Health Insurance News and Comments
IRS releases guidance on COBRA subsidies
Posted On: April 01, 2009 12:50 PM CST
Jerry Geisel
WASHINGTON—The Internal Revenue Service has released eagerly sought guidance on the new federal COBRA premium subsidies available to employees who lose their jobs.
The guidance, released Tuesday, resolves numerous questions—such as clarification of situations when laid-off employees are entitled to the subsidy—that employers have been asking since the subsidy legislation was signed into law in February.
The subsidy, included in a broad economic stimulus measure, is available to employees who are involuntarily terminated between Sept. 1, 2008, and Dec. 31, 2009. A 65% federal premium subsidy is provided to eligible beneficiaries for up to nine months, until they become eligible for coverage from a new employer or a spouse’s employer or until they become eligible for Medicare.
Lawmakers put the cost of the federal subsidy at about $25 billion, enabling as many as 7 million jobless people and their families to retain health care coverage.
Congress, eager to pass the legislation quickly, left the role of providing detailed guidance on the subsidy to the regulatory agencies, with the first major batch provided by the IRS in a question-and-answer format spanning 27 pages.
The most significant guidance—crucial for helping employers determine who is eligible for the subsidy and who is not—is defining what constitutes an “involuntary termination of employment” and then providing numerous examples of involuntary termination.
In the guidance, the IRS defines an involuntary termination as the independent exercise of an employer’s authority to terminate employment when the employee was willing and able to work. The determination of whether a termination is involuntary is based on all the facts and circumstances, not on whether a termination is designated as voluntary or a resignation.
For example, the IRS says, retirement could be considered an involuntary termination if the employee knew he or she would be terminated unless the individual retired.
In addition, the resignation of an employee who left due to a “material change” in the geographic location of the employer would be considered to be an involuntary termination.
The IRS guidance extends to many other areas as well, including how the premium subsidy is to be calculated when the employer pays part of the COBRA premium, whether the subsidy is available to those who continue only dental coverage, and the length of the subsidy for employees who are involuntarily terminated several times while the subsidy law is in effect.
Obama signs stimulus bill providing COBRA subsidy
Feb. 17, 2009
The federal government will pay 65% of COBRA premiums for employees who are laid off from Sept. 1, 2008, through Dec. 31, 2009. The subsidy will extend for nine months. However, individuals with an annual adjusted gross income of more than $125,000 and couples with an adjusted gross income of more than $250,000 will not be eligible for the subsidy.
Employers will face a significant communications and administrative challenge to comply with the COBRA provisions, which go into effect March 1.
Employees who were laid off since Sept. 1, 2008, and declined to opt for COBRA coverage will have a new right to enroll in COBRA, and employers are required to inform those individuals of that right.
In addition, laid-off employees now receiving COBRA will have to be informed of the new subsidy and their premium contributions will have to be adjusted—as of March 1—to reflect the new subsidy.
The Joint Committee on Taxation estimates that the subsidy could help 7 million individuals and their families. It also estimates that the subsidy will cost the government nearly $25 billion.
Buyer Beware: Scheduled Benefit Policy: Have you made this mistake?
This is a typical scheduled benefit plan. I advise my customers to stay away from these types of plans at all cost if possible. In my opinion they just don’t offer enough protection.
What does this benefit outline mean:
- Deductible amnount is only $500.00
- Primary Daily Hospital Expense Benefit $2,000.00
What it does say here is that it’s limited to the first 10 days in the hospital. - Secondary Daily Hospital Expense Benefit $1,000.00
- Maximum Hospital Expense Benefit $50,000.00
- Maximum Intensive Care Benefit $10,000.00
- Maximum Outpatient Benefit $300.00
This is enough to make my point without even getting into the rest of the benefit outline. This is an actual case that I recently ran across. This person went into the emergency room with severe intestinal cramping. They were dignosed with Diverticulitis. No laughing matter, believe me. This person was admitted to the hospital and had a 6 inch section of their colon removed. Patient was in the hospital the first time for a total of 6 days. The bill, a whopping $50,000.00, came a couple months later for the hospital stay. The carrier would pay according to this scheduled benefit only $12,000 towards the hospital bill. 6 times the daily maximum of $2,000.00. We’re not considering the surgical benefit which was very limited in the first place. So what happened to the rest of the bill you might ask? The patient has to come up with it. They are approximately $38,000.00 out of pocket. Not a very pretty picture. The agent had said they would be covered 100% after this benefit level. What this policy really means is that the stated amount is the absolute maximum the carrier will pay in the event of a claim. They were not told the truth. The customer had no idea what this scheduled benefit really meant. After explaining it to them they told me they would have never bought it had they known.
For comparison sake. Lets say this customer had a Health Savings Account type major medical policy with a high deductible of $2,700. What would have happened. The major medical would have paid the bill in full minus the $2,700 deductible. So the customer would have been $2,700.00 out of pocket. They would also have met their yearly deductible, so every claim the rest of the year would have been paid in full. To top it all off the monthly premium for the HSA (Health Savings Account) would have saved this customer a little over $100.00 a month. This savings could have been put into a health savings account and written off on their taxes.
Customers should ask a lot of questions. If you are still unsure get a second opinion. Call Focus Insurance Group, Inc. We specialize in health insurance. You can run a competitive Illinois health insurance quote directly from our website. After entering the basic information we need to run a quote. You will get a list of different plans (quotes) to choose from. You can also pick up to four plan designs at a time and do a side by side comparison of the plans your interested in. This will give you the information you need to make a qualified decision. No agent will be in your living room pressuring you to sign on the dotted line.
To run a free competitive quote go to: www.focusinsgroup.com
Lost group health plan - What now?
As long as your job loss is a qualified event, which it most likely is, you would be entitled to the same group health plan through COBRA (Consolidated Omnibus Budget Reconciliation Act) or state continuation. Group health plans for employers with 20 or more employees on more than 50 percent of its typical business days in the previous calendar year are subject to COBRA. Group health plans with 19 or fewer employees would be subject to state continuation.
1. Now I have some good news and some not so good news. First the good news, relax you can keep your health benefits. The bad news is that it can be very expensive. The reason is that you are now responsible for the entire portion of your health plans premium not just the part you use to pay. The employer can also add a 2% increase for administration. This is very difficult to pay for most people.
2. The plan administrator must provide notice to individual employees of their right to elect COBRA coverage within 14 days after the administrator has received notice from the employer.
3. You must respond to this notice and elect COBRA coverage by the 60th day after the written notice is sent or the day health care coverage ceased, whichever is later. Otherwise, you will lose all rights to COBRA benefits.
I would try to get an Individual or family policy first, this could save you a lot of money. To get a free competitive quote go to www.focusinsgroup.com. You can pick up to 4 plans at a time and do a side by side comparison of the plans your interested in. You can also download the Illinois Health Insurance Buyers Guide to help you pick the policy which will help your circumstances the best.
If you have pre-existing health conditions and you do not qualify for an individual policy you will most likely have to stay on COBRA. The length of time you are allowed to stay on COBRA can vary. It is typically 18 months.
Recommendations: If you have pre-existing conditions but your family does not, try to put the rest of your family on an individual policy. If you are not sure which way is the best and most cost effective way give me (Randy Gillespie) a call at Focus Insurance Group,Inc. Office number 217-645-3075 I’d be glad to help.
WellPoint suspended from new Medicare enrollments
Posted On: Jan. 13, 2009 2:51 PM CST
Jerry Geisel
INDIANAPOLIS—Managed care giant WellPoint Inc. said it has been suspended by the Centers for Medicare and Medicaid Services from enrolling new members in its Medicare programs as it moves to resolve undisclosed issues uncovered by internal and CMS audits.
Indianapolis-based WellPoint said it was surprised by the immediate suspension since it had been meeting with CMS regularly regarding its remediation process.
“Our plan is to continue to work with CMS to make improvements as expeditiously as possible, and we will continue to put the resources of our company behind this effort to help ensure we can meet the needs of our Medicare members,” WellPoint said in a Monday statement.
While WellPoint cannot accept new Medicare members, it said it will continue serving those already enrolled.
As of Sept. 30, 2008, WellPoint had about 472,000 Medicare Advantage members and 1.9 million enrollees in its Medicare Part D prescription drug plans. In all, the nation’s largest private health insurer has about 35 million enrollees.
HSA’s have grown by 60% for J.P. Morgan
J.P. Morgan says HSA business has grown by 60 percent
Healthcare Finance News
By Molly Merrill, Associate Editor 09/09/08
NEW YORK - J.P. Morgan has reported that its Health Savings Account business has grown by 60 percent in account volume over the last year.
The firm reports seeing a 97 percent adoption rate among eligible employees in HSA programs sold by J.P. Morgan directly to employers.
Officials say much of the success of these new plans is attributed to senior level commitment and employee training and education.
“Employers that have embraced the HSA as a major part of their healthcare strategy are seeing high levels of adoption,” said David Josephs, head of J.P. Morgan’s Consumer-Directed Healthcare business. “Keys to success are a strong plan design with employer contributions and an aggressive education program.”
J.P. Morgan saw early adoption of its program from medium and small businesses that found the HSA as a way to preserve affordable health coverage.
As the HSA is offered along with a high-deductible health plan, employers are generally able to offer their employees lower premiums and put employees in control of how their dollars are spent. The additional tax savings of these plans can also make offering the program much less expensive for the employer than traditional insurance coverage.
“HSAs enable employers and consumers to balance more effectively short- and long-term needs around healthcare expenses,” said Josephs. “With the rising cost of healthcare coverage, health insurance plans that include an HSA help individuals plan for current and future expenses while helping employers and individuals manage healthcare costs.”
Similarly, many large organizations have adopted J.P. Morgan’s HSA program. These organizations come from industries such as manufacturing, retail and financial services, with participation across all salary levels including low- to-moderate income employees as well as managers and executives. According to J.P. Morgan these larger organizations can save up to 30 percent to 40 percent annually using HSAs.
Supplement This – Health Insurance Basics
If you need a Medicare supplement, knowing your options is important when it comes to making decisions. If you aren’t certain what is right for you, supplements or Medicare Advantage, talk to your insurance broker.
A supplement usually means something extra you get to make what you already have just a bit better. Like eating a healthy diet can be supplemented by good quality vitamins. In the case of health insurance policies, you have the regular choices of the Medicare plans and a choice of Medigap policies to fill in the “gaps” in your Medicare insurance.
No insurance policy is totally perfect, but you will be able to come close enough to perfect and find something that suits you by discussing your needs with a health insurance agent.
Medicare and Medigap weren’t designed to work together. In fact, Medicare was supposed to handle everything. Inevitably, the longer Medicare was around the more “gaps” popped up that had to be filled. Enter Medigap policies. You need to know that Medigap offers certain specific benefits and they are all the same across the board.
The fact that the various policies offer you specific benefits is good for you because that gives you choices. In fact, you have the option to choose from 12 different policies – Plans A through L. Even though each plan is different, they are all the same across the country.
Here’s something else you need to know as well– health insurance and Medicare all follow state and federal laws because they must. This means Medigap policies are mandated to follow the same laws, so you can see how the total package would be tailored to meet your needs.
What about Medicare Advantage plans? A lot of people wonder if they really do offer an advantage. That depends on how you look at it and then the answer would be yes and no.
Simply put, Medicare Advantage Plans may be an advantage for people, but it just depends on what they need. Others feel they’re too expensive for their needs. This is when you talk to your insurance broker for information.
There are people looking for total coverage. The kind of coverage where they don’t have to pay a dime for any of the services they receive. There will also be others who are able to afford to pay the 20% difference between what the physician charges and the insurance company pays. Both these groups have different needs. How they are serviced is the key.
Let’s say you are in a smaller network with a doctor you like. Things are going well, but the doctor decides to opt out of the network. Unless you choose to try and follow your doctor, you are without medical service. Following your doctor doesn’t always work either.
You may be able to see the doctor, but have to pay the total bill. If your doctor goes the fee for service route, they may refuse to accept the terms of the plan.
As you can see there are some difficult choices you need to make. If you choose to go with private health insurance, you may be thinking that you’re covered. That isn’t always the case, as the insurance company might say they don’t have to cover your case.
To get Medicare Advantage or not, and to go private, are personal questions you have to resolve. However, for coverage that likely makes the most sense, Medicare supplements seem to be the better route.
Randy Gillespie is with Illinois health insurance agency, Focus Insurance Group. To learn more about Illinois Medicare, health insurance, group health insurance or to get an Illinois health insurance quotes, visit Focusinsgroup.com
Dynamite Health Savings Accounts
Many people don’t truly realize how valuable a Health Savings Account will be personally and for their families.
Health Savings Accounts (HSAs) were launched in 2003, and despite the fact they have been around for close to six years, people don’t seem to understand how they operate.
The idea sprang from the Medicare Prescription Drug, Improvement and Modernization Act. It was designed for U.S. citizens under the age of 65 to save for medical and retiree health expenses in a manner that gave them the tax advantages. Good start to a great plan.
The other bonus tucked away here is savings on premiums and reduced taxes. What more could you ask for? And, the premiums for HSAs are much lower when you compare them to co-pay and low deductible insurance plans.
Health Savings Accounts benefits are: your deposits and earnings aren’t taxed and you don’t have to use it all right away or wind up losing it. Money you have saved in your account is not taxed, and provided you use it towards health expenses that qualify, it is tax-free. That’s a pretty decent advantage that can add up.
Here’s something else to consider. HSAs are portable. Leaving one company to move to another is no longer an issue, as the Health Savings Account tags along behind you. And if you have coverage with a HDHP (high deductible health plan) with no other first dollar coverage, nothing can stop you from setting up a Health Savings Account.
Health Savings Accounts might just suit your budget too, as they offer terrific flexibility. You may contribute to them three ways. The first way is an individual or a family makes tax-deductible contributions to the plan. There’s no need to keep itemized lists of deductions.
The second way to contribute is your employer making non-taxable contributions directly to you, or employers who have a cafeteria plan may allow employees to have a salary reduction so they can contribute that money towards a Health Savings Account. The choices are nice and make life a lot easier health insurance wise.
If are 55 or older, go ahead and make extra contributions with no problems. Note: if you enroll in Medicare, you are not qualified to add funds to your account. This is similar to an IRA. Those funds in the account grow tax-free based on investment earnings.
The money in your health savings account stays there year round, every year. You don’t lose it because it is a savings account and the funds in it aren’t taxed, just so long as you use them to pay for qualified medical expenses.
The best route to go is to opt first for a HDHP and then supplement it with a health savings account. Find out if this coverage is for you by talking to an insurance broker who can answer your questions.
Randy Gillespie is with Illinois health insurance agency, Focus Insurance Group. To learn more about Illinois Medicare, health insurance, group health insurance or to get an Illinois health insurance quote, visit Focusinsgroup.com.
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