Whats new in a Disability Income Policy

1.  Critical Illness - Return of Premiums
If a policy owner with a Critical Illness contract in force (Assurity or Mutual of Omaha) - the company will refund 100% of the premium paid by the client - less any benefits paid. 

2. COLA - it isn't the same for every carrier.
Some carriers are simple, some are compound. Some are a flat rate, some are geared to the CPI. For young clients - it is good to know what you are receiving.

3. Prudential LTC - they actually have 3 different kinds of products under one policy chassis.
.Reimbursement, partial cash and full cash. Let us get you runs on all 3 for and we will let you know the why's and wherefore's of the premiums differences.

4. Guaranteed Renewable vs Non-Cancelable. Do you know the difference?
Guaranteed Renewable says that as long as you pay the 'billed' premium - there is coverage. The company does have the ability to increase premiums. However, they have to prove to their state commissioner that they had an unprecedented amount of claims that the didn't expect. Plus they have to do so on a whole class of clients. Non-Cancelable - says that the company cannot increase premiums.

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)

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

Employees and Employers Reveal High Satisfaction and Improved Cost Control with HSAs, Surveys Report

Most employers and account holders utilizing Health Savings Accounts (HSAs) and HSA-qualified health plans are satisfied with their coverage, spend less, and are more engaged in managing health benefits, separate surveys released today indicate.

The tax-favored health care savings accounts are designed to help individuals pay for current qualified health care expenses and save for future medical and retiree health care expenses.
"With the vigorous debate over health care reform, and more specifically health insurance reform, the survey results indicate that employers and account holders more effectively control costs and are satisfied with their coverage by utilizing HSAs," said Tom Hricik, national director, AMS Groups or AMS Personal Plans.

"The survey results also indicate that HSAs are being used by account holders as an important vehicle to save for future medical expenses."

Health Savings Accounts provide a convenient way to pay for today's health care expenses and to save and invest for the future.