Employees working fewer hours due to Obamacare: survey

Critics and supporters of Obamacare have argued about its impact on business. A new survey by the Society of Human Resource Management released Tuesday found that some US workers are working fewer hours because of the health care law.

  • The survey found about 14 percent of businesses have reduced part-time hours and another 6 percent plan to do so. Employers are reducing hours to avoid Obamacare’s employer mandate, which requires companies to provide health insurance to all workers that work 30 or more hours a week.
  • In addition, 5 percent of companies have already reduced or plan to reduce the total number of employees. The remainder of those surveyed chose not to reduce employee hours.

The Society for Human Resource Management surveyed 743 human resources professionals from a variety of companies.

This year the law’s employer mandate went into effect for organizations with 100 or more full-time employees, requiring those companies to provide health insurance for 70 percent of their employees. That figure goes up to 95 percent in 2016 and all employees beyond that date.

The small business part of the mandate, which affects business with 50-99 full-time employees, goes into effect in 2016.

  • A common criticism with the law is that companies will have to lay-off workers or reduce full-time employees to part-time to avoid having to pay for health insurance.
  • If any business violates the mandate, they must pay a fee calculated by the number of employees who don’t have insurance. The Internal Revenue Service has said that a company could pay an excise tax of $100 a day per applicable employee.
  • The survey found that 77 percent of companies faced higher healthcare plan costs this year compared to 2014 and 6 percent saw their costs decrease.
  • For that 77 percent, about 24 percent saw their costs go up 16 percent or more. Of the 6 percent that decreased costs, a majority decreased by up to 10 percent.

The survey has a margin of error of plus or minus 4 percent.

Modified from a washingtonexaminer.com article, and the Society of Human Resource Management survey.

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Many Uninsured Choose Penalty Over Enrollment Offer Under Health Law

Tax preparers, and several surveys find tepid response to the Obama administration’s effort to boost sign-ups. A special enrollment period to obtain health insurance for millions of uninsured people who owe a tax penalty under the Affordable Care Act is off to a slow start.

About 11.7 million people have already signed up on state and federal exchanges this year, though not all of them have yet paid premiums.

The health law requires most Americans to have insurance or pay a fine at tax time. The open enrollment period under the health law ended Feb. 15, but the Obama administration said it would allow people who discover they owe a fine to sign up for coverage through April, at the end of the tax season.

The special enrollment period applies to people who have to pay a penalty for going without coverage in 2014, and also face a penalty in 2015. They must pay any penalty they owe for not having coverage but can use the special enrollment period to obtain coverage and not generate any more fines.

  • It is still early, since the special enrollment period launched Sunday, but research also suggests that many people who lack health insurance will pay the penalty and not get covered this year.
  • Only 12% of uninsured people would buy policies if informed of the penalty, according to a survey of 3,000 adults polled through Feb. 24 by McKinsey & Co.’s Center for U.S. Health System Reform.
  • At H&R Block Inc., “our analysis indicates that a significant percentage of taxpayers whose household members were not covered for at least a portion of 2014 are opting” to pay the penalty, said a vice president of health-care enrollment services at the tax-preparation firm.
  • “It was a good PR move and aligns enrollment with tax season, but we’re not seeing a massive rush,” said a spokesman with Jackson Hewitt Tax Service Inc. “It’s been pretty unremarkable.”

A retired employee of United Parcel Service, Inc. found out he will pay a $250 penalty for going without insurance. He said won’t take advantage of the special enrollment period because it is cheaper for him to pay out-of-pocket for health care than to buy insurance on the exchange.

He said he shopped on the exchange but would have to pay $400 a month for a plan with a $6,000 deductible.

“I think it’s wrong I have to pay the penalty… “But it beats paying more than $10,000 a year.”

Modified from a wsj.com article, and other online sources

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IRS blames Obamacare for shoddy customer service

The IRS is unable to answer most taxpayers’ calls this year because it’s had to put money into getting up and running for Obamacare, agency Commissioner John Koskinen told Congress on Wednesday.

Mr. Koskinen said his agency has had to shift tens of millions of dollars from customer service over to build the computer systems and get ready to handle questions this year about Obamacare and the law’s tax penalty, which kicks in for the first time this year.

The commissioner said President Obama’s 2010 law requires the agency to handle Obamacare taxes, but Congress has refused to provide any money, so he’s shifted user fees that used to go to customer service over to handle the Affordable Care Act and the Foreign Account Tax Compliance Act.

“We knew, and it’s been true, that we would get a significant number of inquiries on the Affordable Care Act,” Mr. Koskinen told the House Appropriations Committee, which is considering how much money to give the tax agency for fiscal 2016.

Mr. Koskinen said the IRS is answering just 43 percent of taxpayers’ calls so far this year, which is a huge drop is customer service for the agency.

Congress has cut the IRS’s funding in recent years as Republicans have tried to send a signal of disapproval with the agency’s activities, including its targeting of tea party groups’ applications for nonprofit status.

On Wednesday, Rep. Anders Crenshaw, the chairman of the House Appropriations subcommittee that oversees the IRS, said the agency acts as though it is “entitled to $13 billion” in funding, but in reality the IRS must prove it has earned that level of funding.

“We deliberately lowered the IRS funding to a level that will make the IRS think twice about what you’re doing and why you’re doing it,” the chairman said.

Modified from a washingtontimes.com article

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California love for ACA only goes so far as sign-ups sag

California led the nation in embracing the health-care law, and in enrolling its citizens for 2014 coverage. This year, however, sign-ups for private health plans in California, New York and other states that opted to build and run their own insurance markets has stagnated.

  •  In California, enrollment was flat, with about 1.4 million signed up, the same as in 2014.
  •  In more conservative parts of the country that declined to participate and where enrollment is run by the federal government, sign-ups have surged.

As an example, for 2015, 1.6 million Floridians chose insurance plans sold through the federal healthcare.gov system, 62% more than a year before, according to an analysis by Charles Gaba, in Bloomfield Hills, Mich., who has accurately predicted enrollment under the law.

  • The development is made stranger because California had more uninsured people than any other state in 2013, the year before the health law’s insurance expansions began – 5.8 million, according to the Kaiser Family Foundation, a health research group. About 3.6 million people were uninsured in Florida.

In the 37 states that used the U.S.-run website, growth in sign-ups from 2014 to 2015 ranged from 25% to 81%, according to Gaba. Among states that run their own exchanges, only Massachusetts and Hawaii did better – in part because those two states struggled with technology failures in 2014.

  • Medicaid may be one reason why. Any comparison of enrollment in California and Florida should include people in the program for low-income people, said Dana Howard, a spokesman for Covered California, the state’s Obamacare agency.

California and New York both expanded Medicaid to cover the working poor in 2014. Florida, Georgia, North Carolina and 19 other states didn’t, and as a result some low-income adults in those places who would have been eligible for Medicaid are instead enrolled in private coverage. California’s uninsured population has been halved since last year, including its Medicaid expansion, Howard said.

Modified from an Employee Benefit Advisor article, Bloomberg.com, and other online sources.

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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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Affordable Care Act Creates a Trickier Tax Season

The first year of the Affordable Care Act is in the books, and now comes a tricky tax-filing season for millions of Americans. The reason is that subsidy estimates may be inaccurate.

Millions of Americans who got subsidies under the law may find they are getting smaller-than-expected refunds or owe the IRS because credits they received to offset their insurance premiums were too large. As many as half of the roughly 6.8 million Americans who got subsidies may have to refund money to the government, based on one estimate by tax firm H&R Block Inc.

“The ACA is going to result in more confusion for existing clients and many taxpayers may well be very disappointed by getting less money and possibly even owing money,” said the president of a tax preparation firm.

The law’s requirement that most Americans carry health insurance means all filers must indicate on federal tax forms whether they had coverage last year and got tax credits to help pay for it.

To help avert problems, federal agencies including the IRS and the Centers for Medicare and Medicaid Services in January will reach out to consumers via phone calls, text messages and emails to tell them what to expect during the tax season. IRS officials are urging consumers to file electronically for a quicker return.

“As always, taxpayers are responsible for the accuracy of the information on the tax returns that they sign,” said an IRS spokesman. He added that “the vast majority of filers will have had coverage for the full year and will simply need to check a box to indicate that.”

The IRS also said it would allow taxpayers who have applied for—but not yet received—exemptions from the individual mandate to put “pending” on their forms so they don’t have to delay filing and obtaining their refund.

In addition to determining who has to pay a penalty, IRS has to determine the accuracy of tax credits. Because people often incorrectly estimate their future income, many Americans may have gotten subsidies—based on their own projections of 2014 income—that were too generous.

Tax credits for people eligible to use the health law’s exchanges would, on average, be too high by $208 if they were based on the applicants’ most recent tax returns, according to modeling by Vanderbilt University.

When the health law was passed, the amount of money that could be taken back from lower-income people who overestimated their incomes was capped at $250 for a single person and $400 for a household.

Those caps were significantly raised in an effort to fund Medicare physician payments in late 2010, to as much as $2,500 for a family at the upper end of the income-eligibility range. They were tweaked again in 2011 as part of a tax change to the health law’s 1099 reporting forms that required more people to reimburse over-payments in full.

 

*Modified from a WSJ.com article and other online data 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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