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An Executive Summary on the Top 14 Health Care Reform Requirements

• The Pay or Play penalty requires employers of more than 50 full time employees to offer insurance coverage.  The fine for not offering coverage is $2,000 per worker per year and begins 1-1-2014.
• Unaffordable Coverage – Companies with more than 50 employees who do offer insurance also face a potential fine if the coverage is deemed “unaffordable.”  Coverage is considered unaffordable if the cheapest option an employee can get costs 9.5% of their income or more OR if the plan doesn’t offer coverage robust enough that if a general population was on the plan, at least 60% of the bills would be covered by the insurance carrier.  The fine here is $3,000 per worker that falls into this unaffordable class (not to exceed the penalty the employer would have faced for not offering coverage at all) and begins 1-1-2014.
• SBC – You are now required to make sure your employees get an official “Summary of Benefits and Coverage.”  If you’re self funded you need to make and distribute the SBC, if you’re fully insured, the carrier will make it for you, you just need to be sure it’s given to the employees.  The fine for failing to comply is $1,000 per enrollee who isn’t given an SBC and begins 9-23-2012.
• W-2 – Employers must now report the cost of medical coverage on the form W-2.  The fine for failing to comply is $200 per W-2, up to a maximum of $3 million.  For employers issuing more than 250 W-2’s, this begins with the forms furnished 2013.  For smaller employers, the requirement begins “upon further notice.”
• Discrimination – Employers no longer have the ability (on non-grandfathered plans) to discriminate in favor of highly compensated individuals for things like eligibility or premium co-share for a plan.  The fine here is $100 per day per individual discriminated against and also begins “upon further notice.”
• MLR – The carriers now have to comply with margins of profitability known as “medical loss ratios” or MLRs.  Basically, if the carrier spends more than 20% in individual/small group plans or 15% in large group plans on anything not directly related to medical care, they need to issue policy holders a rebate.  If your company gets a rebate, you may have responsibilities to redistribute the money to your employees.  Rebates began getting issued 8-1-2012.
• Exchanges – All employers will be required to inform their employees about the newly (soon to be) formed exchanges as an option for their health insurance coverage.  This goes into effect March 1, 2013.
• Children up to age 26 regardless of marital or student status are eligible for any medical plan that offers insurance to dependents.  This is in effect now.
• Preventative Care – Non-grandfathered plans may not impose cost-sharing requirements (such as deductibles or co-pays) on preventive care services and immunizations that are recommended by governmental agencies. This is in effect now.
• Breastfeeding – Employers must provide breastfeeding workers with “reasonable break time” and a private, non-bathroom place to express breast milk during the workday. This is in effect now.
• FSA – Non-prescribed over-the-counter drugs will no longer be eligible for reimbursement under flexible spending accounts, health reimbursement arrangements or health savings accounts as of January 1, 2011 and contributions to medical flexible spending accounts will be limited to $2,500 effective January 1, 2013.
• Waiting period for enrollment into the insurance plans may not exceed 90 days.  This begins in 2014.
• Automatic Enroll – If you have more than 200 employees, you have to automatically enroll the employees into an insurance plan.  This begins in 2014.
• Small Business Tax Credit: to incentivize small business to get group plans.  If you have less than 10 employees AND average less than $25,000 annual salary, you qualify for the full credit.  Partial credit is available up to 25 employees and up to $50,000 average salary.  This is available now.  For or a better understanding of the small business tax credit, visit:  http://www.irs.gov/newsroom/article/0,,id=252899,00.html

Do you have a select group of employees that you find to be a primary reason for your positive productivity and business successes?  Do you believe that without these key individuals or individual, your business wouldn’t be where it is today due to their expansive knowledge and skill?

With a proper broker partner, many businesses have successfully protected themselves against physical losses and liabilities.  However, have you considered the loss of a human asset?  How might the loss of a key executive or team member affect your business?  There are many things to consider especially since many business owners are unaware that covering this type of asset is even possible!

Ask yourself a few questions to see if protecting yourself against the loss of a human asset would benefit your organization:

• Do I have other team members that can fill these shoes adequately?  Not only CAN they fill these shoes, but do they have enough hours in the day to do so combined with the proper resources?
• Or do you have to train a new team member, how will that affect the company?
• Would this impact my current client base?
• Will this affect the prospect of new sales?

There are a few ways that you can go about protecting against this risk.  Two ways are Key Person Life Insurance & Key Person Disability Insurance

How Key Person Life Insurance works
As there are many different types of plans and policies to implement to protect against this risk, the essential goal and definition of such is as follows.
Key Person Life Insurance is a policy put in place that is owned by a business rather than by a particular individual.  The policy insureds are key employee(s), yet in the event of a passing of a key employee, the death benefit is paid to the business.  The goal of such a policy is to protect the business against the loss of human assets.  The benefit can do multiple things for the business such as paying for the cost of a replacement and training that particular individual to fill those shoes and can also reinforce credit lines of the business.

How Key Person Disability Insurance works
Similar to Key Person Life Insurance, a business can protect themselves against the loss of a key employee.  In this case, an employee has become physically and/or mentally impaired and cannot perform the natural duties of their job.  Upon this disability, the disability monthly benefit is received by the employer rather than the employee.  This income can be used to fund any losses incurred by not having such a key employee at work and can also pay for the training of a replacement employee.

Gauging your immediate need for personal life insurance and disability insurance is one step towards individual financial security.  But what about business financial security, these are your solutions.  They can strengthen company cash flow and credit lines and can aid in the hiring and training of a new employee.  Consider this option!  Sit down with an advisor.

In a landmark ruling with wide-ranging implications, the Supreme Court today announced it will rule to uphold individual mandate, the piece of the legislation requiring Americans to buy health insurance or pay a penalty, a key part of the law which had come under heavy scrutiny.

In a semi-conservative and also slightly technical statement, the court ruled that the mandate IS actually unconstitutional under the Constitution’s commerce clause, but it CAN stay as part of Congress’s power under a taxing clause. The court said that the government will be allowed to tax people for not having health insurance.  Originally the wording “taxing” was avoided to make the bill a little more palatable to legislators to pass, potentially making it fall under the “commerce clause” or ability for the Federal Government to regulate interstate purchasing.

Addressing the concern that this expands the commerce clause so far people could in the future be forced to “buy broccoli” as one argument puts it, Chief Justice John Roberts wrote, “(t)he Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness,” Chief Justice John Roberts wrote in the ruling.

The country has been in suspense for months, with an announcement at the beginning of the week that the court would hand down its decision today. The ruling is considered a victory for the Obama administration as many had anticipated that at least some of the law would be struck down.

The court’s ruling upholding the main part of Obama’s law means that people must buy health insurance or pay a tax up to several thousand dollars a year. It also means that other popular provisions of the law will stay, including the various employer mandates we have discussed in several seminars.  If you would like to discuss our Health Care Reform expert doing a personal seminar at your location for your Executive Team, please let us know and we will be happy to look into scheduling that.

The vote was ultimately five to four. Roberts, who was appointed by George W. Bush, joined the more liberal four justices in upholding the mandate. Justice Anthony Kennedy who was originally thought to be the liberal swing vote, sided with the conservative bloc.

“Our precedent demonstrates that Congress had the power to impose the exaction in section 5000 A under the taxing power and that section 5000 a need not be read to do more than impose a tax,” Roberts wrote.

Thank you for trusting us to be your source for pertinent information and if you would like to read the entire Court writing, please click the below.

http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf

“Mr. HSA” Finalizes 2013 HSA Projections – Washington, DC (PRWEB) April 16, 2012

Ramthun says that the maximum HSA contribution (not including catch-up contributions) will increase to $3,250 for individuals with self-only coverage and $6,450 for those with family coverage in 2013. “The HSA contribution limit for individuals ended up $50 higher than I projected in February,” Ramthun says. The annual catch-up contribution for individuals age 55 or older is set by statute and will remain $1,000 per person for 2013.

Roy Ramthun, also known as “Mr. HSA,” is now finalizing his projections for the 2013 amounts for HSAs. “With last Friday’s release of the March inflation figures by the Bureau of Labor Statistics (BLS), the inflation-adjusted amounts for health savings accounts (HSAs) for 2013 can be finalized,” says Ramthun.
“I am pleased to be able to provide this information in advance of the official publication by the Internal Revenue Service. The earlier notice will help banks, health plans, and plan administrators begin to lock in their program designs for next year,” says Ramthun. The IRS is required to publish the inflation-adjusted amounts for the upcoming year by June 1 each year.

Ramthun says that the maximum HSA contribution (not including catch-up contributions) will increase to $3,250 for individuals with self-only coverage and $6,450 for those with family coverage in 2013. “The HSA contribution limit for individuals ended up $50 higher than I projected in February,” Ramthun says. The annual catch-up contribution for individuals age 55 or older is set by statute and will remain $1,000 per person for 2013.
Ramthun also says that changes may be needed for HSA-qualified insurance plans as well. “For the first time in three years, the minimum deductible for HSA-qualified plans will increase. The minimum deductible will rise to $1,250 for individuals with self-only coverage and $2,500 for individuals with family coverage.”
Ramthun reminds consumers enrolled in HSA-qualified plans with the minimum deductible for 2012 to make sure that their plan remains HSA-qualified for 2013. “If your deductible does not increase to $1,250 or $2,500 at your plan renewal, you will lose your HSA eligibility for the coming year,” says Ramthun.
“The limits on out-of-pocket expenses will also rise for 2013,” says Ramthun. “The new limits will rise to $6,250 for individuals with self-only coverage and $12,500 for individuals with family coverage. Existing plans with lower limits will not have to change this feature of their plan designs but can if they want to,” says Ramthun.
About Roy Ramthun:
Roy Ramthun led the U.S. Treasury Department’s implementation of the HSA program after they were enacted in 2003. Now a private consultant, Ramthun is a nationally-recognized expert on HSAs and consumer-driven health plans. He is a frequent speaker at conferences and seminars around the country. More information is available at http://www.mrhsa.com.

Thanks to our friends at SterlingHSA and http://www.prweb.com/releases/2012/4/prweb9404418.htm for the constant updates.

An historic day for the Healthcare Reform bill wrapped up today and most Supreme Court experts were very surprised at the proceedings.  The Supreme Court is really weighing in on 2 major things: #1 is the individual mandate (the part of the Healthcare Reform bill that requires most US citizens and legal residents maintain minimal essential coverage) constitutionally allowed, and #2, whether or not the rest of the bill still survives if the individual mandate was removed.

It can be a little dangerous to make presumptions about final rulings based on tone and tenor, so it is equally important to both recognize that the message was very different than most expected today, but that today is not a decision day.

Essentially, what happened today was the Supreme Court Justices asked many questions that seemed to indicate a majority of them are not leaning toward ruling the individual mandate constitutionally acceptable.  The final ruling is expected by late June 2012, so there will certainly be some deliberation between now and then, but we did want to make sure you were up to date on this historic court case as it unfolds.

There would need to be 5 of the 9 Justices ruling in favor of the legality of the mandate, and at the moment, most experts can only really identify 4 that seem likely to lean that way.  While many expected at least 5, some experts predicting as many as 6 or even 7 Justices would rule that way, as oral arguments concluded today on the individual mandate, many experts began to say the whole reform bill is in big trouble.

We will of course continue to keep you up to date and ALWAYS welcome your phone calls/emails on the matter.

A New Year’s Reflection

I can’t believe that I’ve been an HR practitioner for 20 years!  I started out as a receptionist in the Recruiting area of the Personnel Department of a small Savings & Loan in Santa Monica in 1991.  I couldn’t have imagined that I would learn so much about employment law, safety codes and general human behavior.  At the beginning, this was a job like any other job.  It paid my bills and would allow me time to figure out what I wanted to do with my life.  Yet, here I am, two decades and a lifetime of experience later, knee-deep in Employee Relations issues, employee health insurance renewals, and HRIS research.

In my New Year reflection on my chosen career path, I can honestly say that while Human Resources is definitely not the most glamorous job or department (often called just a “cost center”) it has been always changing, always challenging and never boring!
The state of California keeps HR professionals on our toes, and the Federal government likes to throw curve balls from time to time.   It is our job as the pulse of the employees, and management’s voice to keep up with all of it and relay the messages to our stakeholders in a way that they can understand.  We are required to communicate will all levels of people, from the employee, to Executive Management, to the Labor Attorneys and various vendors.  We are often required to be amateur psychologists trying to walk the fine line of professional etiquette and caring human being.  We truly care for our employees, but are called on to balance that care with the reality of poor performance.  What seasoned HR Professional hasn’t had to layoff or, even worse, terminate for cause, a friend?  Someone, we genuinely cared about.  Yet, we are required to put on our game face, get behind our leader and quickly reconcile our feelings for what is right for the business.
How many times have we had to look at health insurance renewals and make the tough recommendations to management to either reduce the level of coverage the company offers or increase the out of pocket costs to our already struggling employees?  Sometimes, it’s a double edged sword that we bare and both actions are necessary to keep the company competitive and profitable.  After all a profitable company is a more stable company.  We are required to take this information, sort it out and disseminate it on so many different levels with many different angles.  We are mini-Marketing moguls!
What about those coaching opportunities that present themselves out of the blue, and often on the date that you need to process the company payroll?  You know, the manager who runs into your office complaining that his employee has come in late for the third time that week.  He further explains that this employee always comes in late and he’s just plain sick and tired of it and now wants to terminate the employee for tardiness.  After dropping what you are doing, you pull out your notepad and start to write out the details.  You find, after a quick 15 minute conversation with the manager that he has never spoken to the employee about his tardiness.  That he has given the employee stellar reviews for the past 5 years, and recently the employee has told him that he is in the middle of a messy divorce and taking depression medication.  We take it all down, check our records and put on our coaching hat to give our manager the skills he needs to effectively deal with the situation.  Sometimes being a coach, we need to get into the game and show the manager how to document, how to coach their employee, how to pull out the best in their employee without getting too much personal information.  Sometimes, our managers know what they need to do and as their coach we serve as a gentle reminder and give them the tools that they need to move their team forward.
Indeed we wear many hats as HR Professionals, psychologist, marketing managers, and coaches just to name a few, but I know that I wouldn’t give this up for anything.  Sure, I’ve needed to take a break from time to time.  Breathe, check out the “greener pasture” of “regular employee life” – but in the end, I come running back to the comfort and chaos of Human Resources.

Health Care Reform is now a reality.  Another reality is that some employer groups are very angry about it.  Many employer groups are throwing up their hands in exasperation saying they would rather simply pay the fine.  The fine introduced in the bill applies to companies of 50 or more full time employees (or the equivalent based on a calculation of part timers’ hours) and is applied for every employee that is not offered insurance (fine equals total number of employees minus 30 times $2,000).  While some employer groups are looking at 2014 (the date the fine activates) saying we will simply cease our offering of insurance and pay the penalty, there is more to consider.  Consider for example, simply purchasing a base plan and allowing the employees to “buy up” to more comprehensive plan offerings if they choose to.  You would only need to pay for a portion of the base plan, and that money would still be tax sheltered—versus simply paying a huge fine at year end.  In the case of the fine, the money is not a write off, and it goes to waste.  In the case of buying a base plan, your company can write off the premium and continue to use benefits as a recruitment/retention tool.  However, this multifaceted problem is less urgent than issues that may impact your group as early as June 1st.

The most urgent matter to consider is the addition of your employees’ children back onto plans regardless of student or marital status.  Technically speaking, the bill itself calls for this addition to be made mandatory at your plan’s renewal beginning for plans that renew October 1, 2010.  However, in an effort to get ahead of the curve, carriers are implementing their own pre-regulation responses.

Do you know how your carrier is handling the addition of 26 year old children?  Some carriers are requiring action immediately—on or before June 1st of this year.  Some carriers may add a 2% load to your rates.  Some ancillary carriers (e.g. dental, vision, etc) are allowing over age dependents and others are not.

The over age dependents issue is absolutely one of the most pressing matters of the reform and because every carrier is different, it is vital that you speak with your insurance broker, or a broker whose information you trust and you find out exactly (based on your renewal date and your carriers) what you must do now, what can wait until later, and what you will need to prepare for at renewal.

Again, love it, hate it, indifferent to it, the reform bill is a reality, and because benefits are a big part of a company’s budget, it’s important to educate yourself on what pertains to your company specifically.  It’s a long and complicated bill, but there are plenty of great avenues for further education.

Keep up to date as many of the changes phase in at different times over the next several years, and no one wants to miss out on tax benefits, or pay unnecessary fines.

For individuals tasked with fostering a positive work environment, it is vital to maximize every resource.  America is suffering from layoffs, salary reductions and a host of other factors working against our would-be motivators.  Having said that, these corporate rays of sunlight are still hoping to shine down a little joy at their companies, and we’re all better for it.

One effective way to boost morale amidst a downtrodden group is education.  More specifically, benefits education.

Even if your company is scaling back benefits, and even if your co-pays are rising exponentially, you can still garner great amounts of appreciation from the benefits—yes, even with your employees.

Benefits are an engine that your company purchases to drive recruitment and retention—a very expensive engine.  Doesn’t it make sense to get the most productivity from that purchase?

Several studies have linked education of the benefits to appreciation, all arriving at the same conclusion.  Measured with survey questions such as: If a competitor offered you a job, how likely would you be to take it? How happy are you at your current job? Employee appreciation was tied to both the manner of education and the actual benefits themselves.  In other words, companies that spent less money on benefits, but more focus on good education reported happier employees than competitors.

Keeping in mind that benefits are put in place to recruit and retain, the level of employee appreciation you glean from them should be the central focus.

Employees read the papers and understand when companies are struggling, making cuts to keep afloat.  What employees are less understanding toward is being left in the dark—decisions made in manners that they feel detached from, administered in ways they feel forced into.

Talk to your broker about education.  You’re subject to the same 24 hour day we all are. You have enough on your plate, and that’s what they get paid for!  Once a year, at open enrollment, is not enough.  You should receive monthly outreach pieces, prompt industry updates (Health Care Reform, COBRA subsidy etc.), frequent face-to-face gatherings, easy to understand benefit brochures, exciting enrollment events, and helpful new hire kits among a myriad of other practices designed to help you maximize ROI surrounding this expensive retention tool.  Could your company’s education improve? Be sure you are getting the most from your benefits.

As companies are reducing hours and wages the human resources professional may need to review the impact towards the employee benefit program.  If your company has reduced the salaries of the employees and they are working the same hours then you will want to check your life and disability offerings.

At the point of adjudication of the claim, which would be the claim date, the life and disability carrier will ask for the salary earned the day before the claim date.  If your employee’s life insurance benefit is a 1, 2, 3, 4 or 5 times the salary you may want to put a temporary revision in place to your contract if your company has reduced salaries.

Many companies are continuing to pay the premium based on the salary and if the salary goes down it is important to ensure the benefits are not going down as well, unless this is your intention.  Some carriers will adjudicate the claim based on the premium; however it is important to ask the question, because you may be paying the higher rate and the benefit may reduce.

According to Louis Gallucci from The Hartford, these are a few questions you may want to ask your carrier representative:

1. If a claim was to occur during this reduction of salary period of time, would we be able to calculate the salary off an average of six months of income rather than the salary at the point of the claim?
2. If you believe the reduction of salary period of time will go beyond a six month period of time, then you may want to amend your plan document.
3. If your employee’s hours have been reduced lower than the thirty hours, or number of hours to qualify for your employee benefit plans, you may ask to amend your contract to the current number of hours worked to qualify.
4. Another alternative would be to inform your carrier your salary has reduced and you do not want the benefit to reduce.  You can determine if you need to add 5% or 10% to the amount of benefit.  So instead, if 1 x salary was $45,000 and has been reduced to $40,000, then you will add an 11% or 11.5% increase to the benefit to be paid out.  This would be a change to a 2.1% or 2.2% depending on your needs. This way your employee’s loved ones will not receive less than the employer desires.

As far as the disability products, it is possible to amend your Summary Plan Document (SPD) adding the provision to 70% all source.  In order to make up for the decrease in salary, the company can ask for this contract change. The carrier will not offset from other sources of income, including CASDI, until the employee has 70% of their income.  Contact your carrier for your plan details.

The role of CFO has been pushed to the forefront in recent times like never before in history.  As the position has evolved over time, it has never been besieged by an economy in quite the way the recent downturn has seen.  Luncheon Awards like this publication’s recent Woodland Hills event show that, when gathered together, a true strategist begins to emerge.  The picture of a room full of financial experts talking best practices and truly sharing stories of grabbing a company from the brink, righting the ship and now poising for the prosperous times we can now mathematically dare to hope for was an encouraging scene to be a part of.

Consulting for businesses on a product that is invariably in their top 3 expenses, the insurance policies, it’s clear that now is the perfect time to address costs in this arena.

It was not uncommon for a company in the last three years to give comments like, “We are just hunkering in” or “Changes?! We’re just trying to survive!”  But with the hands-on approach active CFO’s have taken, many companies are looking at this season as one to re-evaluate some things that may have gotten a pass while other items’ urgency saw them dominated the meeting requests.

Of all of the ways people discuss cost saving on insurance policies, be it Property & Casualty, Workers’ Compensation or Employee Benefits, one seems a particularly good fit for immediate injection with minimal disruption—Health Savings Accounts, or “HSA” plans.

First and foremost, HSA plans do not have to be implemented as the only medical option.  Companies are free to simply add the option beside their in-force HMO/PPO duel option insurance benefits.  This might be the year to offer it as an additional option, and have a good education session with employees about the positives.

HSA plans allow employees access to the PPO world, and the freedom of choice that comes with it, for a much more reasonable price.  Obviously, by design, they come with a high deductible and that often scares people off.

What’s important to note about the HSA plan though, is in most cases, they come with a lower out of pocket maximum than their Traditional PPO counterparts.   This means, not only does the healthy employee who only gets the free preventive care benefit from a plan like this, but the very high utilizer, whose expenses would blow through the out of pocket maximum on any PPO gets to a 100% coverage point much quicker.  When you add to this the ability to use employer funds in some cases and federally tax-free money is all qualified cases, the employee might actually find that not only is the plan less premium ,but it’s also ultimately less annual out of pocket.

As one of the company’s main strategists, it’s important to stay abreast and have in-depth conversations about this world.  The Medical Loss Ratio (MLR) on these plans tends to run much more profitably due to the high deductible.  The bottom line is, with Health Care Reform pushing MLR’s into the conversation about future planning, it’s important to examine the positives of these plans, rather than assume the high deductible will be too intimidating.

Studies have shown that education is actually the greatest driver of positive sentiments about your benefits program.  As an agency, we have overseen not just adding the HSA to the offering, but doing a wholesale replacement so it’s the only option, and we have done so for groups as sophisticated as Hedge Fund Managers and as blue collar as building maintenance workers.  In all cases, what’s proven by an active and engaging education system is that the benefits of a plan like this can be grasped and even welcomed.

With an economy pushing the CFO role into a more and more active place and Health Care Reform making us all take a hard look at the way America receives Health Care, maybe it’s time to look at these plans.  With Health Care Reform, all Non-Grandfathered plans will have free preventive care, but these also have a low out of pocket maximum should it be a tough year, and in the cases where  members gets a couple of bucks from the employer to buy the odd antibiotic here and there, they can make even more sense.