Category Archives: Blog


Countdown To Obamacare Special Report

admin-ajaxIn 100 days, the Affordable Care Act, otherwise known as Obamacare, will become law the land. Some key elements of the the bill will not take effect on January 1, 2014, and, if some Republican members of congress have their way, the law will not be funded and essentially be voided.

However, as Small Business owners know, expecting only one unlikely outcome is no way to run a business. Thus, with barely three months left until the law is in effect, Newtek, the Small Business Authority,
a health insurance broker for small businesses, recognizes there is an urgency for both employers and employees to understand what to expect and what to do.

Beginning Monday, we will be posting five blogs here to help you understand the key elements of the bill that are going to take effect.

The first blog, “Understanding the Exchanges” will cover the newest, and perhaps most critical element of the Affordable Care Act — the online marketplace created by the government to shop for health insurance plan.

The second blog, “ Understanding the Exchange Plans” explains the five different coverage options available on the Exchange.

The third blog, “ Understanding The Private Market Options” addresses the changes many health care plans will be making as ObamaCare takes effect.

The fourth blog, “ The Five Things Small Businesses Need To Know” will identify what is required of employers and employees.

The fifth blog, “ The Three Q’s of ObamaCare: Quality, Quantity, and Quitting” will cover the impact ObamaCare may have on you and your family’s healthcare.

With the end of the year fast approaching, businesses need to anticipate both their responsibilities and their employees needs in the coming year. These blogs should illuminate many of the concerns and eliminate some of the anxiety about the bill.

It’s Simple – SMBs Need (and Appreciate) Agents and Brokers

iStock_000018435702XSmallAccording to the J.D. Power 2013 U.S. Small Business Commercial Insurance Study, small businesses rely on independent agents and brokers to act as risk advisors with a deep understanding of their businesses. It is important to these business to have such entities rank insurers on the breadth and quality of their policy offerings – something they are not qualified or experienced enough to do on their own.

Based on responses from almost 4,000 small business insurance decision makers at companies under 50 employees, the inaugural study examined overall customer satisfaction, insurance shopping, and purchase behavior within the demographic.

Overall satisfaction with respect to the insurance-buying experience was based on five disparate factors including interaction, policy offerings, price, billing and payment, and claims. Here are the findings in order of importance:

  • On a 1,000-point scale, small-business customer satisfaction came in at 777. This number jumped to 835 when an agent or broker who understood their business provided risk guidance.
  • Policy offerings, not price, are more of a determinate in how small businesses select an insurer. (While price remains a factor, quality takes a front seat.)
  • Buyers who stay with their insurer for more than 2 years base their decision on the level of service.
  • Buyers were most satisfied with their agent interaction when communication was in person (854), compared with 819 when communication was via email.
  • Customer satisfaction was highest among small businesses with 11 to 50 employees, with higher scores influenced by agents and brokers spending more time in person with these key accounts. In fact, figures show that the higher the employee count, the more important the product selection becomes. Nearly two-thirds (62 percent) of such small businesses, indicate that policy offerings are a leading reason for retaining business with their insurer. This compares favorably to the 50 percent of businesses with fewer than five employees where cost seems to be a bit more of a factor.

Individual Mandate Clarifications For Small Business

Health-care-reform5The IRS has finally taken one more step to clarify what will constitute the Individual Mandate provision of the Affordable Care Act. The mandate, which requires all Americans to obtain health insurance, had gone mostly undefined until now. As we approach the 30 day mark to the opening of the “online marketplace” also known as exchanges and the 100 day mark of Obamacare Implementation, American consumers and small businesses now have a clearer picture as to what will be required on January 1, 2014.

  1. First, the penalty has been “remarketed” as a shared responsibility payment. This still requires those that do not qualify for an exemption or tax subsidies based on income, to obtain health insurance that meets minimum essential coverage.
  2. “Minimum essential coverage” is broadens the definition of employer sponsored plans to include multiemployer plans, single employer collectively bargained plans, plans sponsored by third parties such as professional employer organizations, temporary staffing agency, etc.
  3. One of the big coverages that were not identified in the ruling by the IRS is how some funding arrangements will be considered. Standalone Health Reimbursement Accounts, which are a common funding option to allow employees to purchase their own health insurance in the open market, have not yet been addressed.
  4. Penalty exemptions have also been clarified to in an effort to make it easier for lower income individuals to understand how the subsidies work, and what is needed to claim them. Some changes include:
    • A taxpayer is not required to file a federal income tax return solely to claim the exemption, and may apply for exemption via the Exchange/Marketplace
    • Individuals who have a gap in minimum essential coverage of less than three consecutive months in a calendar year, with the continuous period beginning no earlier than January 1, 2014
  5. How will the penalties be paid? – Penalties are to be paid to the IRS through the filing of tax returns starting in 2015. A penalty is the greater of either a specified dollar amount or percentage of income. The annual penalties for 2014 through 2016 are noted below. Beginning in 2017, penalties will increase based on the cost of living.
    • 2014: Greater of $95 per adult and $47.50 per child under age 18, maximum of $285 per family, or 1% of income over the tax-filing threshold
    • 2015: Greater of $325 per adult and $162.50 per child under age 18, maximum of $975 per family, or 2% over the tax-filing threshold
    • 2016: Greater of $695 per adult and $347.50 per child under age 18, maximum of $2,085 per family, or 2.5% over the tax-filing threshold

Most Recent Obamacare Implementation Delay, Also Most Pronounced

Medical-money-300x225No matter which side of the aisle you most closely connect, the assumption by the vast majority of both Democrats and Republicans must have included the recognition that overhauling a system (health care insurance) that was so engrained into the fabric of our country … would indubitably require a complicated and lengthy transition – one that would never be referred to as “seamless.”

And so it seems  the Healthcare Reform Act is suffering yet another setback. Unfortunately, this one extends beyond the realm of a mere temporal delay. Rather, it has the potential to bring extraordinary fiscal strain and pain to many individual consumers. Again, I am sure this is something that both parties would have preferred to avoid.

Just last week, it was revealed that a legal/policy implementation (that would otherwise have protected consumers from exorbitant out of pocket costs) has been delayed until 2015.

These out-of-pocket cost limits (said to include both deductibles and co-payments) were originally conceived so as not to exceed $6,350 for an individual or $12,700 for a family. However, federal officials have allowed some insurers a one-year grace period before the policy is implemented. What that means is, for 2014, they will be able to set higher limits, or even remove them altogether, for some costs. Probably not the way lawmakers had conceived of this from the get go. But, again, no one expected “seamless.”

For the record, the Labor Department’s website alluded to the grace period as far back as February, albeit it was offered with substantial industry and legal jargon. Suffice it to say, the grace period generally went unnoticed for the most part – until now. Again, this is a megalithic reform so continued hiccups are to be expected. In fact, we should be stunned if this were to be the last.

So, what does this hiccup actually mean to consumers?

Well, myriad group health plans will be able to divide the limits set above. So, a consumer could very realistically pay the $6,350 for doctor, hospital visits, and services and then conceivably still have to shell out another $6,350 for prescriptions administered through a pharmacy benefit manager. And, there are some that may be obligated to pay even more than the aforementioned totals as it seem that some group healthcare plans are beholden to zero limits on their patients’ out-of-pocket drug costs for next year. In short, if they do not have one now, they will not impose one for 2014.

While the President specifically set an immovable overall limit when it was first voted in, it seems the insurers are unable to comply quite yet. Why? They literally are incapable of leveraging their current technology to operate the new parameters quickly enough. Most providers go through one company to administer their major medical and another for drug benefits – each with separate out-of-pocket limits. Not surprisingly, these disparate companies have completely different computer systems and as a result, an egregious inability to communicate.

Again, this is not an indictment on the motivations of policy makers, it is just the natural ebb and flow of indoctrinating new policy. Hopefully the next problem area is more of the “delay, please exercise patience” variety, than it resembles the most recent “hitting the consumer in the pocket” example. One thing is for certain, it’s going to take just a bit more time before we get an idea of what this entire implementation will actually feel like when complete.

SHOP Delayed (and What That Means to Individuals and SMBs)

business-health-care-delayTo be clear, SHOP, or the Small Business Health Care Options Program, is a piece of the Health Reform Act (in addition to HIX which are the Health Insurance Exchanges for individuals) that has been delayed. Specifically, SHOP is an insurance exchange that is intended to provide small businesses a range of choices.

So what does the postponing SHOP do in the meantime? Well, it seems that businesses that fit into this category now have but one viable plan, contrary to what was promised, at least for the time being.

Why the delay?

Neil Trauntwein, an employee-benefits lawyer for the National Retail Federation, says the delays have at least allowed business leaders to return to Capitol Hill to discuss such issues as whether the cutoff for the employer mandate should be less than 50 full-time employees and if a 30-hour week is the best definition of a full-time worker.

It is important to note that this one-year delay will impact the 33 states that are using federally facilitated or partnership SHOP Exchanges. There are 17 states that are implementing state-based SHOP Exchanges that have the option to choose between limiting a small group employer to one benefit plan choice for its employees or could allow the employees of a small group to choose among several Qualified Health Plans in 2014. For list of which states have state SHOP Exchanges, the information is posted on the federal government’s health care reform website. Certainly the endgame is uncertain when it comes to SHOP, however, we still must prepare for the rest of Healthcare Reform.

In the meantime, there are other aspects of the Healthcare Reform Act that remain on schedule and are seemingly ramping up. Currently, state and federal officials are racing to set up new online health insurance exchanges, where lower-to-moderate income families that lack health insurance will be able to sign up for federally subsidized coverage beginning on October 1. The poor will also be able to sign up for Medicaid coverage in 23 states that have opted to expand the program.

Additionally, most large employers already offer health insurance and CBO (Congressional Budget Office) said few are expected to drop coverage because of the delay. Nevertheless, it seems the SHOP delay will have its effects by NOT being available.

For example, the change will result in a $10 billion reduction in penalty payments that some employers would have made in 2015 for failing to provide coverage next year, estimates the CBO. They also predict it means another $3 billion in added costs for exchange subsidies.

Why?

Basically, it is because about half of the 1 million workers who would have gained employer-sponsored coverage next year will now obtain insurance through the exchanges or via public programs including Medicaid.

It should be pointed out that an increase in in taxable compensation (resultant of fewer people enrolling in employment-based coverage) would offset those factors by about a third.

Is An Exchange Option Right For You?

Apple in HandOne of the most pressing questions that individuals and small business owners have regarding the exchanges (the new online market places being set up by the state and federal governments to help consumers purchase health insurance), is whether these options will be better than their current private market options.

As we approach the expected opening of the exchanges on October 1st, below are 5 points that will help you determine if the state exchanges are a better option:

  1. Cost – If you were quoted with no medical rate up, and have seen consistent pricing, you will most likely receive a better deal in terms of coverage by staying in the private market. Unless you have been denied coverage previously and do not have any exclusion on your policy, there is a good chance that your pricing will be in line with the exchange pricing. Once we factor in community rating that will take place on 1/1/2014, you would likely see a major price increase, by going to the exchange.
  1. Structure of Exchange Plans – The exchange plans do offer policies with varying minimum essential health benefits, but the strength of the networks are still unknown. If a plan is offered at a lower rate, and only offers local hospital network coverage, then it may not suit your needs. This is especially if you travel for work or on vacation, or live in a more rural area that already has limited health care providers.
  1. Application – The preliminary application for the exchange enrollment is 16 pages. The exchanges will provide assistance in completing the applications however the process is looking to be more complicated than the carriers are currently offering. Most carriers have a quick 10 minute online application, where the exchange plans cross reference carrier systems and the IRS, to determine eligible subsidies.
  1. Operations – There is still the uncertainty that the exchanges will be opening on time. We are currently about 60 days out from the exchanges opening, and many of them have not started advertising or generating awareness of their opening. Pair this with the system and servicing issues in requiring insureds to complete a 16 page application, and not having any experience in operating these programs, operationally there are many obstacles in getting these exchanges up and running successfully
  1. Subsidies – One of the greatest issues with the subsidies through the exchanges is how the subsidies will be managed by the IRS. The government is still confirming how they are going to check the individual’s income to make sure that there is no fraud, and ensure that the appropriate credits are given to the correct people.

ObamaCare Statistics That You Oughta Know

obamacare-logoWell, we all know by now that Health Care Reform and its real world iteration (often referred to as ObamaCare) is on its way. And even if you live in a cave, you have probably heard endless debates amongst the pundits both for and against its indoctrination.

Specifically, Health Care Reform directly references the comprehensive health care reform law enacted in March 2010. The law was enacted in two parts: The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010, and was amended by the Health Care and Education Reconciliation Act on March 30, 2010. The name “Affordable Care Act” is used to refer to the final, amended version of the law … often times referred to as both “Health Care Reform” and “ObamaCare.”

Now that its implementation is foregone conclusion, what do “the people” really think about what is on the horizon? Sure, some of the statistics trickling in are not surprising, but a collection of data from independent, non-partisan studies is painting an interesting picture. Here’s what we collectively think about where our health care is headed:

How we prefer to consume insurance information:

  • 85 percent of all people (56 percent of employers) still say they rely heavily on media to explain health-care reform details.
  • More than half of larger employers (more than 500 employees) are turning to brokers and consultants for information.

Satisfation/Expectation:

  • 62 percent of Americans without health insurance think ObamaCare will be good for America.
  • In contrast, 42 percent of Americans with health insurance think so.

Gen Y vs. Baby Boomers:

  • They Gen Yers (65 percent of them) believe ObamaCare will have a positive impact.
  • Baby boomers feel differently with only 34 percent believing healthcare reform will do them any good.
  • Inasmuch as Gen Y is concerned, only 44 percent say they are currently satisfied with their medical coverage.
  • Yet, 63 percent of Boomers are currently satisfied with their health coverage.

Affects of current health issues among us:

  • If one suspects his or her health to be “fair or poor,” 64 percent of those who fall into that category look favorably on ObamaCare.
  • Conversely, those with “very good or excellent” health only have a 28 percent approval rating for ObamaCare expectations.

World of Employers:

  • 41 percent of employers report that “they still aren’t sure” how they will handle new policy implementation.
  • 36 percent of employers are concerned about non-medical benefits and if those will also be affected by the new legislation.
  • Only 44 percent feel they won’t have to make any drastic changes.
  • For now, only 5 percent of employers believe they will have to reduce employee benefits.

At Newtek Insurance we have kept our finger on the pulse of ObamaCare and the mandated changes therewith. If you have any questions or concerns, contact us today at 1-88-284-3722 to speak with an expert. We’re here to help.

Managing the Healthcare Reform Act

moneystethoscope-1-e1364393455404Under the PPAHCA, small businesses with 50 or more employees are mandated to buy health insurance for their employees or pay a fine, or tax according to Justice Roberts. (Update: the ACA has been amended to extend the deadline for the employers of 50+ requirement until 2015).

In addition, many small businesses will be eligible for tax credits under the PPAHCA, as well as taking under consideration managing full-time and part-time staff to meet or beat the 50 employee threshold. Will small business owners hire advisers and consultants to get them through this knothole? Will they try to read and understand the 2000+ page piece of legislation themselves? Healthcare expenditures are approaching 20% of GDP, thus spiraling healthcare costs is a significant concern for small business owners.

4 Biz Options to Manage Increased Obamacare Costs

5.31healthcarecostsRising healthcare costs, Obamacare taxes, and the individual mandates are all major factors that are affecting the price and coverage ofhealthcare plans for businesses today. All small business owners need to take an objective look at the options that are available to their business, and how we can effectively contain costs while making sure your employeebenefits package remains competitive. Below are 4 important options to consider in order to manage the increases costs of Obamacare:

1)      Address a long term solution and institute Wellness Programs. As an employer, you want to choose a health plan option that will be affordable to employees but will also provide a game plan for the business in the coming years. By looking at future budgets, plan options, growth in workforce and employee education, you can establish a plan that will ensure you are reform compliant, within budget and on the same page as your employees as to what kind of benefits they can expect. Additionally, you may want to consider instituting Wellness Programs designed to encourage employees to live healthier lifestyles. By providing cash or gift incentives, Wellness Programs help motivate employees to engage in and sustain healthy behavior.

2)      Manage employee headcount. Under the PPAHCA, small businesses with 50 or more employees are mandated to buy health insurance for their employees or pay a fine, or tax, according to Justice Roberts. This may force some employers to get creative by possibly switching many of their full-time employees into part-time roles or splitting their companies into two separate businesses in order to control headcount.

3)      Re-examine benefits to employees. Review the benefits currently offered to your employees and decide which are absolutely necessary to maintain. While removing certain benefits will manage costs (which is essential to the viability of a company health plan), it may bring down employee morale and may make your company appear less competitive with other employers in the same field. Unless your benefit package is out of line with competitors, your goal is ensure that your benefits package remains as comparable as possible. If you eliminate too many benefits you may risk losing some of your most valuable staff and revenue producers to local competition.

4)      Share the increased cost of the health plan with your employees. While it is important to make sure that there is a vested interested in benefits by the employees, it should be part of a larger plan. You want to make sure that employees not only share in the sacrifice, but also in any benefits as well. If you only look to pass along the full cost of the plan increase to the employees, you will risk driving them out of the plan (which can cause eligibility issues), or to look for work at an employer that offers more competitive benefits. A better option would be pass only part of the increased cost to the employee, while having the company share in the expense.

At Newtek – “The Small Business Authority” we stand ready to help you review what options work best for your business. Please feel free to contact us with any questions at 855-2THESBA or tweet us directly @the_sba or@SloaneBarry.

 

Fully Enacted Healthcare Reform – What to Expect

Health care reform5As the full enactment of Obamacare approaches, there are many factors that business owners know to look out for.

  • Do I need to provide health insurance to my employees?
  • Should I go to an exchange?
  • How will the mandate impact my business and profitability?
  • How much are my health insurance premiums going to go up?

These are all questions that many business owners are starting to look. Below are some points that you may not have thought of that should go into your business planning.

We all know that health insurance premiums are expected to go up, but do you know how much? Small groups (2-99 employees) can expect to see price increases between 20% and 50% upon the full enactment of reform. When factoring in medical trend, taxes and fees, carrier and product changes and the introduction of community rating, your premiums will jump significantly. As a small business owner, asking your existing broker for a quote is not going to solve this problem as it will require a new method behind providing employees with health insurance. The objective of a health insurance plan should not be to carry you over to the next year with as little pain as possible, but to address your company’s healthcare expenses for the long term. You need a road map that will allow you to offer affordable coverage to employees while keeping costs in line.

Some employers are looking to drop plans in order to remain profitable. Unfortunately, this is not the answer either and can cause more pain than gain. With the Supreme Court upholding the individual mandate, all Americans will be required to obtain health insurance or pay a penalty. The cost of obtaining coverage for individuals is expected to jump 100% – 200% with an average increase of 116%. This is going to push many employees who either have individual plans or would ordinarily look at obtaining individual plans to go to their employer to obtain coverage. By not obtaining small group coverage, you risk losing your talent to other companies who are willing to absorb the cost. This can result in the loss of business and inevitably impact the bottom line more then not offering coverage at all.

The federal funding for health care reform is already facing challenges that will impact all small business owners. In the deal that was reached in the fiscal cliff debate, an agreement was made to cut the remaining $1.9 billion dollars that was set to fund Consumer Oriented Operated Plans (CO-OP’s) through the Affordable Care Act. $1.9 billion was already spent to fund the creation of CO-OP’s. These will remain in place; however no more federal money will be used to create any additional CO-OP’s at this time. This is another example of where the Obamacare bill has been modified in order to maintain its functionality. This will lead to higher costs in term of premium and taxes for small business owners and individuals seeking health insurance in the short term, to cover the high costs of implementing the systems and covering up all other budget shortfalls that would have ordinarily paid for these costs.

The Small Business Authority is here to answer any related questions you may have. Please contact us either by commenting below, tweeting us directly@The_SBA or sending an email to info@thesba.com.

 



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