “insurance.” Many people don’t understand the kinds of disability insurance that are available. Let’s help out the cause by providing awareness of various disability protection options that businesses might consider.

1 – Disability Income. Many employers are aware of this form of disability coverage. If you become disabled, after a waiting period, the insurer pays a monthly income for a period of time or until the disability ceases. Companies can buy it for a group of employees (Long-Term Disability “LTD”) or for individuals (Individual Disability Income “IDI”) like themselves or key employees. At the risk of sounding overly simplistic, if you make a high wage and are insurable, the question is not, “Can I afford it?” Rather, the question is, “Can I afford NOT to have it?”

2- Overhead Expense Protection. Smaller, privately-held companies often avail themselves of this coverage. The idea is that if the owner, who is typically the key employee, becomes disabled, the business needs to continue paying fixed expenses such as rent and salaries. As the name implies, with this coverage the insurer pays a defined amount to the company to defray overhead expenses until the owner returns to work. I think of this as “optimism insurance” with the purpose of keeping the company’s doors open while the owner recuperates from a disability.

3 – Disability Buy-Out. Much like Overhead Expense Protection, this coverage is more about the business than the individual. With this option an amount, typically a lump sum, is paid by the insurer if a stockholder becomes totally disabled and consequently triggers a stock buyout. Perhaps because of high profile disabilities in the news, it seems like this coverage is getting more attention – and should. A lot of buy-sell agreements I see either ignore disability, or have it as a triggering event, but without funding. Disability buy-out can provide the cash (typically on a reimbursement basis) when it is most needed. Just be sure to coordinate this coverage with the terms of the buy-sell agreement.

These are the “Big 3” in disability coverage for businesses. One replaces income, one defrays overhead and the other helps fund an ownership transfer. With this being the month for “disability insurance awareness,” I want to point out two other coverage options that are not as well known.

Business Loan Protection – In an environment when business borrowing is both more difficult and more important, this protection may be crucial. This type of coverage helps ensure lending institutions get paid even when an owner becomes disabled and can’t bring in revenue to cover his/her business-related loan obligations. So, if you become totally disabled and have this insurance, you essentially transfer your loan obligation to the insurance carrier. I’ve seen this offered as a rider to an Overhead Expense Protection policy; that makes sense to me, considering that often debt service is one of the top forms of overhead for a business.
Key Person protection – When a key employee can no longer work because of a disability, it leaves a serious gap for the business owner and business profits can take a hit. Key person protection provides a benefit for owners to use at their discretion to fill the gap – whether that means spending the benefit to offset recruitment costs or simply replacing lost revenue. It’s become common place for companies to protect themselves with key person life insurance. It’s time to cover the contingency of a “living death”.

Most don’t realize – an individual is 240 times more likely to incur a disabling injury than suffer a fatal injury. It’s important for businesses and their employees to be aware of the “what if” and consider if a disability insurance policy is right for them. My intent is not to evoke pictures of hospitals, rehab centers and nursing homes. I’m suggesting, rather, images of continuing income for families, companies surviving a rough patch while the owner is gone, and successful transfers of business interests. It’s something we don’t want to think about happening, but better to be prepared than not. Think about it. Be aware of it.

Filed Under: Disability Income Insurance, Paycheck Protection Tagged With: Professional Disability Income Protection

Disability Income – Who Will Help With Bills If You Get Disabled?

April 28, 2015 by Frank West

When You Can’t Work, Disability Insurance Goes to Work for You

But what would happen if you become disabled or ill and could not work?

How would you…

Pay your bills?
Make your monthly rent or mortgage loan payments?
Buy your groceries?
Make your car payments?
Provide for your children’s education?
Save for retirement?

Most people don’t realize the risk of becoming disabled, permanently or temporarily, at some point in their lives. But the reality is that at age 40, your chances of becoming disabled for 90 days or more prior to age 65 is 43%. (Source: 2004 Field Guide, National Underwriter).

When evaluating the chances of disability, you should carefully consider sources of available funds:

Employer Coverage

How long would the business continue to pay you? How much would they pay you? When would your employer have to hire a replacement? Could the business afford to pay both?

Using Savings

If you saved 10% of your income each year, one year of total disability could wipe out 10 years of savings. Can you afford that?

Obtaining a Loan

Without an income, who will lend you money?

Working Spouse or Partner

Can your spouse or partner earn enough and be a companion, parent, private nurse, and employee — all at the same time?

Selling Investments

Will a sale under forced conditions bring a true value? What will their value be at the time you are disabled?

Collecting Social Security

You cannot collect benefits until the end of the fifth full calendar month of total disability and only if it is expected to last 12 months or more. What will you do if your disability doesn’t meet those requirements? Even if it does, can you wait six months for payment?

Counting on Friends, Family or Charity

Would these sources have funds for you to use? Do you want to depend on them?

Many different disability insurance products are available to help protect you and your family against severe financial hardship that may accompany a disability.

Filed Under: Disability Income Insurance, independent insurance agent, Paycheck Protection Tagged With: Professional Disability Income Protection

Hospital Industry Raids The Medicare Trust Fund.

April 28, 2015 by Frank West

Every year, millions of Americans pay federal taxes to support government programs that provide health, wellness, and other benefits to those who need it most. One would assume that safeguards are in place to ensure that our taxpayer dollars are used appropriately and efficiently. However, a recent Government Accountability Office (GAO) report states that rampant waste exists within the Medicare program. In 2014 alone, Medicare overpaid hospitals and other healthcare providers nearly $60 billion for services that were unnecessary or billed improperly. That’s billion—with a “B.”

Would you allow yourself to be overcharged for your groceries and not ask for a refund? Would you go out to dinner and pay for items on your check that you never ordered? The federal government would, and it is wasting your taxpayer dollars while doing so.

The GAO report states that Medicare has the highest level of improper payments government-wide, which should be unacceptable given the program’s important role as the healthcare safety net for the nation’s seniors and other beneficiaries. Pair that with a recent Medicare Trustee report that says Medicare will go bankrupt in the next 15 years (by 2030). Clearly, Medicare waste needs to be made a higher Congressional priority, or we can bid farewell to a program that we hoped would be there for us when we turn 65.

In 2009, Congress launched a program to provide vital oversight to Medicare, the Recovery Audit Contractor (RAC) program, which leverages the expertise of independent contractors to review post payment Medicare claims and determine if they have been billed according to Medicare policy. Since the RAC program began, these contractors have returned more than $9 billion back to the Medicare Trust Fund while reviewing less than 2% of all Medicare claims. This work to recoup dollars that have been inappropriately billed helps prolong the life of this vital healthcare program.

So, what’s the problem? Congress has benched the RACs, the only program looking out for taxpayer dollars, while Medicare hemorrhages billions due to provider complaints that they are “burdened” by Medicare oversight programs.

In fact, in an effort to game a broken system and retain as much money as possible, whether billed correctly or not, hospitals have spent tens of millions of dollars lobbying Congress to shut down the RAC program, one of the most successful oversight programs in U.S. history. Hospitals most passionately fight against review of Medicare Part A claims, which are directly paid for by taxpayer dollars.

Medicare improper billing runs across a wide spectrum—including everything from simple coding mistakes to outright fraud. For example, providers have inappropriately charged Medicare ten times what it costs to administer a single medication, have billed for care provided after a patient’s death, and also have held patients in the hospital longer than necessary in order to recoup a higher reimbursement rate.

Guest post written by Kristin Walter

Ms. Walter is spokesperson for the Council for Medicare Integrity, a non-profit organization.

Filed Under: Medicare Advantage, Medicare Supplement Plans, Medigap Insurance Tagged With: Medicare Insurance Plan, Medicare Supplement

7 Rules For Deducting Medical And Dental Expenses.

April 22, 2015 by Frank West

In past years, if you itemized your deductions, you could deduct qualified medical and dental expenses to the extent they exceeded 7.5% of your adjusted gross income (AGI). However, beginning January 1, 2013, this threshold was raised to 10%. In this article, we’ll discuss what you need to know to claim a federal income tax deduction for medical and dental expenses.

1) AGI Threshold Increase

The total of your qualified medical and dental expenses must exceed 10% of your AGI to claim a deduction. There’s one exception which we’ll discuss in the next section.

2) Temporary Exception to the 10% AGI Threshold

If married, and one spouse is at least age 65, the threshold remains at 7.5% of AGI until December 31, 2016. Beginning January 1, 2017 the threshold will be 10% for all taxpayers.

3) You Must Itemize

You must itemize your deductions (i.e.; Schedule A) in order to qualify. You cannot use the standard deduction and claim medical and dental expenses.

4) When Are Medical Expenses Considered Paid?

You must have paid medical expenses during the calendar year. If you paid by check, the date you mailed or delivered the check is usually the qualifying date of payment.

5) Qualified Costs And Expenses

You may use any medical or dental costs you paid for yourself, your spouse, and your dependents. However, if you were reimbursed by insurance or another source, your deduction will be reduced by the amount of the reimbursement. In general, any legitimate medical expenses will qualify, including the costs of diagnosing, treating, easing, or preventing disease. This also includes the cost of health and dental insurance premiums and possibly long-term care insurance premiums. Also on the list are eye exams, eye glasses, contact lenses, and eye surgery. The list of qualified expenses is quite extensive. To find everything you’ll need to know about deducting medical and dental expenses, click the following link which will take you to the IRS website and to the specific publication on this subject. To learn more, click: IRS Publication 502.

6) Travel Costs

You may be able to claim the cost of travel for medical care. This includes public transportation, ambulance, tolls, parking fees, etc. If you used your personal automobile, you may be able to deduct 24 cents per mile for 2013.

7) No Double Benefits

If you participate in a Health Savings Account or Flexible Spending Arrangement and you used either to pay for medical expenses, you cannot claim a tax deduction as these funds are usually withdrawn on a tax-free basis.

Filed Under: Dental Insurance Tagged With: Dental insurance plans

In a Changing Economy, Protect Your Most Valuable Asset: Income

April 22, 2015 by Frank West

If you were asked to identify your most valuable financial asset, what would you answer? Your home? Your investments? Your savings? If so, you’d be in good company. Yet none of those things are possible without income.

“Income is our most valuable asset,” says Sandra Botcher, Vice President-Disability Income Insurance at Northwestern Mutual. “And it’s more important than ever to protect our ability to earn income.”

Northwestern Mutual’s 2013 Planning and Progress Study illustrates the income pressure many continue to experience in this ever-changing economy. According to the study, Americans feel like they’re falling behind in their savings goals, and nearly a quarter of those surveyed said they’ve dipped into their retirement or savings in the past few years to tide them over.

“Clearly, there remains anxiety about the economic environment,” says Botcher. “The good news is, there are simple steps we can take to protect our ability to earn income. And when we do, we free ourselves to live the life we envision—today and in the future.”

What’s involved in protecting income? There are two basic factors that can impact our long-term ability to earn money: death and disability. Death is inevitable, so most people appropriately purchase life insurance to protect the financial welfare of those who depend on them. However, the economic hardship caused by a disability is just as real, but often overlooked.

“In fact, we are twice as likely to become disabled before the age of 65 than we are to die prematurely,” says Botcher. “Even a relatively short disability could have a significant impact on our ability to meet our basic expenses, let alone our short-term savings and long-term retirement goals.”

Only a minority of Americans purchase disability insurance, in part because they don’t realize how easy it is to become sick or injured to the extent that their ability to work would be affected.

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Filed Under: Disability Income Insurance Tagged With: Professional Disability Income Protection

How Much Life Insurance Do I Need?

April 22, 2015 by Frank West

Figuring out your life insurance needs sounds trickier than it actually is. The important thing is first determine whether you need life insurance, which kind is best for you and carefully calculate how much you need.

All we have to do is be clear about what your situation is, what risk to mitigate and voila, you have your answer.

First question: Do you need life insurance at all? If you have dependents to protect and don’t have enough savings, you definitely need insurance.

Second question: Which kind of insurance should you get? If you want to protect your family against the destruction of your business or estate taxes after your death, whole life or universal life insurance has to be considered. But if your main concern is to protect your family against a loss of your income, term insurance is the way to go.

Finally, how much insurance do you need? This question is also pretty straightforward. It takes a few steps, but it’s not rocket science. Let’s go through it:

1. How much debt do you have other than your mortgage? If you have any other debt, you are spending more than you earn. Do you add to your debt each month? Do you pay it down each month? If you have debt, you have to buy more life insurance to pay it off.

2. How much do you spend each month? The most accurate way to determine your monthly needs is to use a personal budget software package, but you can also use your bank statements to estimate your spending.

You can’t protect your family if you don’t know how much you need every month. Don’t just guess. You might think that $500,000 in term coverage is sufficient. After all, it’s a lot of money. But give it careful thought. You may find that this is not enough.

If you die and your family gets the $500,000, what can they do with it? They might invest it using an income diversity strategy and maybe earn 5%. That amounts to just $25,000, of yearly investment income. So, if you earn $25,000 in salary, a $500,000 term policy is plenty. But if your family depends on more than $25,000 each year, you need more coverage.

3. How much do you save each month? If you put away money every month and live within your means, keep it up. In fact, you probably don’t need to replace all of your income, so you need less term life insurance.

4. What are your longer-term saving goals? How much money do you need to retire and pay for your immediate future? Are you saving enough to fund your future automobile purchase, retirement and education for the kids?

If you have funds set up for nonrecurring but expected outlays, fine. Otherwise, you need more coverage.

5. How much income do your survivors need if you aren’t around? This is the only thing that really matters when it comes to determining how much life insurance you need. But to answer this you have to first add up your answers for the above questions.

Let’s say you know you spend $6,000 each month to pay all your bills including taxes. You calculate this using a personal budgeting software program so you know you are on target.

Let’s also assume that this $6,000 pays for everything including future college education, automobile purchases and retirement. Of the $6,000, you earn $3,500 and your husband earns $2,500.

You run a financial plan and figure that by age 65, your maximum social security benefit and income from your investments will replace your earned income. That’s when you retire. (Without a financial plan it’s really tough to know how much insurance you need.)

After you do this exercise, you know that you need to replace your income until you reach 65. That’s $3,500 per month for you and $2,500 for your husband.

Your monthly income is equivalent to $42,000 a year. You need enough term insurance so that if you pass away, you could invest the proceeds and earn $42,000 after tax. How do you calculate that?

Filed Under: Life Insurance Tagged With: Term Life Insurance

Obamacare is About to Bankrupt a Whole Bunch of Small Businesses.

April 8, 2015 by Frank West

The crushing costs of compliance with the regulatory burdens of Obamacare have already been well documented, especially as they pertain to small businesses. But as small businesses prepare their corporate tax returns next year, many accountants are warning that, based on Department of Labor guidelines issued after the election, countless small businesses are about to be hit with a huge tax penalty that they simply cannot afford.

The issue here is somewhat complex, and is exactly the sort of issue that most small business owners trust to professionals to handle for them. When these businesses were notified that the health plans they offered their employees were not compliant with Obamacare, many of them sought to avoid dumping their employees on the exchanges. At the time, insurance vendors, based on a colorable reading of the law, encouraged many small businesses to work with them to either provide so-called section 105 plans where the employer would reimburse a broker for the cost of coverage bought by the employees, or to encourage their employees to buy their health insurance directly from brokers and to reimburse them for the purchase of this healthcare coverage. All year long, the Department of Labor allowed this practice to continue, only to declare at the 11th hour that this arrangement would be treated as noncompliant with Obamacare and thus subject employers to a penalty. The reasons for this decision are obvious and disgustingly political: the Obama administration wants to boast of larger numbers of people enrolled in the exchanges for political reasons:

This answer is very clear that ANY reimbursement of health insurance payments by an employer for an employee is subject to the ACA rules and therefore are subject to possible penalties under Section 4980D of the Code. These penalties can be substantial (up to $100 per day per employee). Therefore, it is extremely important to make sure that any payment of premiums for employees is as a direct result of payments withheld from an employee’s paycheck and then directly transmitted to the health insurance provider. Any gross of up wages directly related to payment of premiums may be problematic.

Additionally based on this Q & A, it is probably better for the employer not to pay any health insurance premiums (unless a qualified group plan or for only one employee employers). It appears that the DOL and the Administration is pushing all non-qualified premiums onto the exchange and those premiums are usually paid directly by the employee (and may not be reimbursed). This will increase the number of persons covered by the exchange which is the primary goal of the administration (this last part is strictly my opinion).

If you can do basic math, you can probably figure out that many small businesses are about to get hit with a penalty of $36,500 per employee through no fault of their own. If you have any familiarity with small businesses, you know that the overwhelming majority of them are simply not going to be able to pay an unforeseen penalty of $36,500 per employee and are going to be forced to simply shut their doors. As a result, who knows how many employees are about to have no health coverage at all or be forced onto the subsidies (provided that they aren’t eliminated in most states via King v. Burwell). It’s yet another example of the twisted incentive created by Obamacare where the government would actually prefer that taxpayers be on the hook for these people’s health insurance than their own employer, just because they oppose the specific payment mechanism for political reasons.

And the saddest thing of all is that many small businesses are going to get caught in the crossfire of this political fight and snuffed out. The monstrosity that is Obamacare must be repealed, and fast, no matter the political cost, or the damage it wreaks on our economy might well be permanent.

Filed Under: Affordable Care Act, Health Insurance, independent insurance agent Tagged With: Affordable Care Act, Health Care Reform

Small Businesses and the Affordable Care Act at Five Years.

April 8, 2015 by Frank West

Small businesses were promised lower costs and more choices once the Affordable Care Act (Obamacare) was implemented. Five years after being signed into law, small businesses have not seen many of the benefits they were promised.

Higher Insurance Costs
Very little has changed for small businesses and the self-employed when it comes to costs. They keep going up. Yes, there are exceptions here and there, but for the most part, the promise of lower costs has been an empty one for small businesses.

According to a National Small Business Association survey in 2014, “91 percent of small businesses reported increases in their health plan at their most recent renewal while 96 percent reported increased health insurance costs over the past five years. The majority expect to continue seeing cost increases in the coming year.” Indeed, that has been the case for 2015.

You can’t load up health insurance plans and the health care system with mandates, regulations and taxes (like Obamacare does) and expect lower costs. Let’s make this clear: The law has not produced lower costs. President Obama promised a $2,500 decrease in insurance costs per family. This did not happen.

Choice and Access Have Not Improved
The performance and effectiveness of the health insurance exchanges for small businesses have been underwhelming, to say the least. In most states, the exchanges have been a sad and wasteful disaster. “One year in, the new small-business insurance marketplaces born out of the new federal health-care law have fallen short of their promise in nearly every state, both in terms of functionality and enrollment,” reads an October 2014 Washington Post article.

For 2015, small businesses have been promised bigger and better. The federal Small-Employer Health Option Program (SHOP) was delayed until this year and is now open. One of the original selling points was the offering of many plan choices that the employees of small businesses could select from. This feature will not be available nationwide until 2016, but some state exchanges do provide this option (albeit with limited choices). Exchange website “glitches” and lack of insurer participation have slowed SHOP down, and it remains a question mark as to whether small businesses will actually use the government exchanges. It’s a question mark as to whether more insurance companies will actually want to participate on the SHOP exchanges, thus undermining their whole purpose.

Obamacare stripped existing health care plans from many small businesses and the self-employed – most have not been (or will not be) able to keep the health care plans they liked. We knew this was going to happen, despite promises stating otherwise. Obamacare is upending Health Reimbursement Accounts (HRAs) as well, which are used by many small businesses. While the federal government announced it would delay the imposition of financial penalties on companies that use HRAs until July of this year, stripping this choice from small employers is going to hurt.

The bottom line is that small businesses and the self-employed are losing, not gaining, health insurance choices under Obamacare.

Obamacare controls the market; therefore health insurance choices are limited by government’s control, and dictates on plans. Obamacare has eliminated many preferred and affordable choices. The government exchanges are not real markets. These markets are not appealing for most small businesses, or insurers. That is probably why the federal government (HHS) will not fully release the data on the number of small businesses that are using the exchanges (despite repeated requests by former House Small Business Committee Chairman Sam Graves in 2014, and those shortly following the launch of the new HealthCare.gov.) The total numbers would be embarrassing, but we know the truth. Small business participation is abysmal.

Small Business Tax Credit a Dud
During debate on Obamacare, most members of the small business community did not see how the plan would lower costs or improve access. So the White House kept talking up the benefits of the health care exchanges (see how that worked out above?) combined with the small business tax credit. Unfortunately, and as predicted, the tax credit remains a big dud.

The tax credit is so measly and complex that only a tiny fraction of the small business sector qualifies for it, or dares to sift through the morass. To make matters worse, the tax credit is only temporary. As noted by the Government Accountability Office last year, “the credit may be too small and administratively complex to motivate many employers to enroll.” Indeed, another reason why small business participation in the health exchanges is so low.

The credit needs to be much more robust to minimally harmonize with the high cost of Obamacare and the reality of small business pay scales. Moreover, simplification, permanency and allowing more small business employees to qualify, could yield a higher adoption rate.

New Burdens, Uncertainty and Complexity
Remember when President Obama boldly claimed that buying health insurance on the exchanges would be easy peasy – as simple as purchasing something on Amazon.com? Well, it did not turn out that way. There was the dreadful launch of HealthCare.gov, but bad websites are only one aspect of Obamacare’s false starts, complexity, confusion, and the burdens impacting small businesses.

Obamacare’s incessant changes and delays have been confusing for many small businesses. According to the Galen Institute, “more than 49 significant changes already have been made to the Patient Protection and Affordable Care Act: at least 30 that President Obama has made unilaterally, 17 that Congress has passed and the president has signed, and 2 by the Supreme Court.”

Obamacare’s administrative and compliance burdens are not insignificant either. They are imposing hefty costs on top of general frustration for small businesses. In February, we also learned the Department of Health and Human Services (HHS) sent faulty tax information to 800,000 taxpayers – presumably many of these are small businesses and the self-employed. (House Small Business Chairman Steve Chabot has multiple requests into HHS about the incident.) Moreover, the complexity of Obamacare’s employer mandate (where, for example, a 30-hour work week is considered full time) and its sheer costs have forced small businesses to cut hours, wages and jobs.

The Struggle Continues for Small Businesses
From the small business perspective, Obamacare has exacerbated their 20-plus year struggle with health insurance – costs are too high and keep increasing, innovative choices are lacking, and buying coverage and administering health insurance is a burdensome hassle.

Obamacare supporters point to those getting insurance (though not all are newly insured) as the key measure of its success. Yet, those meager achievements could have easily been reached without disrupting the lives and health plans of millions of people, and without spending $1.7 trillion of taxpayer dollars, including the wasted billions on bad exchanges, consultants, technology and who knows what else

Filed Under: Affordable Care Act, Health Insurance, insurance broker, Obamacare Tagged With: Affordable Care Act, Health Care Reform

Introduction

What Does Medicare Not Cover?

What Does Part A Cover?

What Does Part A Cover? Continued

What Does Part B Cover?

Preventive and screening services covered by Medicare Part B

Emergency Services Covered by Medicare Part B

Supplies Covered by Medicare Part B

Is Your Business Aware of Disability?

When You Can’t Work, Disability Insurance Goes to Work for You

Employer Coverage

Using Savings

Obtaining a Loan

Working Spouse or Partner

Selling Investments

Collecting Social Security

Counting on Friends, Family or Charity

Quick Links