6 “Benefits” to Having Group Employee Benefits.

June 8, 2015 by Frank West

As a small business owner, you may be thinking about providing group employee benefits for your employees. There are many “benefits” (no pun intended) to providing this kind of service for your employees. There are many different insurance companies with many different programs. Generally speaking, there are six types of benefits you should at least consider when selecting which to include in your package.

1) Health Insurance: Health insurance protects against the risk of medical expenses. There are many health insurance companies with many different types of programs and options. It is best to do some research to see which insurance company is best for your company and employee’s needs. Two very popular insurance programs are HMOs and PPOs.

HMOs, or health maintenance organizations, provide managed care for insurance companies. HMOs cover services of doctors who agree to treat patients under HMO guidelines. Under HMOs, individuals usually select a primary care physician and need to obtain referrals in order to see other doctors or specialists. These referrals are only given when the HMO plan deems the services necessary.
PPOs, or preferred provider organizations, are subscription based and the employee can visit a network doctor without going to a primary care physician for a referral. Doctors and hospitals work with insurance plans in order to provide care at reduced rates. Most PPO plans also allow you to visit a non-network doctor, but you pay a higher deductible and/or Co Pay.
High deductible HSA plans are also gaining popularity. The premiums can be significantly lower than a PPO and this option allows the employee to set up a qualifying bank account and make contributions from which they pay the expenses that fall within the deductible. The contributions to the HSA that are not used in the calendar year roll over to the next year.

2) Vision Plans: Usually offered as an addition to a general health insurance plan, but can be purchased stand alone, vision plans provide reimbursement for vision services. This insurance would be used when visiting an optometrist or ophthalmologist for services such as eye exams, eye glasses or contact lenses.

3) Dental Coverage: Generally offered in addition to a general health insurance plan, dental insurance provides individuals with insurance for dental care. Dental plans vary, but generally speaking they cover (partially or in total): basic cleanings, fillings, x-rays, periodontics, endodontics. Some plans may even cover parts of oral surgery, crowns, implants or dentures. Some carriers offer HMO and PPO dental options.

4) Group Life: Life Insurance can be purchased on the group with a set limit for the group or set limits by job/class. The coverage is term, is reasonably priced and is available while the individual is employed by the company. While a Group Life program can be purchased stand alone, most employers will combine as part of the overall benefits package.

5) 401K : 401K plans are a great way for employers and the owners to provide a vehicle to create a retirement income pool. Individuals contribute a percentage of pre-tax income into a qualified plan while they are working and later receive funds from the plan upon their retirement. The investment income accumulates tax free and the recipient pays income taxes as the funds are distributed, usually at a lower rate. Individuals can start withdrawals without penalty upon turning 59 ½. Many employers will provide a matching contribution based on a formula that may include company profitability.

6) Disability (Short and Long Term): this type of insurance protects those who become disabled and are unable to work. Short-term disability insurance generally pays a percentage of a disabled employee’s salary for a certain amount of time after a short waiting period of 7-14 days. Each state has different guidelines and rules regarding short-term disability; some states require benefits be provided for up to 26 weeks. Long-term disability insurance is more popular among employers. If an employee is unable to work for a long period of time due to disability, this coverage will pay a part of the employee’s salary. The amount of money that an individual will receive often depends on their position and how much coverage their company provides. Many employers will provide both STD and LTD as complimentary products.

Filed Under: Affordable Care Act, Group Health Benefits, Group Health Insurance Tagged With: Group Health, Group Medical Insurance

Cobra Insurance Coverage

April 29, 2014 by Frank West

What is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) was established in 1986 and is also known as continuation coverage. COBRA allows qualifying individuals who lose their group health coverage due to certain events like termination of employment to continue their coverage temporarily. Generally under COBRA individuals must pay the full cost of the coverage and a two percent administrative charge. Certain employers may subsidize COBRA fees, but they are not required to do so. As a result, continuing health insurance coverage through COBRA can be costly.

Why Enroll in COBRA?

Many people enroll in COBRA to offset the expensive costs associated with receiving medical care
While in between jobs, individuals enroll in COBRA to prevent a lapse in health insurance coverage
For individuals with a pre-existing condition, COBRA is often the only option to ensure coverage through a health insurance plan

How Do I Know if I am Eligible for COBRA?

Employers are required to provide general information about COBRA coverage when hiring new employees. When a worker is no longer eligible for health coverage through the employer’s insurance plan, the employer must notify the worker of his or her rights to COBRA benefits. These rights may also be extended to the employee’s spouse and dependent children.

Events that may make you or your family members eligible for COBRA may include:

Termination of employment
Reduction in number of hours worked
Retirement
Divorce or legal separation from the beneficiary
Death of the beneficiary
Loss of dependent child status

COBRA and the Affordable Care Act

The Affordable Care Act, also known as Obamacare, requires insurers to sell health insurance to virtually everyone (often called “guaranteed issue”) regardless of health status. As a result, individuals with a pre-existing condition need not enroll in COBRA in order to have healthcare coverage after leaving a job. However, the mandates of the Affordable Care Act do not go into effect until 2014.

Even after the Affordable Care Act goes into effect, individuals may elect to enroll in COBRA since the benefits under their old group health insurance plan may be better than the health plans provided under ACA.

Alternatives to COBRA

Individuals can find healthcare coverage as an alternative to COBRA:

If your spouse is covered under a group health insurance plan, you may have a right to special enroll without waiting until the next open season for enrollment
Starting in 2014, an individual can enroll in an individual health insurance plan even with a pre-existing condition
Individuals and families may become eligible for government programs such as CHIP or Medicaid after one of the COBRA qualifying events

Filed Under: Cal Cobra, COBRA, Group Health Benefits, Group Health Insurance Tagged With: COBRA, Group Health, Group Medical Insurance

Health Insurance Options for Part-Time Employees

April 29, 2014 by Frank West

The Affordable Care Act (ACA), also referred to as Obamacare, does not require employers to offer health insurance to part-time employees Part-time employees are defined as those who work less than 30 hours a week, and employers without healthcare coverage for part-timers will not be penalized.

The Individual Shared Responsibility Provision of the ACA that goes into effect in January 2014 requires that all individuals, including part-time workers, must either have creditable health coverage or qualify for an exemption. Individuals that do not meet either requirement will be assessed a penalty on their income tax return for the year. Part-time workers without access to job-based coverage will be responsible for obtaining their own healthcare if they do not wish to pay the tax penalty.

Individuals and families will have several options for purchasing their own health insurance. Individual plans may be purchased directly from private insurance companies. Beginning in January 2014, insurers will not be able to deny applicants that have a pre-existing condition, which may be beneficial to those individuals that are not able to work fulltime due to illness.

Part-time workers may be able to purchase health insurance via their state’s Health Insurance Marketplace, also known as the state exchange. Individuals and families may qualify for lower costs on monthly premiums based on household size and annual income. Part-time workers can also purchase insurance from a private exchange, particularly those that include on-exchange and off-exchange health plans for maximum consumer choice.

Monthly premiums for health plans purchased via a state exchange may be partially subsidized via premium tax credits. Generally these credits will be extended to non- elderly families with annual incomes of 100 to 400 percent of the federal poverty line. About half of the non-elderly population has an annual income in that range, but this varies depending on geographical location and family size.

Premium credits will only be extended to consumers who are not offered health insurance through an employer. Since about 95% of all companies that employ over 50 full-time workers already provide healthcare to those workers, subsidies will not be available to most of those who do full-time work. Full-time employees would be eligible for lower costs via subsidies only if their job-based coverage isn’t considered affordable or doesn’t meet certain minimum standards of care.

Healthcare coverage is generally considered to be affordable according to ACA standards if an employee’s premium cost is less than 9.5% of their yearly household income. The minimum standards of care are called the Essential Health Benefits, which cover 10 medical coverage categories that must be offered by every insurance plan.

Part-time workers may qualify for free or low-cost coverage through Medicaid or the Children’s Health Insurance Program (CHIP). Eligibility guidelines for these programs vary by state, but are usually determined by annual income and household size.

Individuals and families that use their state exchange sites can explore their coverage options and learn whether they qualify for premium tax credits, Medicaid, or CHIP. Many states offer a free-to-use Navigator program that provides assistance in comparing and applying for healthcare. Small businesses that employ less than 50 full-time workers can use the Small Business Health Options Program (SHOP) to explore their options for employee coverage.

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

White House delays employer mandate requirement until 2015.

July 3, 2013 by Frank West

White House delays employer mandate requirement until 2015

By Sarah Kliff, Updated: July 2, 2013

The Obama administration will not penalize businesses that do not provide health insurance in 2014, the Treasury Department announced Tuesday.

Instead, it will delay enforcement of a major Affordable Care Act requirement that all employers with more than 50 employees provide coverage to their workers until 2015.

(Photo by Jessica Rinaldi/Reuters)

The administration said it would postpone the provision after hearing significant concerns from employers about the challenges of implementing it.

“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Mark Mazur, Assistant Secretary for Tax Policy, wrote in a late Tuesday blog post. “We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so.”

The Affordable Care Act requires all employers with more than 50 full-time workers provide health insurance or pay steep fines. That policy had raised concerns about companies downsizing their workforce or cutting workers’ hours in order to dodge the new mandate.

In delaying the enforcement of that rule, the White House sidesteps those challenges for one year. It is also the second significant interruption for the Affordable Care Act, following a one-year delay on key functions of the small business insurance marketplaces.

Together, the moves could draw criticism that the administration will not be able to put into effect its signature legislative accomplishment on schedule.

Filed Under: Affordable Care Act, Group Health Benefits, Group Health Insurance, Health Insurance Exchange Tagged With: Affordable Care Act, Group Health, Group Medical Insurance, Health Care Reform, Health Insurance Exchange, Obamacare

Will Small Firms Self-Insure After Jan. 1, 2014?

June 27, 2013 by Frank West

Starting Jan. 1, 2014, the Affordable Care Act (ACA) will bring about significant changes in the regulatory landscape for small firms offering health insurance to their employees.

Regulations affecting small firms include “guaranteed issue” and “guaranteed renewal” which require health insurers to offer and renew plans to all enrollees, regardless of health status. Additionally, three-to-one age rate banding will require that the premium paid by the oldest adult enrollee in a health plan will not exceed the premium paid by the youngest adult enrollee by more than a factor of three for the same set of benefits. Such regulations could have the effect of raising premiums for firms with young and healthy workers.

The ACA’s small group regulations will apply to firms with 100 or fewer workers. The impact of ACA’s regulations could be particularly strong for firms with 51 to 100 workers, because health plans available to firms with 50 or fewer workers are already subject to significant regulation, including guaranteed issue requirements, under federal and state law.

Because of the ACA’s regulations, some smaller employers with young and healthy workers are considering avoiding the purchase of health care coverage in the regulated market, opting instead to self-insure their employees. Firms that self-insure pay directly for employees’ health care expenses, and assume the financial risk associated with unpredictable health costs incurred by employees and their family members.

Historically, concerns about these financial risks have dissuaded most small firms from self-insuring. According to the most recent Kaiser Family Foundation Survey, only 15 percent of insured workers at firms with fewer than 200 employees are enrolled in self-insured plans, compared to 81 percent of insured workers at larger firms. However, if their premiums increase due to regulations, small employers may find self-insurance more attractive. This will have broader consequences. If small firms with young and healthy workers self-insure, premiums could increase for firms remaining on the regulated market.

RAND has developed the COMPARE computer micro-simulation model, which uses what is known about the health care system to estimate what will happen as a result of changes such as those prescribed under the ACA. Recent RAND work provides estimates of the proportion of small firms that will self-insure after implementation of the ACA. These simulations suggest that a critical factor affecting self-insurance decisions will be the pricing and availability of stop-loss coverage, a type of reinsurance for self-insured firms.

One common type of stop-loss policy reimburses the self-insured firm if an enrollee’s health care claims exceed a specific dollar value, called the attachment point. An attachment point of $10,000 per enrollee is considered generous. COMPARE predicts that a large proportion of small firms will self-insure only if generous stop-loss coverage becomes widely available, at an affordable price.

Moreover, COMPARE predicts that such increases in self-insurance would occur even if the ACA were not implemented, as long as affordable and comprehensive stop-loss coverage is available. Therefore, we estimate that any increase in self-insurance would be due to the availability of generous stop-loss coverage, not to a strong interest in avoiding ACA regulations.

Will small firms self-insure? The answer will largely depend on actions taken by stakeholders other than small employers, namely, companies selling stop-loss coverage, and the government. There are already many signs that insurers are trying to lure small firms into self-insuring by advertising low stop-loss attachment points. This inducement to self-insurance could be counterbalanced by government action, in order to maintain a balance of healthy and less healthy employees across the marketplace (including the exchanges, the regulated market outside the exchanges, and the self-insured market).

Currently only a handful of states impose limits on how low attachment points can be set. What should the government do to maintain balance among the different segments of the small business health insurance market? One option is to mandate limits on stop-loss attachment points so as to discourage small firms from self-insuring. However, this option could have the drawback that consumers in self-insured plans would have less financial protection in the event that their firms self-insure.

This commentary appeared on The RAND Blog on June 17, 2013.

Filed Under: Affordable Care Act, Group Health Benefits, Group Health Insurance, Health Insurance Tagged With: Affordable Care Act, Group Health, Group Medical Insurance, Health Care Reform, Obamacare

Why a Health Insurance Penalty May Look Tempting.

June 22, 2013 by Frank West

Why a Health Insurance Penalty May Look Tempting .

Often, when the government wants you to do something, it makes you pay if you don’t. That would seem to be the case with Obamacare, which penalizes companies for not providing health care. But in that penalty, there could be a paradoxical result: dropping health coverage could save companies a lot of money.

$11,429

Employer portion of family health benefit, average current cost

$2,000

Employer penalty for not providing benefits under Obamacare

Once new health insurance exchanges are up and running in October, companies with 50 or more full-time employees will face a choice: Provide affordable care to all full-time employees, or pay a penalty. But that penalty is only $2,000 a person, excluding the first 30 employees. With an employer’s contribution to family health coverage now averaging $11,429 a year, taking that penalty would seem to yield big savings.

Yet there may be costs in employee satisfaction, especially if companies don’t raise pay enough to keep workers whole when they buy insurance on the exchanges.

“No one wants to drop health insurance and have unhappy employees,” says Rick Wald, who heads Deloitte’s employer health care consulting practice.

Few experts see immediate, big changes to existing employer-sponsored coverage. But that may change in time. A generation ago, defined-benefit pensions were prevalent. Not so today.

So why did the government set the penalty at $2,000?

Policy experts don’t agree on the rationale, and the White House didn’t respond to requests for comment. Perhaps the intent was to start a gradual shift from employer-sponsored coverage to the new exchanges. Or maybe the low amount was a compromise needed to pass the law.

Whatever the reason, the government is about to conduct a huge experiment in corporate decision-making.

By ANNA BERNASEK Published: June 22, 2013 New York Times Business Daily

Sources: 2012 Employer Health Benefits survey from the Kaiser Family Foundation and Health Research and Educational Trust; the Affordable Care Act

Filed Under: Group Health Benefits, Health Insurance Exchange Tagged With: Group Health, Group Medical Insurance, Health Insurance Exchange

What to Expect of the Small-Business Insurance Exchanges.

June 21, 2013 by Frank West

Looking to buy a small group plan from your state’s new health-insurance exchange? There’s a risk it won’t be ready to open on time in October.

A report released Wednesday from U.S. Government Accountability Office said that officials still have big tasks to complete, including reviewing plans that will be sold in the exchanges and training and certifying consumer aides who can help small businesses and individuals find plans. (See related article, “Health-Insurance Exchanges Are Falling Behind Schedule.”)

Eleven percent of 783 firms with less than $20 million in annual revenue said that their biggest concern regarding the health-care law is how the insurance exchanges will operate, according to an April survey by The Wall Street Journal and Vistage International Inc., a San Diego-based executive-mentoring group. That compares with 33% who said the cost of health care is their top concern.

If you own a small business and are looking to purchase a small-group plan from your state’s exchange, here’s what you need to know:

Is my small business eligible to buy insurance from an exchange?

The exchanges are limited to only businesses with 100 or fewer full-time-equivalent employees. Full-time equivalent is the number of employees on full-time schedules plus the number of employees on part-time schedules, converted to a full-time basis.

How would an exchange benefit my business?

The small-business exchanges are expected to make it easier for small employers to manage their health-benefits programs. An employer could make a single payment to an exchange, which would disburse the money to the various insurance providers covering its staff, among other benefits.

Also, small group plans purchased through an exchange could be less expensive than what’s available in the private marketplace. This is because the exchanges are expected to attract a large pool of participants, which theoretically would create more competition among insurers, thus resulting in lower insurance premiums.

Husband-and-wife business owners Chris and Maria Guertin of Minneapolis are among those hoping to find a small-group insurance plan within their budget through their state’s exchange. They say they currently can’t afford one to cover themselves, their one full-time employee and any recruits they hire in the future for Sport Resource Group Inc., a retail and wholesale company they started in 2006. But they would like to be able to offer health insurance as an employee benefit to attract and retain top talent in order to grow the business. “A group plan right now is too much,” says Mr. Guertin.

Who’s running the exchanges?

Seventeen states are running their own small business exchanges, with the federal Centers for Medicare and Medicaid Services carrying out the task on behalf of the remaining 33 states. For more information on the exchange in your state, visit www.healthcare.gov/marketplace.

What kind of plans will the exchanges offer?

The exchanges will offer insurance plans from private insurance companies. For 2014, employers in states where the federal government is running the exchange will be able to select just one plan to offer to workers. Which carriers will be participating and how many will vary by state. In some states, such as New Hampshire, only one insurance carrier has expressed interest in the small-business exchange.

When will I be able to start using my state’s exchange?

Though enrollment is slated to begin in October of this year, with plans to take effect in January 2014, the GAO report suggests they may not open in time. The 17 states running their own exchanges were late on an average of 44% of key activities that were originally scheduled to be completed by the end of March, it said.

There have been other setbacks as well. The federal government said in April that contrary to initial plans, it wouldn’t allow workers in the first year to choose between a range of insurance options offered through employers. For the first year, companies will select one plan to offer to workers.

Also, in some states only one insurance carrier has expressed interest in the small-business exchange. For example, regulators in New Hampshire have said they received applications from only one carrier, Anthem Blue Cross and Blue Shield, a unit of WellPoint Inc., WLP +2.48%to sell small group plans or individual policies next year. And in Washington state, officials have had to postpone the exchange altogether because they couldn’t find a carrier willing to offer small-business plans for all parts of the state.

Can I get a tax credit?

If you have fewer than 25 full-time equivalent employees, you may qualify for a tax credit of up to 35% of your premium costs this year and up to 50% in 2014.

Do I even need to buy a small-group plan?

Once your firm reaches 50 full-time equivalent employees, a penalty will kick in if you fail to provide coverage for employees who average 30 or more hours a week in a given month, starting in January. The penalty is $2,000 for each full-time employee in excess of 30 full-time employees. There are no penalties if part-time employees are not offered coverage. The government will rely on data about the composition of employers’ workforces this year in order to determine whether a firm will be liable.

Also, if an employer with 50 or more full-time equivalent employees does offer coverage, but the insurance doesn’t meet the law’s minimum requirements, there is a penalty of $3,000 for each worker who gets a federal subsidy through state insurance exchanges.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

Filed Under: Group Health Benefits, Group Health Insurance, Health Insurance Exchange Tagged With: Group Health, Group Medical Insurance, Health Insurance Exchange

Some Employees Plan to Work Longer in Hopes of Enjoying Workplace Health Benefits.

May 13, 2013 by Frank West

Some Employees Plan to Work Longer in Hopes of Enjoying Workplace Health Benefits

About 50 percent of American workers say they plan to work more years than they originally planned to work to maintain their employer-provided health insurance. This finding was the result of a recent study about workers and health insurance. However, their wishes to work longer may not be in line with reality in all cases. Research shows that only about 20 percent of retirees said they were able to remain in the workplace longer to keep their coverage.According to the 2012 study that yielded these findings, a large number of Americans who are older planned to retire earlier if they knew they could count on health coverage. In a similar study conducted in 2003, only about 15 percent of workers said they would consider retiring early as long as they could count on health coverage. By 2012, that number had nearly doubled.
Experts believe that the federal health care reform law may alter the dynamics of the labor market for older workers. According the PPACA, all retired individuals will be permitted to buy health coverage from insurance exchanges. In addition to this, they will receive other insurance market reforms that are blended with exchanges. Some of these benefits include modified community rating, guaranteed issue, more health plan choices and cost sharing subsidies for anyone who is under 400 percent of the poverty line. With these options available, employers currently offering retiree health benefits may start considering dropping their own benefits. Experts believe that this will lessen the enthusiasm of workers to remain at their current jobs.
When it comes to retirement spending, health care expenses are important components. According to a study conducted in 2009, health care comprised 18 percent of expenses for people aged 85 or older. For those between the ages of 75 and 84, health care comprised about 15 percent of expenses. This number was only about 12 percent for those between the ages of 65 and 74. People receiving Medicare who were 65 years of age or older paid more than 10 percent of the cost of their own health care charges during that same year. On average, private insurance paid slightly less than 15 percent, and Medicare covered about 60 percent of the bill. However, experts note that the Medicare program designed for the elderly was not originally intended to pay for medical expenses in full.
Experts estimated that the average 65-year-old married couple with average drug expenses may need more than $160,000 saved in 2012 to even have a 50 percent chance of possessing enough money to pay for their own health expenses. This number excludes the cost of long-term care during retirement years. To enjoy a 90 percent chance of paying health expenses, a couple in 2012 would have needed $283,000 saved. It is important to understand how much money should be saved for a comfortable retirement. With the future still uncertain about health coverage, it is in every employer’s and employee’s best interest to discuss concerns with an agent.

Filed Under: Group Health Benefits, Group Health Insurance Tagged With: Group Health, Group Medical Insurance