Archive | Insurance Company News – California

How Obamacare Will Impact Your 2014 Taxes

The Affordable Care Act is supposed to make health care coverage universal and more affordable to millions of Americans, but it might also make filing your 2014 taxes more cumbersome and more expensive.

“This tax season is the first time people will experience the financial consequence of the individual mandate, and it will bring additional paperwork and some surprises for taxpayers,” remarked Michael Mahoney, healthcare expert and senior vice present of consumer marketing for GoHealth, a health insurance technology platform.

  • For the vast majority of tax filers, the changes will only mean checking a box to indicate that they had health coverage during 2014. But some of those who signed up for Obamacare will need to take additional steps when filing their taxes this year.
  •  Consumers who signed up for health care through a marketplace will receive a new form this month, called 1095-A, which they’ll have to fill out and will be needed for filing Federal taxes.
  •  On form 1095-A, you’ll be asked to figure out whether you received the correct amount of financial assistance, whether you are subject to a penalty and whether you can claim an exemption among other things.

Advance Premium Tax Credit

The government has been providing financial assistance to some Americans to lower the monthly cost of health insurance on an advanced basis. These credits have been applied directly to monthly health insurance premiums.

  • The tax credit is determined based on your estimate of your household income. It needs to be reconciled taking into account your actual household income when you file your tax return.
  • You may owe money if you’ve underestimated your income, reducing your refund, while it could increase your refund if you’ve overestimated it.

Penalty

  • If you don’t have health insurance and don’t qualify for an exemption, you’ll have to pay the higher amount between a flat fee penalty and a percentage penalty.
  • The penalty will be $96 for an adult and $47 for a child for 2014, up to $285 per household, or 1 percent of your annual household income. The 2015 penalty for lacking insurance is $325 or 2 percent of household income.

This could mean a smaller refund or you might owe more in taxes. “This will be an unpleasant surprise to people who are still unaware that virtually everyone is now required by law to have health insurance,” said Mahoney.

Exemptions

You could lower this penalty or eliminate it if you qualify for one of the exemptions based on financial hardships, religious affiliations and gaps in coverage among others. Just remember that you may need to apply for some exemptions and receive approval.

Modified from an article in The Fiscal Times, and other online sources.

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How ObamaCare Harms Low-Income Workers

The primary purpose of the Affordable Care Act was to make health insurance affordable for people with modest incomes. Yet as the employer mandate begins to kick in for 2015, the law is already hurting some of the people it was intended to help. 

  • Full-timers become part-timers, losing wages and the opportunity to buy the health coverage they most prefer. By this time next year, we may find that many workers who earn within a few dollars of the minimum wage have less income and less insurance coverage (as a group) than they did before the mandate began to take effect.

This is the conclusion from survey conducted by John Goodwin Senior Fellow at the Independent Institute in December of 136 fast-food restaurants (franchisees) that employed close to 3,500 workers.

Before 2014 about half the employees were “full time” as defined by ObamaCare; that is, they worked 30 hours or more a week. The potential cost to the employers of providing mandated health insurance to their full-time staff would have been about $7 million a year.

But by the time the employers took advantage of all their legal options they were able to reduce their cost to less than 1% of that amount.

  • The first step was to make all hourly workers part time. That may seem easy to do, but in the fast-food business it’s not uncommon that employees fail to show up for work.

Other employees are asked to work additional hours to prevent the restaurant from shutting down. By the end of 2014, 58 employees had crossed the line to full-time status and were eligible for mandated health insurance in 2015.

  • The companies offered these employees ObamaCare-compliant health insurance—bronze plans—but asked them to pay the maximum premium the law allows: 9.5% of their annual wage.
  • For a $9-an-hour employee working 30 hours a week, the maximum monthly premium was $111. The total premium was $367, and the law requires the employer to pay the difference.

The bronze plan has very large deductibles and copayments—up to $6,600 or $13,200 for a family, depending on the family’s income. But the designers of the Affordable Care Act apparently did not understand that high deductible health insurance with no Health Savings Account is not attractive to young, healthy, low-income workers.

  • These workers are far more likely to prefer mini-med plans that pay for generic drugs and doctor visits but not catastrophic care.

Before ObamaCare, these companies offered all full-time, hourly employees a standard Blue Cross health plan as well as a mini-med plan for a much lower premium.

  • No one signed up for the Blue Cross plan. About 200 signed up for mini-med insurance.

The companies in the survey offered to pay the full premium for the mini-med plans, in order to make that alternative more attractive. If employees choose the bronze plan it costs the employers about six times as much.

  • The result: Only one of the 58 remaining full-time employees enrolled in a bronze plan; the rest will likely be in MEC plans.
  • What about the families of these workers? Employers don’t have to pay the premiums for coverage of dependents.

To cover a family of three, the employee in one of these restaurants can face a premium of $805 a month for a bronze plan, almost 70% of his monthly wage.

  • Since ObamaCare considers this offer “affordable,” any family member who turns it down is ineligible for premium subsidies on an insurance exchange.
  • What about the mini-med plans? Although these plans are offered free to the employees, dependent coverage is not free.
  • An employee has to pay about 25% of his income to cover a spouse and kid. If he doesn’t, the family faces a fine next April 15.
  • Workers in the survey whose hours were reduced to part time can get subsidized insurance through an exchange, but they will be asked to pay up to 9.5% of their income for what is unattractive coverage. 

To recap: Almost half the workforce of these restaurants was involuntarily reduced to part time and has less income as a result.

  • These employees have also lost the opportunity to have the coverage they most prefer: mini-med plans that pay for medical care they are most likely to need.
  • Those few remaining full-time employees will get mini-med insurance for themselves, but they are unlikely to be able to afford coverage for any dependents they have.
  • They will not get an ObamaCare bronze plan unless they fork over about one-tenth of their take-home pay, and they won’t be able to get bronze coverage for other family members unless they forfeit more than half their income.

*Modified from an article by Mr. Goodman, senior fellow at the Independent Institute, and other online sources.

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From the E.R. to the Courtroom: How Hospitals Are Seizing Patients’ Wages & Other Assets

One important reason to obtain health insurance is not to go to a doctor but to protect wages and other assets. When patients receive care at a growing number of hospitals, and don’t or can’t pay, their bills often end up at collection service companies.

And if those patients don’t meet collection demands, their debts can make another, final stop: the County Courthouse.

A majority of U.S. hospitals, have a history of aggressive debt collection. From 2009 through 2013, one hospital in the Midwest filed more than 11,000 lawsuits.  When it secured a judgment, as it typically did, the hospital was entitled to seize a hefty portion of a debtor’s paycheck. During those years, the company garnished the pay of about 6,000 people and seized at least $12 million—an average of about $2,000 each, according to an analysis of state court data.

No one tracks how many hospitals sue their patients and how frequently, but one source found hospitals that routinely did so in various parts of the Country. The number of suits is clearly in the tens of thousands annually.

In one Midwest state, hospitals and debt collection firms working for them filed more than 15,000 suits in 2013. But if patients don’t obtain health insurance or enroll in MediCal or Medicaid, hospitals must take action.

As one spokesman for a hospital stated, “the services were rendered, and the hospitals have to figure out how to get them paid for”.

 

*Article modified, and data obtained from Propublicia.org, NPR, and other sources.

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Small Firms Start to Drop Health Plans

In 2015, if you work for a small company with less than 50 employees, be prepared to obtain your own individual health insurance.  Small companies are starting to turn away from offering health plans as they seek to reduce costs and increasingly view that individual coverage is an inviting and affordable option for workers.

The health law doesn’t penalize companies with fewer than 50 workers that don’t offer coverage, and those with fewer than 100 employees won’t face fines until 2016.

  •  Anthem Blue Cross recently stated that its small-business-plan membership is shrinking faster than expected. It has lost about 300,000 people since the start of the year, leaving a total of 1.56 million in small-group coverage.
  • Anthem said it had projected that it would take about five-years to significantly reduce small-employer membership, but it now thinks the drop-off will be compressed into two years.
  • Some other insurers have seen a similar trend. Aetna said the company was seeing erosion at the bottom of the market among employers with two to 10 workers. Kaiser Permanente said that it is seeing some contraction in the small-group market, particularly in places where insurers are offering cheap individual plans.
  •  A number of small California companies with less than 50 full-time employees have discontinued their health plans during 2014. This trend will continue next year as companies direct their workers to individual plans issued either through Covered California or directly by an insurance company.  
  • Insurers, for their part, are moving to recapture the lost business by signing up employees to their individual plans. As an example, one carrier said it is seeing the strongest shift away from offering health benefits among the smallest employers with just two to four workers, and is working to ease the transition for companies that want to move from a group plan to individual coverage.

Workers with pre-existing health conditions can now buy coverage on their own, and insurers can’t charge them more based on their health history, as they could before the law took effect.

  •  For many small companies, the increasing paperwork to administer small group plans has become a burden. In addition, the increase in premiums has forced companies to either require an employee pay for a greater percentage of coverage or drop the group coverage altogether.
  •  Many employers are changing how much they will contribute to the premium for employee coverage. A number of companies have begun paying a larger percentage of the employee’s portion but are requiring the employee to pay up to 100% of dependent’s coverage.

Some employers are facing premium increases to keep offering coverage as they shift to plans that meet the law’s requirements—though this impact has been delayed for many because the Obama administration has allowed states and insurers to keep older plans in effect.

*Data obtained from the WSJ online, and other online sources.

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DOCTOR NETWORKS TO STAY LIMITED IN 2015 UNDER OBAMACARE

If you are having difficulty finding doctors willing to accept your new Obamacare plans in 2014, finding a doctor who takes Obamacare coverage could be just as difficult in 2015.

Even as California’s enrollment grows, many patients continue to complain about being offered fewer choices of doctors, and having no easy way to find the ones that are available.

Based upon information provided by Covered California, and the carrier’s recent information provided to insurance brokers the general consensus is:

  • The state’s largest health insurers are sticking with their narrow networks of doctors, and in some cases they are cutting the number of physicians even more, according to an analysis of company data.
  • Insurers say they can pass along savings by paying doctors less, and rewarding the limited network of doctors with higher patient volume.
  •  Covered California, still has no comprehensive directory to help consumers match doctors with health plans. There’s no timetable for a state provider directory after the exchange scrapped an initial version that was riddled with errors. Instead, Covered California refers people to insurance company websites that vary in usefulness.
  • In addition to shedding doctors, Anthem Blue Cross and Blue Shield of California, the state’s biggest insurers have promoted more restrictive policies known as EPO, or exclusive-provider organization. Unlike a more generous PPO, an EPO typically does not provide any coverage for out-of-network providers. Consumers would be responsible for the full charges if they left their network.
  • Health Net has proposed the most dramatic change for 2015, the data show. It’s dumping the current PPO network, and switching to a plan with 54% fewer doctors and no out-of-network coverage, state data show.
  • For 2015, Blue Shield has proposed two health plans with up to 4% fewer physicians in the areas where they’re sold. Blue Shield includes about two-thirds of its regular PPO doctors in its broadest exchange network.
  •  Anthem, which has added nearly 7,000 doctors since January, intends to maintain the current size of its networks; however the carrier is maintaining its EPO structure in parts of California.

 

*Modified from an LA Times article, Insurance Company information, and various online articles.

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2015 Penalty for Not Having Health Coverage Can Be Thousands of Dollars

If you’re opting out of the health-care coverage required by the Affordable Care Act, make sure you understand how much you’ll owe Uncle Sam as a result. For those who are thinking of opting out, here’s what you need to know.

  • For 2014, the penalty is either a flat amount or 1% of your income, whichever is greater. The flat amount is $95 per adult and half that for children under 18, with a cap of $285 per family.
  • As with the flat penalty, there is also a cap on the maximum payment. It rises no higher than the average cost for a family of five under a bronze-level Affordable Care Act-approved plan. The maximum penalty if calculated as a percentage of income is $12,240.
  • For 2015, the percentage-of-income penalty rises to 2%. The flat amount increases to $325 per adult, and $162.50 per child up to a maximum of $975. The maximum percentage penalty would be approximately $13,400.
  • For 2016, the percentage of income increases to 2.50%. The flat amount rises to $695, and $347.50 per child up to a maximum of $2,085. The maximum penalty could be as high as $14,800.

REMEMBER YOUR MAXIMUM PENALTY IS THE FLAT PENALTY OR YOUR PERCENTAGE OF INCOME, WHICHEVER IS GREATER.

CALCULATING HOUSEHOLD INCOME TO DETERMINE THE PENALTY

  • “Household income” is defined differently from other tax thresholds. It begins with adjusted gross income, or AGI, the number at the bottom of the first page of the 1040 form. (This number includes reductions for 401(k) contributions and other items, but not for itemized deductions such as mortgage interest.) AGI earned by children counts as well.
  • To this total the taxpayer adds back any foreign-earned income and municipal-bond income that has been exempted, and then subtracts the filing threshold—the amount below which a taxpayer needn’t file a return.
  •  In 2014, that’s $10,150 for most singles and $20,300 for most joint filers. The result is household income, the base for figuring the penalty.
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Obamacare Auto-Renewal Plan Could Cause Costs to Soar

A significant problem looms for the Affordable Care Act when the next open enrollment period begins in November, according to many health care experts and media accounts. The administration announced on June 26 that those currently enrolled would be automatically renewed in the same plan for 2015.

There is a growing concern this will cause many who received subsidies, through Covered California or the federal exchange, to see sharp rises in after-subsidy insurance premiums due to the way subsidies are calculated. Many who are auto-enrolled will end up paying more than they needed to for coverage because they will not realize that last year’s best choice won’t be this year’s best choice.

  • Automatic Renewal  = Automatic Premium Increase?

The automatic renewal of plans for people already enrolled through the either Covered California exchange or in other states Healthcare.gov was intended to allow greater focus on enrolling the uninsured as well as easing pressure on both web sites.

But many people who do nothing and allow their plans to be automatically renewed will likely face a substantial increase in what they have to pay. Subsidies for plans sold through the exchanges are determined according to a person’s income and the premium of the second-lowest ‘silver’ level plan available in each market, called the benchmark plan.

The 2014 benchmark plan in California and other states will be replaced with a different benchmark plan in 2015. Most of the 2014 benchmark plans have higher premiums in 2015. This combination of plan change and higher premiums will lead to much higher out-of-pocket costs for many of those who are auto-enrolled in the same plan, as the Obama administration intends to do.

For example, in 2014 several benchmark Anthem Blue Cross & Blue Shield plans, had a monthly premium of $354 for a 40-year old. In 2015 the same plan will cost approximately $363 according to rate approval information. 

If the value drops by $90, then someone automatically re-enrolled in the 2014 benchmark plan from Anthem could see their monthly premium skyrocket by nearly $100 or more once the premium increase for the former benchmark plan is included.

  •  Critics fault auto-enrollment plan

According to the president of a health care think tank, “every time the Obama administration has changed the law to make it less onerous for consumers – like automatic re-enrollment – it winds up creating new pitfalls for consumers.  In this case, millions of consumers could face higher premium and out-of-pocket costs because the plan they selected for this year might not qualify for extra subsidies next year, The law’s endless administrative complexity shows the impossibility of trying to centrally plan one-sixth of the economy.  We need to put the market and consumers in charge of choices, not bureaucrats, politicians, and regulators.”

Some point out that the auto-enrollment plan goes against the idea that people should be actively involved in the selection of their own health insurance plans. “A passive auto re-enrollment can be useful, but we shouldn’t coddle consumers,” said Yevgeniy Feyman, a health policy fellow at the Manhattan Institute. “If we want patients to be good consumers when it comes to purchasing health insurance, some level of administrative burden will be necessary.”

Modified from a news.heartland.org article

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High Health Plan Deductibles Weigh Down More Employees

As employers seek to comply with the Affordable Care Act (Obamacare) on 2015, even more corporate workers are likely to be offered high-deductible plans — sometimes known as consumer-directed plans — and at a rising share of large companies, it will be the only option remaining.

  • Just as employers replaced pensions with retirement savings plans, more large companies appear to be in a similar cost-sharing shift with health plans. Besides making workers responsible for more of their care, employers hope these plans will motivate employees to comparison-shop for medical services — an admirable goal but one that some say is hard to achieve.

Several big companies started offering consumer-driven plans as their only option in the last couple of years, including JPMorgan, Wells Fargo, General Electric and Honeywell, among others; it is the only choice for Bank of America employees earning more than $100,000.

  • Next year, nearly a third of large employers will offer only high-deductible plans — up from 22 percent in 2014 and 10 percent in 2010, according to a study by the National Business Group on Health, which included 136 large companies that collectively employ 7.5 million workers. And 81 percent of those large employers will have added one of these plans to their lineup of choices, up from 53 percent in 2010.

With high-deductible health plans, consumers pay for all their medical services — at the insurer’s negotiated rate — until they meet their deductible. After that, consumers typically pay coinsurance, which is a percentage of each service — say 10 to 35 percent — until they reach the out-of-pocket maximum.

  • That is scheduled to be generally capped at $6,450 for singles and $12,900 for families in 2015, according to the Kaiser Family Foundation, and includes items like deductibles, coinsurance and co-payments, but not premiums, which tend to be lower in these plans.

So it is easy to see how shopping for an M.R.I. of the lower back — which can range from roughly $415 to $4,530 — would suddenly pay off for both the employee and the employer.

Insurers and independent providers, tools that help consumers estimate their costs and the quality of the providers. But shopping around can still be challenging; the question is whether the prices they give you are binding. Another concern is that some people will be ill prepared to handle large bills, and will forgo care as a result. 

  • High-deductible plans are often used with health savings accounts. As long as the plan deductibles in 2015 exceed $1,300 for single people or $2,600 for families, and meet other criteria, employers and workers can deposit money into an Health Savings Account (HSA). In 2015, individuals will be allowed to contribute up to $3,350 in pretax dollars (or $6,650 for family coverage). The money grows tax-free and can be used to pay for out-of-pocket health care expenses. 

Given the increased adoption of the plans — Kaiser estimates about 20 percent of workers covered by plans were enrolled in a high-deductible plan with a savings account option in 2013, up from 8 percent in 2009 — consumers will need to weigh their options more closely during open-enrollment season.

  • When evaluating these plans, consumers need to ask themselves several questions: Do you have the money to pay for all medical expenses until the deductible is met? What is the out-of-pocket maximum — can you afford that? And are you the type of person who will skip needed care if you need to pay out of pocket?

Many workers may not have a choice — a high-deductible plan may be their only option. One still has protection against very high claims, but one may have to pay $5,000, or more during one year toward the cost of their care. 

Modified from a nytimes.com article

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Employers consider alternatives as health care costs rise

U.S. employers want a more efficient system of health care delivery that is better able to control costs, according to a recent report from the HR Policy Association and the American Health Policy Institute, based on interviews with chief human resources officers at large corporations.

  • Many HR professionals believe that rising health care costs are putting U.S. employers at a disadvantage globally and hampering job growth and economic growth in the United States, the report noted.

The Affordable Care Act has caused large employers to closely examine their benefit costs, the reasons behind the cost increases in recent years, and their future role in health care delivery.

  • There’s no consensus on the future of health benefits. “Some believe that employers may, in fact, continue to absorb increases in the cost of health care and greater regulatory burdens no matter how great they might become. Others, including financial analysts and even some principal architects of the Affordable Care Act, see the collapse of the employment-based system as inevitable,” the report states.

Only 50% of chief HR officers said their company will continue to offer health benefits for the foreseeable future, regardless of what most other large employers do, while 16% disagreed with that statement.

Jeffrey McGuiness, CEO of the HR Policy Association and co-author of the report, says, “Large employers have used self-insured plans to provide health care to their employees and dependents, as well as retirees, for decades and view it as essential to a productive and competitive workforce and as the most valued benefit in compensation packages. However, the cost of health care continues to escalate despite this and is causing large employers to not only question the long-term viability of the current system of employment-based care, but also to begin moving toward alternative health care delivery methods.”

  • Among the alternatives are high-deductible health plans, private insurance exchanges, or not offering health benefits, meaning that employees will obtain coverage on public insurance exchanges or go uninsured.

At least 50% of respondents said their company offers a consumer-directed health plan (a high-deductible plan with a personal account), or plan to do so. In fact, 23% said they offer a consumer-directed plan as the only option for workers, or plan to do so.

  • Forty percent of respondents said they are considering private exchanges, but have not yet made a decision, while 37% said they considered private exchanges, but decided not to go that route.

The strategies of the past, such as HMOs, PPOs and self-insuring, have helped to contain health care costs somewhat, but have not resolved long-term cost concerns. The most successful efforts have occurred when a very large company or group of companies in one region have combined their purchasing power, the report notes.

  • “Large employers see the current health care environment as being in flux. They have a strong interest in figuring out how best to provide health care to their employees in the current environment and which alternative approaches will work best in the emerging new world of health care,” says Tevi Troy, president of the American Health Policy Institute and co-author of the report.

*Modified from an eba.benefitnews.com article

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Will Employer-Sponsored Health Insurance Survive?

Will the link between employment and health insurance survive?

That’s one of the serious questions that a new report from the Employee Benefit Research Institute (EBRI), a nonprofit research organization based in Washington, D.C., raises about the future of employee benefits.

  • Paul Fronstin, head of the health research and education program at EBRI, noted that the Affordable Care Act “levels the playing field like it’s never been before,” as employees will not necessarily have to depend on getting health coverage through work.

“Employers are just not sure if they’ll be offering coverage in the future,” he added.

  • In fact, the U.S. Congressional Budget Office estimates that 3 million to 5 million fewer Americans will obtain coverage through their employer each year from 2019 through 2022 than would have been the case without the ACA.

Starting next year, the ACA will require employers with at least 50 full-time employees to offer a minimum level of health coverage to workers, but some employers may prefer to pay a tax penalty instead of paying for the coverage. The need to recruit and retain good talent is what keeps employers offering benefits.

Kathryn Gaglione, a spokesperson for the National Association of Health Underwriters, says, “Offering comprehensive, competitive benefits makes for a more robust workforce and better compensation for individuals trying to support families … Many American business owners understand the benefit to offering employees and their families coverage. Employer-sponsored health plans might change, but they won’t be going anywhere.”

Most employees want and expect health insurance through their employer, especially knowing that it’s much less expensive to receive group coverage that comes with an employer’s premium contribution than to buy individual coverage on a health insurance exchange (with no employer contribution).

Nonetheless, “one could argue workers won’t need their employers any more for health benefits once the law is fully implemented, and health exchanges become a viable option to job-based health benefits,” Fronstin said.

*Modified from an ebabenefitsnews.com article

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