Save Money on Medical Insurance … While You Still Can

Business owners can now take tax-deductible money out of your business and put it in your pocket on either a tax-free, or tax favorable-basis. This is a great way to save money on your medical insurance!

On December 22, the IRS issued Notice 2011-01 delaying the effective date of the new healthcare reform’s requirement that insured health plans meet the same non-discrimination rules that apply to self-funded plans under Section 105(h).

This is great news because you can, once again, utilize executive medical reimbursement!　And, because we have no way of knowing how long this window of opportunity will last, be sure to take advantage of this as quickly as possible.

Most likely, further guidance will be issued sometime this year to set up another “grandfathering” provision in 2012 or beyond. The bottom line is that you have just been handed an incredible opportunity to take advantage of this wonderful benefit again. – Ben

It’s Time to Consider a Self-Funded Medical Plan

If you haven’t explored a self funded medical plan option in the past, now may be as good a time as any. Most of the PPACA dramatic changes that have occurred or are coming down the pike affect fully insured plans more dramatically than they do self funded medical plans. Fully insured carriers continue to raise rates at an alarming rate, and there is no expected change to that coming in the near future.

Self Funded medical plans continue to gain popularity as a result. In a self funded medical plan, the employer is the plan sponsor, not the insurance carrier. As the plan sponsor is the entity who has a legal right to claims information, it makes sense that self funded plans will gain popularity with the rise in wellness and disease management efforts as a way to minimize claims and control as much of the process as possible.

Self funded plans are subject to ERISA and not the individual mandates of each state in which the domiciled company resides, which can equate to more cost effective medical plan costs and more flexibility in plan design and administration.

If you’re looking for more control, flexibility, and choice, perhaps its time to explore what self funding your medical risk could do for you ability to recruit and retain the top talent in your market place, and provide a comprehensive benefits package in the process. – Ben Krambeck

Repeal or Defund? That is the Question

Now that the GOP-controlled Congress is in session, the question on everyone’s mind is, “What are they going to do with PPACA, the healthcare reform bill?” Many people have expressed their dissatisfaction with PPACA and are looking to a new Congress to do something about it.

If they haven’t already, business owners will see changes in the costs and offerings of their health plans due to changes included in PPACA. These changes will effect both companies and employees. Small businesses, especially, can’t afford these changes.

This Congress has already started delaying certain aspects of all of PPACA’s provisions, like the release on 12/23 putting a stay on discriminatory fully insured plans. Expect more of the same during this Congress. The departments that regulate certain aspects of PPACA are either understaffed or do not have adequate resources to enforce parts of the new law. Once Congress realizes that, we’ll see more postponements of the minor aspects of the law, at least for 2011 and perhaps 2012.

Former Arkansas Governor Mike Huckabee is participating in a movement to repeal the bill. His website is www.repealitnow.org for those interested in signing a petition to support the repeal effort.

Iowa Congressman Steve King recently discussed a potential approach to contesting healthcare reform in its present form. The approach that he outlined was to vote to repeal PPACA in the House, which would presumably be vetoed by President Obama. Then, once the repeal was vetoed, the GOP could go through the appropriations committees to defund certain parts of the PPACA.

It’s probably safe to say that a total repeal of the law is not likely. However, it seems that defunding specific portions of PPACA is quite probable.

-Ben Krambeck

What’s Next for Healthcare Reform?

The elections have come and gone; what’s next for healthcare reform? Voting Americans have swung the balance of power in Congress back to the GOP, and the GOP and its Tea Party counterparts won the majority of seats that were up for election in the Senate. Consequently, the state of the PPACA Healthcare Reform bill that was signed into law on March 23, 2010, should be expected to be in constant flux for the remainder of the session.

If we look back at the history of our nation, a total repeal of a law has seldom occurred. However, it has happened before, so it will most likely happen again. With the president’s veto power, its unlikely that a total repeal of PPACA will occur during this presidential term. However, individual parts of PPACA are likely to be modified.

The strength of the GOP resides with small business owners and pro-business voters. That means the modifications proposed by both the GOP and the Tea Party will benefit employers who offer medical insurance plans to their employees, and restore some limitations and exclusions for group insurance underwriters, in order to keep claims and then premiums from skyrocketing in the private health insurance market.

-Ben Krambeck

First Healthcare Insurer Bows Out: What it Means for You

On September 30, Principal Financial Group announced that it would be exiting the group medical insurance business.　There will be a three-year phase-out, but Principal is projected to be 100 percent out of the group medical insurance business by 2014.　They are selling their existing book of business, or “transitioning” it, to United HealthCare during this 36-month period.So, what will this mean for your business? Is one less national competitor a good or bad thing?　In certain parts of the country, it will be business as usual; but, in areas where Principal held a respectable percentage of the market, there will be a noticeable void.

For years, the insurance community wondered whether Principal was preparing its exit. Earlier this decade, Principal segmented its benefits insurance business, creating a medical division and a non-medical division, the latter of which marketed group life, as well as short-term and long-term disability insurance.　Many saw this as the first step toward what was announced on Thursday.

It’s not a good thing to remove a solid competitor from the market, especially because fully insured carriers seem to be pre-funding their coffers for potential future losses after the Patient Protection and Affordable Care Act (PPACA) goes into full effect in 2014.

Next week at the Self-Insurance Institute of America, Inc. (SIIA) convention in Chicago, NSCA’s own Chuck Wilson will be presenting how the SystemsPlus™ Health Solutions program is proving to be a valuable option for industry business owners. Given the buzz surrounding group medical captives, perhaps the market will pick up with alternative medical risk options to help fill the void created by Principal Financial Group’s exit.

-Ben Krambeck

6 Reasons Your Health Plan Will Lose Grandfather Status

Prospective clients often ask me whether it is worth keeping the health program they have that has been grandfathered in or if they should just change plans. First, let me point out that there are rules to determine if and how your business can, in fact, keep its grandfather status:

• The program is in complete compliance with federal and/or state law;
• It voluntarily complies with provisions of the Patient Protection and Affordable Care Act (PPACA) healthcare reform or increases the plan’s benefits to comply; and
• There is a third-party administrator. Self-funded groups have administrators who make sure they are administering their plan is in accordance with ERISA. You can change the administrator and not lose your status as long as you don’t make any other changes.

 However, you will lose your grandfather status if you:

1. Eliminate all or substantially all benefits for a particular condition. For example, if you exclude or eliminate coverage for in vitro fertilization or hip replacements for individuals older than 57.
2. Increase coinsurance by any amount greater than what it was on March 23, 2010. So, if you had a 90/10 plan in place prior to March 23, you would lose your status if you went down to an 80/20 plan at your next renewal, even if you kept everything else the same.
3. Increase the deductible/out-of-pocket limit by more than medical inflation + 15%. In 2010, medical inflation is set at or about 18%, so you can’t change your deductible by more than 33%. So, if you had a $100 deductible, you can’t go up to a $200 deductible even if everything else were the same.
4. Increase a copayment by the greater of medical inflation + 15% or $5 + medical inflation. Similar to the previous point, you can’t go from a 90/10 co-insurance plan to an 80/20 plan to try to shave a few points off of your renewal.
5. Decrease an employer contribution by more than 5% below the rate that it was on March 23, 2010; or
6. Change the annual limit by any means.  

 To boil this down, if you change the plan to make it better or PPACA-compliant, you would be considered “grandfathered in.” If you make any change that would reduce the benefits from the baseline set on March 23, you would lose your grandfather status and have to comply with all PPACA requirements.

 Some insurance companies have been telling their clients that insurance rates are going up because of PPACA, but the Department of Health and Human Services has ceased these types of communications. The fact is that if you make any change that would decrease the benefits you currently offer, you will lose your status and have to abide by the new guidelines. 

-Ben Krambeck

Grandfathers and Medical Plans?

What’s all this talk about grandparents and your medical plan?  If you ask your existing medical insurance carrier, they might tell you you’ll lose your grandfather status if you switch carriers instead of signing off on the 40% renewal increase they just slid across the table. Then, you’ll have to adhere to the healthcare reform requirements immediately.  So, just sign off on the renewal and maintain that grandfather status regardless of the increased cost to your medical insurance plan. We’ll call this Option 1.

Option 2 is accepting Option 1, but also raising your deductibles and changing your plan to alleviate some of the renewal increase. You may think, “This could save our plan some money, but couldn’t it also cause my plan to become a ’new plan’ and lose grandfather status?” Yep, sure could. In other words, if you stay with your existing carrier but change your plan parameters, your plan could still risk losing grandfather status even though you’ve kept the same carrier. Well, Option 2 may not be all it’s cracked up to be, right?

In Option 3, you keep the plan the same, but explore other options in the competitive market. You could end up either changing carriers or changing your plan design and carrier. But, you could also save money for the upcoming year versus signing off on your renewal offer from the incumbent carrier.  In Option 3, you must be comfortable with the loss of your grandfather status. 

If the “to grandfather or not to grandfather” debate can be boiled down to one simple question, it’s this: Does the benefit of maintaining grandfather status outweigh the costs? You won’t know unless you go to market before your next renewal and make carriers compete for your business. 

If you’re interested in the details of the grandfather status, click here to view my webinar.