Viewing posts from: December 2012

Healthcare Reform Costs & Potential Savings

Posted December 21, 2012 by Megan DiMartino

Healthcare reform has captured headlines around the country with many cost-saving initiatives for employers and individuals. The potential, however, for substantial savings exists within the current framework without any changes necessary. These savings are dependent upon a carrier’s ability to negotiate with providers, as well as a number of factors relating to the business.

To review the potential for savings within your organization, contact AP Benefit Advisors For more on this important and timely topic, read the Milliman white paper here.

Fiscal Cliff Proposal Could Impact Small Businesses' 401(k) Plans

Posted December 20, 2012 by Megan DiMartino

The latest round of fiscal proposals for the federal budget includes a provision by President Obama that would penalize small business owners, according to Brian H. Graff, CEO/Executive Director of NAPA and ASPPA. This attempt to bridge the gap between the President and House Speaker John Boehner represents yet another point of contention in their ongoing negotiations to avoid the fiscal cliff. The provision includes a 28% cap on the current tax benefit for itemized deductions and exclusions (35% for charitable contributions).

Small business owners with a marginal tax rate of more than 28% would therefore pay a surcharge on elective deferrals to a 401(k) plan in the year in which the contributions are made — and then pay tax again on the full amount when those contributions are paid out at retirement, Graff explains. To read more about this, view the NAPA Net article here.

Walmart's New Health Care Policy Shifts Burden To Medicaid, Obamacare

Posted December 20, 2012 by Megan DiMartino

By Alice Hines, Huffington post

Walmart, the nation’s largest private employer, plans to begin denying health insurance to newly hired employees who work fewer than 30 hours a week, according to a copy of the company’s policy obtained by The Huffington Post.

Under the policy, slated to take effect in January, Walmart also reserves the right to eliminate health care coverage for certain workers if their average workweek dips below 30 hours — something that happens with regularity and at the direction of company managers.

Walmart declined to disclose how many of its roughly 1.4 million U.S. workers are vulnerable to losing medical insurance under its new policy. In an emailed statement, company spokesman David Tovar said Walmart had “made a business decision” not to respond to questions from The Huffington Post and accused the publication of unfair coverage.

Labor and health care experts portrayed Walmart’s decision to exclude workers from its medical plans as an attempt to limit costs while taking advantage of the national health care reform known as Obamacare. Among the key features of Obamacare is an expansion of Medicaid, the taxpayer-financed health insurance program for poor people. Many of the Walmart workers who might be dropped from the company’s health care plans earn so little that they would qualify for the expanded Medicaid program, these experts said.

“Walmart is effectively shifting the costs of paying for its employees onto the federal government with this new plan, which is one of the problems with the way the law is structured,” said Ken Jacobs, chairman of the Labor Research Center at the University of California, Berkeley.

For Walmart, this latest policy represents a step back in time. Almost seven years ago, as Walmart confronted public criticism that its employees couldn’t afford its benefits, the company announced with much fanfare that it would expand health coverage for part-time workers.

But last year, the company eliminated coverage for some part-time workers — those new hires working 24 hours a week or less. Now, Walmart is going further.

“Walmart likely thought it didn’t need to offer this part-time coverage anymore with Obamacare,” said Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy at the University of California, Santa Barbara. “This is another example of a tremendous government subsidy to Walmart via its workers.”

In pursuing lower health care costs, Walmart is following the same course as many other large employers. But given its unrivaled scale, Walmart’s policies tend to influence American working conditions more broadly. Tom Billet, a senior consultant at Towers Watson, a professional services firm that works with large companies to develop benefit plans, said other companies are also crafting policies that will exclude some part-time workers from medical coverage.

Billet portrayed the growing corporate interest in separating out part-time workers as a reaction to another aspect of Obamacare — the new rules that require companies with at least 50 full-time workers to offer health coverage to all employees who work 30 or more hours a week or pay penalties.

Several employers in recent months, including Darden Restaurants, owner of Olive Garden and Red Lobster, and a New York-area Applebee’s franchise owner, said they are considering cutting employee hours to push more workers below the 30-hour threshold.

“In the past, firms were less careful about monitoring whether someone was full- or part-time,” Billet said, noting that some of his clients were planning to track workers’ hours more carefully. “I expect health plans like Walmart’s won’t be uncommon as firms adjust to this law.”

For Walmart employees, the new system raises the risk that they could lose their health coverage in large part because they have little control over their schedules. Walmart uses an advanced scheduling system to constantly alter workers’ shifts according to store traffic and sales figures.

The company has said the scheduling system improves flexibility and efficiency. But in recent interviews with The Huffington Post, several workers described their oft-changing schedules as a source of fear that they might earn too little to pay their bills. Many said they have begged managers to assign them additional hours only to see their shifts cut further as new workers were hired.

The new plan detailed in the 2013 “Associate’s Benefits Book” adds another element to that fear: the risk of losing health coverage. According to the plan, part-time workers hired in or after 2011 are now subject to an “Annual Benefits Eligibility Check” each August, during which managers will review the average number of hours per week that workers have logged over the past year.

If part-time workers hired after Feb. 1, 2012, fail to reach the 30-hour threshold, they will lose benefits the following January, according to the book. Part-time workers hired after Jan. 15, 2011, but before Feb. 1, 2012, must work at least 24 hours a week to retain coverage and will also be subject to an eligibility check each year. Those hired before 2011 aren’t subject to the minimum hours requirements or eligibility checks.

As for full-time workers under the plan, those who lose hours and slip to part-time at any point during the year will see their spouses’ health coverage dropped immediately. Those workers will also lose their dental and life insurance policies in the following pay period, according to the plan.

Some Walmart workers who are excluded from the company’s health care plans are likely to become eligible for Medicaid under the Obamacare expansion, which aims to replace a patchwork of standards now set by individual states with one minimum federal threshold — income below 133 percent of the federal poverty line, which for an individual currently comes to $14,856. However, the Supreme Court ruled earlier this year that the decision to expand the program is voluntary for the states. At least eight states, including Texas, have said they will not expand the program, which would leave Walmart workers there with one less option.

Part-time workers who lose their Walmart insurance but earn too much to qualify for Medicaid should be able to buy insurance through the health care exchanges to be established under Obamacare — essentially, online marketplaces offering an array of health care plans.

For workers who do qualify for health coverage under Walmart’s new policy, the latest package represents an upgrade over previous plans. Walmart’s health plans began covering 100 percent of spine and heart surgeries this year at select hospitals and medical centers. They also include a smattering of preventative care services required by Obamacare.

But the company’s plans still leave many workers facing significant financial distress in the event of major illness. Under the new policy, one major offering, the so-called Health Reimbursement Account Plan, costs nonsmoking workers $34.80 a month — a seemingly affordable sum. Yet it comes with an annual deductible of $2,750, a hefty expense given that half of Walmart’s hourly workforce earns no more than $10 an hour.

While a shifting of Walmart employees to Medicaid rolls may increase the burden on American taxpayers, it is likely to be a better deal for the workers themselves.

“The packages Walmart is providing for low-income people aren’t offering very much coverage except for catastrophes,” said Linda Blumberg, a senior fellow at the Urban Institute, a left-leaning think tank. “It’s likely they’ll be better off going with a government-sponsored plan.”

HHS Guidance New PPACA $63 Per Head Fee

Posted December 13, 2012 by PHaynes

HHS Guidance:  $63 per head fee to help stabilize the individual health insurance market from 2014 to 2016.

Update, March 6, 2013

With the issue of the Final Regulations on Friday, March 1, 2013 (and a new CMS/HHS Fact Sheet) we have confirmation of some nuances here.

  • The fee will apply to former employees and their dependents receiving COBRA continuation coverage.
  • In the case of fully insured employers, the fee will be paid by insurers. For self-funded plans, third-party administrators are to remit the fee on behalf of their clients.
  • The fee will not apply to retirees enrolled in Medicare and receiving supplemental coverage from their former employers. However, the fee would be assessed on retired employees not yet eligible for Medicare and receiving health care coverage from their former employers.
  • Exempted plans still include HCFSAs, HSAs, stand-alone dental and vision plans, most EAPs, disease management and wellness plans.

Original Post Continues->

HHS (the Department of Health and Human Services) issued additional guidance on the three-year transitional reinsurance program that is established under the Affordable Care Act (PPACA) to help stabilize premiums in the individual health insurance market during the period 2014 through 2016.  The fee has been set at $63 per health care plan participant (this includes employees and dependents).  For fully-insured plans this fee will be paid by carriers (insurers) and built into the rates for 2014; self-funded plans are liable for the fee but may use TPAs (Third-Party Administrators) to remit the fee on behalf of the plan sponsor.

I am an Employer that Sponsors a Plan for my employees.  Why must I pay a fee that will go to carriers/insurers that provide individual health insurance policies?

Short answer:  Because that’s what the new law requires.  PPACA Section 1341(c)(1)(A) states that the purpose of the reinsurance contributions is “to help stabilize premiums for coverage in the individual market” during the first three years the individual Exchanges are in operation, “when the risk of adverse selection related to new rating rules and market changes is greatest.”  Insurers that end up covering more than their share of high-cost individuals in the Exchange will be eligible for reimbursement of a percentage of claims that exceed a specified attachment point.

How much is the “National Per Capita Contribution Rate”?

The annual per participant fee for 2014 will be $63.00 ($5.25 per month) and is scheduled to decrease in 2015 and 2016.  The rate was calculated by dividing the 2014 annual amount of $12 billion (set by PPACA) by the estimated number of enrollees in plans required to make transitional reinsurance contributions.  [The specified annual amount for 2015 is $8B (which would yield a rate of $42/participant) and it is $5B for 2016 (yielding a $26/participant)].    The $63.00 per-covered-member-rate is a national uniform contribution rate and does not vary by state.

Are there any plans that are exempt from this fee? 

Only “major medical” plans are required to pay this reinsurance contribution fee.  The introductory comments to the regulations defines these plans as plans that cover a broad range of treatments and services, including preventive, diagnostic, medical & surgical services, each/all/any of which may be provided on an inpatient, outpatient or emergency room setting.  The following will not be required to pay this fee:

  • Integrated with HDHP plans – HRAs and HSAs
  • HCFSAs (Health Care Flexible Spending Accounts)
  • EAPs (Employee Assistance Program)
  • Disease Management
  • Wellness Programs
  • Dental & Vision plans that are offered on a Stand-Alone basis

Should I just add up my employees, their spouses and children and prepare to pay my fee?

That would be a good start, but don’t forget to include your COBRA QBs and Retirees too.  [COBRA QBs (Qualified Beneficiaries) count.  And, any former employees enrolled in your retiree medical plans (if they are not yet Medicare eligible.  Note:  Supplemental, employer-provided Medicare coverage participants would not count towards your total number of participants).  Also, at this time, there is no “Retiree-Only” exception to the headcount and the fees owed].    If you would like to comment to HHS and CMS, your comments must be received at one of the addresses listed in the regulations (link below) by 5:00 p.m. on December 31, 2012.

How will I pay my company’s fee? 

That will depend on how your plan is insured or funded.

  • Fully Insured Major Medical Plans – carriers/insurers are responsible to pay this fee (most have already indicated that they will add this fee into their rates).
  • Self-Funded Health Plans – the Employer/Plan Sponsor is responsible to pay the fee but may use a TPA (Third Party Administrator) or ASO (Administrative Services Only) contractor to remit the fee on their behalf.

When am I expected to pay these fees?

This fee will be collected annually by HHS.  Previous guidance indicated this would be paid/assessable quarterly.  The expected timeline is:

  • 11/15/2014:  Plans and Carriers/Insurers send their headcounts to HHS. 12/15/2014:  HHS sends a bill to those entities (fees are due within 30 days).
  • 01/15/2015:  Payment is made to HHS.
  • Similar time frames will apply in 2015 and 2016.

Is this a tax-deductible expense?

Yes, the fee is a tax deductible expense to carriers/insurers and plan sponsors (self-funded plans).  HHS guidance says the DOL has deemed these reinsurance contributions as valid plan expenses under ERISA.


Dental Insurance and Oral Care Prove Vital for Children’s Health

Posted December 13, 2012 by Megan DiMartino

BUSINESS WIRE–Argus Dental Plan warns that parents may not realize that the most common chronic childhood disease is tooth decay. Nearly 25 percent of preschoolers have baby-teeth cavities before they enter kindergarten, according to the Centers for Disease Control and Prevention.

“With routine screenings and scheduled visits to a dentist, tooth decay can be prevented”

“Thousands of families are uninsured but do not qualify for Medicaid, causing children to lack access to regular and affordable dental care,” said Nicholas Kavouklis, DMD, founder and president of Argus Dental Plan, which provides quality-based Prepaid Dental Plans, Dental Discount Plans, Dental Saving Accounts, Dental PPO, and HMO.

The National Children’s Oral Health Foundation estimates that 17 million children in America don’t have dental care every year.

“With routine screenings and scheduled visits to a dentist, tooth decay can be prevented,” added Kavouklis. “If decay does occur, it must be treated early for the best possible outcomes.”

Children who have untreated tooth decay can experience considerable pain that they might not be able to articulate. Further, poor oral health in childhood contributes to problems from missed school days and impaired learning ability to inadequate nutrition due to how oral health affects diet. Poor oral health also can impair speech development and self-esteem.

A startling statistic about pediatric health is from the U.S. Surgeon General, who reported that children lose more than 51 million school hours overall because of dental-related problems.

According to Kavouklis, pediatric dental care is one of the best investments for keeping children healthy. Seeing a dentist regularly can contribute to a child’s ability to succeed in school, and provides a foundation for lifelong oral health.

47 percent of Americans live paycheck to paycheck

Posted December 10, 2012 by Megan DiMartino

By Paula Aven Gladych

Nearly three-quarters of Americans worry that they won’t have enough money to retire or pay for health care costs in retirement, and nearly 50 percent are living paycheck to paycheck.

In the most recent Harris Interactive poll, only 41 percent of people who haven’t retired yet believed that Social Security would still be around when they retire.

Sixty-three percent of Americans said they are putting money toward savings, with the top goals being a rainy day fund for unexpected costs and retirement. Priorities change in households with children. College savings rises in importance among respondents with children, largely at the expense of the rainy day and retirement savings accounts, the survey found.

One-quarter of adults ages 18 to 35 said they are saving to purchase a car and 27 percent of all Americans said they are saving for a vacation.

An alarming 47 percent of respondents said they live paycheck to paycheck and can’t afford to put money in savings. This trend is more common among younger Americans and those with children in their households.

Debt is not helping the situation, with 59 percent of Americans saying they would pay off debt rather than increase savings with unexpected funds.

“There is clear anxiety on the part of the American public regarding their day-to-day finances and those related to their futures,” says David Krane, senior vice president of Harris Interactive. “Yet rather than creating products and services that could alleviate these concerns, bringing peace of mind to their customers, the financial services industry continues to focus its marketing on products and services related to spending and further debt accumulation. Companies that figure out how to take advantage of this missed opportunity are likely to be those that will rebound from the trust disadvantage that the industry now faces and grow their businesses.”

This Harris Poll was conducted online in the United States from Aug. 13-20, 2012, among 2,307 adults age 18 and over.


Getting the most from your dental and vision plans

Posted December 5, 2012 by Megan DiMartino

By Mark Roberts,

Most Americans get dental and vision coverage through their employer. As a general rule, ancillary benefits are most commonly purchased by employees on a voluntary basis. Typically, when employees are offered a dental insurance product, many of them turn it down as a benefit they are willing to pay for, especially if they are part-time or a lower-wage worker.

According to the Minnesota Department of Employment and Economic Development, while 67.3 percent of full-time workers and 14.9 percent of part-time workers in surveyed industries are offered some type of employer-sponsored dental coverage, either as a stand-alone policy or as part of their medical plan, only 52.7 percent of full-time workers and 8.0 percent of part-time workers participate in an employer-sponsored dental plan.

However, if you or your employees do have dental benefits, use them.

“Ever feel like you funnel money into a dental insurance plan that you’ll never see again? Don’t let your dental policy become a black hole,” says Dr. Robert Schwartz, a dentist in New York. “Take advantage of all the benefits they offer—benefits you’re already paying for.”

Need a little motivation? Here are 5 very good reasons to use your benefits to the fullest:

  1. Yearly maximums. Dental insurance plans put a maximum on the amount of money they’re willing to pay for your dental care. Maximums vary from one company or policy to the next, but typically fall around $1000. Sounds like a lot of money, doesn’t it? Insurance companies consider this amount to be a good investment. Allowing you to get regular dental care, your carrier can prevent the need for more serious (and more expensive) dental procedures down the road. Why not do you both a favor and use it, ensuring your mouth is in tip-top shape when next year rolls around?
  2. Premiums. You’re probably paying a monthly premium to keep your insurance. Even if you don’t need extensive treatment, you should use that money for regular check ups and cleanings to prevent costly procedures in the future. Don’t throw your money away.
  3. Deductibles. Insurance companies typically expect you to pay a certain amount of money for your dental care each year – usually about $500. If your smile isn’t in good shape, your dentist can create a treatment plan to put you back on track. Deductibles begin anew each year, so spreading out this care over more than one year will mean you have to pay more out-of-pocket.
  4. Inflation. It seems everything becomes more expensive from one year to the next, and dental materials and equipment are no exception. Putting off necessary dental care could mean that you’ll have to pay more down the road.
  5. Dental problems escalate. If your pearly whites are anything but, they’re only going to get worse. That is, of course, unless you take advantage of your insurance benefits and tend to your teeth and gums. A little cavity that isn’t bothering you one year may become a major headache (or toothache) the next.”

And what about your eyesight? If you wear glasses or contact lenses, or it’s been a while since you’ve had your vision checked, a visit to your optometrist is in order. According to EyeMed Vision Care, “a complete view of potential employee out-of-pocket costs is one of the most important tools for assessing the value and effectiveness of your vision benefit plan. Benefits decision-makers need all the facts—together in one place at one time—to make the right benefits decisions for employees, their dependents and your company.

Some vision benefit vendors claim to have low out-of-pocket costs, yet use only a single, hypothetical “example” transaction as support. Forty percent of eyewear consumers prefer to receive eye care services during evenings and weekends. A complete out-of-pocket assessment should consider:

  • Annual premium costs
  • Co-pays and allowance overages
  • Lens/material type frequency
  • Lens add-ons
  • Contact lenses
  • Additional discounts beyond the plan of coverage—like discounts on additional pairs of eyeglasses or contact lenses

If you don’t have insurance, purchase a discount dental and vision plan that can save you a lot of money, both on the fees to participate, and on the actual procedures with participating dental and vision network providers. Compare the cost of insurance to a dental discount plan. Discount plans with Careington, Aetna,, or other companies allow you to visit a dentist and receive significant savings at the time of service with participating dentists including specialists for oral surgery, periodontal work, orthodontia, cosmetic procedures, implants, and more.

Low membership fees each month for an individual or family can be found that provide huge savings for most procedures. You pay a discounted rate to the dentist at the time of service, and may end up with a cleaning, a set of X-rays and an exam for under $100 on your first visit. And, you have a fee schedule that tells you in advance what you pay the dentist. How about that – no surprises and you know how much it costs before you go. That is transparent consumer-directed health care. Plus, there is no waiting and no limit on how many times you can use a discount plan.

Regardless of the type of plan, benefits, or coverage you have, the main point is to use what you have to maintain good oral health and keep your vision intact. Delaying treatment only prolongs the inevitable. Sooner or later, visiting your dentist and your eye doctor is going to be on your calendar. If you go sooner, you avoid more expensive care later. Don’t put off taking care of your smile or your vision. After all, with healthy eyes and teeth, you can see all those people who are going to be smiling back at you.


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