Monthly Archives

May 2014

Understanding Health Insurance Basics

By | Health Insurance

Health Insurance CostsEven though the Affordable Care Act has been dominating the national news for the past five years, many Americans admit they still don’t understand basic health insurance terms – such as ‘premium’ or ‘co-pay.’

With most people receiving coverage from their employer or the government, via Medicare or Medicaid, knowing health insurance basics may not have been necessary. However, with the ACA upending the health insurance market and causing many to evaluate coverage for the first time – understanding a few basics in these uncertain times could prove valuable.

Premiums, Deductibles and Co-Pays

While many people look at their premium, or out-of-pocket cost to maintain coverage, this aspect of a plan shouldn’t be the only financial concern. Rising deductibles are increasingly becoming part of the cost conversation when it comes to coverage.

Implemented to cut down on frivolous medical bills, the deductible is the out-of-pocket threshold that must be met before an insurance company begins to pay medical expenses. If a plan’s deductible is $2,000 – it means the person or persons being covered must spend $2,000 before their insurer spends a single penny. High-deductible plans are ideal for young healthy persons who infrequently need medical care.

Consumers worried about out-of-pocket costs should also look to see the amount of their co-pay. A co-pay is a fixed cost for medical expenses, such as fees for doctor visits or prescription drugs. It should be noted that a co-pay is different from co-insurance – which a percentage of costs the policy holder must pay after a deductible is met.

At the end of the day, individuals who require regular medical care may want to consider a plan with a higher premium, if the plan includes lower co-pays and a lower deductible.

Out-of-Network Costs

A healthcare plan includes a network of hospitals and providers that have agreed to provide services at a particular rate for the insurance company. Policy holders can still receive care from out-of-network providers, but they may be stuck paying a much higher percentage of costs – up to 100 percent in some cases.

If consumers aren’t sure if the provider they received care from if in their network – it is ultimately their responsibility to pay for services rendered. Insurance experts have pointed out that an insurance card is not a credit card – and therefore not a form of payment.

Avoid the ER, at All Costs

Finally, whether people are insured or not – the emergency room should be avoided at all costs. The emergency room is designed to treat those with the most urgent need – and it is priced accordingly. For non-life-threatening injuries, such as a broken leg or manageable laceration, urgent care facilities are a more cost-effective option.

 Professionals That Can Find Your Best Deal

We at Health-Dental-Life-Insurance offer a range of plans with varying deductibles, premiums, benefits and co-pays. Feel free to contact us via our website or call us at 1-800-257-1723 and we can determine which selections best fit your needs and will provide the best value.

Taking the Obamacare Penalties Might Be Best Option for Businesses

By | Group Health Insurance

Sticker ShockWhile Obamacare’s individual mandate has individual Americans stressing out about penalties, the section of the Affordable Care Act causing the biggest concern for businesses is the Employer Shared Responsibility (ESR) provision, which mandates the “large employers” must offer coverage to its employees.

The ESR originally applied to large employers with 50 or more employees that work an average of 30 hours or more per week or 130 hours per month. Under an IRS guidance issued in February, employers with a monthly average of between 50 and 99 workers can apply for transitional relief – if the employer meets three criteria:

  • Maintain an average of 50 to 99 employees
  • The workforce cannot reduce in size or hours of service worked between February 9 and December 31, 2014.
  • Health care coverage that was offered to employees as of February 9, 2014 cannot be reduced or eliminated.

The Two Penalties

For the large employers with 100 or more employees and those large employers that do not meet the above criteria, there are two potential penalties. The first penalty is for large employers that do not choose to offer insurance. The penalty goes into effect when the first full-time worker signs up for coverage through the Health Insurance Marketplace and qualifies for a cost-sharing premium or tax credit and was not offered coverage. In this case, the employers would be penalized up to $2,000 for each full-time employee.

The second ESR penalty is for large employers that do not offer affordable coverage that includes 10 essential benefits. Affordable coverage is described as costing the employee no more than 9.5 percent of their household income. For violating this provision of the ESR, an employer will be penalized up to $3,000 per for each employee receiving an “applicable premium tax credit or cost sharing reduction with respect to that employee’s purchase of health insurance exchange.”

When Taking the Penalties is the Best Option

Despite these stiff penalties, some large employers are opting not to either offer their employees coverage – or not offer them “affordable coverage.”

Rick Levi, owner of an Iowa-based cafeteria company, told the Wall Street Journal last year that the total penalties he would absorb under the ACA is still less than the premiums he would have to pay to cover all of his 102 employees — $500,000.

“I’ve never made a profit in any year of the company that has surpassed that amount,” he said. “I don’t make enough money.”

Other companies may want to follow suit and take the penalties just so they can remain in operation. Small-businesses with less than 50 employees would not be subject to a penalty. We here at Health-Life-Dental-Insurance have a team of experienced agents who will calculate potential penalties you may face and determine what’s the best health insurance strategy given health care reform. Visit our website or give us a call at 1-800-257-1723.

Federal Tax Deduction Makes Coverage for Self-Employed More Affordable

By | Health Insurance

Broken Arm

Self-employed individuals are directly impacted by the Affordable Care Act’s “individual mandate,” which requires that most Americans get health insurance, and the federal tax deduction available to self-employed individuals can make obtaining that coverage even more affordable.

The tax deduction is for medical, dental or long-term care insurance premiums paid for by self-employed individuals to cover themselves, their spouse and their dependents. This insurance could also cover a child who was under age 27 at the end of the year, even if the child is not a dependant.

The amount to be deducted is entered on the first page of the 1040 federal tax form – meaning it is available to those who don’t itemize their deductions – and it effectively lowers the self-employed person’s adjusted gross income.

Eligibility

To be eligible for the deduction – a person must have had a net profit from self-employment, had self-employment earnings as a partner, used an optional method to calculate net earnings from self-employment on Schedule SE or were paid wages reported on Form W-2, as a shareholder who holds more than two percent of the outstanding stock of an S corporation.

Individuals can only claim premiums for months that neither they nor their spouse were eligible to participate in an employer-sponsored health insurance plan. The amount claimed cannot surpass the earned income from self-employment.

Qualifying for the tax deduction also depends on how the insurance plan is established. For those who are self-employed and file Schedule C, C-EZ, or F – the policy can be in their name or the name of their business. For those who are a partner in a business, the policy can be either in their name or the name of the partnership, with either member of the partnership paying the premiums. For those holding more than 2 percent of an S corporation, the policy can be either in their name or the name of the S corporation, with either party paying the premiums. If person in a partnership or an S corporation is paying the premiums – they must be reimbursed and the premiums are then considered income on either Schedule K-1 (partnership) or Form W-2 (S corporation).

Options for Self-Employed Individuals

 

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Health-Life-Dental-Insurance offers a range of coverage option for self-employed individuals looking to obtain coverage. Premiums for coverage may be eligible for the tax deduction described above. Contact us either through the website or via phone, 1-800-257-1723, to speak directly to a professional insurance agent with more than a decade of experience .

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How Not Offering Employees Health Insurance Is The Best Thing You Can Do For Them

By | Group Health Insurance, Health Insurance

Woman holding a $100 billWhile not offering affordable health insurance or not offering it at all may seem like a negative point for companies, some employees may actually be better off in this situation under the Affordable Care Act, also known as Obamacare.

“Our analysis suggests that employees and employers across the country should sit down and discuss the potential merits of discontinuing employer-sponsored plans,” the price comparison site ValuePenguin.com said in a recently-published report. “The company would end up saving money while the employee would benefit from thousands of dollars in tax subsidies—a clear win-win for both parties.”

Affordable Coverage

Under President Barack Obama’s signature healthcare law, if a company offers subsidized health insurance that costs less than or equal to 9.5 percent of their income – they are being offered “affordable coverage.”

Workers offered so-called affordable coverage cannot reject it and buy insurance through the state-run exchanges. However, this affordability test does not pertain to the entire family. So, if the cost of the offered coverage for an employee’s family, including any employer subsidies, exceeds 9.5 percent of family income – the family is NOT eligible to reject employer-subsidized insurance and seek a better government-subsidized deal through the exchange.

In this case the family would either have to take the pricy employers plan, or have the employee get insurance through their employer and cover the rest of the family through a plan from the state exchange, possibly without government subsidies. In some cases, both of these choices may not be financially feasible. So ultimately, an employee with a family to cover may be better off if his or her employer dropped coverage and allowed them to seek a government-subsidized plan.

Are Employers and Their Workers Better Off?

These plans may also be more attractive for individuals as well. According to Abir Sen, president and co-founder of health-plan selection company Gravie, Obamacare plans might be a better deal for everyone involved.

“Individual plans can be 20 to 30 percent cheaper than comparable group plans,” Sen recently told Inc.

Shopping for individual plans also offers the consumer more options in choosing a provider network. With the federal government offering subsidies to individuals and families whose income is less than 400 percent of the poverty level, dropping coverage might be a decision that workers will thank their employers for making.

Health-Life-Dental-Insurance has representatives available for businesses thinking about making a significant change to their coverage plans to dropping their coverage all together. We also provides a range of coverage options for both groups and individuals. Call us today to see how much we can save employers and employees: 1-800-257-1723.

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Self-Funded Insurance: Pros and Cons

By | Health Insurance

Female patient getting serious diagnosis

While fairly popular among large employers, self-funded insurance hasn’t been prevalent among smaller companies.

However, the Affordable Care Act could change all that as some stipulations of Obamacare have smaller companies taking a second look at self insurance. Self-funded plans are not subject to the ACA’s mandatory mental health and maternity care. Also, self-insured employers avoid the mandated tax on health insurers – estimated to increase insurance costs 2 to 3 percent each year.

How It Works

In self-funded insurance plans – the employer, not an insurance company, takes on the risk for paying out the health care claims. This means that the employer must have the cash flow to meet the healthcare needs of its employees or take advantage of stop-loss insurance.

If, God-forbid, an employee in a self-funded plan develops cancer or another potentially costly condition – the employer would be on the hook to provide funds for treatment. To prevent catastrophic losses due to insurance claims, most self-funded plans include stop-loss insurance – which caps off based on expected claims.

Lauren Stoddard, a product manager for Cigna, told Employee Benefit Advisor that most employers cap their exposure at 120 percent of expected claims.

“We can go as high as 150 percent,” she said, adding that few smaller employers do. Most limit their individual employee claim exposure in the $20,000-$30,000 range, she said.

If an employer does decide to go with a self-funded plan, the company can administer the plan itself or subcontract the responsibility to a third party administrator (TPA). TPA services can include arranging provider network contracts and stop-loss insurance.

Under a self-funded system, employees contributions for their coverage are still taken care of via the employer’s payroll department. However, instead of payments being sent to an insurance company, contributions are either held until claims become due and payable; or reserved in a tax-free trust that is run by the employer.

Benefits of a Self-Funded Plan

In addition to avoiding federal mandates, self-funded plans also provide HIPAA-compliant, yet more-detailed claims data. This data can be leverage to tailor programs appropriately to meet employees’ needs, as opposed to a one-size-fits-all policy. A tailored plan could be used to hire and retain ideal workers and could always be adjusted – including negotiating contracts with the providers or provider network to meet needs of those being covered.

Self-Funded Plans – A New Strategy for Obamacare

Self-Funded plans, usually used only by large corporations, are now beginning to make more sense for small employers. With stop-loss insurance. the exposure for a small business is minimized yet the savings can be realized to the business and its employees over time. Self-Funded plan might be the strategy that best fits you.

Health-Life-Dental-Insurance is well-equipped to help employers make the essential decisions surrounding whether or not to go with a self-funded plan. We have agents who have been serving businesses since 1989 ready to help you save money and provide greater benefits to your employees. Visit our website or call us at 1-800-257-1723.

 

Health Insurance Costs Expected to Continue Rising for Employers

By | Health Insurance

Insurance agent at computerWhether it can be attributed to the Affordable Care Cat, also known as Obamacare, or not – insurance premiums are expected to continue to rise in the coming years.

In February, the federal government’s Centers for Medicare and Medicaid Services admitted as much in a released six-page report that found premiums will rise for almost two-thirds of small- to medium-sized companies.

“This results in roughly 11 million individuals whose premiums are estimated to be higher as a result of the ACA and about 6 million individuals who are estimated to have lower premiums,” the report said.

Before the standardization of premiums that took effect on January 1, 2014, “firms with employees who had better than average health risks would typically pay lower premiums, and therefore, they were more likely to be the firms that offer health insurance. As a result, most of people with coverage in the small group market have premium rates that are below average,” the report said.

CMS reported polling several experts who said 60 to 67 percent of smaller firms had below-average premiums before the ACA. Therefore, CMS calculated that 65 percent of small companies will see their premiums go up, and 35 percent will have lower premiums – equaling 11 million and 6 million people, respectively. While some companies renewed their policies to preserve their existing premiums before the end of the year, when the old plans change over premiums will begin to spike in the employer-sponsored market.

Employers to Get Hit by Cadillac Tax

In addition to premium adjustments, some employers will have issues with the excise tax on so-called Cadillac health insurance plans. A tax on plans exceeding $10,200 for individuals and $27,500 for families, the excise tax affects around 42 percent of employers in 2018 if they made no changes to their current plans, according to a recent report from Mercer LLC.

The report found that many employers are either making changes to avoid this potential tax. Nearly 20 percent said they have already dropped their Cadillac plans and an additional 33 percent said they were considering dropping their coverage.

Alternatives for Employers

Health-Life-Dental-Insurance.com LogoHealth-Life-Dental-Insurance has two suggestions for those employers looking for an alternative to group benefits, yet still want to offer decent, affordable health insurance: self-funded group plans or letting the US government pick up the tab through Obamacare.

Self-funded groups have long been an attractive option for larger companies and Obamacare has made this option even more attractive for smaller employers. Self-funded groups pre-fund for any potential claims and any unused funds are rebated back to the company. Stop loss insurance would cover an employer in case of catastrophic losses.

The other option would be to completely replace group benefits with an Obamacare plans. In some situations, the government would contribute more to a health plan than an employer could. Some employees would receive a higher take home pay in this scenario.

If employers are considering either of these options, Health-Life-Dental-Insurance provides multiple options for coverage as well as expert recommendations.