The Road to Reform

The Road to Reform
From United Health Care

 

At UnitedHealthcare, our goal is to help people live healthier lives

How? Providing innovative and affordable choices in the health benefit plans we offer. Focusing on the quality of service we deliver. And, making health benefit plans easy to
understand and simple to administer. The Patient Protection and Affordable Care Act of 2010 (the Act) brings significant and sweeping changes to how Americans access and pay for health care. And while change is good, it can be challenging. We are navigating these changes together. Changes in federal law are just one way to move toward a more modern health care delivery system. UnitedHealthcare is at the forefront of improving access to quality care, containing costs, using technology to increase transparency, and changing the way the system pays for care. We understand that when physicians, insurance companies, employers, consumers and government bring their best ideas to the table, we can help improve access to quality and affordable care.

The Big Picture

The Act is being rolled out in phases between 2010-2019. Generally, the provisions fall into one of these areas:

  • Standards for minimum health benefit plan offerings
  • State-based Health Benefit Exchanges
  • Mandates for employers and individuals to provide or purchase health care coverage
  • Subsidies to individuals to purchase coverage
  • Requirements that insurance companies spend a certain percentage of premium dollars on patient care
  • Insurance market reforms
  • Expanded appeal rights for patients
  • Expanded Medicaid eligibility
  • Changes to Medicare reimbursement The Road to Reform

 

Keeping Your Grandfathered Plan

If you decided to “grandfather” your health benefit plan, some of the health reform changes won’t apply. Grandfathering a plan means that you decided to keep the plan that you had in effect on March 23, 2010, with only minimal changes. Going forward, only approved changes can be or will be made to a grandfathered plan. However, there are a few changes that apply to all plans
whether or not you have a grandfathered plan.

Remember, employers will need to stay on top of any reporting obligations that may be required to maintain grandfathered status. In general, plan changes that can cause loss of grandfathered status include: eliminating certain benefits, increasing coinsurance, increasing fixed dollar cost-sharing (copays, deductibles and out-of-pocket limits) beyond allowed amounts, and the plan sponsor’s decrease in its contributions toward the cost of coverage by more than 5 percent. So if you have chosen to maintain grandfathered status, keep in touch with your broker or account representative to be aware of any changes that could affect that status.

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Five Myths About HSAs

Five Myths About HSAs

Common Misconceptions

Five False Impressions

Here are five of the most common myths and the responses you can use to help your clients understand the advantages of these accounts.

Number One: My employees won’t accept HSA plans ~ they’re too complicated.

While it’s true that this type of health plan can be a bit more complex than a traditional plan, it can be well worth it for employers. Clients need to know more about how the programs work and what costs they can expect. The plan offers important costs savings for both the employer and employee. HSAs actually provide comprehensive health care coverage, and most HSA-qualified plans cover prescription drugs, doctor’s office visits and preventative care without a deductible. One key difference with coverage and costs is consumer-directed plans emphasize individual decision-making. Employees have an incentive to avoid paying for unnecessary services because they keep the money they don’t spend. In the end, this improves health care costs, efficiency and wellness.

Number Two: There aren’t many advantages.

Untrue! HSAs offer:

  •  Flexibility in how employees spend their medical dollars;
  •  Tax deductible contributions;
  •  A way to offset high deductibles;
  •  More control for employees over their healthcare decisions;
  •  A way to make employees more engaged in their health plan.
“Seventy-seven percent of the HR professionals whose companies offer HSAs say it has helped engage employees in their health and wellness.

How HSAs Help Those Nearing Retirement Age

HSAs can be an effective tool for those who are nearing retirement age and looking for a nearly tax-free account to save for health care expenses during their pre-retirement years. People aged 55 and older can make catch-up contributions each year that is over and above the allowable limit for the individual year. The catch-up contribution for 2011 is $1,000, and employees can make contributions until becoming Medicare active.

What’s Next?

The HSAs have survived health reform to become a growing force in the market. Employers are greatly in need of brokers who can help them decipher this ever increasing popular healthcare option.

Number Three: They’re only for young, healthy people.

HSAs are useful for people of any age or health. HSA enrollment is nearly equal across age groups. Forty-nine percent of all HSA/high-deductible health plan enrollees in the individual market, including dependents covered under family plans, were age 40 or older, according to a January 2011 report from America’s Health Insurance Plans.

Number Four: My employees can’t afford it.

Since HSAs are paired with high-deductible health plans, it’s a common misconception that HSAs are for people with high incomes who can more easily afford to pay for a high deductible. In reality, HSAs are a powerful vehicle to save and pay for health care expenses, regardless of income level. According to a March 2011 study by Employee Benefits Research Institute, a little over half of HSA plans are carried by families with incomes of less than $100,000.

Number Five: If we offer it, our employees won’t contribute funds to it.

A common criticism of HSAs is that employees will take the high-deductible insurance and then never make contributions to the HSA. But data has steadily shown that a majority of individuals, including those at low-income levels, contributed their own funds to their accounts and carried over balances the following year. This behavior shows that people understand how their benefits work and realize the advantages of saving for future health-care expenses.

Employers can help increase their employees’ choosing an HSA by giving their employees either a one-time or a systematic contribution. Several surveys have showed that when employers contribute to the HSAs, the percentage of employees who open accounts improved to 86% of those eligible, up from 27% when no contribution was made.

Article From:Health Net of Arizona
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Employee Health Insurance Cost Rising Again

Employee Health Insurance Cost Rising Again
By Sandra Block, USA TODAY
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Good health is the gift that keeps on giving. Not only do you feel better, you probably paid less for health insurance than some of your co-workers. In recent years, many large employers have passed on the rising cost of health insurance in the form of higher deductibles and co-payments — costs borne primarily by those who use health care.
Employees continue to face rising health care insurance costs as incomes have remained stagnant. This year, though, the pain will be shared, according to an analysis by Towers Watson, a human resources consultant. Employers will pass on cost increases primarily through higher employee premium contributions. Towers Watson projects that 66% of companies will increase employees’ share of premiums for single-only coverage in 2012, and 73% will increase the share of premiums for dependent coverage. Another survey by the National Business Group on Health found that 53% of employers plan to increase employees’ share of premiums, while 39% plan to increase in-network deductibles.

If there’s any good news to be found, it’s that the increase in overall costs of providing health care to employees has slowed. Tower projects an increase of 5.9% in 2012, down from 7.6% in 2011. Mercer, another human resources consulting firm, predicts that employee health care costs will rise 5.4% in 2012.

That’s small consolation, though, to employees whose income hasn’t kept pace with the rise in health care costs. In August, personal income fell 0.1% from July, driven by a decline in wages and salaries, according to the Bureau of Economic Analysis.
With open enrollment season underway at many companies, here’s what you can expect to see:

Higher costs for dependents.

The health care reform law enacted last year requires health insurers to allow adult children to remain on their parents’ health insurance plan until age 26. More than 2.3 million young adults have been added to insurers’ plans since the law was enacted, according to the Kaiser Family Foundation. Increasing premiums for dependent coverage is one way employers are dealing that that requirement, says Beth Umland, research director for health and benefits at Mercer.

More spousal surcharges.

It’s not uncommon for working couples to compare their employers’ health insurance options and sign on to the one with the most generous plan. However, this is a practice many employers want to discourage, since covering more family members increases their costs. Spouses are even more expensive to cover than adult children because they’re older and more likely to get sick, says Helen Darling, chief executive of the National Business Group on Health.

Average annual premium contribution paid by workers with employer-provided health insurance.

Year: 2007
  • Single coverage: $694
  • Family coverage: $3,281
Year: 2008
  • Single coverage: $721
  • Family coverage: $3,354
Year: 2009
  • Single coverage: $779
  • Family coverage: $3,515
Year: 2010
  • Single coverage: $899
  • Family coverage: $3,997
Year: 2011
  • Single coverage: $921
  • Family coverage: $4,129
Source: Kaiser Family Foundation
The percentage of employers offering a consumer-driven health plan is expected to increase in 2012.

Offering CDHP option
  • 2011: 41%
  • 2012: 56%
Only plan available
  • 2011: 20%
  • 2012: 17%
Not offering a CDHP
  • 2011: 39%
  • 2012: 27%
Source: National Business Group on Health

More consumer-directed health plans.

Employees who sign up for these plans typically pay lower premiums in exchange for a high deductible. The most common type of CDHP is a high-deductible plan with a health savings account. A health savings account allows you to use pretax dollars to pay your out-of-pocket costs, which could be considerable. To be eligible for a health savings account in 2012, you must have a deductible of at least $1,200, or $2,400 for family coverage.

Unlike flexible spending accounts, which offer another tax-advantaged way to pay your out-of-pocket expenses, unused funds in health savings accounts don’t have to be forfeited at the end of the year. You can also take the money with you when you leave your job. Some employers contribute to employees’ health savings accounts.
In 2012, nearly three-quarters of employers will offer a consumer-directed plan, according to a survey by the NBGH. At 17% of employers, a consumer-directed plan will be the only option. “Overall, these are less-expensive plans” for employers, Darling says.

If you’re healthy, a consumer-driven plan can lower your health care costs, particularly if you contribute to a health savings account, Umland says. The health care reform law requires insurers to provide preventive care without charging a deductible or co-payment, so you won’t have to pay for things such as cancer screenings, blood pressure tests and flu shots. You should, however, have the resources to pay the full deductible in the event of an accident or illness.

Many employees offer modeling tools that allow you to estimate your out-of-pocket costs, Umland says.

More pressure to sign up for wellness programs.

Employers will continue to offer workers cash or other incentives to take health assessment surveys and get screened for potential problems, such as high blood pressure or elevated cholesterol. In addition, a small but growing number of employers are penalizing workers who decline to participate in such programs, either by refusing to cover them or charging them a higher premium, according to Towers Watson.

“There’s a lot of debate on that topic now about whether incentives or penalties or some combination makes sense,” Stone says. “A lot of it varies by culture of the organization. An employer might have a surcharge for smokers, or they may position it as a discount for non-smokers.”

In King County, Wash., county employees who take a health assessment pay lower deductibles and co-payments.
Employees who follow through with a 10-week health-improvement program get an additional discount. The county says the program, launched six years ago, will reduce health care costs by $23 million this year.

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Health Care Reform Creates Tax Credit for Small Businesses

Health Care Reform Creates Tax Credit for Small Businesses

A state whose economy is built by entrepreneurs, Arizona is home to thousands of small businesses. These vital economic engines recently received good news from the Internal Revenue Service: there are immediate benefits for small businesses included in the recent federal health care reform legislation.
Beginning this year, companies with fewer than 25 employees will be eligible for a potentially sizable tax credit.
The windfall couldn’t come at a better time for small business owners, as the recession continues to hamper growth and firms brace for change due to health care reform.
Small businesses make up a substantial portion – an estimated 95 percent – of our state’s business marketplace. These firms employ hundreds of thousands of Arizona residents, and the tax credit may be of great benefit to those already assisting their employees in obtaining and retaining health care coverage.
Under the new law, eligible companies can recoup up to 35 percent of 2010 health care premium costs paid by the employer and up to 25 percent for taxexempt organizations. The smallest businesses (those with fewer than 10 full-time employees and an average salary of less than $25,000) may earn the maximum credit available.

There are three basic requirements to determine eligibility:

  1.  The company must have fewer than 25 full-time-equivalent workers. Organizations with more than 25 employees should consider whether those are full-time or part-time. They could still be eligible for the credit, based on the IRS’s calculations for full-time employees. Employers should also remember for the purposes of qualifying for this tax credit, family members of business owners don’t factor into the total employee count. (Visit IRS.gov for the FTE formula.)
  2.  At least 50 percent of health care premiums must be paid by the employer.
  3. The firm’s average annual wages cannot exceed $50,000.

To claim the credit, firms must declare the appropriate amount on their annual income tax return. Tax-exempt organizations will be given instructions on claiming the credit at a later date. For detailed information on how much their credit will be, employers should consult their tax expert.

For more information, visit IRS.gov.

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