Income plans that pay benefits!

A lot of times we see how income insurance enables clients to survive devastating times. This week, I was looking at a claim on the Retirement Security plan. This client has been disabled for the past 7 years. (stroke at age 58). So - those last 7 years he didn't have any money going into his 401(k). At age 65, (he had his policy for 10 years before his claim) his benefits stopped.

However - he also had a Retirement Security policy and he and his family were so glad - He has an account to use to live on - plus what he had put in before his disability. Again - this coverage has given us a good ending!!!!

Payment Invoices vs. Payment Coupons for Cobra Participants

Payment Invoices vs. Payment Coupons
Some benefits administrators may choose to provide payment coupon books to their COBRA participants, but is this necessarily the best approach for your clients?  Experience with offering both payment coupons and monthly invoices, and when the two payment notification methods are compared, the advantages of offering monthly invoices to our COBRA participants far outweigh a book of coupons. Check out these reasons why.
Payment Prompts
Our monthly COBRA payment invoices are proactive payment reminders. A book of monthly coupons can easily be tossed aside and forgotten, especially at a time that may be difficult for some COBRA participants because of their qualifying event (e.g., death of a spouse or loss of employment). However, sending our COBRA invoices directly to participants each month encourages timely premium payments because of this regular reminder.
Up-to-date Payment Details
As experienced in the past two years, COBRA continuation assistance from the American Recovery and Reinvestment Act of 2009 (ARRA) affected many of our COBRA participants’ monthly premiums. The premium reductions associated with this subsidy were easily incorporated into each qualifying individual’s monthly invoice. In comparison to out-of-date preprinted coupon books, you will find the ability to quickly change our invoices extremely effective as COBRA continuation assistance extensions were mandated.

In addition, our dynamic invoices allow you to carry forward past-due amounts from a previous coverage period, such as an insufficient payment that falls within acceptable COBRA payment timeframes. Advance payments are also reflected in each participant’s actual monthly balance.
Staying in Touch
Invoices also allow you to stay in touch with COBRA participants each month and gather pertinent details. For example, our invoices ask participants about other health coverage opportunities from another group health plan offered through a new employer, their spouse’s employer, or their ability to qualify for Medicare. This thorough outreach ensures that our clients have been diligently reminding their COBRA populations of the financial responsibility for COBRA premiums.
Record Retention
Images and electronically retains all COBRA-related issued invoices and notices. When necessary, CONEXIS provides copies of many types of COBRA correspondence. In the event of a dispute or litigation related to COBRA, these files are available to our clients.

Employer-Sponsored Insurance Costs Rise in California, Across U.S.

Thursday, November 18, 2010

In 2010, the cost of employer-sponsored health coverage increased by 6.9% nationwide, to $9,562 per employee, the largest increase since 2004, according to the results of a national survey released by benefits consulting firm Mercer on Wednesday, McClatchy/Sacramento Bee reports.
For the report, Mercer surveyed 2,836 public and private employers with 10 or more employees.

Report Details.  The survey found that the average PPO deductible increased to $1,200 this year.

In addition, the survey found that employers expect total costs to increase by about 10% in 2011. Employers largely attributed the expected increase to:

• Changes from the federal health reform law;
• Increased health services usage; and
• Rising health care prices.

However, most employers are expected to make changes that will limit their exposure to the increased costs, such as raising deductibles and passing costs on to employees.
Steve Graybill, a senior health consultant for Mercer, said the reform law is increasing costs, but "employers are pulling out all stops" to keep their spending on health coverage down (McClatchy/Sacramento Bee, 11/18).

California Findings

In California, employers have seen an 8.4% rise in health benefit costs this year and could face an 11.4% increase next year, according to the survey.
The survey found that California employers are spending an average of $9,960 per worker on health care in 2010.

According to Mercer, California's health benefit costs might exceed nationwide averages because of the state's relatively high expenses and the prevalence of HMOs.  California employers said they aim to restrict their health cost increases to about 7.8% next year by modifying their benefits and selecting new insurers (Helfand, Los Angeles Times, 11/18).

We can help you to make the necessary changes to your companies plans.

Group Health Plans

• Small Business (2-50 Employees)

2011 Medicare Premiums and Deductibles

Overview

The Centers for Medicare and Medicaid Services (CMS) has set the Medicare premiums, deductibles and coinsurance amounts to be paid by Medicare beneficiaries in 2011.

Medicare Part A deductible and coinsurance

For Medicare Part A, which pays for inpatient hospital, skilled nursing facility, and some home health care, the deductible paid by the beneficiary when admitted as a hospital inpatient will be $1,132 in 2011, an increase of $32 from this year's $1,100 deductible. The Part A deductible is the beneficiary's cost for up to 60 days of Medicare-covered inpatient hospital care in a benefit period. ·   Beneficiaries must pay an additional $283 per day for days 61 through 90 in 2011, and ·   $566 per day for hospital stays beyond the 90th day in a benefit period. For 2010, the per-day payment for days 61 through 90 was $275, and $550 for beyond 90 days. For beneficiaries in skilled nursing facilities, the daily co-insurance for days 21 through 100 in a benefit period will be $141.50 in 2011, compared to $137.50 in 2010. Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. All of these Part A program payment changes are determined in accordance with a statutory formula.

Medicare Supplements  By clicking on this link you will find the most affordable medicare plans today.

Interim Final Rule Grandfathered Health Care Plans

The new amendment to the interim final rule “allows all group health plans to switch insurance companies and shop for the same coverage at a lower cost while maintaining their grandfathered status, so long as the structure of the coverage doesn't violate one of the other rules for maintaining grandfathered plan status,” it said.

A change of issuers in the individual market will still result in the loss of grandfathered status, the fact sheet said.

Under the amended rules, employers that offer the same level of coverage through a new issuer can remain grandfathered as long as the change does not result in significant cost increases, a reduction in benefits or other changes in the original rule.

The amendment “will result in a small increase in the number of plans retaining their grandfathered status relative to the estimates made in the grandfathering regulation,” the fact sheet said. The agencies did not produce a range of estimates for the number of affected groups “given considerable uncertainty about the response to this amendment,” it said.
In the interim final rule issued in June, the administration estimated that, under the most likely scenario, 51 percent of all employer plans will lose their grandfathered status, affecting 87 million people. For that reason, the regulation has drawn heavy criticism from congressional Republicans and some business groups.

The primary difference in regulations that an employer would face from having grandfathered status is the application of new appeals procedures.

Other Rules Will Apply

A lot of the other rules will already apply to grandfathered plans. Grandfathered plans must abide by bans on lifetime limits and rescissions, rules restricting annual limits, as well as the requirement that adult children up to age 26 be allowed to be covered on parents' plan.
In the fact sheet, the agencies said the change was made in response to many comments on the provision in the original rule. A group health plan may need to make administrative changes that do not affect benefits or costs, which could happen if an insurer stops offering coverage in a market, it said. Companies can also change ownership.

There was also concern that the original provision could have the inadvertent effect of interfering with health care cost containment. Forcing employers to stay with the same insurer could give the insurance company “undue and unfair leverage in negotiating the price of coverage renewals,” it said. “Allowing employers to shop around can help keep costs down while ensuring individuals can keep the coverage they have.”

The proposed and interim final rules will be published in the November 17 Federal Register.

New non discrimination rules for Health Plans

With the new requirement, an employer sponsoring a fully-insured health benefit plan, or the plan itself, must not discriminate in favor of highly compensated employees by offering them additional coverage or benefits at more affordable rates compared to the other employees covered by the plan. Effective for plan years beginning on or after September 23, 2010, the non-discrimination provision associated with Section 105(h) of the IRC now applies to both self-funded and fully-insured health plans. However, "grandfathered," fully-insured plans will not be subject to the expanded non-discrimination rule.
Background
The applicable provision in the health care reform law reads:

Sec.  2716. PROHIBITION OF DISCRIMINATION BASED ON SALARY.

(a) IN GENERAL – The plan sponsor of a group health plan (other than a
self-insured plan) may not establish rules relating to the health insurance
coverage eligibility (including continued eligibility) of any full-time employee under
the terms of the plan that are based on the total hourly or annual salary of the employee or otherwise establish eligibility rules that have the effect of
discriminating in favor of higher wage employees.¹

The Internal Revenue Service (IRS) permits employers to offer certain health plan benefits on a tax-exempt basis as long as certain regulations are followed. If the plan discriminates in favor of highly compensated individuals, the tax exempt provision can be disallowed if certain tests are not met and a penalty may be assessed against the employer who is sponsoring or underwriting the plan. 
The new health care reform law promotes a more level playing field in how employer-sponsored health insurance is offered to employees. As a result, the expanded non-discrimination requirement creates a significant chilling effect on fully-insured, executive medical plans where senior executives would have access to higher level benefits or reduced cost-sharing arrangements.
Scope
Generally, the regulations issued pursuant to Section 105(h) apply to employer-sponsored health benefit plans that cover premiums and expenses for qualified medical and other specialty plans.²  The recent amendments expand the non-discrimination provisions to health benefit plans irrespective of whether they are fully-insured, self-funded, or medical reimbursement plans.  Some types of plans are excluded from the new requirements, including “grandfathered” plans, government-sponsored health plans and limited benefit plans.
Eligibility & Benefit Tests
PPACA provides that non-grandfathered, fully-insured plans must satisfy the
Section 105 requirements, which prohibit discrimination in favor of highly compensated individuals. To satisfy the non-discrimination rules, health plans must pass several tests.   
To pass the “eligibility” test, a plan must benefit one of the following:

• At least 70 percent of all employees;
• At least 80 percent of all employees who are eligible for benefits under the plan (if at least 70 percent of all employees are eligible to participate in the plan); or
• A nondiscriminatory classification of employees.

In running the eligibility test pursuant to IRC subsection 501(h)3, an employer may exclude employees that:    

• Have three years or less of service at the company;
• Are younger than age 25;
• Are part-time or seasonal (less than 35 hours per week);
• Are part of a collectively-bargained arrangement; or
• Are non-resident aliens who do not receive U.S. earned income.

In addition, the “benefits” provided under the health plan must not discriminate in favor of highly compensated individuals. The health plan should incorporate several design features in order to be non-discriminatory. For example, plans should: 

1.    Establish parity in employee contributions for each benefit level;

2.    Preclude offering lower co-pays for highly compensated employees; and

3.    Not impose different waiting periods.

The employer sponsoring the health plan also must not discriminate in favor of highly-compensated individuals in actual operation. For example, discrimination in operation could arise if a plan administrator approves certain claims for medical expenses under the utilization management process for highly compensated employees while denying them for lower compensated employees.
For purposes of IRC subsection 105(h)(5), the term “highly compensated individual” means an individual who is: 

1.    One of the five highest paid officers;

2.    A shareholder who owns more than 10 percent in value of the stock of the employer; or

3.    Is among the highest paid 25 percent of all employees. 

Additional Guidance
The IRS recently requested comments on how to apply this extension of the non-discrimination rules to fully-insured plans.³ Therefore; it is likely that additional insights detailing the new non-discrimination requirements for fully-insured plans will be forthcoming. Experts note the new rules most likely will be similar to the self-funded plan, non-discrimination requirements.⁴  
Penalties
In its request, the IRS also clarified that the penalty for failure of fully-insured plans to meet the non-discrimination rules will be the imposition of an excise tax on the plan’s sponsoring employer in the amount of $100 per day for each individual against whom the plan discriminates. In other words, the fee will apply on a daily basis for each employee that is not highly compensated and who does not receive the discriminatory benefit. Therefore the employer will be subject to a $100 per day, per participant excise tax or civil money penalty, which is capped at the lesser of $500,000 or 10 percent of the employer's health care expenses for the previous year. The IRS notice also comments that “the plan is subject to a civil action to compel it to provide nondiscriminatory benefits” to the individual discriminated against.  No penalties will be assessed against a plan if reasonable due diligence would not have discovered the noncompliance and/or the failure was due to a reasonable cause and was corrected within 30 days. 
Next Steps
Plans sponsors should begin to review the design elements of their existing coverage offerings to assess whether: 

1.    The plan is covered by the new IRS requirements; and

2.    If any changes need to be made in order not to run afoul of the new non-discrimination requirements for fully-insured health offerings. 

Interested parties should monitor future IRS bulletins that provide additional guidance on the matter, and plans sponsors should secure input from tax or benefit experts before making any changes. 

* * * * * * * * * *

In order for you to conveniently share this information with you, please view the fill able document, Non-Discrimination Provision Expansion.
Please visit http://www.amsiinsure/  to view past Legislative information on our blog. Or, you may visit irs.gov If you have any questions, please contact your accounting service for more information on how you might be affected by these changes. Thank you for taking the time to read through this important notification.

Sincerely,John A. Beyer, CLU

The Effects of ObamaCare

	Contact John Mauldin Print Version Volume 6 - Issue 46 November 08, 2010 The Effects of ObamaCare By Lisa Cummings What will be the effects of ObamaCare? My friend Lisa Cummings, an expert on employee benefits (she was one of the first employees at Dell and was a senior exec at Wal-Mart), has analyzed the bill; and from what she tells me it appears to be one big pile of unintended consequences and costs. It will be far cheaper for an employer to simply pay the $2,000 fine and pay for the employee to enroll in the government health exchange program, which of course puts more cost on the taxpayer. Behind the curtain of wonderful and laudable objectives is a mountain of regulations and costs. But that is what is coming. I asked Lisa to give me a written report on just the more important changes and costs, and that is your Outside the Box reading today. Lisa Cummings is an expert global benefits consultant with an emphasis on advising Fortune 500 companies of best practices regarding plan design and legal compliance. She is an ERISA attorney by training and has a rich experience with health and retirement plans in the US and around the world. For more information, you may contact her at lcummings@benefitsconnection.co. Many thanks, Lisa, for taking the time out of your busy schedule. Your glad to be back in his own bed analyst, John Mauldin, Editor Outside the Box The Effects of ObamaCare By Lisa Cummings It Does What? Have you ever seen a television commercial touting diet pills, weight loss in a bottle, and bought them, thinking, “The ad seems reasonable, with a nice actor I’ve seen,” and then get the bottle home and read the side effects? Although you were promised a return to the slim, beautiful you, the side effects on the bottle warn of “potential for heart attack, broken bones, upper respiratory infection, edema, loss of balance, and death.” Talk about the cure being worse than the condition! Health-care reform as signed into law is a prime example of the cure prescribed by Dr. Obama being worse than our current condition of rising health-care costs and uninsured Americans. We all know that health care in America is on course to change significantly with the passage of the Patient Protection and Affordable Care Act (“the Act”) on March 23, 2010. Most of you may think of this as “health-care reform,” though some refer to it as “ObamaCare.” You may have heard about what ObamaCare was intended to do, but have you heard about the unintended outcomes of this massive restructuring of US health care? As of the date of this writing, over 55% of Americans would like to have ObamaCare repealed,[1] and that’s based on what they know about it. Let’s also consider the challenges that aren’t commonly known. Intended Outcomes of Health Care Reform: Just What Dr. Obama Ordered Coverage for all with capped premiums First, we’ll begin with a recap of what the President and Congress intended to enact: ObamaCare’s premise is that all Americans should have health insurance and shouldn’t have to pay more than a set amount for their coverage. ObamaCare requires that an employee whose “household income” is less than “four times the Federal Poverty Level” (currently $73,240 for a family a four) pays no more 9.5% of his household income for employer-sponsored health insurance coverage. This is like car insurance being required by a state and then limiting the amount the driver has to pay for monthly premiums, basing the cost on an ability to pay. General provisions of ObamaCare, generally starting in 2014 You can’t be turned down for health insurance coverage. You can cover your children on your health plan up to age 26 (starts in 2011). If you can’t afford health insurance, you will receive assistance from the government to purchase it. You can purchase health insurance more easily. Your personal health records will be digitized, resulting in cost savings. On the surface, these items sound wholesome, kind of like motherhood and apple pie. However, some of the additional items required by ObamaCare include hundreds of requirements for individuals, for businesses, for insurance companies, for health care providers such as doctors and hospitals, and for government entities. To get a visual idea of the complexity surrounding the new health-care requirements, you can peruse the following chart prepared by the Joint Economic Congressional Committee, which outlines the bureaucratic Frankenstein that is being created. I’m printing the chart in a size that is too small to read here, just to give you the idea. You can download the chart itself by clicking here. Side Effects of Obamacare: Beware, the cure may be worse than the current condition. The Health Reform Act and accompanying Reconciliation Act encompass over 1000 pages. Since their passage in March, dozens of additional interim final regulations, guidelines, and memos have been written, and in addition direct conversations from the HHS Secretary have now been made into law. Here are some of the more audacious requirements of ObamaCare, along with the year they become effective: • Moves 18 million people onto Medicaid programs. Remainder of uninsured will go to state health exchanges (2014).[2] To put ObamaCare in context, keep in mind nearly 60% of Americans receive their health care from their employer. 19% of Americans have no health coverage. [3] Once ObamaCare is in force in 2014, the uninsured will be redistributed: a third will go to Medicaid, 28% will go to Government health exchanges, and the remaining 41% will continue to be uninsured. [4] • Adds new taxation on capital gains, including a new 3.8% tax on the sale of your home (2013) • Mandates auto-enrollment in long-term care at a cost of $123 per month for everyone (the CLASS Act), requiring an affirmative opt-out if you don’t wish to be covered (as soon as HHS can determine how to implement).[5] This section is so outrageous, Sen. Kent Conrad (D-ND), Senate Budget Committee chairman, called it “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.”[6] (Yes, Sen. Conrad voted for ObamaCare and the self-described Ponzi scheme.) • Adds a medical device tax of 2.9% on everything from CT scanners to surgical scissors, to be passed along to health-care consumers (2013)[7] • Enhances the Nanny State: restaurant chains will have to post caloric content next to prices on the menu, and nutritional information must be posted on the outside of all vending machines (2011).[8] • Triggers loss of insurance coverage by large numbers of lower-paid employees, starting in 2011 A large number of “mini-med” plans, typically limited-coverage plans for employer groups in the retail and fast-food industries, and providing child-only coverage, will not be able to meet federal regulations on the minimum annual dollar limit. The minimum annual limit for benefits covered by the health plan is $750,000 in 2011. HHS has so far granted waivers for more than 30 employers, including such diverse employers as McDonalds, Jack in the Box, the United Federation of Teachers Welfare Fund, and a New York teacher’s union, to allow coverage to continue for 2011.[9] What about the other 1,000,000 individuals who were previously covered under these plans? Does that mean they will no longer have coverage starting January 1, 2011? • Subjects college student medical plans to possible elimination since they will not meet the “Medical Loss Ratio” requirements recently approved by the National Association of Insurance Commissioners.[10] The Pork Included in ObamaCare The Cornhusker kickback: the federal government picks up Nebraska’s Medicaid expansion bill forever.[11] The Louisiana Purchase: Louisiana receives $300 million for increasing Medicare subsidies.[12] $100 million special funding for a hospital in Connecticut[13] Funding of asbestos clean-up in Montana[14] The Gator Aid, by which three counties in south Florida are exempted from Medicare Advantage cuts[15] Unintended Consequences of Health Care Reform “We have to pass the bill so that you can find out what is in it.” – House Speaker Nancy Pelosi, March 9, 2010 Well, now we know. Here are some of the outcomes of legislation that was passed without having been read: Employers may decide it is cheaper to drop health care plans altogether and instead pay the $2,000 penalty per employee. Large employers typically pay in excess of $9800 per employee for health plan coverage today.[16] After the new requirements for health-care reform are added to the already large costs, they may decide to split the cost savings with the employee and reinvest the difference in their businesses, whether in the US or in other countries where perhaps a higher return on investment can be achieved. Employers may decide to limit the number of full-time employees, favoring part-time employees instead. Employer penalties only apply to full-time employees working more than 30 hours a week. Would you try to move employees to less than 30 hours a week to save taxes? Remember, employers today provide 59% of all Americans with their health insurance. The Congressional Budget Office estimates that today over 150 million Americans have their health insurance with their private employer. If employers decide to get out of the health insurance game, then the majority of Americans will have to look to the government health exchanges to purchase their health insurance. When 2014 arrives, every employer with a health-care plan will need to make the same calculation: Determine the per-employee cost implications of providing a health-care plan and compare them to the benefit of dropping the plan, paying the penalty, and reimbursing the employee for his employee-mandate fee. The employer might also decide to share the cost savings with the employee to help reimburse the employee for his premium cost to purchase government-exchange health insurance. Aside from the hard-dollar cost savings, the employer will also need to analyze whether providing a health-care plan can help the employer attract and retain highly prized employees. The logical conclusion is that employers who hire positions in great demand will be more likely to keep employer health-care plans, while employers who hire less unique skills will more likely terminate their health-care plans, pay the penalties, and redeploy the savings where there is a higher return on investment. Healthy people will pay more for insurance coverage. Instead of individuals being able to choose the coverage they need, they will be required to purchase only government-approved benefit choices. Younger individuals will be required to subsidize older individuals, who will be required to have preventive-care screenings, with an expected increase of 17% in premiums, or up to $500.[17] Health-care cost curve bends in the wrong direction by increasing overall health spending by $222 billion between now and 2019. [18] Neglects Medicare funding, which is already due to become insolvent in 2016 Retirees in Medicare Advantage plans may lose their coverage due to decreased government funding. Starting in 2011, the government reimbursement will be frozen at 2010 levels. Health providers will be reimbursed less for Medicare patients, causing providers to reduce the number of Medicare patients they treat. This is an outcome of the reconciliation act that followed the passage of ObamaCare, migrating funding away from Medicare providers to pay for part of the ObamaCare provisions. Consolidation of health markets: from small community hospitals, to doctors, regional hospitals, and insurance companies[19]. The consolidation of health-care providers will lead to increased costs for hospitals and doctors, simply because there is a reduced supply of providers. If uninsured individuals choose to pay the tax instead of signing up for insurance through a government exchange, the government-exchange premiums will become so expensive, individuals won’t be able to afford to buy insurance. Just look at the outcome of the Massachusetts mandated health-care coverage for an idea of how this will turn out. Child-only policies will stop being issued due to the required annual benefit levels being increased along with the new requirements that at least 85% of all insurance premiums be used on health-care providers. This means that higher-cost child-only coverage plans will fail to meet the limits and must be discontinued. This will cause the children to lose their own cheap coverage and instead either have to move to their parents’ employer plans or access care through the government exchanges. Employer-sponsored retiree medical plans may be dropped due to repeal of the Medicare part D pharmacy subsidy. Although the subsidy isn’t cancelled until 2013, the SEC requires accounting recognition of any changes as soon as they are known. This provision is what triggered the earnings impact announcements by Caterpillar, Deere, and AT&T within a week of ObamaCare being signed into law. Over 43% of employers with retiree plans indicated they would likely eliminate retiree medical programs due to the additional requirements under ObamaCare.[20] Employers’ Decision to Keep or End Retiree Medical Plans It isn’t going to be easy or cheap to be ObamaCare-compliant. All of us will be affected in numerous ways by ObamaCare. Below is a listing of major groups that will be impacted. Overall Economy[21] Some 670,000 jobs could be eliminated due to the additional $760 billion in taxes, penalties, and fees on investors and businesses. The federal deficit will be increased up to an additional $115 billion over original projections.[22] By 2020, ObamaCare will: Increase the interest on the national debt by $23.1 billion per year Raise the national debt by more than $753 billion Increase annual budget deficits by an average of $75 billion.[23] Employers Short-term: Costs are increasing for employer-sponsored plans. Health-care premiums for 2011 are being increased by an average of 8.8%, and a 1-2% increase is due to the mandated 2011 changes of covering all dependents to age 26 and eliminating certain lifetime and annual limits.[24] Starting in 2014: Employers who provide health-care plans for their employees will be required to ensure that the level of health-care benefits they provide their employees meet new government standards or face fines and penalties equal to $2,000 per year for each full-time employee. Even then, if their employees would have to pay more than 9.5% of their adjusted gross income for the health plan, or if the employee chooses to purchase from a government exchange, the employer will still have to pay a $2,000 penalty.[25] Employers who provide health coverage will be required to provide an annual report to HHS that lists each individual eligible to enroll in “minimum essential coverage,” the length of waiting period, number of months that coverage was available, monthly premium for lowest-cost option, plan’s share of covered health-care expenses, number of full-time employees, number of months covered, and any other requirements that may be identified by HHS.[26] If an employer doesn’t provide a health-care plan for employees and has more than 50 full-time employees (who work more than 30 hours per week), the employer must pay a penalty equal to $2,000 per full-time employee per year. [27] Individuals Starting in 2014 you are required to have coverage, either from your employer or from a government-sponsored health-care exchange. If you don’t purchase it, the IRS will assess you with tax of $695 per year per family member (capped at three) or 2.5% of your income, whichever is greater.[28] Doctors[29] With the increase of covered patients, there will be a shortage of 150,000 doctors.[30] Doctors are already overworked. Patients will have to wait longer to can get an appointment to see the doctor. Starting in 2011, Medicare reimbursements will be reduced. Medicare already reimburses doctors at an amount equal to only 81% of private payments. Between 18 to 20 million new Medicaid patients will flow to doctors. Medicaid coverage pays doctors 56% of the private payment amounts. Federal funding will pay for parity to Medicare for 2013 and 2014, and then it is up to the states to figure out how to pay the Medicaid doctors. Doctors will face more federal agencies, boards, and commissions, including the Independent Payment Advisory Board in 2012, a nonprofit Outcomes Research Institute, and the Physician Quality Reporting Initiative. 59% of doctors think the quality of medicine will decline in the next five years and 79% are less optimistic about the future of medicine. 69% are thinking about dropping out of government health programs, 53% would consider opting out of treating insurance-covered patients, and 45% have considered leaving the profession altogether. [31] States[32] ObamaCare mandates the increase of Medicaid participation by 18-20 million more people, but provides states with limited support funding. States are required to establish exchanges by 2013, and if they decline to establish exchanges, the Secretary of HHS runs the exchanges. Here’s a question for you: if HHS runs a state’s exchange, for whom do the state insurance commissioners work, the people who elected them or the federal government? The states will first have to figure out how much money is required to pay for this – and guess what, it won’t be cheap. Texas’ Medicaid costs would increase by $4.5 Billion for 2014-2019 alone.[33] These new state mandates explain why over 21 states have filed suit in federal court to declare parts of ObamaCare unconstitutional, as infringing on the Tenth Amendment rights afforded to states.[34] [35] Retirees[36] Medicare Advantage plans, which cover nearly 25% of Medicare seniors, will be cut in half over the next ten years due to ObamaCare freezing payment to the plans. Some $416.5 billion in “savings” from Medicare (actually, cuts in Medicare payments to doctors and hospitals) is being shifted from shoring up Medicare funding to paying for ObamaCare.[37] The donut hole in Medicare Part D is being reduced with a $250 payment in 2010 and drug companies being required to provide a 50% discount on brand-name prescriptions filled in the hole. The Medicare program will be adding 77 million baby boomers starting in 2011. Finding a doctor will become even more difficult with the already existing doctor shortage and another 18-20 million individuals receiving Medicaid coverage in 2014. Medicare Part A providers – hospitals • will receive reduced funding. By 2020 15% are slated to become unprofitable, according to the Center for Medicare and Medicaid Services Actuary. Seniors will pay higher taxes as well. Taxpayers[38] Three major tax increases: • New 40% excise tax on health insurance plans, known as the “Cadillac Tax” if a health plan is valued in excess of $10,200 for employee-only coverage [Can someone show me where the hell I can get a policy for less than $10,200?? Seriously. – JM] and $27,500 for family coverage. 43% of all plans are expected to incur this tax by 2018, when it becomes effective.[39] • Increase in hospital insurance portion of payroll tax: Medicare tax will be increased from 1.45% to 2.35% for families making more than $250,000. The new rate will be 3.8%, effective in 2013. Note: the health insurance rate increase is not being used to fund Social Security and Medicare, but rather a separate entitlement.[40] • Payroll taxes on investment. A new 3.8% health insurance tax applies to investment income, including capital gains, dividends, rents, royalties, and yes, even the sale of your home.[41] Numerous additional taxes:[42] • Limit on itemized deductions for health care • Increased taxes on prescription drugs • Increased medical device taxes • Additional taxes on insurers [43] What’s Next? Regulatory interpretations are piling up, along with regulatory burdens. Since ObamaCare and the Reconciliation Act were signed into law in March, there have been no fewer than twelve sets of additional regulations, guidelines, or notices that have been issued to lend clarification and at the same time add additional regulatory requirements. ObamaCare establishes more than 159 boards, panels, and programs, all of which will add to bureaucratic red tape. Employers face immediate plan changes that must be implemented for the upcoming plan year. All plans (except retiree-only plans) have to allow children of covered employees to be added up to age 26. Additionally, the lifetime maximum benefit levels have to be eliminated. These costs alone will add 1-2% to 2011 health-care costs for employers.[44] Longer-term, employers will need to consider whether they will cancel health-care plans in 2014, when exchanges become effective. Also, employers will need to determine whether they will eliminate retiree medical coverage due to elimination of the pharmacy subsidy in 2013. [1] Rasmussen Poll, October 11, 2010 [2] Heritage Foundation, May 11, 2010,Webmemo #2895, Impact on Doctors [3] Employee Benefits Research Institute No. 347, Sources of Health Insurance and Characteristics of the Uninsured, September 2010. [4] http://www.heritage.org/research/projects/obamacare/obamacare-in-pictures [5] Section sec. 8002(a)(1) of P.L. 11-148; Letter from Douglas Elmendorf, director, Congressional Budget Office, to House speaker Nancy Pelosi, March 20, 2010. [6] Lori Montgomery, “Proposed Long-Term Insurance Program Raises Questions,” Washington Post, October 27, 2009. [7] Section 9009 of P.L. 111-148 [8] Section 4205(b) of P.L. 111-148 [9] http://www.hhs.gov/ociio/ regulations/patient/appapps.html. [10] NAIC.org, October 21, 2010, “Regulation for Medical Loss Ratio per Section 2718(b) [11] Section 10201(C)(3) of P.L. 111-148 [12] Section 2006 of P.L. 111-148 [13] Section 10502 of P.L. 111-148 [14] Section 10323 of P.L. 111-148 [15] Section 3201(c)(3)(B) of P.L. 111-148, as amended in P.L. 111-152 [16] Aon Hewitt, September 27, 2010 [17] Carla Johnson, “Health Premiums Could Rise 17 Percent for Young Adults,” Associated Press, March 29, 2010. [18] National Health Spending Projections: The Estimated Impact Of Reform Through 2019; Sisko et al. Health Affairs.2010; 29: 1933-1941 [19] Wall Street Journal, October 26, 2010, “Big Insurance, Big Medicine. [20] Towers Watson Flash Survey, http://towerswatson.com/health-care-reform [21] Heritage Foundation, September 22, 2010, Webmemo #3022, Impact on the Econ [22] Ibid. [23] HIS/Global Insights macroeconomic model, using HeritageFoundation.org assumptions [24] Aon Hewitt “Rate of Increase Rises Significantly as Companies Struggle to Keep up with Rapidly Evolving Health Care Landscape” September 27, 2010 [25] Section 1513(a) as amended by Section 10106 (e-g) of P.L. 111-148 and Section 1003 of P.L. 111-152 [26] Section 1514 of P.L. 111-148 [27] Section 1513(a) as amended by Section 10106 (e-g) of P.L. 111-148 and Section 1003 of P.L. 111-152 [28] Section 1501(b) as amended by Section 10106(b) of P.L. 111-148 and by Section 1002 of P.L. 111-152 [29] Heritage Foundation, May 11, 2010,Webmemo #2895, Impact on Doctors [30] Susan Sataline and Shirley Wang, “Medical Schools Can’t Keep Up,” Wall Street Journal, April 12, 2010. [31] Terry Jones, Investors Business Daily, September 15, 2010 [32] Heritage Foundation, May 3, 2010, #2408, Impact on States [33] Cato Institute, Michael Tanner, Bad Medicine, Page 8 and Table 1 [34] Heritage Foundation, June 21, 2010, #2424, Ongoing ObamaCare Concerns [35] http://www.heritage.org/research/projects/obamacare/obamacare-in-pictures [36] Heritage Foundation, May 20, 2010, #3022, Impact on Seniors [37] Letter from Douglas Elmendorf, Director, Congressional Budget Office, to House speaker Nancy Pelosi, March 20, 2010. [38] Heritage Foundation, April 14, 2010, #2402, Impact on Taxpayers [39] “Cadillac Health Plan Tax to Penalize Majority of Employers by 2018,” Towers Watson, press release, May 19, 2010. [40] Section 9015, of P.L. 111-148 [41] Section 1411, of P.L. 111-152 [42] Cato Institute, Michael Tanner, Bad Medicine, Page 21 [43] Ibid. [44] Aon Hewitt, September 27, 2010 John F. 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