healthcare reform

5 Ways to Contain Rising Healthcare Costs

Barbara Weltman — Wed, 21 Dec 2011 23:52:57 +0000

Link:

http://www.openforum.com/articles/5-ways-to-contain-rising-healthcare-costs

Healthcare costs continue to rise, even skyrocketing for some businesses. Premiums for small businesses have grown by 113 percent in the last decade. Despite passage of the Patient Protection and Affordable Care Act (“Obamacare”) last year, there is no premium relief in sight. However, there are still actions you can take to provide the care you want for your staff to keep them healthy and protected without causing you financial hardship.

1. Check Your Plan Options

Health insurance doesn’t mean that you must have the Cadillac of plans to cover every health need. Such plans are very expensive. There are other types of plans, such as HMOs, that provide less costly coverage.

Some states may offer state-sponsored plans for small businesses and sole proprietors. For example, New York’s HealthyNY.com provides an option for small businesses and sole proprietors that meet certain income limits. Massachusetts, with its health care mandate, has a HealthCareConnector for employers to find affordable coverage within the state; eligible small businesses can save 15 percent by joining a wellness health care track.

Discuss your needs with an insurance agent who can offer a variety of health care plans. Or do your own research using the small employer health care finder from HealthCare.gov. The finder lets you search your options by zip code.

2. Tweak Your Coverage

One way to keep premiums down is to increase the portion of costs borne by employees, including deductibles and co-payments. To maintain premiums, you probably need to hike these out-of-pocket costs. While it will cost more to visit a doctor or obtain a medication, at least you’ll be able to retain coverage for your staff. Again, you’ll want to discuss the impact that proposed changes will have on your premiums. Obviously, once you make decisions, share them with your staff.

3. Share Costs

Many small business owners would love to pay for all of their employees’ coverage but just can’t do it financially. They’re forced to share the responsibility for paying for coverage. Some cost-sharing options to consider:

You pay the cost of coverage for an employee. Anyone who wants to add family coverage pays the additional cost;
You share the cost of coverage in some way (e.g., 50/50);
You give employees a dollar allotment and they choose the type of coverage they want from options you provide, paying any additional costs.

Important: The cost-sharing option you choose may impact your eligibility for a federal tax credit, explained later.

4. Use Consumer-Driven Plans

There is a growing trend toward consumer-driven plans because of the money that can be saved by the company. As of January 2011, there were 11.4 million people using health savings accounts (HSAs) (explained below). HSAs and health reimbursement arrangements (HRAs) are plans that combine a personal account with a high-deductible (low cost) health plan (HDHP) in which the first dollars of care are borne by the employees. Once the deductible is met, the insurance operates like regular insurance.

Out-of-pocket medical costs can be paid through a couple of different accounts.

HSAs. These allow the employer, employee, or a combination of both to make tax-deductible contributions (within IRS-set limits). The funds grow on a tax-deferred basis and withdrawals for qualified medical costs are not taxable. There is no use-it-or-lose-it feature, so if employees don’t use up their account funds, they can use the funds in later years. If they leave the company, they take the accounts with them.
HRAs. These are employer-funded plans that cover employee’s out-of-pocket costs up to a dollar limit set by the company. Unused amounts carry over to the following year, but accounts are not portable; employees lose this benefit when they leave the company.

5. Take Advantage of the Federal Tax Credit

The small employer health insurance credit allows you to offset your federal income tax liability by 35 percent of the cost of the premiums you pay for your staff. When enacted last year, the government had expected 4 million small businesses to use the credit, but as of mid-October 2011, only 309,000 had done so, in part because many were unaware of its existence.

To qualify for the credit, you must meet all of the following conditions.

You pay at least 50 percent of the cost of the premiums for employees.
You have fewer than 25 full-time equivalent (FTE) employees. You may be able to meet this condition even if you have more than 25 employees because owners and their relatives who are employees are not counted.
The average annual wages for your FTEs are less than $50,000 per FTE.

The maximum credit applies if you have fewer than 10 FTEs with average wages under $25,000; a partial credit applies for more FTEs with higher wages until you hit the limits above. There are other limitations, restrictions, and requirements for the credit. Learn more in the instructions to IRS Form 8941.

More Resources

Handling the issue of health care coverage for your business can seem monumental. However, there are plenty of resources that can help. Here are two.

IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans (it has not been updated for 2011 and 2012, but still provides valuable, general information about plan types).
MyVenturePad’s free webinar on Rising Costs, Unclear Mandates.

This article is from Barbara Weltman of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Things to Know about Healthcare Reform

Tom Harnish — Fri, 01 Jul 2011 21:06:55 +0000

Link:

http://www.openforum.com/articles/5-things-to-know-about-healthcare-reform

In a recent (and controversial) survey produced by McKinsey & Company, 30 percent of employers said they are likely to stop offering health plans in 2014 when the full impact of the healthcare reform law will take effect. Sixty percent said they would look for some alternative to employer-sponsored insurance. What’s going on here?

In 2010 the nearly 70 percent of firms that offered employee healthcare plans paid an average of $9,500 per family; slightly more than two-thirds of the $14,000 total premium. That’s a 114% increase over the average cost of healthcare in the year 2000.

When federal health insurance premium subsidies for lower-income uninsured employees begin in 2014, employees will be able to purchase coverage from health insurance exchanges.

As a result, some companies may opt to increase wages and have their employees get their own insurance from these new exchanges. Even with the $2,000 per employee penalty they’ll incur, they’ll still come out ahead, and they’ll eliminate their ever-increasing spiral of healthcare costs.

Ultimately, what employers do will depend on insurance costs in 2014 and the extent to which health care benefits impact their recruiting and retention. In case you’re out of the loop about how healthcare reform can and will impact your company, here’s a quick catch up.

Improved Benefits are Already Available

Group policies issued since September of 2010 must include free preventive care screenings and they are not permitted to have lifetime limits in most situations.

If your current group plan doesn’t provide these benefits, you may be leaving benefits on the table because comparably priced plans that offer better coverage may be available.

Find out What your Employees Want/Need

It’s illegal to ask questions about employee’s health in some states, but there’s no law against asking them what they want from their healthcare benefits. You may find that if you educate them on alternatives available through healthcare reform, they may be willing to make changes in their current plans, such as increased cost-sharing, high-deductible plans, or Health Savings Accounts. You might also find that they’re more interested in prescription drug plans than dental coverage.

One way to stay on the right side of privacy issue, buy the way, is to use an anonymous survey.

Wellness is the Best Healthcare Approach

Small group health insurance policies cost less when you have a healthy group. Like safety, wellness comes from a company-wide attitude, not just a poster in the break room. Encourage exercise and stock the break room with healthy snacks.

One company employs a number former Marines. Before work they get together for PT and then jog, singing cadence songs. “I’ve never been in better shape except when I was in the service,” one vet said. “Exercising with a group helps me keep from getting bored, and I push myself harder, too.” Sempre Fi!

Preventive care helps also. You may not have an HR department, but you can point people to websites that offer advice on preventive screenings and check-ups.

Shop Around

Shopping around for health insurance every couple of years may yield better coverage and lower costs.

But be careful, there are unscrupulous agents that try to take advantage of the confusion surrounding healthcare reform. Be sure you’re dealing with a licensed agent. It doesn’t cost anymore and they’re in the best position to make sure you get the right plan at the best price.

Tax Credits are Already Available

If you have fewer than 25 employees, and your average wages are $50,000 or less, you may qualify for tax credits in 2011 through 2013. You have to provide group health insurance and pay at least 50% of employee monthly premiums.

If you have fewer than 10 employees and average wages of $25,000 or less, you’ll qualify for the maximum tax credit of 35% of the premiums you pay.

Whether you have two employees or 250, you probably know that employer-sponsored health insurance is one of the benefits workers value most. Offering a group health insurance plan can help you hire and retain the best workers, as well as provide valuable protection for yourself and your family. That’s all going to be a lot more complicated as 2014 approaches, so stay in touch with what’s going on.

To learn more about healthcare reform and individual and family health insurance and keep up to date with changes, visit www.healthcare.gov.

This article is from Tom Harnish of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How Much After Healthcare Reform?

Julie Rains — Mon, 07 Jun 2010 03:25:17 +0000

Link:

http://www.openforum.com/idea-hub/topics/money/article/how-much-after-healthcare...

How much will healthcare reform cost or save your small business? It depends.

The intent of federal legislation is to make healthcare coverage more affordable for small businesses. The definition of a small business in regard to eligibility criteria, requirements, incentives, and disincentives vary. In general, though, companies with 50 employees or less that offer healthcare coverage stand to benefit most from recent legislation

Cost savings could be realized through 1) tax credits, 2) lower costs of medical coverage based on SHOP Exchange rates along with changes in insurance underwriting guidelines, and 3) lower administrative costs associated with streamlined delivery of services through Exchanges.

However, certain small businesses might spend increasingly more if they purchase relatively expensive health plans for their employees, triggering an excise tax. Though the policy issuers, generally insurance carriers, are responsible for paying this tax, there is concern that they may pass these expenses back to businesses in the form of higher premiums.

Tax credits starting in 2010, up to 6 years

For starters, small businesses that offer healthcare coverage (medical as well as dental and vision) could save money. Beginning in 2010, if your company has 25 full-time equivalent employees (FTEs) or less, and the average wage of your employees is less than $50,000 (not counting owners and family members), and your company pays at least 50% of employee-only insurance premiums, then you may be eligible for tax credits.

Businesses could recoup up to 35% of premium costs from 2010 to 2013 and 50% of these expenses for two more years, starting in 2014. For more information, see the IRS's three-step process to determine initial eligibility and the White House's Health Reform Small Business Guidance.

Cost savings on healthcare premiums and administrative costs, starting in 2014

Small businesses should have greater access to affordable healthcare insurance plans primarily because of Small Business Health Options Program (SHOP) Exchanges and related legislative mandates. Underwriting guidelines favoring community rating rather than individual rating and consumer protections address insurance practices that often resulted in excessively high expenses for many small businesses.

Specifically, Kaiser Family Foundation's Health Reform Implementation Timeline indicates these new requirements mandated for implementation by 2014 consist of "guarantee issue and renewability and allow rating variation based only on age (limited to 3 to 1 ratio), premium rating area, family composition, and tobacco use (limited to 1.5. to 1 ratio) in the individual and the small group market and the Exchanges."

The Exchanges allow pooling of risk among many employees of multiple employer groups, similar to the risk advantages that large corporations with thousands of employees enjoy.

In addition to the possibility of lower rates initially, rates should hold steady over time; for example, one employee with a serious illness will have much less or even negligible impact on premium rates compared to dramatic increases that would have likely occurred prior to reform legislation.

There has been some controversy regarding unfair risk spreading due to community-rating requirements. However, federal rules are less strict than many states. For example, federal legislation limits age rating variation to a 3:1 ratio (that is, older employees can be charged up to 3 times the amount of younger employees) whereas New York and Vermont make age rating illegal and other states control variations at rates lower than federal rules. Wherever a company is on the age spectrum now, limits to age ratings should allow the business to control fluctuations in costs over time, even as its employee population ages.

Excise tax on high-value plans, starting in 2018

The 40% tax on relatively expensive healthcare coverage (commonly referred to as "Cadillac" plans) will be charged to the company that issues the insurance policy, which might in turn add to the policy fee, causing costs to spiral upward. The tax is on the amount that exceeds the value of the thresholds, which are $10,200 for individuals and $27,500 for families.

However, these thresholds will be higher for employee groups that have higher healthcare costs because of factors such as age or high-risk occupations. And, the threshold will be increased for all groups if healthcare costs rise higher than expected in 2018.

Steps to take now in order to control spending later

1. Consider the value of offering healthcare insurance in attracting and retaining a qualified workforce, often the cornerstone of an employee benefits package.

2. Decide whether you want to begin or continue offering medical coverage to your employees.

3. Evaluate your current plan coverage, its appeal to your employees, and its value compared to employer plans in your geographic area and industry.

4. Monitor the development of state-based SHOP Exchange offerings and insurance programs (see RAND Health COMPARE for information on state initiatives).

5. Read more about federal legislation (see Summary of Health Reform Law) and stay alert to possible changes in guidelines.

This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

What You Need to Know About Your FSA

Heather Johnson — Wed, 02 Jun 2010 13:00:03 +0000

Most readers of this blog understand the basics of Flexible Spending Accounts (FSAs) and why they are an important employee benefit. If you are employed and obtain your health insurance from your employer like 62% of Americans in the work force, then you probably use an FSA as part of your own benefits plan. As with many provisions in healthcare, though, you may not be up-to-date on all of the finer points of an FSA. Even if you are, it never hurts to brush up on the basics.

FSAs Cover More Than Just Medical Expenses

Federal law, not your employer's HR department or benefits administrator, dictates how an FSA may be used. While most consumers associate FSAs with covering coverage premiums and medical copays and deductibles, it is useful to know that FSAs go much further than that.

An FSA can be used to cover a variety of expenses outside of the doctor's office. Many employer-based health plans, for example do not offer dental or vision coverage. With an FSA, an employee can use his or her pre-tax income to pay for dental or vision coverage and services that may not be provided, especially by smaller employers.

Many are surprised to find that their FSA will not only cover services provided in the setting of a medical, dental, or vision professional office, but they also cover things that can positively affect your well-being but are not exactly medical services. A few include:

Birth control pills and other contraceptive devices
Over-the-counter drugs and medications, although the health reform bill will limit the FSA coverage of many of these items
Membership in a gym (if specified by a physician)
Massage therapy (also if specified by a physician)
Sunscreen with an SPF of 30 or above
Hand sanitizer

Under the vein of dependent care expenses, also covered by an FSA, one can pay for a variety of services for his or her dependents, such as day camp for a child under the age of 13. You can even use a flexible spending account to remove lead paint from your home if the afflicted areas are in the reach of children, in addition to other home improvements that will have a demonstrable health benefit for your family.

Strategies for Saving Money with FSAs

Ultimately, it all comes back to saving money. Saving money on healthcare expenses is the main attraction for consumers to save with an FSA and approximately 90% of all employers who provided health insurance in 2008 offered a FSA option for their employees. Money saved through FSAs is done so pre-tax, creating a major tax benefit for those who consume medical services or require dependent care.

The broad application of FSAs create an opportunity for nearly anyone to save pre-tax money on healthcare, since an employee can save in an FSA no matter what kind of healthcare plan they elect to receive. A health savings account (HSA), on the other hand, is restricted to be used only with high deductible health plans. Many consumers interchange HSA and FSA terminology, but in reality they are quite different and the proliferation of HSA use is a fraction of what FSAs have become.

To get the most from your FSA, it is a no-brainer to maximize your benefits by paying for your premiums and deductibles with FSA-approved funds. Nowadays, we see many employers automatically applying FSA dollars to cover insurance premiums, leaving the employee with relatively simple decisions, such as how much of the deductible or other care expenses to set aside in the FSA.

While most people are aware of the FSA's "use-it-or-use-it" characteristic, it always bears repeating. Unlike a HSA, FSA's must be used by the end of each plan year. Forecast carefully to make sure you get the maximum FSA benefit but don't overshoot the target.

FSAs Changed Under Health Reform

Nearly every aspect of healthcare was impacted by the recent Patient Protection and Affordable Care Act (PPACA), and FSAs are no exception. With the passage of the PPACA, FSAs are now fitted with a contribution cap. Prior to this law, there was no cap on contributions from an employee. Starting January 1, 2011, FSA contributions from employees will be limited to $2,500 a year. While statistics show that very few participants ever saved that kind of money in an FSA, the cap may be relevant to families or others who are heavier consumers of healthcare services.

Also important to note is that after January 1, 2011, most over-the-counter medicines will no longer be covered by FSAs. Why would they be targeted by health reform? The expected additional tax revenue from not being able to run these things through a pre-tax account will help pay for the bill.

Always Changing

In short, while the concept of FSAs remains relatively stable from year-to-year, the finer point of what is covered and how much you can save is continually changing. Do your homework a couple times a year and stay current on how to get the most out of this vehicle.

Guest Post Blurb:

This is a guest post by Heather Johnson, Director with HealthHarbor.com. Find more tips on HealthHarbor:

This article is from Heather Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: