Replace Cobra Blog

Taxing the rich for group health benefits

William Steffen — Wed, 14 Sep 2011 15:44:25 +0000

While I don’t like a hike in taxes, I agree this should be done. Tax deductible group plan benefits are part of the problem and contributing to higher premium prices. Why shop or question the price when a 33% discount on any number is still a perceived good price. Right now, the tax code distorts consumer behavior. If implemented, it may cause more people to shop for cheaperr individual private insurance which is non tax deductible for employees. But, when you start to equalize the tax code, consumers start to take over the market and demand lower pricing through competition. For those who lost their job and are being offered Cobra, it forces their hand to shop around. Many people utilize an agent to assist in the process at ReplaceCobra.com

Obama Would Cut Health Insurance Tax Exemption For High Earners.

The Hill (9/14, Pecquet) reports in its “Healthwatch” blog, “A little-noticed provision in President Obama’s new jobs bill seeks to tax healthcare benefits for the wealthy, a controversial idea that went nowhere during the healthcare reform debate.” While a Democratic Congress refused “to endorse limiting itemized deductions to 28 percent for individuals making more than $200,000 a year,” the Administration is proposing the measure again, along with “an exclusion for employer-sponsored health insurance.”

Cobra Subsidy Created Uncertainty

William Steffen — Tue, 13 Sep 2011 14:54:03 +0000

Uncertainty is the word of the day. Employers were uncertain if the Cobra subsidy would be extended, and employees were wondering also. Employers are relieved they no longer have to administer this subsidy, and employees are dealing with reality that they are on their own to solve their problems. At Replace Cobra , we provide solutions to those facing large Cobra premiums. One item that most people do not realize, is that Cobra can be owned individually, and is no longer tied to the past employee. For those people that have health issues, keeping Cobra for that solo person, and placing the family on a private insurance plan will save the average family $500/mo compared to Cobra premium. Most states have a robust private market. Contact a local agent to get educated on solutions in the market.

As of Sept. 1, Americans who were laid off between September 2008 and May 2010 are no longer eligible for the COBRA subsidy, which was passed under the American Recovery and Reinvestment Act.

The COBRA subsidy covered 65 percent of COBRA premiums for 15 months of the program’s 18-month eligibility, meaning unemployed participants are now responsbile for all costs during the last three months.

But some employers were surprised to learn the subsidy was coming to an end so soon. Given all of the political posturing and the poor economic environment, those employers could have been under the impression that the subsidy was available for the full 18 months.

“The government had extended the subsidy and actually made some of them retroactive if they hadn’t acted in time, so that may have caused a perception that because of the high unemployment and the continued economic uncertainty that Congress would have extended the subsidies again,” says Steve Wojcik, vice president of public policy for National Business Group on Health.

The effects for unemployed workers

Now that the unemployed participants are footing the entire COBRA bill, many are wondering if they can afford to keep their coverage. Unemployment already provides a tough situation for millions of Americans, but adding those additional premium costs just makes the situation that much harder.

“I’m sure it’s going to be a tough situation,” Wojcik says. “The long-term unemployed are growing in numbers, and if they still have COBRA eligibility as their subsidies run out, they have to make that tough decision about whether they want to pay the full amount now, minus the subsidies, or give up their coverage, be uninsured and risk having some kind of big health claims without any insurance.”

Cobra Subsidy – Winners and Losers

William Steffen — Tue, 13 Sep 2011 14:38:52 +0000

It seems to me that the well intended Cobra Subsidy was just another federal game of picking winners and losers. The Cobra Subsidy was available for much of the recession to those that lost their jobs. But where you worked, the size of the company, and how benefits were purchased determined if you were eligible. The winners: employees of larger companies. The Losers: Everyone else including the self employed, those companies with under 20 employees with no Cobra available at all, employees of companies that went bankrupt, and those who bought private insurance with an employer stipend. Finally, this unfair game has ended.

Cobra Subsidy Expires – Alternatives to Consider

William Steffen — Sun, 04 Sep 2011 21:22:18 +0000

Starting Sept 1st, 2011; thousands of Americans will begin to lose their subsidy to assist in paying 65% of their Cobra health insurance costs. As an agent, I never found a situation where a client should have turned down the subsidy. $350/mo for a family of four on a cadillace plan was impossible to beat on the open private health insurance market. Now that the cobra subsidy has expired, many are on their own to get coverage and keep the costs low. Most states have a robust marketplace, and with the assistance of an agent, you have a better chance to avoid mistakes, give insight into underwriting differences, rate ups, exclusion riders, and of course….price and benefits comparison. One way to get in touch with an agent in your state is by visiting ReplaceCobra.com

Read entire article here: McClatchy – Federal Subsidy for Cobra health covearge to expire

or here at Kaiser Health News

Health Savings Accounts-2012 Indexed Amounts

William Steffen — Fri, 27 May 2011 22:39:34 +0000

Medical inflation continues to rise, so the IRS has rolled out 2012 Inflation adjustments for HSA Health Savings Account. Maximum allowable 2012 contributions for HSA’s are raised to $3100 (individual), and $6250 for family. Accordingly, out of pocket maximums for HSA qualified health plans have also risen. Visit the U.S. Department of Treasury for 2011 contribution information.

Health Savings Accounts – 2012 Indexed Amounts (U.S. Department of the Treasury)
5/16/2011
Part III
Administrative, Procedural, and Miscellaneous
26 CFR 601.602: Tax forms and instructions.
(Also: Part 1, §§ 1, 223.)
Rev. Proc. 2011-32

SECTION 1. PURPOSE
This revenue procedure provides the 2012 inflation adjusted amounts for Health Savings Accounts (HSAs) as determined under § 223 of the Internal Revenue Code.

SECTION 2. 2012 INFLATION ADJUSTED ITEMS
Annual contribution limitation. For calendar year 2012, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,100. For calendar year 2012, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $6,250.

High deductible health plan. For calendar year 2012, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,200 (no change from calendar year 2011) for self-only coverage or $2,400 (no change from calendar year 2011) for family coverage, and the annual out-of pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,050 for self-only coverage or $12,100 for family coverage.

SECTION 3. EFFECTIVE DATE
This revenue procedure is effective for calendar year 2012.

SECTION 4. DRAFTING INFORMATION
The principal author of this revenue procedure is Bill Ruane of the Office of
Associate Chief Counsel (Income Tax & Accounting). For further information regarding § 223 and HSAs, contact Leslie Paul at (202) 622-6080 (not a toll free call). For further information regarding the calculation of the inflation adjustments in this revenue procedure, contact Mr. Ruane at (202) 622-4920 (not a toll free call).

Child Only Policies Available in California and Kentucky

William Steffen — Fri, 24 Dec 2010 18:40:02 +0000

State legislators in California and Kentucky are requiring health insurance companies to offer “child only” policies during an open enrollment period at the beginning of 2011. Maximum prices are 200% of a standard rated policy in California.

Excerpt from Los Angeles Times article:

Major Health Insurers In California To Resume Offering Individual Policies For Children- California’s largest health insurers, fearing they’ll lose new customers in the state’s lucrative individual insurance market, have canceled controversial decisions last fall to stop selling policies for children” (Helfand, 12/23). Click here for full article.

Be sure to contact a local agent through our website at the top right of this screen, to assist you in determining your health insurance options for your children.

Free Preventative Care

William Steffen — Fri, 24 Dec 2010 18:17:17 +0000

One of the benefits of buying a new “Reform Compliant” plan in the open private marketplace, is most, if not all plans come with FREE preventative care and no deductible. Until the state government exchanges are up and running in 2014, all private market health insurance plans are mandated as of Sept 23rd, 2010 to offer these new preventative care upgrades. Plans purchased before that date, are “grandfathered plans”, and will not receive these new benefits on most plans.

The extensive list of services covered can be found on the www.healthcare.gov website and specifically at this link:

http://www.healthcare.gov/law/about/provisions/services/lists.html

Tip 1: Be sure the service is “coded” as preventative care, or you may be liable for the bills. Stay in network!

Tip 2: Don’t assume that your procedure will be covered free of charge. Call your insurance company claims department or agent before your appointment.

Tip 3: Things change, polyps found during a colonoscopy is no longer preventative care in some cases. Ask questions before going through an expensive $1000+ procedure.

Tip 4: Use an agent when applying for a plan to ensure you’re buying a “reform-ready” plan. Agents are state licensed, and knowledgeable about the changes taking place locally.

Tip 5: Nothing is free in this world; the premiums now reflect the mandated preventative care benefits.

Cobra Subsidy Ending?

William Steffen — Wed, 03 Nov 2010 00:12:56 +0000

Since late last summer, thousands across america have begun to lose their Cobra subsidy which was provided to them for 15 months through various government passed legislation over the past couple years. Most individuals and families have never shopped for their own health insurance policy in their entire lives because they always got it through their employer who did the choosing.

Now, you can do it on your own, or save time and money by seeking a professional. I, of course, recommend that you contact a local independent health insurance agent, who brokers all insurance companies, and who basically does the shopping for you. This local advice and consultation comes for free, as the agent only gets paid a commission if they get you approved for a plan that you want, at the price you need.

Health care reform has made shopping for health insurance even more difficult, and creates even more need for a health agent. Also, until 2014 when guaranteed issue starts (pre-existing conditions won’t matter), underwriting will still be the major determinant of an agents’ success in getting you approved.

If you cannot get approved, you will have to stay on the Cobra plan for the full 18 months, and then apply for a “guaranteed issue”/”HIPAA Portability Conversion” plan offered in most states, and at increased rates. Otherwise, depending on the health conditions, you may want to consider a short term health insurance plan. Once declined somewhere, you are ineligible for a short term plan and you’ve just reduced one of your cheaper options. A good agent will warn you of a possible decline, and provide the alternatives.

Health Reform – Important Update

William Steffen — Wed, 06 Oct 2010 16:27:27 +0000

Here is my update on Health Care Reform: All of us will be impacted differently based on income, age, family make-up, health conditions and the date you purchased the health insurance policy. Some VERY IMPORTANT information is contained below, so please take time to review, as it means up to $1000 of savings for self-employed clients. I’ll first give you the broad picture, and then drill down to some specifics on what happens now and in the future. Please also remember, this business is changing on a daily and weekly basis right now as everyone interprets the legislation differently. The information below is what I know as of today, some of which may change or may have been incorrectly communicated to me. Any changes of your policy will be directly communicated to you by the insurance company.

First, (VIDEO) if you did not have a chance to read the 2000 pages of law and want a quick 9 minute education on the “big picture” of health reform, take the time to view this video. While it over-simplifies the onerous details, the creators made a clever and humorous video that can be viewed at this link: http://source.kff.org/the-animation.aspx

Second, (TAX BREAK) if you are self-employed and you paid for health insurance premiums in 2010, then I have some great news for you. In the recently signed Small Business Jobs and Credit Act of 2010 (H.R. 5297), there is a provision that will allow self-employed business owners to “take a ONE YEAR tax deduction for health costs in determining your payroll tax in 2010”. This means that a tax break equal to your health premiums in 2010 multiplied by 15.3% will be available at filing. To see if you are eligible, please check out this link and check with your tax professional (CPA):

http://newsmanager.commpartners.com/nahuw/downloads/What%20You%20Need%20To%20Know%20About%20the%20One-Year%20Tax%20Deduction%20On%20Health%20Costs%20for%20the%20Self-Employed.doc

Next, what happens to my insurance that I own now? The answer depends on when you bought the policy, and if you’ve made changes to the policy since March 23^rd, 2010. If you bought your policy BEFORE 3/23/10 and have made NO changes, then your policy is “grandfathered” and will NOT receive all of the new mandated health coverage benefits. But, you also won’t be subjected to the higher costs associated with those mandates. (Ex: free preventative care – turns out it’s not free). The only benefits a “grandfathered” policy will receive, at the time of your annual renewal (typically Jan 1^st), are:

No lifetime limits on the dollar value of “essential” benefits (not yet defined)
Insurers may only rescind your policy in cases of fraud
Adult children can stay on your policy until age 26

If you purchased a policy or made changes to your policy AFTER the law was signed on March 23, 2010 than your plan is NOT “grandfathered”. Your policy will be upgraded with all the new mandates and a new price on your annual policy renewal date. These are the mandated benefits:

All of the 3 items above + no annual dollar value limits on benefits
FREE unlimited preventative care (mammograms, immunizations, etc.)
Plans may no longer impose pre-existing condition exclusions on children under age 19. (more on this below)

If you buy a NEW plan after Sept 23^rd, 2010; the plan will or should include all of the above. I say “should”, because all companies are still interpreting the law differently, and some plans still on the market do not come with the above mandates…..yet. For example, when insurers were told they have to cover all sick children, the insurance companies reacted byno longer offering “child only” policies. While this will only affect a small portion of people, it reduces choice and flexibility for that family. Insurers will only cover children if at least one parent/adult is on the application to offset the risk. If your child currently has a medical rider/exclusion, or been declined in the past; you now have a possible solution to your problem. Some of my clients want all of these new benefits and protections, and are willing to pay more money for it, or save money depending on your situation. (Call / email me if you need a consultation.)

H.S.A. Health Savings Account owners: be aware of two important changes starting January 1, 2011. The first is that you will no longer be able to spend your savings account money tax free on any OTC over-the-counter medications. So, if you buy OTC allergy meds or other, then you may want to stock up on them using your H.S.A. account before the end of the year. Only medications prescribed by a doctor will be allowed. Also, the penalty for non-medical/dental/vision expenditures goes from 10% up to 20%. Learn more at HSA Consumer.com

What does the future look like? In 2014, insurers will no longer be able to decline adults and tax credits will be available to those in lower income brackets in the new state health exchanges that will be created due to the law. If you want to see how much you will be paying in 2014, visit this Kaiser tax subsidy calculator and run your personal numbers at this link:http://healthreform.kff.org/SubsidyCalculator.aspx Everyone will be paying approximately 10% of their income on health insurance premiums, with or without tax credits. I’d be interested in what you find, will you be paying more or less in 2014?

More information: can be found at www.healthcare.gov including the PCIP federal plan for people with pre-existing conditionswho have been declined by insurance in the past, and without insurance for the past 6 months. While its’ expensive, it might be the only option for some people.

Update: PCIP rates were lowered by 40% in some states, a doctor’s letter is now an accepted form to prove that you’re uninsurable, and agents can now assist you with the plan and get paid $100 for the referral.

My role in your future? While most members in Congress want to eliminate the agent from the equation, I just don’t see how that can happen when they are creating a more complicated system. Advice from professionals will be in higher demand, but they seem to differ in opinion. It will be tough for private health insurance ONLY agents (like myself) to survive the reform, and insurance companies (due to mandated government profit controls) are already reducing our income by up to 50% (ie. commissions). I hope to survive by positioning myself as “the” resource for your health insurance advice as reform takes shape and make it up with volume. With that said, I’ll need to be flexible with my business model, and have done the following to get ready:

Our current website at Replace Cobra.com has been re-launched with a new look and feel. (Any feedback would be appreciated). The website now allows consumers to find a qualified agent like me in the other 48 states I’m not licensed. AZ and FL residents will still come to me when they visit the site.
As mentioned above, the reform law mandates that each state create a health exchange. Private health exchanges are available at State Health Exchanges.com . For my current clients, Florida Health Exchange.com and Arizona Health Exchange.com . They are currently live, and we hope to re-launch with a similar structure to our current website. I hope to be “the” privately run health exchange in each state as an alternative to the state government version.

Stay tuned to the blog for more updates