Affordable Care Act, Benefits, Flexible Spending Accounts (FSA's), Health Care, Health Insurance, Uncategorized

Scoring the Impact & Compromise for Passage

With a vote expected this week on the Republican proposal to end many Obamacare provisions, detractors have enjoyed great press about the “ills” of change. The most persuasive to leave well enough alone came surprisingly from the CBO (Congressional Budget Office) when they scored the bill. Headlines about 24 million Americans losing coverage over the next decade sounds a dire alarm.

For those who read the details though, assumptions by this non partisan group of futurists starts with 14 million dropping current coverage in 2018 because the legal mandate to be insured ends. Since there are 10 million now insured through the MarketPlace, the assumptions include Americans also dropping their Medicaid coverage. Since Medicaid requires no premium payment responsibility, the forecast for 2018 is puzzling.

While worrisome if the CBO projections come true, their track record forecasting health care change has missed the mark in the recent past as follows:

A. The CBO forecast that 26 million Americans would have health insurance through the MarketPlace by now, and the number is 10 million.
B. The CBO forecast Medicare Part D, which provides prescription coverage for senior citizens, to be 40% higher than the actual cost.

These misses show how very hard it is using assumptions to project value, cost, acceptance and rejection for insurance decisions and usage.

As mentioned in my last posting, the greatest challenge to assuage enough politicians to agree to support the bill referred to a AHCA, comes down to Medicaid funding. Another hurdle is that insurance will become more costly for seniors. Since available tax credits will be tied to age, this is likely not as major a cause for concern as postulated. And, returning to the pre-Obamacare five tier rating system will make health insurance lower in cost for younger Americans who incur fewer medical expenses.

Besides eliminating Obamacare taxes and bureaucratic obligations imposed on American businesses, the AHCA is trying to accomplish a radical new funding approach for Medicaid. Per capita block grants will place more cost pressure on states than the current percentage of expense sharing approach. Since the politicians are elected by the citizens in their state, it is not a surprise that some believe it is critical to get it “right” now. Reality is that adequate funding will continue to be a moving target, and will vary state to state.

With adequate compromise this week, expect the House of Representatives to approve the AHCA bill. It is then up to the Senate.

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Affordable Care Act, Benefits, Flexible Spending Accounts (FSA's), Health Care, Health Insurance, Uncategorized

Scoring the Impact & Adequate Compromise for Passage

With a vote expected this week on the Republican proposal to end many Obamacare provisions, detractors have enjoyed great press about the “ills” of change. The most persuasive to leave well enough alone came surprisingly from the CBO (Congressional Budget Office) when they scored the bill. Headlines about 24 million Americans losing coverage over the next decade sounds a dire alarm.

For those who read the details though, assumptions by this non partisan group of futurists starts with 14 million dropping current coverage in 2018 because the legal mandate to be insured ends. Since there are 10 million now insured through the MarketPlace, the assumptions include Americans also dropping their Medicaid coverage. Since Medicaid requires no premium payment responsibility, the forecast for 2018 is puzzling.

While worrisome if the CBO projections come true, their track record forecasting health care change has missed the mark in the recent past as follows:

A. The CBO forecast that 26 million Americans would have health insurance through the MarketPlace by now, and the number is 10 million.
B. The CBO forecast Medicare Part D, which provides prescription coverage for senior citizens, to be 40% higher than the actual cost.

These misses show how very hard it is using assumptions to project value, cost, acceptance and rejection for insurance decisions and usage.

As mentioned in my last posting, the greatest challenge to assuage enough politicians to agree to support the bill referred to a AHCA, comes down to Medicaid funding. Another hurdle is that insurance will become more costly for seniors. Since available tax credits will be tied to age, this is likely not as major a cause for concern as postulated. And, returning to the pre-Obamacare five tier rating system will make health insurance lower in cost for younger Americans who incur fewer medical expenses.

Besides eliminating Obamacare taxes and bureaucratic obligations imposed on American businesses, the AHCA is trying to accomplish a radical new funding approach for Medicaid. Per capita block grants will place more cost pressure on states than the current percentage of expense sharing approach. Since the politicians are elected by the citizens in their state, it is not a surprise that some believe it is critical to get it “right” now. Reality is that adequate funding will continue to be a moving target, and will vary state to state.

With adequate compromise this week, expect the House of Representatives to approve the AHCA bill. It is then up to the Senate.

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Affordable Care Act, Benefits, Flexible Spending Accounts (FSA's), Health Care, Health Insurance, Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs), Obamacare

The Rise of Account Based Health Plans

Momentum turning into a tidal wave is upon us with employers increasingly offering Account Based Health Plan options. This relatively new term in the wild world of benefits is a pragmatic “catch all” for:

  1. Health Savings Accounts – HSAs
  2. Health Reimbursement Arrangements – HRAs
  3. Flexible Spending Accounts – FSAs

Tax Advantages. Paying for out of pocket health care costs on a pre-tax basis has been legal for more than 30 years with FSAs, saving 30% or more versus after tax payments. HRAs have been around for 12 years and HSAs became a vibrant option when the 2003 law was updated in 2007.

Statistics. Studies indicate more than 80% of employers with 1,000 or more employees will offer one or more ABHP options to their employees in 2015. Projections are the take up rate for employees electing these options will exceed 50% for the first time as transparency of premium costs and increased cost shifting results to greater overall cost awareness and risk acceptance.

Why Now. Consequences of The Affordable Care Act include standardization of medical plan designs. Silver plans with $2,000 single and $4,000 family deductibles are a new “mid-point” from which richer and more basic plan designs are compared. Want Platinum? Be prepared for dramatically higher payroll contributions. Accept Bronze with lower contributions and $6,000+ to $13,000+ worst case exposure, then deposit payroll contribution savings into an ABHP.

How to select. If interested in a longer term, potentially retirement type health care savings approach, HSAs are the best option as unspent funds roll over to future years, are portable and can be invested, earning tax free interest. And yet, short term pre-tax funds instantly available to reduce out of pocket exposure may make more sense. HRAs coupled with FSAs are cash flow advantaged options where 100% of annual promised amounts are available at time of need.

 

 

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Benefits, Flexible Spending Accounts (FSA's), Health Care, Health Insurance, Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs)

Offering Health Insurance as a Small Employer

Small businesses and the people who own them are the backbone of their communities. In a larger, interwoven sense, when combined with similar-sized businesses across the United States they are the backbone of this country. While the intrinsic benefits of owning a small business are numerous, providing health insurance to employees is not necessarily one of them. For many employers, the expense has not been affordable, and in some industries with higher employee turnover, the obligation seems as appealing as a can of worms.

This may be changing as there are several benefits to offering health insurance. Here are some examples:

Pre-tax payment of premiums. The employer and the employ deduct the cost of premiums from their income resulting in a 30% savings on average versus paying individual premiums with after tax income.

Tax credits. The IRS offers a Small Business Healthcare Tax Credit to qualifying businesses who offer benefits to their employees. If you’re an employer with fewer than 25 full-time equivalent employees, pay an average wage of less than $50,000 (as adjusted for inflation beginning in 2014) a year, and pay at least half of employee health insurance premiums, you may qualify for the credit.

High Deductible, Lower Premium Plans. It is more and more common for employees to select plans that allow Health Savings Accounts (HSAs). By design they are lower in cost than traditional plans with copays, and so more affordable. And owners have the same opportunity as employees to save money for future health care needs on a pre-tax basis.

Offering benefits attracts high-quality employees. A competitive benefits package offered to potential new hires can be the deciding factor between an employee choosing your company over another. Attracting higher quality employees increases efficiency, attentiveness, and morale. Working conditions are better and ultimately the bottom line!

 

 

 

 

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Flexible Spending Accounts (FSA's), Health Care, Health Insurance, Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs)

Comparing HSAs, FSAs and HRAs

  1. HSAs are for long term SAVINGS. The required health insurance has an UPFRONT DEDUCTIBLE meaning there are no flat copays and you will be at out-of-pocket risk for potentially thousands of dollars. Your premium cost is likely thousands less than plans with copays and so do the math. It usually works out that you are financially ahead four out of five years.
  2. FSAs are for short term SPENDING. They have two advantages over HSAs in that whatever you voluntarily defer per pay, the annual total is available at time of need throughout the year. Second, you can be covered under a plan with upfront copays and set money aside. One more advantage is that if your employer has made the change, you can roll over up to $500 of unspent funds to the next plan year.
  3. HRAs are for REIMBURSEMENTS. The funds are provided by your employer to offset out-of-pocket expenses built into your health plan. Generally available to pay you back for a portion of UPFRONT DEDUCTIBLE cost exposure, they are advantageous as the annual amount is available at time of need throughout the year and you may defer your own money into an FSA to reduce out-of-pocket risk. Often HRA and FSA funds are available on one debit card.
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Benefits, Flexible Spending Accounts (FSA's), Health Care, Health Insurance, Health Savings Accounts (HSAs)

7 Key Health Insurance Tips to Get the New Year Started Off Right

It’s the beginning of the New Year and the news and information about health care has never been more confusing for more people. Health care expert Jonathan P. Warner provides 7 important and timely health care insurance tips to give you a strong start to your new year.

  1. If you have a Health Savings Account and did not fully fund it in 2013, you have until April 15, 2014 to maximize tax deductible deferrals of $3,250 individual and $6,450 with dependents, plus $1,000 catch up if you are age 55 and older. Maximum deferrals for HSAs in 2014 are $3,300 individual and $6,550 with dependents.
  1. Think of HSAs as health care retirement accounts. Forecasts show that seniors living into their mid-80s will spend more than $150,000 on premiums and out of pocket costs above what is covered by Medicare.
  1. About a third of employer-sponsored health insurance plans are grandfathered and do not include coverage of preventive care services.
  1. Consider your historical health insurance usage when choosing a new plan. If your usage is limited, then accept reasonable risk and enroll in a plan with deductibles and coinsurance.
  1. If your plan allows for HSAs, deposit a portion of the premium savings into your own HSA to build a reserve for future time when you have higher health care costs. Drip money into your HSA now so the burden of a gusher cost to satisfy out of pocket costs is saved when you need it for future health care expenses.
  1. You have until March 31, 2014 to enroll in a Marketplace health insurance at www.healthcare.gov without penalty. If you enroll by March, your coverage is effective May 1, 2014. If you enroll in January, coverage is effective March 1st. If enrolling in February, your coverage will be effective April 1st.
    Although a moving target at its outset, the current understanding for signing up is as follows: If enrollment occurs between January 16 and February 15, coverage is effective March 1st. If between February 16 and March 15, coverage is effective April 1st. If enrollment is completed between March 16 and March 31, coverage is effective May 1st.Regardless of coverage effective date, the next renewal date will be January 1, 2015. The Open Enrollment period to change and update coverage selections will run from November 15, 2014 through January 15, 2015

7.  If you are eligible for Medicare, signing up for Social Security automatically enrolls you in Medicare Part A (Hospitalization). Consider delaying this enrollment if              you plan on working until age 70, as once enrolled you can no longer deposit tax deductible funds into an HSA.

Wishing everyone a healthy and happy New Year!

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