Employers Adding Group Health Insurance Penalties

Employers Adding Group Health Insurance Penalties in Group Health Insurance

Many employers are looking to cut health costs for group health insurance policies in 2011. Employers are now considering and planning on penalizing workers who do not participate in programs that work to improve the health of employees.

Marketwatch reports that employers would penalize workers who did not participate in disease management or lifestyle behavior programs, employees who smoke or employees who don't participate in health screenings offered by the employer.     

Currently almost half of large United States employers are currently using or plan to use financial penalties for employees who do take part in health improvement programs within the next few years.  These penalties would result in higher health insurance costs through increased premiums, out-of-pocket costs or deductibles.

Cathy Tripp, from the Health Management Practice at Hewitt Associates said, "The economy and continued escalation of health care costs have driven many employers to be a little more bold and demanding of their employees, making disincentives an increasingly attractive option. As companies learn more about their workforce, they're realizing that some people may be more motivated to take action if they risk losing $100 versus gaining $100."    

Many companies have been using financial incentives in the recent past and have decided that penalizing people may be a better way to get them to act. Poor lifestyle behaviors like smoking and drinking could result in automatic higher premiums for some workers. Or other workers who do not go to health screenings could automatically see their deductible go up.

People will have to become more responsible for their lifestyle behaviors because companies do need to save money on health insurance costs to continue to afford them.

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Health Insurance Audits for Dependents and Spouses

Health Insurance Audits for Dependents and Spouses in Group Health Insurance

A recent post on the Coverage Corner talked about companies conducting audits for dependents on health insurance plans. Now more attention is getting paid to the subject as companies that conduct eligibility audits are seeing a spike in business.

CNN reports that companies are expecting to see a 9 percent increase in their health insurance plans in 2011, due to increasing coverage costs and provisions in health care reform.

In order to cut costs, more companies that provide group health insurance are expected to conduct eligibility audits. Usually eligibility audits find 10 to 13 percent of dependents on health plans are actually not eligible to receive health care benefits.

As well as checking children on plans, many businesses are now conducting spouse audits. Some companies audit to see if a spouse has health insurance benefits through his or her employer, and if that is the case, a company may decide that he or she is ineligible for coverage or charge an additional fee.

Companies are also conducting spouse audits because many ex-spouses will remain on group health insurance plans after a divorce which  make that spouse ineligible.

Removing ineligible dependents on a health insurance plan can save an employer an average of $5,000 a year for a spouse and $1,900 for a dependent between the ages of 19 to 25.

Don't be surprised if your company conducts an audit soon — they are only trying to save money and keep health insurance costs low for employees.

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Three-Fourths of Illinois Small Businesses Eligible for Health Care Reform Tax Credits

Three-Fourths of Illinois Small Businesses Eligible for Health Care Reform Tax Credits in Group Health Insurance

A new report by Families USA shows that around 78.5 percent of Illinois small businesses will be eligible for the health care reform tax credits. These tax credits will be used to help pay for employees’ health insurance coverage.

Businesses that have 25 employees or less will be eligible for the new tax credits, which will help at least 159,900 small businesses in Illinois. Also, the report showed that 48,400 Illinois small businesses will be eligible for the maximum credit of 35 percent, which accounts for businesses that have 10 or less workers who earn around $25,000 or less a year. 

The tax credits will be issued this year and are only the first round of credits for small businesses providing group health insurance benefits to employees. In 2014, small businesses will be eligible for 50 percent tax credits when meeting certain requirements.

Typically small businesses have a hard time being able to afford health insurance and these tax credits will help alleviate some of the burden.

Opponents to the tax credits believe they will promote employers to keep wages low and to avoid hiring new employees, yet is impossible to debate that these credits will help businesses.

Ron Pollack, the Executive Director of Families USA, said, "Our nation has counted on small businesses for personal, neighborhood services and as a wellspring for economic growth. The new health reform law will provide much-needed relief to these businesses so they can provide health coverage for their workers."

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Companies Conducting Audits for Dependents on Health Insurance Plans

Companies Conducting Audits for Dependents on Health Insurance Plans in Group Health Insurance

One trend that is growing among companies and employers that provide group health insurance plans to employees are audits to determine dependents’ eligibility on policies. The purpose of the audits is to cut back on the number of dependents that are receiving coverage from parents’ health insurance plans that are not eligible for coverage.

Employees are receiving these audits in the mail and have 30 to 45 days to fill out the questionnaire and provide proof for dependents. According to a report by The New York Times, a company audit of 10,000 employees will find 200 to 500 dependents that do not meet requirements. Removing these dependents can save a company $420,000 to $1.05 million a year.

Allowing children to stay on parents’ health insurance policies used to be based on an honor system but as more companies are trying to cut back health care costs, these audits are becoming more popular.

Right now, most of the dependents that are no longer eligible for coverage are children over the age of 18 and are not enrolled in school. This will change in January from the new health insurance legislation, which will allow children under the age of 26 to stay on health insurance plans even though they are not in school.

It is important for employees to make sure that their children are eligible for coverage and read their policy before they are audited. Employees should also fill out the audit as quickly as possible, because if it is not returned, the company is likely to drop the dependents’ coverage.

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Small Businesses Could See Penalties for Expensive Health Insurance

Small Businesses Could See Penalties for Expensive Health Insurance in Group Health Insurance

Even though the health insurance legislation was passed in March, small businesses and companies are learning of the effects the new law could have on their company. One provision may require small businesses to pay penalties if health insurance costs for employees are considered to be too expensive for the employee.

The New York Times reports that if employers offer coverage to full-time employees but require the employees to pay a premium-that premium may not exceed 9.5 percent of their employee’s household income. If the premium costs more than 9.5 percent of their household income, that employee can apply for a subsidy from the government and then the government will penalize the employer. 

This piece of the health insurance legislation could have a huge impact on retailers and restaurants. Typically these types of businesses do not offer coverage and may not be able to provide affordable coverage defined by the government.

Still the government has to define what coverage will be included in determining the affordability of the health insurance plans. Employees that have coverage for their entire family will pay more out-of-pocket than employees that only pay for individual coverage.

Many companies may change their health insurance plans to avoid the penalties.  Yet it is uncertain how small businesses will gain information on an employee’s household income and whether that information will be readily available. Experts are worried that an employer knowing an employee’s household income could cause discrimination to hiring or firing an employee that gets subsidies for health care coverage.

Either way, small businesses will need to work with health insurance companies to find health insurance policies that will fit the all of the new requirements under health care reform.

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Small Business Tax Credits from Health Care Reform

Small Business Tax Credits from Health Care Reform in Group Health Insurance

One of the big highlights of reform was that the health insurance bill will provide tax credits for small businesses. These tax credits will help pay for employees’ health insurance bills and provide small businesses a 35 percent tax credit.

The health care legislation established that tax credits would be given to businesses, but didn’t provide any specifics on which small businesses could apply or how much they would be worth. Recently, the Internal Revenue Service has issued a list of rules and qualifications for small businesses that could receive tax credits for offering employees health insurance.

Small businesses with less than 25 employees and also pay their employees an average salary of less than $50,000 are eligible for the tax credits. However, according to The Washington Post, the tax credit will become smaller when small businesses have more workers and have larger salaries. So only businesses that have 10 full-time workers that pay less than $25,000 on average to each employee will receive the full 35 percent tax credit. Otherwise bigger companies or companies that pay employees more will not get such a large tax credit.

Small businesses that receive the tax credit have to pay at least 50 percent of employees’ premiums. They can also use the tax credit to pay for dental, vision or other insurance benefits.

The small business tax credits could provide help to four million small businesses; however, the credits not be granted until businesses file taxes in 2011.  

It is great that small businesses will be receiving help to provide health insurance benefits but many experts are unclear how much these tax credits will help.

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Large Companies Consider Dropping Employee Health Insurance Benefits

Large Companies Consider Dropping Employee Health Insurance Benefits in Group Health Insurance

Today in Politico, Fortune Magazine reported that AT&T, Verizon, Caterpillar and John Deere are considering dropping health insurance benefits for their employees and bearing the brunt of a federal fine for doing so.

The Politico article did say that the Fortune report wasn’t clear if the companies were simply doing an assessment of dropping coverage or actually planning on making it happen. AT&T, Caterpillar and John Deere declined to comment on the matter.

After the Fortune report, Verizon has since said they will not cancel their group health insurance plans for employees.

Detractors of health reform had warned that Americans with employer-sponsored coverage could be faced with losing their coverage, even though President Obama promised that citizens who liked their current coverage could keep it. 

If these companies were to drop coverage, they would pay a $2,000 penalty for every employee; even if some receive federal subsides to purchase their own health insurance.

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Health Reform Delayed for Federal Employees’ Children

Health Reform Delayed for Federal Employees’ Children in Group Health Insurance

Since health care legislation was passed, health insurance companies have been committing to implement provisions from the legislation before the deadlines. Under the health care law, young adults will be able to stay on their parents’ health insurance plans until the age of 26 starting in September. 

Just last week WellPoint, United HealthCare, Humana, Blue Cross Blue Shield plans and Kaiser Permanente announced they would allow young adults graduating this summer to stay on parents’ policies to avoid gaps in coverage. This will provide a lot of relief for many students and young adults who cannot afford the coverage. 

Unfortunately, young adults whose parents are enrolled in the Federal Employee Health Insurance Program will not be eligible for this new benefit according to McClatchy Newspapers. They actually may not even see the benefits from this provision in reform until January.

The Office of Personnel Management made a statement saying, “Though we are eager to provide coverage to young adults prior to January 1, the current law governing the FEHB Program specifically prohibits us from doing so.”

Currently the OPM provides coverage for dependents who are unmarried children under the age of 22.  Therefore, once the OPM can enact the health care legislation into its health insurance policies, young adults under the FEHB plans will gain a lot of extended coverage.

Even though health insurance companies are offering the benefit to provide coverage for young adults before the effective date, employers do not have to change their health plans.  Experts say that it is hard for companies to change employee benefits in the middle of the year and many companies will have to take on the extra cost of providing the coverage.

Either way, health insurance legislation will help many young adults receive coverage this summer they may have gone without.

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Reinsurance Program for Early Retirees

Reinsurance Program for Early Retirees in Group Health Insurance

One program as a result of the Affordable Care Act of 2010 will help early retirees obtain insurance coverage through group health insurance plans. The reinsurance program for early retirees will provide financial assistance for employers that continue to cover early retiree’s benefits.

The early retiree reinsurance program will provide $5 billion to employer plans that provide coverage for “certain” retirees.  Payments for the program are retroactive for a plan year which will help many employers and early retirees. The temporary program will start in late June and will only last until the beginning of 2014. Then in 2014, early retirees with pre-existing conditions will be able to find coverage at a more affordable price.

According to The White House, an early retiree is any individual aged 55 and older who is not an active employee or eligible for Medicare. Adults between the ages of 55 and 64 are too young to receive assistance from Medicare but cannot purchase insurance on the individual market.  Early retirees typically are in poor health and have pre-existing conditions and cannot find cheap coverage.  

Employers and union employer-based health insurance plans will submit applications to the Department of Human and Health Services to participate in the program. These plans will receive payments for medical, surgical, hospital and prescription drugs costs which will benefit many early retirees. The payments from the government will go to the group health insurance plan on behalf of the early retiree.

Many employers have been cutting back their early retiree programs and this will provide financial assistance for a few years. 

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Businesses are Reporting Higher Health Care Costs Due to Reform

Businesses are Reporting Higher Health Care Costs Due to Reform in Group Health Insurance

The aftermath of passing health insurance reform may take weeks to settle.

Some of the largest businesses in the United States are reporting higher health care costs because of the passed legislation. Last week, AK Steel Corporation, Caterpillar Inc., Deere & Co., Verizon and Valero Energy announced that their health care spending would increase by millions. Now AT&T will be taking a $1 billion non-cash accounting charge to pay for the overhaul.

A spokesperson from AT&T says that the charge is a result of the way Medicare subsidies will now be taxed according to the Associated Press and USA Today, Companies that provide drug benefits for retirees receive subsidies covering 28 percent of the costs. Prior to the legislation, these subsidies were tax deductible but now companies will only be able to deduct the 72 percent of drug costs. 

In response, AT&T may stop providing drug coverage for retirees and change active employees’ health insurance plans. It will be a few years before AT&T can implement any changes because AT&T is the biggest private employer of union members.  Union workers’ contracts end in 2012 and AT&T will then be able to renegotiate health care benefit packages.  

Lawmakers aren’t very happy to hear about these reported higher health care costs. U.S. Representatives Henry Waxman and Bart Stupak are requesting companies to attend a meeting on April 21 to discuss these changing health care costs and to send an explanation for the rising costs by April 9.

Congressmen Waxman and Stupak wrote to the company executives, “The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern.  They also appear to conflict with independent analyses.”

Hopefully the meeting will clear the air between lawmakers and executives and determine how this overhaul will affect businesses.

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Adding Health Insurance Costs to Restaurant Bills

Adding Health Insurance Costs to Restaurant Bills in Group Health Insurance

Restaurants are starting a controversial practice in San Francisco by adding health insurance charges to customers’ bills. Instead of increasing the price of menu items, restaurants are just tagging the charge separately on the bill. 

This price hike stems from Healthy San Francisco which provides uninsured residents access to affordable and ongoing health care services. Uninsured residents who are not eligible for other public programs can join Healthy San Francisco. Some residents have even dropped private health insurance to sign up for this generous program, which includes prescription drugs, diagnostic and mental health services, and specialty and inpatient care.

Healthy San Francisco helps many residents every year, but the cost of this program is shifted to employers who are mandated to contribute. Restaurant owners have had enough of the charges and are now just adding them to the menus and bills.

Restaurant owners are defending this practice by saying the extra charge will let customers know how much employee’s health coverage costs. Restaurants are going so far as to put notices on their menus so that the charge isn’t hidden or a surprise to customers.

How will consumers react to this new charge?

In the present hard economic times, it may not seem natural to add on extra fees for consumers. Many people are trying to save money and may not appreciate the charges.

The practice of fees is common in other industries like the travel and hospitality industry. Airlines add fuel charges, hotels add housekeeping bills but restaurants adding health insurance costs? It doesn’t seem normal.

The Chicago Tribune is worried that this practice will catch on quick to other restaurants. They believe that employee health insurance costs are no different than electricity, property, rent and other costs that are necessary to run a business. There is nothing to stop restaurants from adding those charges as well.

Hopefully the practice of adding health insurance charges stays in San Francisco.

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President Obama’s Health Insurance Proposal Receives Criticism from Small Businesses

President Obama’s Health Insurance Proposal Receives Criticism from Small Businesses in Group Health Insurance

Small and medium-sized businesses are criticizing President Obama’s health reform proposal that was released yesterday. Advocates for small businesses believe that Obama’s health insurance proposal will impose stiffer requirements on employers to provide employees with group health insurance. They also believe that President Obama is not doing enough to lower overall health care costs.

Under President Obama’s proposal, businesses with more than 50 employees have to offer health insurance benefits or pay $2,000 per person, which would put financial pressure on already struggling employers.

In fact, writes the Wall Street Journal, one in five small businesses had reduced their work force because of rising health insurance costs in December.

Michelle Dimarob, a lobbyist for the National Federation of Independent Business said, “Employer mandates are the opposite of what small businesses need. Instead, they need more choice and lower costs.”

Alternative to the president’s proposal, small businesses would rather create pools to increase competition and expand choice while controlling costs. Employers also favor tax-free financial contributions to employers who could purchase their own health insurance policies.

In addition, businesses are also concerned with the “Cadillac” tax on high-cost health insurance plans, as well as the 0.9 percent surtax on individuals who earn more than $200,000 to cover Medicare expansion.

Hopefully, these issues will be discussed in full on Thursday’s summit.

Main Street Alliance, a national network of small business coalitions, came up with a very good request, asking that the government make a national definition of health insurance. A solid definition, they argue, would help small businesses know what the requirements are in terms of price and quality.

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Employers to Include Mental Health Benefits

Employers to Include Mental Health Benefits in Group Health Insurance

Soon, employers and insurance companies will be required to change group health insurance benefits to meet new laws that improve employer-provided mental-health and substance-abuse insurance coverage. 

The original mental health parity legislation of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 went into effect in October in 2009 but improvements to the plan were added last month.

The new law requires that all employer plans provide mental health benefits coverage equal to that of medical and surgical care. The law applies to companies and group health plans with more than 50 workers. 

These days, health professionals accept mental health conditions as serious and treatable ailments. According to the American Institute of Stress, mental health issues cause 61 percent of absences from work every year, 65 to 85 percent of terminations and 80 to 90 percent of industrial accidents.

The Wall Street Journal notes that the Congressional Budget Office estimates that the legislation will cost $3 billion in 2012 and premiums will increase by 0.4 percent. Additional costs to employers who add the benefits will be less than 1.5 percent even though employers could potentially save money from lower rates of absenteeism.

Adding insurance coverage for mental health conditions may be one way for employers to ultimately drive down health care costs and keep employees happy and healthy. We think that’s probably a good thing.

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Gallup Poll Finds More Americans Have Government-Sponsored Health Insurance, Fewer Have Employer Coverage

Gallup Poll Finds More Americans Have Government-Sponsored Health Insurance, Fewer Have Employer Coverage in Group Health Insurance

Remember the public health insurance option that much of America and all Congressional Republican lawmakers were against? Well, a new Gallup poll found that more Americans actually jumped on a public health plan in 2009 than 2008.

According to the poll, 24.6 percent of insured Americans in 2009 had coverage through a government plan such as Medicaid, Medicare or a military or veteran’s health insurance plan.

In 2008, 23.3 percent of insured Americans were covered with a government-sponsored plan.

The poll also found that employer coverage is waning. In 2009, 46.8 percent of the insured population had employer-based group health insurance — 49.2 percent had employer coverage in 2008.

More Americans also were uninsured in 2009 than 2008 — 16.2 percent and 14.8 percent respectively.

With the poor economy and unemployment as high as it is right now, this data really isn’t a huge surprise. But it does highlight the fact that when people can’t afford health insurance, which many can’t, they turn to the government.

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How Employer-Mandated Health Insurance Stacks Up

How Employer-Mandated Health Insurance Stacks Up in Group Health Insurance

All the bills currently in play — the house bill and the two in the Senate — contain employer mandates, but differ to what degree. This has provoked a few layers of questions.

The Senate Finance Committee’s bill penalizes employers who don’t offer their workers any kind of coverage, but stops short of making any requirements whereas the bills from the House and the Senate Health Committee flat-out require employers offer their employees coverage. As a matter of fact, they go one step further: They require employers to contribute a significant share of the cost (except for small businesses) or pay a fine. 

That’s a big difference. And it’s hard to tell which way Majority Leader Harry Reid will lean in his reconciliation of the two Senate bills alone. 

Now, it’s true that for about 60 percent of Americans at big firms, the point is moot since they get their health insurance through their jobs, where they are covered at about 75 percent. But it isn’t for those who work at smaller companies where coverage and employer contribution aren’t as considerable. 

It’s also important to note that anywhere from 2.3 to 2.6 million businesses are expected to opt to pay the penalty rather than offer group health insurance should that version of the mandate go into law.

It will be interesting to see which provision ends up in the final bill, and even more interesting to see how it pans out.

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