Should I Skip Insurance to Save Money?

July 8, 2015 by Frank West

When money is tight, you may be looking for easy ways to save money. One item that can be especially frustrating is your insurance bill each month. You send the money in, but then you rarely if ever use it. You may be tempted to try to go without insurance because it is something that you rarely use. However, insurance is there to protect you from the overwhelming catastrophes.

Should I Cancel Insurance Completely?

The simple answer is no. There are three basic types of insurances you need to have no matter what. You need to have health insurance, car insurance, and home or renter’s insurance. Law requires car insurance and you can choose to get just the bare minimum requirements. If you have a car loan make sure you have enough coverage to pay off the loan.

What’s a Life Insurance Premium?

If you have a mortgage, the company will require you to carry the insurance. Health insurance is also required under the Affordable Care Act, and can protect your from financial disaster. If you have any dependents you really should have life insurance, as well.

What If I Never Use It?

If you never use health insurance or make a claim on your car or home owner’s insurance, that is great. However, it does feel like you may be wasting your money. The simple fact is that you do not know when you will need the insurance. No one wakes up and plans to get an appendectomy or to get in a car accident. No one wakes up and thinks it would be great to be robbed today. These things happen everyday to all over the world, and your insurance is your protection so these events are easier to mange. Insurance makes it easier to move forward.

How Can I Save?

One of the ways you can save money is by increasing your deductible. If you rarely use your insurance, you can set aside money each month to cover your deductible.

With a high deductible health insurance policy, you will pay out of pocket until you reach your deductible. However, you will be covered when you become seriously ill, and you will better be able to manage your bills. You can also lower you car and home insurance policy premiums by increasing your deductible. You need to be sure that you can afford to pay the difference. Another way you can save is by shopping for a new policy every few years. Most insurance companies will charge new customers less for their premiums. You can also take advantage of discounts through your job and alumni association to help reduce costs.

Is There Any Insurance I Can Do Without?

There are some options that you may not need right now. One easy example is cancer insurance, which usually offers a one time lump payment when you are diagnosed with cancer. Unless you have an extremely high chance of getting cancer due to family history, you can likely skip this option. When you are in your twenties, you do not need to purchase long-term care insurance, since you will likely not need it until you are a bit older. Finally, you may not need an umbrella policy when you are in your twenties, because you do not have a large number of assets that you need to protect.

Remember that insurance is designed to protect you. The protection it offers is worth the amount that you are paying in premiums each month. It only takes one accident or unexpected event to put your finances in a tailspin. While it may seem like you are throwing money away, you will find at some point just how much your insurance gives you, including peace of mind. Take the time to review your policies each year to make sure that you have the right amount of coverage for your current needs.

Tips for selecting the right comprehensive health insurance plan.

June 8, 2015 by Frank West

Today, with medical costs at all-time high, emergencies such as sickness, disease and accidents which may result in prolonged hospitalisation, can leave you in severe financial crisis unless you have a comprehensive medical insurance policy which takes care of all your required expenses. So how do you choose a plan that’s perfectly suitable for you and your family?

There are a lot of factors to consider when choosing an insurance plan, most importantly: what your health care needs are, and what you can afford to spend? Once you are aware of your financial strength, the next step is to identify the “ought-to-have” with anticipating certain medical needs. With the right insurance, you could save thousands, perhaps even tens of thousands, if you or a family member gets sick.

Here are some critical clauses that needs your attention to detail while buying a health insurance policy:

• Sum insured limits

The main limit in health insurance is the sum insured. Any medical expenses incurred over and above the sum insured are not payable. It is advisable to take adequate cover from an early age, particularly because it may not be easy to increase the sum insured after a claim occurs or when the age increases.

• Individual/floater policies

Most buyers often struggle to make a decision on whether to buy an “individual” policy for each family member or a “family floater policies”. While an individual policy works best in all situations, it can be an expensive option. The family floater plan on the other hand offers flexibility in terms of utilising the overall insurance coverage among the family as a group. While an individual opts for a family floater cover, the sum insured opted should be sufficiently high considering a situation where more than one person in a family needs hospitalization in the same year.

• Extent of coverage

When you are paying for a comprehensive cover, it is important to make sure that the risk covered is comprehensive as well. One should not buy a plan just because it’s cheaper than the rest but should be measured in terms of premium versus benefit comparison. Benefits such as pre and post hospitalization, day care procedures, OPD cover, maternity extensions or ambulance service, should be taken into consideration.

• Waiting period for pre-existing disease exclusions

Many individuals have health related problems that exist before you apply for a health insurance policy or enroll in a new health plan. Pre-existing condition imposes a waiting period which is also called the cooling period. Therefore, apart from the insurance premium being charged by various insurers, you also need to compare the waiting periods stipulated in the policies for covering pre-existing ailments. Some policies specify a waiting period of two years, while in case of some, it could extend to four years. Similarly, there are waiting periods for certain listed conditions like hysterectomies, cataract, kidney stones and knee replacement surgeries which may vary from one year to four years and these also need to be compared.

• Any internal sub-limits like room rent curbs, sub-limits on specific procedures

In order to avoid inflated charges that hospitals levy on patients with an insurance cover, some policies have sub-limits on room rents or certain procedures and this becomes the most critical feature when evaluating a health insurance policy. Typically the insurer places two kinds of limits, on the hospital room rent and the liability for specific diseases. Classically the room rent expenses are capped at 1% of the sum assured for a day, while ICU charges have a ceiling of 2% of the sum assured. Plans free of sub-limits are preferred as it prevents surprises at the time of claims. These sub-limits are generally seen in plans with lower overall sums insured.

• Deductibles/co-payments

Sub-limits can also take the form of co-payments, where the insurer will be asked to pay a predetermined percentage of the claim amount or deductibles, where the insurer will have a cut-off cost which you will have to bear and the insurer will come into the picture only when the bill goes beyond this limit. It is advisable to go for plans that come devoid of restrictive options, such as co-payments, limits on room rents and treatment-specific limits. They may cost a little more but evade financial risk during emergencies.

• List of exclusions

While your health insurance policy can provide relief in times of emergencies, there may also be times of trouble in case you are not aware about the ailments that are covered and those that aren’t. It is important to know the list of exclusions in your health insurance policy to avoid instances when you end up paying additionally for a service already covered in your policy or in worst case scenario, post treatment you realise that your policy did not cover the treatment of that particular illness.

• In-house claims servicing or use of TPA and service levels/market feedback

It is important to know whether the insurance company has its own in-house servicing unit or uses a TPA for servicing the policies.

Insurance companies having their in-house servicing units have a better turnaround time for claims servicing and cashless processing.

A hospital or medical institution which has an agreement with the insurance company or TPA (Third Party Administrator) to provide cashless treatment is a network hospital. While buying a health plan, make sure of the proximity of the network hospital from your place of residence or work. Opt for an insurer who has more network hospitals in geographical locations where you are likely to need medical care.

Ensure that the facilities and repute of the hospitals in the network are worthy.

• Reputation of the insurer

Traditionally, we all are inclined to go for plans that our friends and family suggest as we trust their experience and judgment.

But the market is flooded with products and marketing gimmicks to lure customers. While deciding on a health plan, it’s important to conduct a due diligence on the insurance company — keeping track of how smooth their claim settlement is, how many claims have been settled, time efficiency and network.

Filed Under: Health Insurance, Health Insurance Self Employed Tagged With: Health Insurance Self Employed, independent insurance agent

California Immigration 2016: Senate Approves Health Insurance For Undocumented Immigrants.

June 8, 2015 by Frank West

A proposal to expand health care to Californians in the country illegally cleared the Senate on June 2nd, passing on a 28-11 vote and heading to the Assembly.

Senate Bill 4 would allow undocumented immigrants to purchase health insurance on the state exchange, pending a federal waiver, and enroll eligible people under the age of 19 in Medi-Cal, the state’s insurance program for the poor. A capped number of undocumented adults would also be allowed participate, if additional funding is appropriated in the state budget.

“We are talking about our friends, we are talking about our neighbors and our families who are denied basic health care in the richest state of this union,” said Sen. Ricardo Lara, D-Bell Gardens, the measure’s author. “Ensuring that every child in California grows up healthy and with an opportunity to thrive and succeed is simply the right thing to do.”

The debate frequently turned to other intersecting issues, including Medi-Cal reimbursement rates. An effort to reverse a 10 percent cut to the payments from 2011 has been front and center at the Capitol during final budget negotiations, with many lawmakers arguing that doctors simply cannot afford to accept new Medi-Cal patients.

“If this bill were to be signed into law, it would only serve to exacerbate the problem and not fix it,” said Sen. Jeff Stone, R-Temecula. “This bill would only add hundreds of thousands of more patients to the roll with no one to care for them.”

As the discussion shifted to stalled federal efforts to overhaul the country’s immigration laws, it got increasingly contentious. Sen. Isadore Hall, D-Compton, baited his Republican colleagues – who supported a resolution in April calling for comprehensive immigration reform – to vote for SB 4, calling their “excuses” to oppose the measure “tools of the weak and incompetent.”

“If excuses are the tools of the weak and incompetent, then we have a weak and incompetent president,” retorted Sen. Bob Huff, R-Diamond Bar.

Republican Sens. Andy Vidak of Hanford and Anthony Cannella of Modesto, who both represent swing agricultural districts, joined Democrats in voting yes on the bill.

“Taxpayers are already paying high health care costs for the undocumented Californians when they show up in our emergency rooms,” Vidak said.

While support for SB 4 is strong in the Assembly, a signature from Gov. Jerry Brown is not guaranteed. Brown has expressed skepticism over the bill because of its cost, which was estimated to be as much as $740 million annually in an earlier incarnation.

Lara scaled back the bill last week to help it get past the Senate Appropriations Committee, where a similar proposal was held last year. In addition to limiting the Medi-Cal enrollment guarantee to children only, the amendments eliminated a proposal to establish a secondary insurance market for undocumented immigrants if the federal waiver is not approved.

Because SB 4 aims to expand the scope of the federal Affordable Care Act, which prohibited undocumented immigrants from participating in any of the health insurance exchanges it established, California would be required to apply for a waiver allowing individuals to buy plans on the state exchange regardless of immigration status, though they would not be eligible for subsidies to help pay for the coverage.

Filed Under: Affordable Care Act, Health Insurance Tagged With: Medi-Cal

5 Reasons Your Health Insurance Premium Will Likely Rise in 2016.

June 1, 2015 by Frank West

If you don’t want to pay more for health insurance, look away now! Here are five reasons why you should be prepared to pay more per month for your health insurance plan in 2016. The Motely Fool Sean Williams May 25, 2015

Cdc Fb
Source: Centers for Disease Control and Prevention via Facebook

It’s been a little over a year since the Patient Protection and Affordable Care Act was officially implemented and U.S. citizens were required to purchase health insurance or face a penalty come tax time.

Obamacare’s two main goals
The goals of this healthcare reform law, which you probably know better as Obamacare, are twofold. First, it’s designed to encourage people to enroll for health insurance and lower the number of uninsured people in the United States. Uninsured people are a strain on the healthcare system, from hospitals to insurers, so getting more people involved helps spread the cost of medical care across a greater percentage of the population. That leads to the second point: controlling medical cost inflation. Obamacare is designed to help increase competition among insurers by making the process of shopping for health insurance more transparent.

Through two full enrollment periods Obamacare appears to be decisively taking care of the first point. Nearly 12 million people enrolled through a state-run exchange or Healthcare.gov for the 2015 calendar year, well ahead of tempered Department of Health and Human Services estimates of 9.1 million by year’s end. Even with some expected attrition throughout the year from non-payees, Obamacare will have notably lowered the uninsured rate in the U.S.

The second point, though, leaves much to be desired still. Although healthcare premiums have been rising at a slower rate over the past five years than at any time over the previous five decades, this has more to do with pricing pressure caused by the Great Recession than Obamacare making the health insurance process more transparent.

Five reasons your health insurance premium may be on the rise
In actuality, it looks as if health insurance premiums could potentially be in for a healthy price hike in 2016. Here are five reasons why.

1. Targeted therapies are pressuring insurers
To begin with, a new trend in targeted therapies, known also as personalized medicine, is hurting insurers. Instead of focusing on one-size-fits-all therapies for chronic diseases, biopharmaceutical companies are aiming their research and development dollars at rare diseases and/or lesser-common diseases that have specific genetic markers.

Source: Bristol-Myers Squibb

There are two reasons drug developers have recently seized the opportunity to focus on targeted therapies. First, there’s little competition among rare diseases and gene-targeted therapies. Secondly, it allows these drug developers to set astronomical price tags on these drugs in order to ensure they recoup their development costs — and not just for the approved drug, but for other clinical and preclinical therapies that didn’t make the grade.

For example, recently approved PD-1 checkpoint inhibitors Opdivo from Bristol-Myers Squibb and Keytruda from Merck both work to enhance the immune systems’ ability to recognize and attack cancer cells, which often go undetected. However, both drugs come with an annual wholesale cost of $143,000 and $150,000, respectively. Admittedly, insurers are possibly getting some discount from these levels, but it’s still difficult for insurers to support paying these targeted therapy costs profitably, so they may choose to boost premium pricing across the board.

2. The individual mandate penalty isn’t encouraging enough people to enroll
The primary purpose of the individual mandate, the actionable component of the PPACA, is to encourage healthy young adults (whose premium payments are direly needed for Obamacare to work) to enroll. Having these individuals sitting on the sidelines, especially when they’re less likely to go to the doctor anyway, isn’t helping insurers spread their medical costs around.

Source: Flickr user Reynemedia.

The individual mandate institutes a penalty on U.S. citizens come tax time if they were without health insurance for more than three months during a calendar year. In 2014, this penalty was the greater of $95 or 1% of a taxpayer’s modified-adjusted gross income. In 2015, the penalty soared to the greater of $325 or 2% of modified-AGI.

However, based on data from H&R Block, the median penalty during 2014 for those without insurance was just $178. This works out to less than one month’s payment if an individual had purchased the lowest level of insurance on an Obamacare exchange, known as a bronze plan. In other words, unless the penalty for not having insurance approaches the cost of purchasing insurance for the full year, it’s cheaper for non-purchasers to continue to simply pay the penalty.

Not to mention, the IRS’ hands are tied when it comes to penalty collection. The IRS can’t garnish wages or seize property, thus its only means to get you to pay is to take money out of your refund if you’re owed one, or to ask nicely.

3. Risk corridor funding gaps are hurting insurers
According to a recent report from Standard & Poor’s, and as reported by FierceHealthPayer, the risk corridor payments designed to protect insurers who simply aren’t doing as well as others may wind up hurting rather than helping insurers.

Source: Centers for Disease Control and Prevention via Facebook

The risk corridor is a program put in place to collect funds from some of Obamacare’s best-performing insurers and funnel it to insurers who are losing significant amounts of money on enrollments. If you’re wondering how an insurer can lose money after more than 11 million people enrolled over the past two enrollment periods, it pretty much comes down to the makeup of their new members. Too many sick enrollees and the scales tips toward higher medical costs and losses for the insurer. With a new state-level adjustment risk added last year by the Department of Health and Human Services, the risk corridors budget is now neutral, and many insurers who are due payments from the program aren’t collecting or getting paid.

More than half of insurers included in S&P’s report neither made a payment to the risk corridor program nor received one. Some insurers didn’t even post receivable payments on their financial statements because they frankly don’t expect to be able to collect money from the program.

It’s believed that struggling insurers that aren’t receiving these payments, especially smaller insurers, could be forced to propose hefty premium increases just to make up the difference.

4. Insurers still maintain some degree of pricing power
Fourth, it’s important to realize that despite becoming part of a transparent marketplace exchange, insurers still maintain some degree of power when it comes to setting the pricing of their plans.

Source: Centers for Disease Control and Prevention via Facebook

Prior to Obamacare, the checks and balances on premium increases simply weren’t there. It wasn’t uncommon for insurers to hit consumers with a double-digit percentage increase in their health insurance premium rates within a state or region if its costs were higher than expected.

Under Obamacare, insurers are required to submit their premium rate proposals to their states’ Office of the Insurance Commissioner for review. From there some “bargaining” between both sides ensues and a rate is often set that’s between what the Office of the Insurance Commissioner would like, and what the insurer would prefer.

But, insurers still control what states they operate in, thus they maintain the upper hand on overall insurance plan “supply.” In states where there is little competition among insurers, it’s not out of the question that insurers could propose hefty increases, even with the new Obamacare checks and balances in place. While insurers may have given up some of their power when transitioning to Obamacare, they are far from helpless. Expect them to use their clout to help health insurance rates move higher in 2016.

5. Inflation is taking its toll
Finally, don’t forget that inflation plays a role too. Regardless of targeted therapies increasing insurers’ medical costs, the average cost of most healthcare goods is on the rise — be it expensive diagnostic services or the needles used in IVs.

Generally speaking, as long as the Consumer Price Index, one of the more common gauges of inflation, is rising, there’s a good chance that health insurance premiums will need to rise as well, at least to match inflation. If there’s one piece of solace that readers can take here, it’s that overall inflation levels have been pacing well below their historic average since the Great Recession.

Keep your eyes peeled
Consumers will also want to keep their eyes peeled for the upcoming King vs. Burwell ruling from the Supreme Court next month, which could have a definitive effect on premium pricing in 2016. Obviously we’ll have to watch and wait to see whether prices do indeed rise in 2016 — insurers just submitted their 2016 pricing this past week — but my personal belief is we can expect a noticeable uptick in health insurance premiums in 2016, so prepare accordingly.

The Motley Fool Sean Williams May 25, 2015

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

7 Rules For Deducting Medical And Dental.

May 28, 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: Health Care Reform, Health Insurance Tagged With: Health Care Reform, Health Insurance Self Employed

Of Obamacare’s Many Taxes, What Hurts Most.

May 20, 2015 by Frank West

At tax time, more of us are looking anew at the Affordable Care Act. Some of us are doing so as we hunch over our tax returns. Yet many of the panoply of taxes added by Obamacare are not open and obvious. They are more like those Lois Lerner emails, or Hillary Clinton’s for that matter. In fact, there could be a new competition for what is Obamacare’s most unfair tax. As one editorial noted, some say it is the 2.3% excise tax on medical devices, increasing their cost, hurting the industry, and designed purely to collect revenue.

Another pure revenue raiser is the 3.8% net investment income tax. Depending on your income, it adds a 3.8% tax on top of your interest, dividends and capital gains. While this one may be politically safe since it purports to target only upper income people, it is hard to explain this to someone with a modest income who sells their lifelong property and ends up with an extra 3.8% tax on top of their capital gain tax. Such a person might be in that upper income category just once year.

There are many Obamacare taxes, so many, in fact, that can even be debated how many there are. In terms of tax filings this year, Obamacare is creating a tax filing backlash. Yet most of the approximately 85% of Americans who have health insurance and who make less than $250,000 a year can relax. Most of the new taxes are unlikely to hurt you or impact your pocketbook. Even so, it’s easy to be overwhelmed, which is one reason the IRS has a 21-page Publication 5187 on the Health Care Law: What’s New for Individuals and Families.

If reading about the now-not-so-new-law triggers a need for an entertainment break, there’s always President Obama’s Buzzfeed video. Or you can review three new tax forms: the 1095-A Health Insurance Marketplace Statement, the Form 8962 Premium Tax Credit, and Form 8965 Health Coverage Exemptions. Forms 1095-A and 8962 are for people who bought health coverage through the Marketplace. Form 8965 is for those who got a Marketplace coverage exemption or plan to claim an exemption.

For ranking Obamacare’s taxes, you must first list them. That is no mean feat, since some of it depends how you count and what you regard as a tax:

2.3% Tax on medical device manufacturers (this doesn’t hit you directly, but indirectly it sure can).
3.8% Net investment income tax. This one is a big one. Depending on your income, it adds a 3.8% tax on top of your interest, dividends and capital gains.
Employer mandate on business with over 50 full-time equivalent employees to provide health insurance to full-time employees. $2,000 per employee $3,000 if employee uses tax credits to buy insurance on the exchange.
40% Excise tax on high-end (Cadillac) health insurance plans (40% excise tax on the portion of employer-sponsored health coverage that exceeds $10,200 a year and $27,500 for families).
Medical deduction threshold tax increase (threshold to deduct medical expenses as an itemized deduction increases to 10% from 7.5%).
Individual mandate (a tax for not purchasing insurance, though the tax penalty is called a Shared Responsibility Payment, the greater of 1% of your income above the filing threshold of $10,150 for singles and $20,300 for married couples filing jointly or $95 per adult ($47.50 per child), with a maximum of $285 for a family, whichever is higher. It goes up in 2015.
Excise tax on charitable hospitals which fail to comply with the requirements of Obamacare.
Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D.
Medicare Part A tax increase of .9% over $200k/$250k.
An annual $63 fee levied by Obamacare on all plans (decreased each year until 2017 when pre-existing conditions are eliminated) to help pay for insurance companies covering the costs of high-risk pools.
Medicine cabinet tax (over the counter medicines no longer qualify as medical expenses for flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), health savings accounts (HSAs), and Archer medical saving accounts (MSAs).
Additional tax on HSA/MSA distributions.
HSAs or Archer MSAs, penalties for non-qualified medical expenses of 10% to 20% in the case of an HSA and from 15% to 20% for an MSA.

Filed Under: Health Insurance, Obamacare Tagged With: Affordable Care Act, Health Care Reform, Health Insurance Self Employed, Obamacare

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

Employers cutting worker hours to avoid PPACA.

March 24, 2015 by Frank West

About one in five U.S. employers either have reduced hours for workers they consider to be part-time, or will do so, in response to requirements of the Patient Protection and Affordable Care Act. That’s what a survey of some 740 human resources professionals conducted by the Society for Human Resource Management found.

The vast majority — nearly three-quarters — of respondents haven’t altered schedules to avoid providing health insurance for part-timers working 30 or more hours a week on average. But 14 percent have, and another 6 percent told SHRM they intend to.

It’s still a significant number as some previous studies have found that most large employers will not circumvent coverage extension by reducing full-time workers’ hours. SHRM’s survey results come as PPACA marks its 5th anniversary this week.

PPACA mandates large employers offer health care coverage to employees working 30 hours or more per week or face a penalty.

When it comes to trying to reduce full-time worker hours or reducing the number of full-time employees to duck under the requirement, SHRM reported that only about 10 percent have considered going down that road.

“As organizations learned more about the law, they found that their coverage levels were already the same or more than what the law required, minimizing the adjustments that some anticipated employers would need to make when the ACA was created,” said Evren Esen, director of SHRM’s survey programs.

Among other outcomes:

54 percent of employers require employees to work 30 hours a week to be eligible for coverage, an increase from 44 percent in 2014 and 39 percent in 2013. Another 26 percent require employees to work more than 30 hours a week to be eligible.
66 percent said their organization offered the same level of health care benefits as before PPACA was enacted.
77 percent said that their health care coverage costs increased from 2014 to 2015, and 6 percent saw a decrease.

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

Health Insurance: It’s Not Too Late To Get Covered.

March 24, 2015 by Frank West

Health Insurance: It’s Not Too Late to Get Covered – Special Enrollment Period Now Open

(Fremont County, Wyo.) – Up to six million Americans are expected to pay a tax penalty this year for not having health insurance coverage in 2014. To help families avoid future penalties, a special enrollment period for the Health Insurance Marketplace opened on March 15 and will close April 30.

This special enrollment period is an additional time outside of open enrollment during which you and your family can sign up for health coverage. This will be your last chance this year to receive health coverage through the Health Insurance Marketplace and avoid a tax penalty for next year.

Why is health coverage important?

Health coverage helps cover the cost of medical services, tests and treatments that assist you in getting and staying healthy. The required basic level of coverage includes preventive care, health screenings, well woman and prenatal care, immunizations for adults and children, treatment for pre-existing conditions, and the cost of some prescription medications.

What fees might I owe if I’m not covered?

Surveys have shown that nearly half of uninsured adults are unaware of the penalty associated with not having health coverage. In 2014, the penalty for not having the required minimum level of health coverage was up to $95 per uninsured person or 1% of a household’s income. For 2015, this amount will more than double, with the penalty per uninsured person reaching $325 or 2% of a household’s income.

There are exemptions available to those who cannot afford coverage or who have experienced hardship. Consult Healthcare.gov or a certified application counselor to see if you qualify for an exemption.

Who’s eligible for the special enrollment session?

The special enrollment period is designed for the following:

Those who don’t currently have health coverage for 2015;
Those who paid a penalty as part of their 2014 federal income tax returns for not having health insurance in 2014; and
Those who became aware of the individual mandate penalty after the regular 2015 enrollment window closed.

Filed Under: Affordable Care Act, Health Insurance, Health Insurance Exchange, insurance broker, San Diego Health Insurance Tagged With: Health Insurance Exchange, Health Insurance Self Employed, insurance broker

Health Insurance: It’s Not Too Late to Get Covered – Special Enrollment Period Now Open

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