The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Health Care Reform Matters Clients Need to Know

Posted by Alan on August 11, 2010


As discussed in my previous post, while some brokers spend their time venting about health care reform and others expend their energy ignoring it, prepared brokers are busy talking with their clients (and the clients of those other brokers) about decisions, challenges, and opportunities that need to be addressed now. that post used as an example the need to discuss the Grandfathered plan provisions with both individual and group employers. There are other pressing issues to address, too. Here’s a few more:

Dependent Children to Age 26: Most people are aware that starting September 23, 2010 all health plans will need to cover dependent children up to age 26 (and that most carriers voluntarily began offering this coverage weeks ago). But as anyone whose ever actually read an underwriting guide, it’s not quite that simple. Which is why reviewing the FAQ posted by HHS concerning coverage for “young adults” is a worthwhile expenditure of time. There’s a few interesting nuances you’ll learn. For example, the coverage is available to the member’s child regardless of that child’s marital status, financial dependence on the parents, residency, or school enrollment status.  About the only circumstances which could result in excluding the young adult dependent is where a Grandfathered plan is involved and if the child has access to other employer-based coverage – and even this exemption expires for plan years beginning on or after January 1, 2014. Significantly, dependent coverage need only be extended to the child, not to the child’s dependents. So if the 24 year old son of a covered employee is married the parent’s carrier needs only cover the son, not the daughter-in-law.

Small Business Tax Credit: Help for some small businesses in paying health insurance premiums were among the first elements of the Patient Protection and Affordable Care Act to take effect. To qualify, firms must have no more than 25 full-time equivalents (which is a way of counting employees that takes into account part-time employees). As the IRS FAQ on the small business health care tax credit explains, the full benefit of the credit is available only to firms with up to 10 full-time equivalents. It’s also worth noting that the tax credit is calculated against the actual premiums paid for the small business’ coverage or the average small group premiums in the employer’s state, whichever is less. The IRS published a table indicating the average premium by state to be used for calculating this cap in 2010.

This table is interesting for answering other questions, too. For example, which state’s small businesses pay the highest average premiums? Alaska with an employee-only rate of $6,204 and Massachusetts with a family rate of $14,138 (which is enough to make one look forward to the 2012 candidate debates should both former Governor’s Mitch Romney and Sarah Palin both run for president).

Early Retiree Reinsurance Program: Much attention has been paid to the impact of the PPACA on individual and small group health insurance, but the legislation’s impact on larger groups shouldn’t be ignored. For example, the legislation sets aside $5 billion to help employers lower the cost of covering early retirees. Providing coverage for any retirees is rare in all but the largest groups, but for those enterprises that qualify this could mean a welcome reduction in health care costs. The reimbursements can be used to reduce the sponsor’s health benefit premiums or health benefit costs, the participants premium contributions or out-of-pocket costs, or a combination of the two. Eligibility and details surrounding how the early retiree reinsurance program works is available from the Department of Health and Human Services. Most importantly, for employers who qualify for the program, the reimbursements are available for claims dating back to June 1, 2010.

There are other provisions of the health care reform legislation taking effect in 2010. We’ll discuss them in future posts. But one takeaway should already be clear: there’s a lot to talk about with your clients. And the time to be talking with them is now.

8 Responses to “Health Care Reform Matters Clients Need to Know”

  1. Allan:

    I read your blog posts avidly and have shared them with my peers here. Indeed, it is precisely as you state and it is your focus on the practical issues that draws me to read and re-read your well-thought and well-written articles.

    Thank you for your voice, for your delivery and for all you have done to guide us through this time of change. It is most appreciated.

    Onward & Upward.

  2. Ann H. said

    Welcome back, Alan. We missed you. I respect your sound, measured approach to all of these issues. It’s an anchor of logic amongst all of the highly opinionated writers from the radical margins of both sides. I’ve been in the health insurance business for 30 years, specializing in small group. Surviving in this business takes a willingness to ride the roller coaster with excellence and with patience. Thanks for helping us navigate all the twists and turns, yet stay firmly seated. Ann H., Phoenix AZ

    • Scott said

      Thank you Ann, Being a new agent this time can be stressful. It is very reassuring hearing an experienced agents express their thoughts.

  3. Alan;

    On the small business tax credit, Steve Chapkin and I wrote about a way to access the tax credit using a high deductible major medical health plan with a limited medical benefits plan effectively serving as way of insuring the high deductible.

    You can read about the calculations here: http://www.franchise-info.ca/supply_chain/2010/08/Small-business-tax-credits.html

    There are limitations on this, which we realize. But, in your opinion, have we missed anything? Overstated the case? Thanks.

  4. Scott said

    Hi, I know this is not on point with what we are talking about, but thought it was important.

    I am a broker in California. I went to a Blue Shield luncheon yesterday to hear state marketing executives speak. They said that in December they will announce how much broker compensation will be reduced starting Januray but noone will say how much just yet. They also said that we will all be getting a letter in December to let us knoww how much the reductions will be. This will be on existing business and any business going forward.

    Aetna has also sent letters, one that I received, stating that they will also be reducing compensation and that the facts will be forth coming in the next few months.

    I think that this will greatly affect e health and anyone getting leads via the internet, because aquistion costs will remain the same, with less compensation to offset it.

    I also think, as Alan has told us more then once, that we will need to balance our book with other products so we are not too heavily in just one market.

    Good Luck everyone!

  5. Alan, you said:

    As discussed in my previous post, while some brokers spend their time venting about health care reform and others expend their energy ignoring it, prepared brokers are busy talking with their clients (and the clients of those other brokers) about decisions, challenges, and opportunities that need to be addressed now. that post used as an example the need to discuss the Grandfathered plan provisions with both individual and group employers. There are other pressing issues to address, too.

    All that you say after these words is excellent, as usual. That said, I take umbrage with your comments about those agents who are still “kvetching.”

    Many of these agents have worked their butts off for years, decades, and they are being hurt. Many are too old or too far along in years to be able to make up for the losses they will experience, and haven’t had the good fortune to have made and invested enough to be able to look at these issues more philosophically and roll with the punches, that others, such as ourselves, have had.

    I agree that taking a positive attitude and working for the future is more productive, but denying those who aren’t as likely to be able to recover, or who will be working far beyond normal retirement age in order to “make up” for the damage done, and which will be done by those parts of HCR yet to take effect,” an opportunity to “vent” their watching their world crumble, some as others stand by with glee at their misfortune (as evidenced by earlier posts on earlier threads), “strikes me as being insensitive”.
    Just my 2 cents.

    • Alan said

      Spencer, you raise a valid point. There are folks who will have little, if any, time to recover from what’s happening in our industry.. And I don’t mean to diminish or belittle their pain. Their problems are very real. So is the anger they (and others) rightly feel. I’m suggesting that venting that anger may feel good, but will not actually solve the problem. Nor is this blog the best place for their venting. There are plenty of other blogs that revel in political debate (I used to run one) and others where providing an arena for kvetching (now there’s an image) is the whole point. This isn’t one of those, however. My goal is to focus attention on the practical issues brokers, consumers and others need to be thinking about and addressing. My hope is that readers here will find ideas, insights and approaches that help them deal with what’s coming. And I’ll leave it to other sites to provide an outlet for the very real anger and dismay many feel concerning reform.

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