As my wife is fond of saying to me, "communication is key".
One of the main reasons we find ourselves in the state we're in is because people do not understand insurance products, especially health insurance products. If we had automobile insurance built in a similar fashion to health insurance, no one could afford to own a car, much less drive one.
Imagine getting a starter or muffler installed for a $20 copay. Need a transmission or engine overhaul? As long as you were in your automotive repair network, you get 80/20 coinsurance until your deductible is met. Have existing accident damage? As long as you can get in an employer group where the carrier has to accept you, you get your car fixed. No matter that you weren't part of the original underwriting, Everyone helps pay your expenses. After all, isn't that what America is all about?
Now I know this sounds ridiculous, but no more ridiculous than for people to expect healthcare delivered this way for little or no cost.
The American public needs an education. I'm afraid it will come at the expense of the healthcare/insurance industry collapsing. No one knows what procedures cost, where they can get cost effective care, care provider success/mortality rates, what insurance carriers pay claims best, and how money works within the system.
HDHP/HSA's are a great first step because a policyholders self interest requires that they ask these questions. At this time they cannot get all the answers, but more and more light is being shed on the situation.
As agents that have our clients best interests at heart, we must continue to fight the good fight. If we continue to promote, communicate, and educate, we know that understanding will provide a sensible answer.
Saturday, December 6, 2008
Wednesday, December 3, 2008
Government now requires SSN on dependents
Office of Financial Management/Financial Services Group
DATE: June 23, 2008
SUBJECT: Collection of Social Security Numbers (SSNs), Medicare Health Insurance Claim Numbers
(HICNs) and Employer Identification Numbers (EINs) (Tax Identification Numbers) –
ALERT
This ALERT is to advise that collection of SSNs, HICNs, or EINs for purposes of compliance with the reporting requirements under Section 111 of Public Law 100-173 is appropriate.
SSNs and EINs:
The SSN is used as the basis for the Medicare HICN. The Medicare program uses the HICN to identify Medicare beneficiaries receiving health care services, and to otherwise meet its administrative responsibilities to pay for health care and operate the Medicare program. In performance of these duties, Medicare is required to protect individual privacy and confidentiality in accordance with applicable laws, including the Privacy Act of 1974 and the Health Insurance Portability and Accountability Act Privacy Rule. Please note that The Centers for Medicare & Medicaid Services (CMS) has a longstanding practice of requesting SSNs or HICNs for coordination of benefit purposes.
The EIN is the standard unique employer identifier. It appears on the employee’s federal Internal Revenue Service Form W-2, Wage and Tax Statement received from their employer. The Medicare program uses the EIN to identify businesses. The establishment of a standard for a unique employer identifier was published in the May 31, 2002 Federal register, with a compliance date of July 30, 2004.
A new Mandatory Insurer Reporting Law (Section 111 of Public Law 110-173) requires group health plan insurers, third party administrators, and plan administrators or fiduciaries of self-insured/selfadministered group health plans to report, as directed by the Secretary of the Department of Health and Human Services, information that the Secretary requires for purposes of coordination of benefits. The law also imposes this same requirement on liability insurers (including self-insurers), no-fault insurers and workers’ compensation laws or plans. Two key elements that will be required to be reported are SSNs (or HICNs) and EINs. In order for Medicare to properly coordinate Medicare payments with other insurance and/or workers’ compensation benefits, Medicare relies on the collection of both the SSN or HICN and the EIN, as applicable.
As a subscriber (or spouse or family member of a subscriber) to a group health plan arrangement, your SSN and/or HICN will likely be requested in order to meet the requirements of P.L. 110-173 if this information is not already on file with your insurer. Similarly, individuals who receive ongoing reimbursement for medical care through no-fault insurance or workers’ compensation or who receive a settlement, judgment or award from liability insurance (including self-insurance), no-fault insurance, or workers’ compensation will be asked to furnish information concerning their SSN and/or HICN and whether or not they (or the injured party, if the settlement, judgment or award is based upon an injury to someone else) are Medicare beneficiaries. Employers, insurers, third party administrators, etc. will be asked for EINs.
To confirm that this ALERT is an official Government document and for further information on the mandatory reporting requirements under this law, please visit the CMS website at www.cms.hhs.gov/MandatoryInsRep.
MMSEA111AlertSSNandHICNandEINcollection062308final
DATE: June 23, 2008
SUBJECT: Collection of Social Security Numbers (SSNs), Medicare Health Insurance Claim Numbers
(HICNs) and Employer Identification Numbers (EINs) (Tax Identification Numbers) –
ALERT
This ALERT is to advise that collection of SSNs, HICNs, or EINs for purposes of compliance with the reporting requirements under Section 111 of Public Law 100-173 is appropriate.
SSNs and EINs:
The SSN is used as the basis for the Medicare HICN. The Medicare program uses the HICN to identify Medicare beneficiaries receiving health care services, and to otherwise meet its administrative responsibilities to pay for health care and operate the Medicare program. In performance of these duties, Medicare is required to protect individual privacy and confidentiality in accordance with applicable laws, including the Privacy Act of 1974 and the Health Insurance Portability and Accountability Act Privacy Rule. Please note that The Centers for Medicare & Medicaid Services (CMS) has a longstanding practice of requesting SSNs or HICNs for coordination of benefit purposes.
The EIN is the standard unique employer identifier. It appears on the employee’s federal Internal Revenue Service Form W-2, Wage and Tax Statement received from their employer. The Medicare program uses the EIN to identify businesses. The establishment of a standard for a unique employer identifier was published in the May 31, 2002 Federal register, with a compliance date of July 30, 2004.
A new Mandatory Insurer Reporting Law (Section 111 of Public Law 110-173) requires group health plan insurers, third party administrators, and plan administrators or fiduciaries of self-insured/selfadministered group health plans to report, as directed by the Secretary of the Department of Health and Human Services, information that the Secretary requires for purposes of coordination of benefits. The law also imposes this same requirement on liability insurers (including self-insurers), no-fault insurers and workers’ compensation laws or plans. Two key elements that will be required to be reported are SSNs (or HICNs) and EINs. In order for Medicare to properly coordinate Medicare payments with other insurance and/or workers’ compensation benefits, Medicare relies on the collection of both the SSN or HICN and the EIN, as applicable.
As a subscriber (or spouse or family member of a subscriber) to a group health plan arrangement, your SSN and/or HICN will likely be requested in order to meet the requirements of P.L. 110-173 if this information is not already on file with your insurer. Similarly, individuals who receive ongoing reimbursement for medical care through no-fault insurance or workers’ compensation or who receive a settlement, judgment or award from liability insurance (including self-insurance), no-fault insurance, or workers’ compensation will be asked to furnish information concerning their SSN and/or HICN and whether or not they (or the injured party, if the settlement, judgment or award is based upon an injury to someone else) are Medicare beneficiaries. Employers, insurers, third party administrators, etc. will be asked for EINs.
To confirm that this ALERT is an official Government document and for further information on the mandatory reporting requirements under this law, please visit the CMS website at www.cms.hhs.gov/MandatoryInsRep.
MMSEA111AlertSSNandHICNandEINcollection062308final
Monday, December 1, 2008
Wall Street Journal article, Beware the pitfalls of early retirement.
Almost everyone fantasizes about swapping the cubicle and BlackBerry for a life of leisure while they're young enough to enjoy it.
Millions work long hours to make the fantasy a reality, and in these rough economic times, others have simply taken buyouts. But America's patchwork health-care system is making those transitions harder.
Too young to qualify for Medicare and rarely covered by employers, early retirees can face premiums they never dreamed of -- triple or more what they paid while working.
And that's for the healthy ones. Others, who suffer from middle-age ailments like arthritis or back pain, wind up paying far more -- if they aren't simply rejected. Researchers at the Commonwealth Fund found that in 2007 about 35% of people between the ages of 50 and 64 were uninsured or underinsured, up from 26% five years ago.
Bought Out, Left Out
In the decades after World War II, most retirees could count on generous health perks. But over the past two decades, the situation has changed. Today, just 29% of large private companies provide insurance to younger retirees, according to the Kaiser Family Foundation. This spring, the Society for Human Resource Management found that less than half of workers laid off or bought out were offered health benefits.
That leaves many younger retirees with only one place to go: the individual-insurance market, which is hardly friendly terrain for fiftysomethings.
Unlike in employer plans, where all members pay similar premiums, here each consumer gets examined for risk. Insurers often react to minor pre-existing health conditions the way an auto insurer reacts to accidents -- by charging steep rates or rejecting the applicant.
Health-care advocates have documented instances of older people being denied coverage because of high blood pressure or mild depression after the death of a spouse. "I used to joke that just living past 45 was a pre-existing condition," says Anthony Wright, executive director of the advocacy group Health Access California.
Higher Age, Higher Risk
Insurance executives defend underwriting practices as necessary to keep up with the costs of care, pointing out that age makes customers riskier to insure. "It's not like we're running a pirate ship," says Richard Collins, president of UnitedHealthcare's individual-insurance unit.
Although states prohibit insurers from dropping consumers who develop health problems after enrollment, they do let insurers purge those who allegedly commit fraud on applications -- leading some companies to comb patients' medical records for signs they should have known a problem was looming.
Fortunately, some younger retirees tame the frontier. Holding on to group coverage helps: Retirees willing to work self-employed can get group rates in 13 states.
For those with health issues who must use the individual market, Carolyn McClanahan, a financial planner in Jacksonville, Fla., recommends applying for a special insurance pool that each state holds open to consumers for the 36 days after they exhaust their COBRA coverage -- while benefits there can be spotty, the pools can't reject anyone.
Early retirees also can boost their underwriting odds by losing belly fat and going over their medical records with physicians for errors.
Email: letters@smartmoney.com
Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit
www.djreprints.com
Millions work long hours to make the fantasy a reality, and in these rough economic times, others have simply taken buyouts. But America's patchwork health-care system is making those transitions harder.
Too young to qualify for Medicare and rarely covered by employers, early retirees can face premiums they never dreamed of -- triple or more what they paid while working.
And that's for the healthy ones. Others, who suffer from middle-age ailments like arthritis or back pain, wind up paying far more -- if they aren't simply rejected. Researchers at the Commonwealth Fund found that in 2007 about 35% of people between the ages of 50 and 64 were uninsured or underinsured, up from 26% five years ago.
Bought Out, Left Out
In the decades after World War II, most retirees could count on generous health perks. But over the past two decades, the situation has changed. Today, just 29% of large private companies provide insurance to younger retirees, according to the Kaiser Family Foundation. This spring, the Society for Human Resource Management found that less than half of workers laid off or bought out were offered health benefits.
That leaves many younger retirees with only one place to go: the individual-insurance market, which is hardly friendly terrain for fiftysomethings.
Unlike in employer plans, where all members pay similar premiums, here each consumer gets examined for risk. Insurers often react to minor pre-existing health conditions the way an auto insurer reacts to accidents -- by charging steep rates or rejecting the applicant.
Health-care advocates have documented instances of older people being denied coverage because of high blood pressure or mild depression after the death of a spouse. "I used to joke that just living past 45 was a pre-existing condition," says Anthony Wright, executive director of the advocacy group Health Access California.
Higher Age, Higher Risk
Insurance executives defend underwriting practices as necessary to keep up with the costs of care, pointing out that age makes customers riskier to insure. "It's not like we're running a pirate ship," says Richard Collins, president of UnitedHealthcare's individual-insurance unit.
Although states prohibit insurers from dropping consumers who develop health problems after enrollment, they do let insurers purge those who allegedly commit fraud on applications -- leading some companies to comb patients' medical records for signs they should have known a problem was looming.
Fortunately, some younger retirees tame the frontier. Holding on to group coverage helps: Retirees willing to work self-employed can get group rates in 13 states.
For those with health issues who must use the individual market, Carolyn McClanahan, a financial planner in Jacksonville, Fla., recommends applying for a special insurance pool that each state holds open to consumers for the 36 days after they exhaust their COBRA coverage -- while benefits there can be spotty, the pools can't reject anyone.
Early retirees also can boost their underwriting odds by losing belly fat and going over their medical records with physicians for errors.
Email: letters@smartmoney.com
Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit
www.djreprints.com
Tuesday, November 25, 2008
Family Medical Leave Act, Final Rule
ESA News Release: [11/14/2008]Contact Name: David James or Dolline Hatchett Phone Number: (202) 693-4676 Release Number: 08-1703-NAT
Final rule brings two-year public process to close with common sense reforms for modern workforce
WASHINGTON - The U.S. Department of Labor will publish a final rule on Nov. 17 to update its regulations under the 15-year-old Family and Medical Leave Act (FMLA) - a measure that will help workers and their employers better understand their rights and responsibilities, and speed the implementation of a new law that expands FMLA coverage for military family members.
"This final rule, for the first time, gives America's military families special job-protected leave rights to care for brave service men and women who are wounded or injured, and also helps families of members of the National Guard and Reserves manage their affairs when their service member is called up for active duty," said U.S. Secretary of Labor Elaine L. Chao. "At the same time, the final rule provides needed clarity about general FMLA rights and obligations for both workers and employers."
"This common sense, balanced rule is the product of a two year-long transparent process involving about 20,000 public comments and reflects the careful consideration of the views of FMLA's stakeholders," said Victoria A. Lipnic, assistant secretary for the Labor Department's Employment Standards Administration.
Provisions in the final rule call for increased notice obligations for employers so that employees will better understand their FMLA rights, while revising the employee notice rules to minimize workplace disruptions due to unscheduled FMLA absences. The final rule also contains technical changes that reflect decisions by the U.S. Supreme Court and lower courts.
Featured final rule actions implementing the statutory expansion of FMLA for military families:
Military Caregiver Leave: Implements the requirement to expand FMLA protections for family members caring for a covered service member with a serious injury or illness incurred in the line of duty on active duty. These family members are able to take up to 26 workweeks of leave in a 12-month period.
Leave for Qualifying Exigencies for Families of National Guard and Reserves: The law allows families of National Guard and Reserve personnel on active duty to take FMLA job-protected leave to manage their affairs - "qualifying exigencies." The rule defines "qualifying exigencies" as: (1) short-notice deployment (2) military events and related activities (3) childcare and school activities (4) financial and legal arrangements (5) counseling (6) rest and recuperation (7) post-deployment activities and (8) additional activities where the employer and employee agree to the leave.
ADDITIONAL REGULATORY PROVISIONS:
The Ragsdale Decision/Penalties: The updated rule contains technical changes to be consistent with the U.S. Supreme Court's decision in Ragsdale v. Wolverine World Wide Inc. The court ruled that the regulation's so-called "categorical" penalty (requiring an employer to provide 12 additional weeks of FMLA-protected leave after the employee had already taken 30 weeks of leave) was inconsistent with the statutory limit of only 12 weeks of FMLA leave and contrary to the law's remedial requirement that an employee demonstrate individual harm. The new rule removes these penalties and clarifies that if an employee suffers individual harm because the employer did not follow the notification rules, the employer may be liable.
Waiver of Rights: The department has finalized its longstanding position that employees may voluntarily settle their FMLA claims without court or departmental approval. However, prospective waivers of FMLA rights will continue to be prohibited.
Serious Health Condition: While the rule retains the six individual definitions of "serious health condition," it adds guidance on some regulatory matters. First, it clarifies that if an employee is taking leave involving more than three consecutive calendar days of incapacity plus two visits to a health care provider, the two visits must occur within 30 days of the period of incapacity. Second, it defines "periodic visits to a health care provider" for chronic serious health conditions as at least two visits to a health care provider per year.
Light Duty: At least two courts have held that an employee uses up his or her 12-week FMLA leave while on a "light duty" assignment. Under the final rule, time spent in "light duty" work does not count against an employee's FMLA leave entitlement, and the employee's right to job restoration is held in abeyance during the light duty period. If an employee is voluntarily doing light duty work, he or she is not on FMLA leave.
Perfect Attendance Awards: The final rule changes how perfect attendance awards are treated to allow employers to deny a "perfect attendance" award to an employee who does not have perfect attendance because he or she took FMLA leave - but only if the employer treats employees taking non-FMLA leave in an identical way.
Employer Notice Obligations: The final rule consolidates all employer notice requirements into a "one-stop" section of the regulations to clear up some conflicting provisions and time periods. Further, the final rule clarifies and strengthens the employer notice requirements to employees in order that employers will better inform employees about their FMLA rights and obligations, and allow for a smoother exchange of information between employers and employees.
Employee Notice: The final rule modifies the current provision that had been interpreted to allow some employees to notify their employers of their need for FMLA leave up to two full business days after an absence, even if they could provide notice sooner. Under the final rule, the employee must follow the employer's normal and customary call-in procedures, unless there are unusual circumstances.
Medical Certification Process (Content and Clarification): The final rule, which is the result of significant stakeholder feedback (including a September 2007 meeting at the department on "medical certifications"), recognizes the advent of the Health Insurance Portability and Accountability Act (HIPAA) and the applicability of HIPAA's medical privacy rule to communications between employers and employees' health care providers. Responding to concerns about medical privacy, the rule adds a requirement that limits who may contact the health care provider and bans an employee's direct supervisor from making the contact.
The public can view the entire text of the final rule as it will appear in the Federal Register at: http://www.federalregister.gov/page2.aspx#reg_W.
For further information about the FMLA and the proposed regulations, visit the Wage and Hour Division's Web site at www.wagehour.dol.gov
Final rule brings two-year public process to close with common sense reforms for modern workforce
WASHINGTON - The U.S. Department of Labor will publish a final rule on Nov. 17 to update its regulations under the 15-year-old Family and Medical Leave Act (FMLA) - a measure that will help workers and their employers better understand their rights and responsibilities, and speed the implementation of a new law that expands FMLA coverage for military family members.
"This final rule, for the first time, gives America's military families special job-protected leave rights to care for brave service men and women who are wounded or injured, and also helps families of members of the National Guard and Reserves manage their affairs when their service member is called up for active duty," said U.S. Secretary of Labor Elaine L. Chao. "At the same time, the final rule provides needed clarity about general FMLA rights and obligations for both workers and employers."
"This common sense, balanced rule is the product of a two year-long transparent process involving about 20,000 public comments and reflects the careful consideration of the views of FMLA's stakeholders," said Victoria A. Lipnic, assistant secretary for the Labor Department's Employment Standards Administration.
Provisions in the final rule call for increased notice obligations for employers so that employees will better understand their FMLA rights, while revising the employee notice rules to minimize workplace disruptions due to unscheduled FMLA absences. The final rule also contains technical changes that reflect decisions by the U.S. Supreme Court and lower courts.
Featured final rule actions implementing the statutory expansion of FMLA for military families:
Military Caregiver Leave: Implements the requirement to expand FMLA protections for family members caring for a covered service member with a serious injury or illness incurred in the line of duty on active duty. These family members are able to take up to 26 workweeks of leave in a 12-month period.
Leave for Qualifying Exigencies for Families of National Guard and Reserves: The law allows families of National Guard and Reserve personnel on active duty to take FMLA job-protected leave to manage their affairs - "qualifying exigencies." The rule defines "qualifying exigencies" as: (1) short-notice deployment (2) military events and related activities (3) childcare and school activities (4) financial and legal arrangements (5) counseling (6) rest and recuperation (7) post-deployment activities and (8) additional activities where the employer and employee agree to the leave.
ADDITIONAL REGULATORY PROVISIONS:
The Ragsdale Decision/Penalties: The updated rule contains technical changes to be consistent with the U.S. Supreme Court's decision in Ragsdale v. Wolverine World Wide Inc. The court ruled that the regulation's so-called "categorical" penalty (requiring an employer to provide 12 additional weeks of FMLA-protected leave after the employee had already taken 30 weeks of leave) was inconsistent with the statutory limit of only 12 weeks of FMLA leave and contrary to the law's remedial requirement that an employee demonstrate individual harm. The new rule removes these penalties and clarifies that if an employee suffers individual harm because the employer did not follow the notification rules, the employer may be liable.
Waiver of Rights: The department has finalized its longstanding position that employees may voluntarily settle their FMLA claims without court or departmental approval. However, prospective waivers of FMLA rights will continue to be prohibited.
Serious Health Condition: While the rule retains the six individual definitions of "serious health condition," it adds guidance on some regulatory matters. First, it clarifies that if an employee is taking leave involving more than three consecutive calendar days of incapacity plus two visits to a health care provider, the two visits must occur within 30 days of the period of incapacity. Second, it defines "periodic visits to a health care provider" for chronic serious health conditions as at least two visits to a health care provider per year.
Light Duty: At least two courts have held that an employee uses up his or her 12-week FMLA leave while on a "light duty" assignment. Under the final rule, time spent in "light duty" work does not count against an employee's FMLA leave entitlement, and the employee's right to job restoration is held in abeyance during the light duty period. If an employee is voluntarily doing light duty work, he or she is not on FMLA leave.
Perfect Attendance Awards: The final rule changes how perfect attendance awards are treated to allow employers to deny a "perfect attendance" award to an employee who does not have perfect attendance because he or she took FMLA leave - but only if the employer treats employees taking non-FMLA leave in an identical way.
Employer Notice Obligations: The final rule consolidates all employer notice requirements into a "one-stop" section of the regulations to clear up some conflicting provisions and time periods. Further, the final rule clarifies and strengthens the employer notice requirements to employees in order that employers will better inform employees about their FMLA rights and obligations, and allow for a smoother exchange of information between employers and employees.
Employee Notice: The final rule modifies the current provision that had been interpreted to allow some employees to notify their employers of their need for FMLA leave up to two full business days after an absence, even if they could provide notice sooner. Under the final rule, the employee must follow the employer's normal and customary call-in procedures, unless there are unusual circumstances.
Medical Certification Process (Content and Clarification): The final rule, which is the result of significant stakeholder feedback (including a September 2007 meeting at the department on "medical certifications"), recognizes the advent of the Health Insurance Portability and Accountability Act (HIPAA) and the applicability of HIPAA's medical privacy rule to communications between employers and employees' health care providers. Responding to concerns about medical privacy, the rule adds a requirement that limits who may contact the health care provider and bans an employee's direct supervisor from making the contact.
The public can view the entire text of the final rule as it will appear in the Federal Register at: http://www.federalregister.gov/page2.aspx#reg_W.
For further information about the FMLA and the proposed regulations, visit the Wage and Hour Division's Web site at www.wagehour.dol.gov
Thursday, October 30, 2008
Can you afford a $50 Co-pay?
Can You Afford A $50 Co-pay?
By J. Keith Johnson
With health insurance rates increasing at double digit rates, more and more employers are searching for a way to stem the tide. Employers are forced to ask employees to shoulder more of the cost as premiums increase. If you have health coverage, whether group or individual, ever increasing premiums, deductibles, co-pays, and co-insurance are a fact of life.
To complicate matters, most employees do not understand their health insurance. Ask them about their coverage, they’ll tell you about their co-pay. Few know their individual or family deductible and virtually none of them know their co-insurance amount or maximum out of pocket. If you increase the deductible and co-insurance, hardly anyone will notice. If you increase the co-pay, everyone screams. Therefore, employers take the path of least resistance.
I have a couple of questions. First, do you think most employees could afford a $50 co-pay for doctor’s office visits? Probably. Emergency room co-pays are $50-$100 right now and many use the emergency room rather than a doctor’s office visit for routine illnesses, so it’s possible.
Second question, would most Americans be happy if they could get the insurance company to pay that whole $50? You bet!
So if you would like the insurance company to pay your $50 co-pay, welcome to the HSA plan.
HSA qualified plans use premium savings from the health coverage to help fund medical expenses. Rather than send a large premium for a co-pay plan to an insurance company, you send less premium by purchasing a lower cost, one deductible plan and placing the premium savings up to the amount of the deductible, in a tax-free fund for use as needed.
So how does that equal a $50 co-pay? Easy. An in-network doctor’s office visit is approximately $50. Under a standard co-pay plan, you pay $20 and the insurance company pays $30. Under the one deductible HSA plan, you pay the medical expenses up to the deductible. Voila, $50 co-pay! And, the employee did not have to pay tax on the $50.
But, you may ask, how do I get the insurance company to pay that $50? Once again, it’s easy. Here is an example of a small group with some health issues that recently switched to an HSA qualified plan:
Small group (7 employees)
Last year’s co-pay plan monthly premium: $3,738.00
(This does not include this year’s increase)
This year’s HSA plan monthly premium: $2,604.00
Monthly savings: $1,134.00 (30% savings)
Monthly savings per employee: $ 162.00
Monthly per Employee Contributions:
Contribution to HSA: $ 50.00
Employer paid Dental premium: $ 88.00
(New benefit)
Employer paid voluntary benefit premium: $ 9.00
(new benefit)
Savings to employer’s bottom line: $ 15.00
(per employee)
Total annual employer savings: $1,260.00
As you can see, the employer used part of the monthly savings (insurance company’s money) to help fund the employee’s HSA. This is the money used to pay the doctor’s office visit. Nothing came out of the employee’s pocket. The money literally came out of the insurance company’s pocket.
In addition, the employer was able to improve benefits by adding dental and a medical bridge plan to help pay medical costs in the event of a hospitalization. All this and he reduced his costs. Find that in a co-pay plan!
Oh, and the best part? Whatever the employee doesn’t use each year, he gets to keep!
Congratulations. You just started a de facto retirement plan with no IRS reporting requirements.
I’ve heard all the arguments against HSA’s. They are all baloney. The only reason an HSA qualified plan will not work is if you don’t save enough premium. Period.
J. Keith Johnson is an independent insurance broker, specializing in HSA qualified plans. For more information you may reach him at:
Free State Business, LLC
15954 Mur-Len, #305
Olathe, KS 66062
(913) 787-0152
Email: jkjohnson@freestatebusiness.com
By J. Keith Johnson
With health insurance rates increasing at double digit rates, more and more employers are searching for a way to stem the tide. Employers are forced to ask employees to shoulder more of the cost as premiums increase. If you have health coverage, whether group or individual, ever increasing premiums, deductibles, co-pays, and co-insurance are a fact of life.
To complicate matters, most employees do not understand their health insurance. Ask them about their coverage, they’ll tell you about their co-pay. Few know their individual or family deductible and virtually none of them know their co-insurance amount or maximum out of pocket. If you increase the deductible and co-insurance, hardly anyone will notice. If you increase the co-pay, everyone screams. Therefore, employers take the path of least resistance.
I have a couple of questions. First, do you think most employees could afford a $50 co-pay for doctor’s office visits? Probably. Emergency room co-pays are $50-$100 right now and many use the emergency room rather than a doctor’s office visit for routine illnesses, so it’s possible.
Second question, would most Americans be happy if they could get the insurance company to pay that whole $50? You bet!
So if you would like the insurance company to pay your $50 co-pay, welcome to the HSA plan.
HSA qualified plans use premium savings from the health coverage to help fund medical expenses. Rather than send a large premium for a co-pay plan to an insurance company, you send less premium by purchasing a lower cost, one deductible plan and placing the premium savings up to the amount of the deductible, in a tax-free fund for use as needed.
So how does that equal a $50 co-pay? Easy. An in-network doctor’s office visit is approximately $50. Under a standard co-pay plan, you pay $20 and the insurance company pays $30. Under the one deductible HSA plan, you pay the medical expenses up to the deductible. Voila, $50 co-pay! And, the employee did not have to pay tax on the $50.
But, you may ask, how do I get the insurance company to pay that $50? Once again, it’s easy. Here is an example of a small group with some health issues that recently switched to an HSA qualified plan:
Small group (7 employees)
Last year’s co-pay plan monthly premium: $3,738.00
(This does not include this year’s increase)
This year’s HSA plan monthly premium: $2,604.00
Monthly savings: $1,134.00 (30% savings)
Monthly savings per employee: $ 162.00
Monthly per Employee Contributions:
Contribution to HSA: $ 50.00
Employer paid Dental premium: $ 88.00
(New benefit)
Employer paid voluntary benefit premium: $ 9.00
(new benefit)
Savings to employer’s bottom line: $ 15.00
(per employee)
Total annual employer savings: $1,260.00
As you can see, the employer used part of the monthly savings (insurance company’s money) to help fund the employee’s HSA. This is the money used to pay the doctor’s office visit. Nothing came out of the employee’s pocket. The money literally came out of the insurance company’s pocket.
In addition, the employer was able to improve benefits by adding dental and a medical bridge plan to help pay medical costs in the event of a hospitalization. All this and he reduced his costs. Find that in a co-pay plan!
Oh, and the best part? Whatever the employee doesn’t use each year, he gets to keep!
Congratulations. You just started a de facto retirement plan with no IRS reporting requirements.
I’ve heard all the arguments against HSA’s. They are all baloney. The only reason an HSA qualified plan will not work is if you don’t save enough premium. Period.
J. Keith Johnson is an independent insurance broker, specializing in HSA qualified plans. For more information you may reach him at:
Free State Business, LLC
15954 Mur-Len, #305
Olathe, KS 66062
(913) 787-0152
Email: jkjohnson@freestatebusiness.com
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