Winthrop & Gray Company Blog

Did you know?

2012-01-27T07:54:00.000-08:00

Did you know Winthrop & Gray Company, sells Auto, Home and Commercial insurance to individuals and businesses? In fact we sell all forms of property and casualty insurance.

Our purpose is to provide the very best protection that covers all of your needs.

Business and commercial insurance includes contractor liability, workers comp, commercial auto, business interruption, garage liability, general liability, disability, rental, restaurants and convenience stores.

We provide personal insurance that includes homeowners, automobiles, boats, flood and wind storm, life and disability.

For your vehicles we have auto, SUV, pick-ups, vans, boats, jet skis, RV's and motorcycles.

This includes liability, PIP/PD full coverage, collision, comprehensive and discounts for safe drivers.

We strive to develop a professional and personal relationship that best meets the needs of yourself, your family, and/or your business.

Winthrop & Gray Company can provide you with the insurance that you need for peace of mind if the unexpected happens, 800-258-1598.

Call us today for more information. Our friendly staff will be waiting to assist you. Always a free quote. Call today at 800-258-1598. We will handle all of your insurance needs.

Payroll Deduction IRAs Are a No-Cost Benefit

2011-12-20T09:18:00.000-08:00

If you've considered setting up a retirement plan for your employees and decided it was too costly, or too much trouble, there is an alternative. No matter how big or small your business is, your employees can participate in a Payroll Deduction IRA, at virtually no cost to you.

Here's how a Payroll Deduction IRA works:

Each employee who wants to participate establishes a traditional or a Roth IRA with his or her own bank, and authorizes you, the employer, to make payroll deductions. Your only responsibility is to forward the money withheld to the financial institution.

Sound easy? It is. In fact, it is the simplest retirement plan available for businesses to institute. There are no plan documents to adopt and no reports to file.

There is little difference between the Payroll Deduction IRA and an IRA that an employee might establish and contribute to on his own. The real benefit is for staff members who need to save for retirement but find it hard to set aside the money for regular contributions on their own.

Employees are responsible for establishing their own IRAs with their own financial institutions.

Only the employee contributes to the account through payroll deduction.

Employers make no contributions and have no filing requirements.

The employer receives no tax deductions.

Participant loans are not permitted.

Assets may not be used as collateral.

Withdrawals are subject to income tax and a 10 percent penalty if the participant is under age 59 1/2.

Eventually, your business may decide to establish a retirement plan that includes employer contributions and discontinue the Payroll Deduction IRA. If that day comes, Winthrop & Gray Company can help you make that switch.

The IRS Announces Tax Relief for Misclassified Workers

2011-12-12T07:45:00.000-08:00

On September 21, 2011, The IRS announced a new voluntary compliance program that will allow employers to reclassify workers on a prospective basis with reduced penalties and back payroll taxes. This program, the Voluntary Classification Settlement Program (VCSP), was designed to limit fines for employers who had previously classified workers as independent contractors, rather than employees.

The Problem

There are many reasons that employees are misclassified as independent contractors. These include:
The worker is being hired on an infrequent or trial basis
The worker is being hired for a one time occurrence
The worker is being paid a flat fee
The worker chooses to be treated as an independent contractor
The employer believes it is too expensive to treat the worker as an employee

Unfortunately, the above excuses do not justify misclassifying workers. Correcting the misclassification is very costly, and can cause employers to continue on an incorrect path, rather than reclassifying workers.

The Solution

The IRS's new program will allow an employer to properly classify a worker as an employee for future tax periods for a very small payment. The VCSP is offered to tax-exempt organizations, private employers, and government entities. To be qualified for the program, an applicant must:
Consistently have treated the workers in the past as   nonemployees;

Have filed all 1099s for all independent contractors for the   previous three years; and

Not currently be under audit by the IRS, the Department of   Labor, or a state agency concerning the classification of the workers under   consideration.
According to IRS Commissioner Doug Shulman, "This settlement program provides certainty and relief to employers in an important area. This is part of a wider effort to help taxpayers and businesses to help give them a fresh start with their tax obligations."

How to Apply

Employers apply by filing Form 8952, Application for Voluntary Classification Settlement Program. The new form must be completed at least 60 days before the employer want to begin treating the workers as employees. The two-page form asks for basic information about the employer and a description of the workers. In addition, a calculation on the form assesses the amount due on the reclassification. This number is derived from the wages received during the most recent tax year and is the equivalent of roughly 1.3% of the wages paid, a huge savings over the previous options before this program. After the form is completed, the IRS will first verify the taxpayer's eligibility. If eligible, the IRS will contact the taxpayer or its representative to complete the process. The IRS retains the right to reject any taxpayer from the VCSP, including taxpayers that otherwise meet the basic eligibility criteria.

A taxpayer participating in the VCSP agrees to treat the workers as employees for all future tax periods. In exchange, the taxpayer will pay approximately 1.3% of the wages paid to the reclassified workers for the past year. No interest or penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years. Participating employers will, for the first three years under the program, be subject to a special six-year statute of limitations, rather than the usual three years that generally applies to payroll taxes.

To read more about the Voluntary Classification Settlement Program click here.

Re-enforcement

The Department of Labor, the IRS, and several state governments have launched a joint enforcement effort to identify and crack down on employers misclassifying employees as independent contractors. By collaborating and sharing information of suspected misclassification, the joint enforcement effort increases the risk of substantial fines.
In the past, a state agency would penalize the employer for misclassifying employees. Under the joint enforcement effort, the state will share the findings with the IRS and Labor Department. These agencies can then go after the employer for fines and penalties for federal wage violations.
The following states have already signed onto the joint enforcement effort: Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah, and Washington. New York and Illinois have also indicated they will join the effort.

Questions Answered on the Smoker Surcharge

2011-11-11T11:02:00.000-08:00

Question:

My client wants to encourage its employees to quit smoking. For 2012, he wants to charge smokers a greater premium for health coverage. Is it possible to charge smokers a greater premium without violating the requirements of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA")?

Answer:

Yes. HIPAA generally prohibits a plan from discriminating among similarly situated individuals based on their health status. This means, among other things, that plans usually cannot charge individuals different premiums or impose different costs (i.e., through deductibles or co-pays) based on the presence or absence of a health factor. However, HIPAA also affirmatively recognizes that the nondiscrimination provisions were not meant to prevent a group health plan or an insurer from establishing premium discounts, surcharges or reduced co-payments or deductibles in return for "adherence to programs of health promotion and disease prevention," as provided under Code §9802(b)(2); ERISA §702(b)(2); PHSA §2705(b)(2). Thus, certain programs of health promotion or disease prevention (referred to as "wellness programs") are an exception to HIPAA's general nondiscrimination requirement.

In order to penalize smokers, any surcharge must be provided under a standard-based wellness program. Standard-based wellness programs that condition eligibility for a reward upon a participant's ability to meet a standard related to a health factor are permissible only if they meet the specific requirements set forth in 71 Fed. Reg. 75014 (Dec. 13, 2006).

Standard-based wellness programs must satisfy each of the following five requirements:

· The reward or penalty must be no more than 20% of the cost of coverage (30% starting in 2014);

· The program must be designed to promote health or prevent disease;

· The program must give individuals an opportunity to qualify for the reward at least once a year;

· The reward must be available to all similarly situated individuals; and

· The plan must disclose that alternative standards (or waivers) are available.

For a full explanation of each of the requirements, please review Field Assistance Bulletin No. 2008-02. A link to this bulletin is provided by clicking here

News in the Health Care Reform Law

2011-10-28T11:30:00.000-07:00

The Obama administration and challengers of the Affordable Care Act (ACA) have accelerated their filings to the U.S. Supreme Court and are submitting preliminary arguments ahead of formal deadlines, making it even more likely the justices will take up the case this term. Twenty-six states and the National Federation of Independent Business are among those who have filed lawsuits claiming the health care reform law is unconstitutional, chiefly because of the individual mandate to buy insurance.

With federal court decisions on the constitutionality of the law split, the Supreme Court is expected to decide the issue. It is possible, however, that the Supreme Court could "punt" or put off a decision for years if it determines that the Anti-Injunction Act, which says that Americans have to pay a tax before it can be challenged in court, applies to the health law.

The Court could decide in just a matter of weeks whether to add the case to the agenda for the current term, which ends in June 2012. In court papers filed last week, the administration is asking the Court to limit its review of the health care overhaul and not consider two of the issues raised by the states -- expansion of Medicaid and penalties for failing to offer adequate insurance. While the Justice Department wants the high court to uphold the constitutionality of the health care law, the states and NFIB want the court to strike down the entire law, not just the individual mandate.

New health care exchange called: MI Health Marketplace

2011-10-18T10:19:00.001-07:00

MICHIGAN: Legislation has been introduced to set up a health care exchange called the MI Health Marketplace. It is estimated that as many as 520,000 individuals who are uninsured or who come from other plans would come onto the MI Health Marketplace in its initial year of operation, and another 500,000 would be Medicaid eligible. Participants could total more than 1 million participants in the first year. The exchange, which would be established as a nonprofit, will serve individuals and small businesses. The nonprofit would be governed by a board, to be appointed by the Governor, and have the ability to appoint an executive director. Federal funds will pay for the operation of the exchange through 2014, and the bill would require insurers to be assessed moving forward. No budget has been spelled out, leaving an open question as to how much the exchange will cost. The Snyder administration expects to pass an exchange bill by the end of November. Many in our industry are working with the sponsors of the bill on amendments.

It is our opinion that health insurance companies, will provide the required medical plans within the exchange, (Gold, Bronze and Platinum) yet for those who qualify provide another set of plans outside the exchange in a free market setting, allowing for lower premiums and more competitive product selection. Much of the same is already happening in Massachusetts and Utah where the federal “health care reform law” was passed and modeled after. Currently in Michigan, if you can not qualify for a medically underwritten medical plan, your only choice would be to purchase health care insurance at an increased rate, from a non-profit, such as Blue Cross and Blue Shield of Michigan or apply for Medicaid. For those of you reading this, what changed with the passage of the new federal health care reform law?

In other news Federal:

Week of October 10, 2011

Long-awaited recommendations concerning "essential health benefits" under the Affordable Care Act (ACA) were released last week (see below). The Institute of Medicine (IOM) recommendations will be used by the Department of Health and Human Services (HHS) to help guide the process of determining what should be included in an essential health benefits package starting in 2014. America's Health Insurance Plans (AHIP) released a statement on the recommendations and the need to strike a balance between cost of coverage and comprehensive coverage.

In other news, a special edition of Health Affairs was released last week with a number of articles that shed more light on the problem of racial and ethnic disparities in health care. Among the findings are that health plans have made considerable progress in the collection of data on race and ethnicity to enable efforts to reduce disparities. Aetna was an early adopter of data collection efforts and made the special Health Affairs edition possible with support through the Aetna Foundation.

IOM's highly anticipated report on the development of the “essential health benefits” package was released last week. The report comes in response to a request made last November by Health and Human Services (HHS). HHS requested that the IOM convene a study committee to advise the Secretary on the criteria and methodology for determining the essential health benefits package. Importantly, the 297-page report doesn’t actually say what the essential health benefits should be. It just recommends the methodology HHS should use to determine the package. The two big take-aways from the IOM recommendations: benefits should be based on the “typical” small employer plan, and states should have some flexibility to determine what is essential. The report further states that only medically necessary services for individuals should be included as essential. And, in defining the essential health benefits, HHS should first set a cost target before filling in benefits to meet that goal. The IOM has recommended that HHS should have the initial benefit package by May 1, 2012, and it should be as specific as possible.

The U.S. Supreme Court opened its new term last week with a case concerning whether individual providers and beneficiaries have the right to legally challenge the adequacy of Medicaid payments in California. The case, Douglas v. Independent Living Center of Southern California, involves providers and patients who claim California cut Medicaid reimbursement rates so low in 2008 and 2009 that they violated federal requirements that payments be sufficient to avoid disrupting patient access to care. Many of the questions from the justices focused on the HHS process for enforcing Medicaid requirements in the states. HHS issued a rule earlier this year that, for the first time, requires Medicaid reimbursements be “sufficient to enlist enough providers so that care and services are available.” That rule was issued, in part, to try to dissuade the Supreme Court from taking up the Douglas case.

Your comments and suggestions are welcome. Contact Winthrop & Gray Company at 800-258-1598 or email us at www.winthrop@winthropgray.com

Payroll and Compensation, Your Time or Their Time?

2011-10-14T11:47:00.000-07:00

The time that employers must pay for isn't always clear. To help make sense of the confusion, here are answers to some frequently asked questions about when companies have to pay employees based on Labor

What States Require

Most states have labor regulations similar or the same as federal labor regulations. Click here to see what your state labor department requires.

The Supreme Court Weighs In

The Supreme Court took up the issue of compensable time in a case involving employees of meat production and poultry plants who were required to put on protective gear and walk to the production floor at the start of each day. At the end of the day, they had to walk back to the locker room and take off the gear.

The issue before the Court was whether the time walking to and from the production floor should be paid time. The Court held the time to actually "don" and "doff" the gear was compensable, under the Fair Labor Standards Act.

The employees asserted that their workday began once they put on the gear. The employers maintained that the walking time was a commute or a break.

The Justices applied the "continuous workday" principle, which states that compensable time begins with the first principal activity of the day and ends with the last principal activity.

Because wearing the equipment was mandatory, the court ruled that the first and last principal activities were donning and doffing the gear. Time in between was work time that had to be paid for.

However, the court ruled against the employees on another issue: Sometimes employees would have to wait until protective gear was available. Applying the same "continuous workday" principle, the court ruled that because "wait time occurred before the first principal activity, the employer wasn't obliged to pay for that time. (IBP, Inc., vs. Gabriel Alvarez, et al, No. 03-1238, Nov. 8, 2005)

Department regulations:

Do We Have to Pay Employees On Call?

Yes, your company is required to pay employees if you require them to remain on your premises while they wait for an assignment (for example, firefighters waiting for an emergency call). If this is the case, they are considered to be working and must be paid, even if they are doing other things, such as playing cards.

No, you don't have to pay employees if you allow them to go home and they are free to leave messages saying where they can be reached. In most cases like these, the employees are not considered to be working.

Yes, you must pay employees if you allow them to leave but restrict their activities, (such as requiring them to remain close to the workplace or not drink alcohol while on call).

Do We Have to Pay for Travel Time?

No, you do not have to pay employees for the time they spend commuting back and forth from home.

Yes, you have to pay for travel time if you have maintenance employees who use their own cars every day to travel to your branch offices in neighboring cities. You pay for time between locations.

Do We Have to Pay for Meal Time and Rest Breaks?

Yes, you do have to pay if the employee continues working during lunch or rest breaks. For example, if your receptionist spends her lunchtime at her desk, answering the phone as usual and has not been relieved of her duties, you do have to pay her for the time. What if she works during lunch breaks against your instructions? It's up to you to enforce the rules.

State laws regulate break periods, including the minimum time required for meals and rest breaks and whether the time must be paid. But even states that don't require paid breaks do require employers to pay employees if job duties are performed during long breaks, such as lunch or rest periods during long shifts.

Do We have to Pay for Sleep Time?

Yes, you must pay for sleep time if employees sleep less than five hours or are on duty for less than 24 hours. They are considered to be working for those hours, even if they are allowed to sleep or engage in other personal activities during non-busy times.

No, you don't have to pay if your employees work 24 hours or more and you have an agreement that their work hours will exclude bona fide regularly scheduled sleep periods for not more than eight hours - as long as you provide sleeping facilities and they can generally sleep uninterrupted.

Will the Supreme Court take up health reform in its next term?

2011-09-30T11:49:00.000-07:00

It is generally accepted that the issue of the constitutionality of the health reform law and the individual mandate will be decided by the U.S. Supreme Court. The only real question has been when that will be.

Now it looks as if it will be during the Court's next term, which begins next week. That means oral arguments by March, and a decision by June – during the 2012 presidential campaign.

On Wednesday, the Justice Department petitioned the Court to hear what is probably the key case concerning the health reform law: the case filed in Florida by 26 state attorneys general and the National Federation of Independent Business (NFIB). A federal judge in Florida ruled in January that the individual mandate was unconstitutional and struck down the whole law. In August, a three-judge panel from the Eleventh Circuit Court of Appeals in Atlanta agreed 2-1 that the mandate was unconstitutional, but did not agree that meant the entire reform law should be struck down.

After losing in the Eleventh Circuit, the Obama administration had two choices on how to proceed: go back to the Eleventh Circuit and ask for an "en banc" (entire court) hearing, or head directly to the Supreme Court. Because of the makeup of the appeals court, a ruling by all the judges probably wouldn't have differed from the ruling of the panel of three, so the administration probably would have lost again and had to appeal to the Supreme Court anyway. But it was widely believed that the Justice Department might go through the process anyway, to slow down this high-profile case's journey and make it more difficult for the Supreme Court to rule before the 2012 election. An after-election ruling would probably be better for the Obama administration than a ruling next summer, since a win would energize Republican opponents, and a loss would invalidate what is commonly seen as the President's signature achievement.

In a statement, the Justice Department said, "The department has consistently and successfully defended this law in several courts of appeals, and only the Eleventh Circuit Court of Appeals has ruled it unconstitutional….Throughout history, there have been similar challenges to other landmark legislation such as the Social Security Act, the Civil Rights Act and the Voting Rights Act, and all those challenges failed. We believe the challenges to the Affordable Care Act…will also ultimately fail and that the Supreme Court will uphold the law."

It was a busy day at the Supreme Court. Earlier, the NFIB had filed its own appeal of a portion of the Eleventh Circuit's ruling. The NFIB's petition says the Court should strike down the whole reform law because the individual mandate cannot be separated from the rest of the law. "Until this court decides the extent to which the ACA survives, the entire nation will remain mired in doubt, which imposes an enormous drag on the economy," the NFIB petition argues. "Individuals, employers and states will lack a firm understanding of their rights and duties when planning their affairs. Providers of health insurance will have no idea what rules will govern their industry. Government officials will not know what regulatory measures need to be developed."

A little later, the 26 states also filed a petition. "Time is of the essence," wrote former Solicitor General Paul Clement, who is representing the 26 states. "The grave constitutional questions surrounding the ACA and its novel exercise of federal power will not subside until this court resolves them."

Meanwhile, last week, another challenge to the reform law was heard by a panel of judges of the Court of Appeals for the District of Columbia Circuit. It is unclear when a decision will come in that case.

So far one appeals court (Cincinnati) has said the individual mandate is constitutional, one (Atlanta) has said it is unconstitutional, and a third (Richmond) dismissed a case saying that the penalty for not having insurance is a tax, and tax provisions cannot be challenged until the tax is actually paid (which won't be until 2014).

The national agenda

The deficit-cutting work of the super committee and the President's proposals for cutting the deficit are absorbing a lot of the energy in Washington. Still, two other important health-related issues are also on the agenda this fall. They include:

The "doc fix"—The latest patch for the broken Sustainable Growth Rate formula expires at the end of the year. Unless Congress acts, the fees for doctors treating Medicare enrollees will decrease by 29.5 percent. Almost no one believes cutting physician fees to that extent is a good idea, but the problem is that repeal or even a long-term patch would cost about $300 billion. Proposals floated to fund the "doc fix" include elimination of the quality bonus payment demonstration for Medicare Advantage plans, which was enacted as part of the health reform law to offset overall payment reductions.

The question of who will run the Centers for Medicare and Medicaid Services (CMS) – The recess appointment of CMS Administrator Don Berwick also expires at the end of the year, and Senate Republicans have said they will block his permanent appointment. Will the Obama administration find some kind of work-around? Or will Berwick be replaced?

Meanwhile, here's a high-level look at the early stages of the deficit-cutting work.

The super committee at work

The Joint Select Committee on Deficit Reduction – or, as it's more commonly called, the super committee – has now had several closed-door and several public meetings. No one is revealing much of anything – for example, after one closed-door meeting last week, the panel's co-chairs, Sen. Patty Murray, D-Wash., and Rep. Jeb Hensarling, R-Tex., said only that the 12-member group was making progress.

"We had a very productive conversation today," Murray said. "Clearly, we all understand the tremendous time challenge in front of us and the tremendous challenge on the part of our country today for us to come to an agreement. We had a great discussion today to begin to frame that."

Hensarling said, "Every day that the committee meets, I believe there is progress."

Still, their job seemed to be made harder when the President and House Speaker John Boehner (R-Ohio) made conflicting demands. In a speech last week, Boehner said that tax increases should not be a part of the deal. Obama, however, promised to veto any deal that includes entitlement cuts but no new revenue from high-income Americans.

The President's deficit-reduction proposals

Last week, President Obama announced his proposals for cutting the deficit. They include collecting $1.5 trillion in additional revenue and saving $1 trillion by scaling back military operations in Iraq and Afghanistan. In addition, here are some of his notable proposed health care savings:

Cuts of $248 billion in Medicare growth in the next decade, and $72 billion in Medicaid growth

Starting in 2017, new beneficiaries would pay higher deductibles before Medicare coverage of doctors' services and other outpatient care kicks in ($25 more in 2017, 2019 and 2021).

Higher-income beneficiaries would pay higher premiums for Medicare Parts B and D, and the income threshold would be frozen so more people would have to pay the surcharge. (About 5 percent of people with Medicare now pay the higher premiums. The proportion would grow to 25 percent.)

Starting in 2017, new enrollees would pay co-payments for home health care that is exempt from co-payments now.

"Medigap" supplemental insurance premiums would increase.

Drug manufacturers would have to give Medicare additional discounts for prescription drugs bought by low-income beneficiaries.

Starting in 2015, the ability of states to use Medicaid provider taxes to increase federal matching funds would be phased down.

The formula for calculating Medicare payments to the states would be revised.

Starting in 2013, Medicare payments to hospitals for bad debts would be reduced. and so would payments to teaching hospitals.

The Independent Payment Advisory Board, whose powers have not yet gone into effect, would be strengthened.

In general, the response to the President's proposals has not been positive from either the Democratic or Republican side. The executive director of the progressive group Families USA said the plan "shifts the burden to states and ultimately onto the shoulders of seniors, people with disabilities and low-income families who depend on the program as their lifeline." A senior vice president of the American Hospital Association said the proposals were "disappointing and aren't helpful in terms of moving forward." Sen. Pat Toomey, R-Penn. and a member of the super committee, said, "With the deadline looming, we do not have time to waste on political games and pushing big tax increase that will only make our economy weaker."

Jacob Lew, director of the White House Office of Management and Budget, was one of the few who publicly defended the proposals, saying, "If you look at the details of what's in the plan that the President is sending to Congress, there is a lot of pain, and it's spread – it's spread broadly and, we think, fairly."

Challenge: Duals

The issue of cutting the health care costs of dual eligibles – that is, people who qualify for both Medicare and Medicaid benefits – is getting a lot of attention right now. But for years, members of Congress and health policy experts have struggled to deal with the interplay of the two government programs, as well as attempts to reduce spending and ensure quality of care. Sen. Ron Wyden, D-Ore., highlighted this history during a Senate Finance Committee hearing on the subject last week. "We have been treading water on this issue literally for decades, when I had a full head of hair and rugged good looks, and I was a director of the Gray Panthers," he said, recalling discussions 30 years ago.

The pressure to cut the deficit and health care costs has renewed interest in the issue. Dual eligibles are some of the states' most expensive, chronically ill patients. They account for 16 percent of all Medicare beneficiaries, but 27 percent of the spending. They account for 15 percent of all Medicaid beneficiaries, but almost 40 percent of Medicaid spending.

At the hearing, the only witness was Melanie Bella, the director of the new Medicare-Medicaid Coordination Office. She pointed to coordinated care arrangements as a key element in controlling costs and promoting better care for dual eligibles. She said that of the 9 million duals, only 100,000 are currently in coordinated care programs (through either a Medicaid managed care arrangement or Medicare Advantage-type arrangement). Her office's goal is to get one million into coordinated care in 2012, then build on that progress.

To that end, states have until Oct. 1 to submit letters of intent for demonstration projects on aligning their Medicare and Medicaid payment systems. Fifteen states have already received grants of up to $1 million to test their own care-coordination programs, which vary in the way they integrate payments and contract with different types of private health plans.

Meanwhile, a new report commissioned by the industry group America's Health Insurance Plans and written by Kenneth Thorpe, professor of health policy at Emory University, has found that as much as $125 billion could be saved over the next decade by enrolling dual eligibles in team-based coordinated care programs. Here are some more of the report's findings:

"Over half of all dual eligibles are under treatment for five or more chronic conditions."

"Some of these conditions, including diabetes, pulmonary disease and hypertension, are potentially manageable."

"Current Medicare and Medicaid policies provide little incentive for the states to rely on health plans and team based care programs."

Thorpe proposes that states enroll every dual in a health plan (but give them the choice to opt out), let health plans design their own evidence-based approaches (must include preventive care, transitional care, medication management, and other specific functions), and make health plans responsible for "coordinating, integrating and developing each of the care-coordination functions."

"States could also contract with other entities such as community health teams or other forms of medical homes."

The paper concludes, "Expanded reliance on health plans and other coordinated care approaches for dually eligible beneficiaries can achieve significant savings while improving quality of care….Policymakers should seriously consider greater reliance on these strategies as action on deficit reduction initiatives moves forward."

What health insurance data will do

For the first time, private sector health insurance claims data will be available just as Medicare claims data is available to policymakers, regulators, researchers, analysts and consumers. Humana and three other health insurance companies – Aetna, Kaiser Permanente and UnitedHealth care – have agreed to supply their claims data to the newly formed Health Care Cost Institute, an independent, nonprofit entity "committed to creating the nation's most comprehensive source of information on health care costs and utilization, and promoting research on the drivers of escalating health care costs and utilization in the U.S." The data, of course, will be de-identified. It will include more than 5 billion medical claim records representing more than $1 trillion of health care activity from more than 5,000 hospitals and a million service providers from 2000 through the present. And it will be updated regularly to ensure its usefulness.

HCCI's mission is to promote independent research and analysis on the causes of rising health spending, to provide more transparent information on what is driving health care costs, and to help the nation get greater value from its health spending.

The institute's governing board is made up of national physician leaders and academic researchers, many of them well known, including Jonathan Gruber, a health care economist at MIT, Harvard Provost Alan Garber, Harvey Fineberg, president of the Institute of Medicine, and Elizabeth Nabel, president of the Brigham and Women's/Faulkner Hospitals.

Starting in 2012, the institute hopes to produce scorecards of trends in health care utilization and cost.

Steep cost climb in 2011

The Kaiser Family Foundation's annual survey of employers' spending for health care coverage showed the average cost of a family plan increased 9 percent this year, to $15,073 – three times the growth in 2010. Coverage for single employees grew 8 percent, to $5,429.

Workers paid an average of $921 toward the premium of single coverage and $4,129 for family plans.

The survey also shows the cost of family coverage has more than doubled since 2001, when premiums averaged $7,061 (this is compared to a 34 percent gain in wages over the same period).

The survey includes data on both fully-insured and self-funded plans. It shows that 60 percent of covered workers are in partially or completely self-funded plans, a trend that has been increasing. (Note: The fact that premiums are increasing for both fully-insured and self-funded employer plans is evidence that these increases are being driven by rising claims costs.)

Half of workers at small firms with individual policies now have annual deductibles of $1,000 or more, compared with 16 percent in 2006. At large firms, the share has grown from 10 percent to almost a third.

Employers are mainly coping with rising health-care costs by moving their workers into plans with higher out-of-pocket costs like deductibles, co-pays, and co-insurance.

The political arguments over health reform's contribution to the cost increases are already starting. In the past year, some new mandates have gone into effect, such as the requirement for new plans to offer preventive care without cost-sharing and for children to be able to stay on their parents' health plans until age 26. The Kaiser survey showed that about a quarter of people with employer-sponsored plans gained the preventive-care benefit last year.

Karen Ignagni, CEO and president of America's Health Insurance Plans, said, "This report is just the latest warning that far more needs to be done to address the rising cost of health care. Policymakers in Washington and the states need to focus on all of the factors that are driving premium increases: soaring prices for medical services, changes in the covered population that has resulted in an older and sicker risk pool, and new benefit and coverage mandates that add to the cost of insurance. Reducing health care cost growth will make it easier for consumers and employers to afford coverage, ease the burden on federal and state budgets, and put our vital safety net programs on sustainable and fiscally responsible paths."

Meanwhile, early responses to an annual survey released by the benefits firm Mercer last week say that per-employee health care benefit costs will increase 5.4 percent in 2012, the smallest increase Mercer has seen in 15 years. Employers surveyed said they have been trying to contain costs by raising deductibles, increasing employee contributions, and moving employees to lower-cost health plans. They also reported that if they made no changes to their plans, their benefit costs would increase by 7.1 percent instead.

More grants to states for rate review

Last week, the Department of Health and Human Services awarded $109 million in grants to 28 states to help them strengthen their rate review processes. HHS already had awarded $46 million to 45 states and D.C. a year ago.

The health insurance industry group AHIP responded in a blog post, "Highly publicized provisions such as premium rate review may make for good sound bites, but literally do nothing to address the soaring cost of medical care." Robert Zirkelbach, an AHIP spokesperson, said, "The current focus on rate review ignores the soaring cost of medical care that is driving up the cost of coverage and taking up a greater and greater share of federal and state budgets."

Steve Larsen, director of the Center for Consumer Information and Insurance Oversight, said that the rate review process "at a minimum" ensures that premiums "really reflect underlying costs."

Meanwhile, an analysis of government data by AHIP shows that premium increases rose in direct proportion to health care cost increases from 2000 to 2009.

Health reform briefs

Two surveys – one by the government and one by Gallup – show that the number of young adults 19-25 covered by insurance has grown by about a million since a provision in the health reform law allowing them to stay on their parents' policies took effect.

The Kaiser Family Foundation has released a 50-state survey that provides a comprehensive look at state Medicaid managed care programs. The survey found that two-thirds of Medicaid enrollees nationally are in comprehensive managed care programs. It also documents their diverse approaches.

The National Association of Insurance Commissioners wrote a letter last week to the super committee, asking members to not prohibit first-dollar coverage in Medigap supplemental insurance policies as some deficit-cutting groups have recommended. They said that change would be disruptive to seniors, particularly if it was applied to existing policies.

The Institute of Medicine says that on Oct. 7, it will announce its recommendations on "essential health benefits" to the Department of Health and Human Services. The essential health benefits package that is then determined by HHS will be the minimum health insurance plan offered in state-based health exchanges beginning in 2014.

Why Combine Policies?

2011-09-13T12:22:00.000-07:00

If you Combine your Policies, you save. Here's how....

You have a number of polices that protect the precious facets of your life. Home, auto, life – you have all your bases covered. Now, if you haven’t considered it before, you may want to consider it now: combining your policies.

At Winthrop & Gray Company, we can combine your policies and even reduce your monthly premium. Just think, less hassle, less paperwork, and a nifty discount.
Contact us today – or fill out online contact form – to get the details!

No Single Factor Determines a Worker's Status

2011-08-23T10:25:00.000-07:00

Does your firm use outside workers for some jobs? This can result in significant tax breaks if the workers are properly classified as independent contractors rather than employees.
Key point: If a worker is an employee, your company must withhold federal income tax and employment taxes from his or her wages. In addition, your business is responsible for paying the employer's share of federal payroll taxes. Conversely, if a worker is characterized as an independent contractor, your company isn't liable for these payroll tax obligations.
In addition, employers aren't required to offer independent contractors the same fringe benefits that regular employees receive, which can result in extra savings.
However, it's not always easy to distinguish independent contractors from employees. There are several factors the IRS and courts examine but it often boils down to a "control" issue. If you control how, where and when the worker does the job, he or she is usually classified as an employee.
Here are two cases heard in U.S. Tax Court that illustrate some of the traps that taxpayers can fall into on the employee-versus-independent-contractor issue:
Case #1: Tax Court Disregards Contracts
An Ohio trucking firm had written contracts with drivers to operate as independent contractors. The company filed 1099 Forms with the IRS for each of the drivers working under the contract. Nevertheless, the corporation:
Hired drivers, oversaw all work performed by them and confirmed
    Under Section 530 of the Revenue Act of 1978, an employer can claim independent contractor status for misclassified workers and not owe employment taxes if it can show:
There is a "reasonable basis" for the classification.
The business consistently treated workers as contractors.
    Here are the ways to qualify for Section 530 relief:
    1. The classification is a long-standing practice of a significant segment of the industry or profession.
   2. The employer was audited regarding the employment tax treatment of workers and the classification was allowed to stand.
    3. The employer relies on an authoritative court decision or IRS ruling to support its position.
   4. The employer based the determination on the sound reasoning of a paid tax professional.
the work had been completed.
Directed, supervised, paid, disciplined and discharged the drivers.
Decided which days that drivers would work and which loads they carried.
Determined when repairs to the trucks were necessary and was responsible for truck maintenance. The drivers had no investment in the trucks.
Based on these facts, the Tax Court ruled that the drivers should be treated as employees, despite the existence of the written contracts, because the company exerted significant control over their activities. (Peno Trucking, Inc., TC Memo 2007-66)
Footnote: The trucking firm argued that it should be entitled to "Section 530 relief" based on its consistent treatment of workers as independent contractors and the fact that two prior Workers' Compensation requests by drivers were denied by the state due to their written contracts. (See right-hand box for an explanation of Section 530 relief). But the Tax Court stated the Workers' Comp cases did not evaluate the employment relationships "through a common law analysis." Case #2: Are Workers Liable for Taxes if an Employer Wrongly Classifies Them?
What happens if an employer misclassifies a worker as an independent contractor and doesn't withhold income taxes or FICA? Does that mean the person is not liable for the taxes? One Florida woman found out the hard way that the answer is "no."
She worked as a seamstress at a retail bridal gown shop. The shop classified the woman as an independent contractor and paid her $11,210 during the year in question. The shop did not withhold income or employment taxes from its payments to her. The seamstress also received unemployment compensation of $208 that year from the Florida Agency for Workforce Innovation.
The woman also failed to file a tax return for the year. So the IRS filed one for her as a self-employed person with its "Substitute for Return Program" and sent her a tax bill. Later, the IRS agreed that the seamstress was an employee, rather than an independent contractor. The woman contended that the bridal shop, which failed to withhold taxes from her wages, was solely liable for the tax bill.
The Tax Court stated that it was "unfortunate" the employer classified the seamstress as an independent contractor and not as an employee.
But, the court added, "that does not alter the fact that the first principle of income taxation is that income must be taxed to (the person) who earns it" and "misclassification of an employee does not relieve the employee of his liability for filing a correct tax return." (Natalia Ravelo Escandon, TC Memo 2007-128)
These two cases are two in a long list of court filings against companies that hire independent contractors. In some cases, workers sue for benefits they claim they were eligible for, including health insurance and retirement plan contributions.
To make matters worse, the IRS continues cracking down on companies that hire independent contractors. If the tax agency "reclassifies" a worker as an employee, your company could be slapped with hefty bills for back taxes, interest and penalties. Audits by state agencies are also common and frequently occur when independent contractors apply for unemployment or Workers' Compensation.
Unfortunately, no single factor determines a worker's status. In the trucking company case described above, the Tax Court looked at these seven questions:
1. What degree of control is exercised by the business? Under this test, the court examined how much control the company exerted over the way the services were performed. But exercising control is not required in an employer-employee relationship, the Tax Court noted, as long as the company has the right to direct a worker if necessary.
2. Which party invests in "work facilities," used by the individual? "The fact that a worker provides his or her own tools generally indicates a non-employee status," the Tax Court explained.
3. Does the individual take any financial risk? "A worker's opportunity to earn a profit and assume risk of loss may indicate a non-employee status," the Court stated.
4. Can the business discharge the individual? "Generally, an employer's right to discharge an employee indicates an employer-employee relationship," the Tax Court noted.
5. Is the work an integral part of the company's regular business? An employer-employee relationship is supported when workers perform a service essential to the success of a business operation.
6. How permanent is the relationship? The Tax Court stated that "a transitory work relationship may point toward a non-employee status."
7. What kind of relationship do the parties believe they are creating? Entering into a written agreement that states a worker is an independent contractor indicates a non-employee relationship. However, a contract alone is not enough. "If an employer-employee relationship exists, characterization by the parties as some other relationship is immaterial," according to the Tax Court.

2011-08-04T14:00:00.000-07:00

Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it?        That's $3,800 on a $100,000 home etc.
       When did this happen? It's in the health care bill. Just thought you should know.
       SALES TAX TO GO INTO EFFECT 2013 (Part of the Health Care Bill) Why 2013? Could it be to come to light AFTER the 2012 elections?
       REAL ESTATE SALES TAX
              Under the new health care bill - all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don't kick in until 2013 If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to penalize ALL Americans and the retiring generation who often downsize their homes. Does this stuff make your November and 2012 vote more important?
       You were not aware this was in the Health Care Reform bill? Guess what, you aren't alone. There are more than a few members of Congress that aren't aware of it either .....   click on this to verify ......
              http://www.gop.gov/blog/10/04/08/obamacare-flatlines-obamacare-taxes-home <http://www.gop.gov/blog/10/04/08/obamacare-flatlines-obamacare-taxes-home>

       An educated public, is a public that votes.

"Health-care overhaul law"

2011-07-01T16:24:00.000-07:00

A federal appeals court on Wednesday upheld the most contentious provision of the health-care overhaul law, ruling that Congress can require Americans to carry insurance coverage.

In backing the individual mandate, the U.S. Court of Appeals for the 6th Circuit in Cincinnati became the first appellate court to rule on President Obama's signature domestic initiative. The decision also marked the first time a Republican-appointed judge has sided with the administration in evaluating the law's constitutionality.

"We find that the minimum coverage provision is a valid exercise of legislative power by Congress under the Commerce Clause," Judge Boyce F. Martin Jr., a Democratic appointee, wrote for the majority. He was joined by Republican appointee Jeffrey Sutton.

The 2 to 1 ruling was hailed by the Justice Department and administration allies, who called it an important bipartisan test of the law's ability to withstand numerous legal challenges. Opponents of the health-care act disputed the ruling's significance, calling it one incremental step in a legal struggle widely expected to wind up at the Supreme Court.

"It's an unfortunate decision," said David Rivkin, a lawyer representing 26 states in a Florida-based lawsuit that also challenges the law. "By the time this gets to the Supreme Court, it's not going to matter which decision was first or second," added Rivkin, who predicted that the law will be overturned.

The differing interpretations reflected the deep divisions over a measure that has provoked vehement opposition and equally strong support among the public and politicians alike. More than 30 lawsuits have been filed since the Patient Protection and Affordable Care Act was pushed through Congress by Democrats in March 2010, resulting in several rulings by lower-court judges that, until now, have cleaved along partisan lines.

As a result, the ultimate fate of the statute, which aims to bring about the broadest changes to the nation's health-care system in several decades, may not be known for a year or more. Lawyers for the plaintiffs in the 6th Circuit case said they will appeal directly to the Supreme Court but acknowledged that the justices probably will not take the case right away.

Most contested provision

The health-care law seeks to extend medical coverage to 30 million uninsured Americans and make major changes in public and private health insurance. By far the most contested provision is the individual mandate, which requires most Americans to purchase at least a minimum level of health insurance starting in 2014 and imposes a tax penalty if they don't.

Like other legal challenges, the lawsuit filed by the Thomas More Law Center - a Christian-oriented law firm in Michigan - says Congress overstepped its constitutional authority to regulate commerce.

A three-judge panel of the 6th Circuit disagreed. The mandate is constitutional, Martin wrote, because "Congress had a rational basis to believe" that the provision would affect interstate commerce and that it was "essential" to the law's broader goals of reforming the health-care market.

Judge James Graham, a Republican appointee, dissented, but it was the concurrence of Sutton - a George W. Bush appointee and former law clerk for conservative Supreme Court Justice Antonin Scalia - that was most noteworthy.

Sutton wrote that "the government has the better of the arguments" and that "Congress did not exceed its power" in passing the individual mandate. But he also appeared to acknowledge that his word would not be final, writing, "The Supreme Court has considerable discretion in resolving this dispute."

And in a phrase that heartened conservative opponents of the law, Sutton questioned whether the legislation will have other, perhaps unintended, consequences. "That brings me to the lingering intuition - shared by most Americans, I suspect - that Congress should not be able to compel citizens to buy products they do not want," he wrote.

"If Congress can require Americans to buy medical insurance today, what of tomorrow? Could it compel individuals to buy health care itself in the form of an annual check-up or for that matter a health-club membership?"

Tracy Schmaler, a Justice Department spokeswoman, said that the government welcomed the ruling "and its finding that Congress acted within its authority in passing this landmark health-care reform law." She vowed that the department will continue to "vigorously defend" the law and said department officials believe that efforts to challenge it will fail.

Her words were echoed by a variety of Democrats and supporters of the law.

"Congress clearly has the authority to regulate the health insurance market, including protecting consumers from insurance industry abuses," said Ethan Rome, executive director of Health Care for America Now. "Every step of the way, the health-care debate has been polluted by partisan politics. Today's decision, made by judges appointed by both Republican and Democratic presidents, is immune to that criticism."

No 'ringing endorsement'

But Rivkin, citing some of the wording in Sutton's concurrence, said the decision is "not at all a ringing endorsement of the constitutionality of the individual mandate." And David Yerushalmi, a lawyer for the Thomas More Law Center, said that while the ruling was "disappointing," Sutton "essentially kicked this thing upstairs to the Supreme Court."

Yerushalmi said he is already drafting a petition asking the high court to hear the case, though he acknowledged that the justices will probably "put it aside" until other appellate court decisions are issued.

Two other federal appellate courts - the Richmond-based 4th Circuit and the 11th Circuit, based in Atlanta - recently heard oral arguments in lawsuits challenging various aspects of the health-care law's constitutionality, and they are expected to issue decisions in the coming weeks or months. The U.S. Court of Appeals for the District of Columbia Circuit has scheduled oral arguments for September.

Three U.S. district judges have ruled in favor of the administration on the constitutionality of the individual mandate, while two district court judges have said it is unconstitutional. Those decisions were all along partisan lines, with Democratic-appointed judges supporting the administration and Republican appointees opposing it.

About the Americans With Disabilities Act (ADA)

2011-06-14T11:06:00.000-07:00

Employers may need to review their policies, procedures and handbooks due to changes in the Americans with Disabilities Act (ADA), which went into effect in 2009. The changes address court and Equal Employment Opportunity Commission interpretations of the law that have, over the years, narrowed certain ADA definitions and generally made application of the ADA more restrictive than Congress originally intended.

The "Findings and Purposes" section of the legislation cites specific U.S. Supreme Court cases that have led to lower courts "incorrectly" ruling in individual cases that people with a range of substantially limiting life impairments are not people with disabilities. The amendments do retain the ADA's definition of "disability:"
A physical or mental impairment that substantially limits one or more of the major life activities of the individual.

A record of such an impairment.
Being regarded as having such an impairment.

However, the amendments add language that provides a non-exhaustive list of major life activities, including routine activities such as caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating and working. They also clarify that a major life activity includes the operation of major bodily functions. Furthermore, the amendments specify that the definition of "disability" be construed "in favor of broad coverage." This means, for example, that an impairment that substantially limits one major life activity need not limit other major life activities in order to be considered a disability, and that an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.

These provisions address the U.S. Supreme Court case of Toyota Motor Manufacturing of Kentucky v. Williams, which narrowly defined "major life activity" as one that is of central importance to most people's lives. The Williams case also required that, in order for an impairment to be viewed as "substantially limiting" a major life activity, it must prevent or severely limit the individual from performing the activity. The amendments clearly apply a much broader standard for ADA protection to apply.

In Sutton v. United Airlines, the U.S. Supreme Court ruled that mitigating measures, such as medication or devices, must be taken into account in determining whether a person is substantially limited in a major life activity. Under such an interpretation, for example, an individual with epilepsy was not protected by the ADA if he or she took medication that controlled the condition. The amendments specify that, with the exception of ordinary eyeglasses or contact lenses, the determination of whether an impairment substantially limits a major life activity is to be made without regard to the ameliorative effects of mitigating measures. Examples given of such mitigating measures include medication, medical supplies, low-vision devices, prosthetics, hearing aids, mobility devices, oxygen therapy equipment, and the like; use of assistive technology; reasonable accommodations or auxiliary aids or services; or learned behavioral or adaptive neurological modifications.

The amendments also remove some language from the ADA that courts had relied upon to interpret the law narrowly. For example, the original ADA included a finding that approximately 43 million Americans have one or more physical disabilities, and that "individuals with disabilities are a discrete and insular minority." In both the Williams and Sutton cases, the U.S. Supreme Court cited this language to set a strict standard for being protected by the law.

As a result of these changes, many more employees may be considered disabled under the ADA and thus fall under the law's protections, including the requirement that an employer provide reasonable accommodation. With these changes to the ADA, now would be a good time to review your company's policies, procedures and handbooks with your attorney to make sure your company is in compliance with these legal requirements.

Health Reform Weekly

2011-06-09T13:22:00.000-07:00

MICHIGAN: In the next couple of weeks, the state Senate is expected to vote on a $400 million paid-claims tax that would be levied on insurers and third-party administrators as proposed by Governor Snyder.

Specifically, the bill would establish an entirely new tax on health insurance claims as a way to match federal Medicaid funding. The 1 percent on tax on all medical claims paid under health, dental, automobile and workers' compensation coverage would impact fully and self-insured business. Ultimately, the cost of the tax will be borne by the sponsor of that coverage – the employer or the individual who already pays for the coverage. As introduced, the tax would begin on October 1, 2011.

While working with lawmakers to help them understand the impact the tax would have on constituents, Aetna has mobilized its grassroots employee network to contact their state legislators regarding the issue. The bill has a strong chance of passing, and Aetna is urging all its constituents in the state to contact the Governor’s office and legislators to express any concerns they may have about the tax.

This would be a good time to contact your local and state representatives opposing this legislation and avoiding additional increases in insurance premiums.

Week of June 6, 2011

While the Affordable Care Act's (ACA) medical loss ratio (MLR) and rate review provisions have been getting most of the media attention, a new coalition of business organizations has come together to draw attention to another important requirement of the ACA. Calling themselves Stop the HIT on Small Business, more than 25 national business organizations have joined forces to work toward repeal of new taxes the ACA would impose on private health insurance starting in 2014. Business leaders behind the effort say that small business owners, their employees and the self-employed will ultimately bear the brunt of $87 billion in additional health care costs in the first 10 years as a result of the new taxes. The group is planning Capitol Hill outreaches and grassroots efforts.

Please keep in mind, these are increases in taxes above those called for in the Health Care Reform Act already made law.

Winthrop & Gray’s Health Care Reform reminders

2011-06-06T12:44:00.000-07:00

Winthrop & Gray’s Health Care Reform reminders, up dates and timeline.

2011

Insurance Reforms

New uniform coverage documents and standard definitions developed (applicable in 2012).

Minimum medical loss ratios required.

Medical Reforms

Medicare Advantage cost-sharing limits take effect.

Medicare beneficiaries who reach the "donut hole" get a 50 percent discount on brand-name drugs.

Primary care doctors and general surgeons practicing in underserved areas, such as inner cities and rural communities, get a 10 percent Medicare bonus.

Medicare Advantage plans begin restructuring of payments and freeze 2011 payments at 2010 levels.

Other

The voluntary long-term care insurance program starts. The program provides a cash benefit to help those with disabilities stay in their homes or pay nursing home costs. Benefits start five years after paying the coverage fee.

Increased funding for community health centers to provide care for many low-income and uninsured people.

Costs for over-the-counter drugs not prescribed by a doctor excluded from being reimbursed through an HSA or FSA.

Employers may report the value of health care benefits on employee W2 tax statements (optional for 2011 tax year; mandatory thereafter).

Start of new annual fees on pharmaceutical manufacturing sector.

2012

Health System Changes

Hospitals, doctors, and payers encouraged to join forces in "accountable care organizations."

Hospitals with high rates of preventable readmissions facing reduced Medicare payments.

2013

Taxes/Deductions

Individuals making $200,000 a year or couples making $250,000 would have a higher Medicare payroll tax of 2.35 percent on earned income - up from the current 1.45 percent. A new 3.8 percent tax on unearned income, such as dividends and interest, also added.

Contributions to flexible spending accounts (FSAs) limited to $2,500 a year - indexed for inflation. And the threshold for deducting medical expenses on taxes goes from 7.5 percent to 10 percent of income.

Medical device manufacturers have a 2.9 percent sales tax on medical devices, with exemptions for some, like eyeglasses, contact lenses and hearing aids.

No more deduction for expenses allocable to Medicare Part D subsidy for employers who maintain prescription drug plans for their Medicare Part D-eligible retirees.

For more information on how Health Care Reform may impact your care or your business

contact Allen Beach at Winthrop & Gray Company 800-258-1598.

News in the IRS

2011-05-17T11:06:00.000-07:00

The IRS has just issued Revenue Procedure 2011-32, which provides the 2012 cost-of-living contribution and coverage adjustments for HSAs, as required under Code Section 223(g). Most contribution limits and the out-of-pocket amounts have been increased for 2012.
HSA Contribution Amounts

2006     2007     2008    2009   2010/2011 2012     Coverage Levels
$2,700 $2,850 $2,900   $3,000   $3,050   $3,100      Individual

$5,450 $5,650 $5,800   $5,950     $6,150 $6,250        Family

$ 700   $   800   $ 900   $1,000     $1,000   $1,000      Catch-up

Max. Out-Of-Pocket Amounts for HDHP
$5,250 $5,500 $5,600    $5,800     $5,950    $6,050     Individual

$10,500 $11,000 $11,200 $11,600 $11,900 $12,100   Family

Min. Deductible Amounts for HDHP
$1,050 $1,100   $1,100   $1,150    $1,200    $1,200    Individual

$2,100 $2,200   $2,200    $2,300   $2,400     $2,400    Family

For a copy of Revenue Procedure 2011-32, please click on the link below:

http://www.irs.gov/pub/irs-drop/rp-11-32.pdf

Winthrop & Gray’s Health Care Reform reminders

2011-05-06T08:19:00.000-07:00

2011
Insurance Reforms

New uniform coverage documents and standard definitions developed (applicable in 2012).

Minimum medical loss ratios required.

Medical Reforms

Medicare Advantage cost-sharing limits take effect.

Medicare beneficiaries who reach the "donut hole" get a 50 percent discount on brand-name drugs.

Primary care doctors and general surgeons practicing in underserved areas, such as inner cities and rural communities, get a 10 percent Medicare bonus.

Medicare Advantage plans begin restructuring of payments and freeze 2011 payments at 2010 levels.

Other

The voluntary long-term care insurance program starts. The program provides a cash benefit to help those with disabilities stay in their homes or pay nursing home costs. Benefits start five years after paying the coverage fee.

Increased funding for community health centers to provide care for many low-income and uninsured people.

Costs for over-the-counter drugs not prescribed by a doctor excluded from being reimbursed through an HSA or FSA.

Employers may report the value of health care benefits on employee W2 tax statements (optional for 2011 tax year; mandatory thereafter).

Start of new annual fees on pharmaceutical manufacturing sector.

2012
Health System Changes

Hospitals, doctors, and payers encouraged to join forces in "accountable care organizations."

Hospitals with high rates of preventable readmissions facing reduced Medicare payments.

2013
Taxes/Deductions

Individuals making $200,000 a year or couples making $250,000 would have a higher Medicare payroll tax of 2.35 percent on earned income - up from the current 1.45 percent. A new 3.8 percent tax on unearned income, such as dividends and interest, also added.

Contributions to flexible spending accounts (FSAs) limited to $2,500 a year - indexed for inflation. And the threshold for deducting medical expenses on taxes goes from 7.5 percent to 10 percent of income.

Medical device manufacturers have a 2.9 percent sales tax on medical devices, with exemptions for some, like eyeglasses, contact lenses and hearing aids.

No more deduction for expenses allocable to Medicare Part D subsidy for employers who maintain prescription drug plans for their Medicare Part D-eligible retirees.

For more information on how Health Care Reform may impact your care or your business
contact Allen Beach at Winthrop & Gray Company 800-258-1598.

Public Sector vs. Private Sector!!!

2011-04-29T09:23:00.000-07:00

Why is there a huge debate in the State of Michigan between the public sector and private sector?

Please click here and you'll have your fact based reasons why. It's time for a drastic change in how our public sector employed citizens are compensated.

We just cannot afford bloated compensation packages for this sector anymore. Not only are the Tea Party groups revolting but so are all Michigan's hard working private sector tax payers.

It's time the burden of sacrifice is shared by the public sector
citizens as well as the ruling class of politicians that support them.

Please go to www.itpp.us for more facts and information about the Public Sector vs. Private Sector battle that is taking place in Michigan and throughout our great country.

IRS Issues Interim Guidance on Informational Reporting of Employer-Sponsored Health Coverage

2011-04-15T07:45:00.000-07:00

IRS Issues Interim Guidance on Informational Reporting of Employer-Sponsored Health Coverage; Reporting is Voluntary for All Employers for 2011 and Small Employers for 2012

WASHINGTON - The Internal Revenue Service today issued interim guidance to employers on informational reporting on each employee's annual Form W-2 of the cost of the health insurance coverage they sponsor for employees. The IRS is also requesting comments on this interim guidance. The IRS emphasized that this new reporting to employees is for their information only, to inform them of the cost of their health coverage, and does not cause excludable employer-provided health coverage to become taxable; employer-provided health coverage continues to be excludable from an employee's income, and is not taxable.

The Affordable Care Act provides that employers are required to report the cost of employer-provided health care coverage on the Form W-2. Notice 2010-69, issued last fall, made this requirement optional for all employers for the 2011 Forms W-2 (generally furnished to employees in January 2012). In today's guidance, the IRS provided further relief for smaller employers (those filing fewer than 250 W-2 forms) by making this requirement optional for them at least for 2012 (i.e., for 2012 Forms W-2 that generally would be furnished to employees in January 2013) and continuing this optional treatment for smaller employers until further guidance is issued.

Using a question-and-answer format, Notice 2011-28 also provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012. The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage.
The 2011 Form W-2, prior IRS Notice 2010-69 deferring the reporting requirement for 2011, and Notice 2011-28 containing the new guidance are available on IRS.gov.

Labor Law Protects Employees' Rants on Facebook

2011-04-07T10:52:00.000-07:00

Here's a recap of the case: After a dispute in the workplace involving a customer complaint, employee Dawnmarie Souza posted a negative remark about her supervisor on her personal Facebook page. This drew supportive responses from coworkers. Those responses then led to more negative comments from Souza about the supervisor.

Souza's employer, the American Medical Response (AMR) ambulance firm, suspended her and later terminated her because of her Facebook postings.

The AMR blogging and Internet posting policy included these statements:

"Employees are prohibited from posting pictures of themselves in any media, including but not limited to the Internet, which depicts the Company, in any way, including but not limited to any Company uniform, corporate logo or an ambulance, unless the employee receives written approval... in advance of the posting...

"Employees are prohibited from making disparaging comments or discriminatory or defamatory comments when discussing the Company or the employee's superiors, co-workers, and/or competitors."

The NLRB filed an unfair labor practice complaint against the Connecticut company.

The NLRB asserted the National Labor Relations Act (NLRA) gives all employees the right to discuss with other employees such work issues as pay, benefits, and working conditions. These discussions on work conditions and work issues are protected activities. In the case against AMR, the NLRB argued an employee's comments about a supervisor and about an employer, posted on a social media site like Facebook, is protected concerted activity when it involves comments and responses between coworkers.

The NLRB alleged the ambulance company illegally terminated Souza for violating the company's policy prohibiting employees from describing the company "in any way" on the Internet without company permission. The NLRB described the company's policy as overly broad.

A settlement is reached: In a private settlement between AMR and Souza, the employer has agreed to back off from its restrictions on employees' expressions of workplace issues outside the workplace.

The NLRB issued this statement about the settlement:

"Under the terms of the settlement... the company agreed to revise its overly broad rules to ensure that they do not improperly restrict employees from discussing their wages, hours and working conditions with co-workers and others while not at work, and that they would not discipline or discharge employees for engaging in such discussions.

"The company also promised that employee requests for union representation will not be denied in the future and that employees will not be threatened with discipline for requesting union representation." [The employee in the case, Dawnmarie Souza, was a member of the Teamsters union and the Teamsters represented her before the NLRB.]

Meaning to employers: The settlement between AMR and the NLRB strengthens the NLRB's position that employers can overreach in attempts to prevent employees from discussing matters relating to their work.

[NOTE: Information and guidance in this story is intended to provide accurate and helpful information on the subjects covered. It is not intended to provide a legal service for readers' individual needs. For legal guidance in your specific situations, always consult with an attorney who is familiar with employment law and labor issues.]

IRS ISSUES W-2 HEALTH CARE COST REPORTING GUIDANCE.

2011-04-04T11:03:00.000-07:00

(PLANSPONSOR.com) - The Internal Revenue Service has issued interim employer guidance about reporting on employees' W-2 the cost of the health insurance coverage they sponsor for employees.

The IRS is also requesting comments on this interim guidance. The IRS emphasized that this new reporting to employees is for their information only, to inform them of the cost of their health coverage, and does not cause a taxable event.

The tax agency said except as provided in a question-and-answer section of the IRS document, all employers that provide applicable employer-sponsored coverage during a calendar year are subject to the reporting requirement under § 6051(a)(14).

The Affordable Care Act provides that employers are required to report the cost of employer-provided health care coverage on the Form W-2. Guidance issued last fall made this requirement optional for all employers for the 2011 Forms W-2 (generally furnished to employees in January 2012), the IRS said. In the latest guidance, the IRS provided further relief for smaller employers (those filing fewer than 250 W-2 forms) by making this requirement optional for them at least for 2012 (i.e., for 2012 Forms W-2 that generally would be furnished to employees in January 2013).

The notice also provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012. The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage.
The IRS notice is at http://www.irs.gov/pub/irs-drop/n-11-28.pdf.

Information About the CLASS Benefit Plan

2011-03-14T07:36:00.000-07:00

If you think you or someone you know needs assistance living in home assistants or nursing home care, this article is for you.

Health & Human Services (HHS) released a series of frequently asked questions on the Class (Community Living Assistance Services and Supports) Act.

These questions and answers follow below:

About CLASS and long term care

What is CLASS?

CLASS (Community Living Assistance Services and Supports) is a new voluntary, federally administered insurance program created under the Affordable Care Act (ACA).

Most working adults age 18 or older will be able to voluntarily enroll in this new program either directly or through their employers, without answering questions about their health.

Those who enroll and meet the benefit eligibility requirements will receive benefits to purchase long-term services and supports such as (but not limited to) personal assistance, homemaker services, specialized transportation and assistive technology to help them address their care needs.

When will CLASS be available?

The Affordable Care Act (ACA) states that the Secretary of Health and Human Services has until October 1, 2012 to designate the CLASS benefit plan. Enrollment will not take place before the plan is announced, and no one will pay premiums until after they enroll.

Is CLASS an entitlement program?

No. CLASS is not an entitlement program. Some people will not be eligible to enroll and some people who enroll will never meet the requirements to receive benefits.

Enrollment in CLASS will be voluntary and will be available to most working adults. Pre-existing medical conditions will not disqualify someone from enrolling. Individuals who enroll will be eligible to receive benefits if they meet specific requirements regarding functional limitation, earnings, and premium payment. Enrollees pay the premiums. Benefits will be paid from premiums and earnings on those premiums. Taxpayer funds will not be used to pay benefits.

How is CLASS different from long term care insurance offered through an insurance company?

CLASS will be administered and insured through the Federal government. Enrollment will be available to most working adults. Unlike most long term care insurance offered by private insurers, pre-existing medical conditions will not disqualify someone from enrolling. In addition, CLASS enrollees will have to meet specific requirements regarding functional limitation, earnings, and premium payment in order to receive benefits. Details about these requirements will be announced by the HHS Secretary no later than October 1, 2012.

What is long term care?

Long term care refers to care that individuals may need for a long time because they are unable to take care of themselves due to an illness, disease, the aging process, or cognitive impairment (for example, Alzheimer's disease).

Most long term care is non-skilled personal care, such as help with everyday tasks, called Activities of Daily Living (ADLs):

Bathing,

Dressing,

Using the toilet,

Transferring (moving to or from a bed or chair),

Caring for incontinence, and

Eating.

The goal of long term care is to provide help with routine functions when being fully independent is not possible. Long term care can be provided at home, in a community setting or in an institution. Most people prefer to receive long term care at home.

Who needs long term care?

The need for long term care can strike anyone at any age. While many people who need long term care are age 65 or older, a person can need long term care services at any age. Forty percent of people currently receiving long term care are adults 18 to 64 years old.

Factors that increase your risk of needing long term care include:

Age - The risk generally increases as you get older.

Marital Status - Single people are more likely to need care from a paid provider.

Gender - Women are at a higher risk than men, primarily because they tend to live longer

Lifestyle - Poor diet and exercise habits can increase your risk.

Health and Family History - These can also impact your risk.

Will Medicare and/or my health insurance pay for any long term care services I might need?

Generally, no. Medicare pays for nursing home care and/or home care only under limited circumstances after a hospital stay and only for a limited time period. Medicare and health insurance pay for acute care, generally needed for a defined period of time with an expectation that you will recover or your condition will improve. Long term care is chronic care (ongoing and long-lasting). It is not acute care.

Enrollment in CLASS

Can I enroll in CLASS now?

No. CLASS is not available yet. By October 1, 2012, the Secretary of Health and Human Services will announce the details of the CLASS benefit plan. Enrollment will not begin until after this announcement.

Who will be able to enroll in CLASS?

Once enrollment begins, most working adults age 18 or older will be able to enroll.

Will I have to pass underwriting to enroll in CLASS?

No. You will not be denied enrollment in CLASS because of a pre-existing condition or for any medical reason.

Will retirees be able to enroll in CLASS?

If they are fully retired (not working at all), they will not be able to enroll in CLASS.

I'm looking at private long term care insurance policies. Should I wait for CLASS instead?

It's important to plan for your potential long term care needs without delay. If you're nearing retirement, you should also note that one of the requirements to become eligible for benefits under the CLASS Program is to earn wages of a certain amount over a period of time after enrollment. Those planning to retire within the next few years may not be able to qualify for benefits under CLASS.

Should employers start withholding premiums for CLASS coverage from their employees' pay?

No. CLASS premiums will not be collected until enrollment begins. The Secretary of Health and Human Services will announce details about the CLASS benefit plan by October 1, 2012. Enrollment will not begin until after this announcement.

Will an employer have to offer CLASS participation to its employees?

No. Employers will be able to decide whether to participate in the CLASS automatic enrollment process for their employees.

Will I have to enroll in CLASS if my employer participates in the automatic enrollment process?

No. You will be able to opt-out of enrollment.

Will I be able to enroll even if my employer decides not to offer the CLASS automatic enrollment process?

Yes. If you meet the enrollment eligibility requirements, you will have the option to enroll individually.

Will I be able to enroll if I am self-employed?

Yes. If you meet the enrollment eligibility requirements, you will have the option to enroll individually.

CLASS Benefits

How will someone become eligible to start receiving CLASS benefits?

In order to receive benefits, an enrollee must:

have an eligible functional limitation(for example, need help to perform everyday activities or have a cognitive impairment);

earn wages of a certain amount over a period of time after enrollment; and

pay premiums for at least 60 months, and comply with other premium payment requirements.

Details about all of these requirements will be announced by the HHS Secretary by October 1, 2012.

Will I be able to use my CLASS benefits to help pay for care in a nursing home or assisted living facility?

Yes. If you qualify for CLASS benefits, you will be able to use them to help cover the cost of care in a nursing home or assisted living facility, as well as care received at home. CLASS benefits can also be used for other types of supports and services, such as home modifications, assistive technologies, accessible transportation, and homemaker services, to name just a few.

How much will CLASS pay in benefits?

We have not yet determined the benefit plan. By October 1, 2012, the Secretary of Health and Human Services will designate a benefit plan, after taking into consideration the recommendations of the CLASS Independence Advisory Council. The CLASS Act requires that the benefit plan include a cash benefit averaging at least $50 per day, not subject to any lifetime limit.

What is the CLASS Independence Advisory Council?

The CLASS Independence Advisory Council is the Department's statutory public advisory body on matters of general policy in the administration of the CLASS Program. The President has not yet appointed the members of the Council. The time period for submitting nominations to the Council has ended.

Can taxpayer funds be used to pay CLASS benefits?

No. The law specifically prohibits the use of taxpayer funds to pay benefits.

CLASS Premiums

How much will CLASS coverage cost?

Premiums have not yet been established. By October 1, 2012, the Secretary of Health and Human Services will announce details of the benefit plan, including premiums, after taking into consideration the recommendations of the CLASS Independence Advisory Council.

Insurance News in Michigan

2011-03-04T14:00:00.000-08:00

MICHIGAN: In his first budget, Governor Rick Snyder has proposed that the state's current HMO-use tax on Medicaid plans be replaced by a 1 percent assessment on paid health claims to raise approximately $400 million.

The paid claims would be an obligation on insured and self-insured entities. Details regarding this budget proposal, including operational issues and effective date, are unclear at this time. But the Michigan budget is predicated on the implementation of this provision. If it fails, then the remaining options will be reductions in Medicaid, largely in provider rates and health plan premiums.

In short if we tax the insurance companies for paying claims, premiums will have to increase to the insured to compensate the additional tax. Individuals should contact their elected representatives and voice their opinion. Insurance rates are already becoming unaffordable to individuals and businesses as it is. This is only a proposal at this stage, but unless action is taken this could become a progressive tax and one in which the public at large is unaware of.

How to get more than mileage out of your vehicles

2011-02-28T11:56:00.000-08:00

Questions answered: How to get More than Mileage Out of Your Vehicles

Q. I'm using my personal car in my business. How much can I deduct on my tax return for the car?

A. There are two basic ways to write off expenses for business-related travel:

The standard mileage method. This provides a basic deduction for mileage and provides built-in depreciation. For 2011, the rate is 51 cents per mile (up from 50 cents for 2010). The tax law restricts the use of the standard mileage method.

A taxpayer cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

The actual expense method. This gives you a depreciation allowance for the cost of the vehicle, plus deductions for gasoline and oil, insurance, and repairs. You generally wind up with a larger overall deduction than if you used the standard mileage method. You can write off the cost of the car based on the percentage of business use. For example, if the car is used 80 percent for business, you can write off 80 percent of the allowable expenses for that year.

Take Notes. To use the actual expense method, you must keep a log and record the time, place, mileage and business purpose of each business trip, and the total mileage for the year. That lets you calculate the business use percentage.

How does the IRS calculate the standard mileage rate for business? It is based on an annual study of the fixed and variable costs of operating an automobile.

There may be other limitations involved in tax-deductible business driving. Winthrop & Gray suggests that you consult with your tax adviser for information about the best ways to buy and operate a business car for tax purposes.

Bourdensom Requirements Remain,

2011-02-15T13:05:00.000-08:00

Despite efforts by some members of Congress, the burdensome 1099 reporting requirements for businesses and rental property owners were not repealed as part of the new law passed on December 17, 2010. And Congress has adjourned for the year so a repeal of the requirements will now have to wait for the new Congress to take up the issue in 2011.

The new requirements were part of two laws passed in 2010:

1. The Patient Protection and Affordable Care Act imposes surprising new Form 1099 reporting requirements. Complying with them may add significantly to the paperwork burden of businesses and other organizations. Beginning with payments made in 2012, businesses generally will have to issue Form 1099’s to vendors (including corporations) and the IRS for purchases of $600 or more in property or services. Earlier this year, IRS Commissioner Douglas Shulman said business transactions conducted using credit and debit cards would be exempt from the requirements. These transactions will already be covered by other new reporting requirements on credit and debit card processors, so there is no need for businesses to report them as well, Shulman said.

2. The Small Business Jobs Act requires taxpayers who receive rental income to issue 1099 forms to service providers when they make payments of $600 or more during the year. Beginning on January 1, 2011, the law requires rental income recipients to follow the same reporting rules as taxpayers engaged in a trade or business. Result: If recipients of rental income make payments of $600 or more to a service provider while earning rental income, they must provide a 1099 form to the provider and the IRS.

Beginning January 1, 2011, taxpayers with rental property income must start keeping records of payments, so they can issue 1099 forms in 2012. For more information about your situation, consult with your tax adviser.Bottom line: Despite a push by the business community and some members of Congress to repeal the rules, they stay in place -- for now. Efforts to eliminate them, or make them less burdensome, will have to wait for Congress to return after the holidays. Stay tuned.

Winthrop & Gray Company has provided this shorten version of the law and is not liable for the content of this article. You should consult your tax advisor for details of your situation.

Importand news in Health Care

2011-02-03T12:12:00.000-08:00

By Janet Adamy
Wall Street Journal

A federal judge ruled that Congress violated the Constitution by requiring Americans to buy insurance as part of the health overhaul passed last year, and said the entire law "must be declared void."

With his ruling, U.S. District Judge Roger Vinson set up a clash over whether the Obama administration still has the authority to carry out the law designed to expand insurance to 32 million Americans.

David Rivkin, an attorney for the plaintiffs, said the ruling meant the 26 states challenging the law must halt implementation of pieces that apply to states and certain small businesses represented by plaintiffs.

But the Obama administration said it has no to plans to halt implementation of the law. Already, it has mailed rebate checks to seniors with high prescription drug costs, helped set up insurance pools for people with pre-existing medical conditions and required insurers to allow children to stay on their parents' insurance policies until they reach age 26.
"We will continue to operate as we have previously," a senior administration official said.
In a pre-emptive move, the Justice Department, which represents the administration, is considering whether to seek a stay while its appeal against the decision is pending, spokeswoman Tracy Schmaler said.

The legal morass is the biggest blow yet to the law since President Barack Obama signed it in March. Most of the plaintiffs-governors and attorneys general in 26 states-are Republicans seeking to knock down Mr. Obama's signature legislative achievement.

The ruling by Judge Vinson, a Republican appointee in Pensacola, Fla., is the second of four to find that at least part of the law violates the Constitution's Commerce Clause by requiring citizens to carry insurance or pay a fee. But in asserting that the whole law is unconstitutional, it went much further than an earlier ruling in a Virginia case.

Thus far, the court decisions are breaking down along party lines, with two Democratic appointees to the federal bench having upheld the law and two Republican appointees ruling against it. The matter is expected to be settled by the U.S. Supreme Court.

The possibility that a court could ultimately unravel the law underscores just how difficult it is to enact universal health insurance-a goal that had eluded presidents dating back to Theodore Roosevelt. Mr. Obama's law, signed after a long-fought partisan battle, has been hailed by supporters as a historic achievement. But it is also one that cost Democrats seats in this fall's midterm elections, as the public was still divided in its support of the legislation.

The court battle against the law-once seen as a long-shot strategy by the Republicans-has emerged as the greatest threat to the overhaul. While the Republican-led House has voted to repeal the law, that effort is expected to die in the Democratic-controlled Senate, and in any case would face President Obama's veto pen.

Now even some Democrats who voted for the overhaul are contemplating whether Congress should strip out the so-called individual mandate, a once unthinkable scenario since the provision is seen as the backbone of the law. Since the law requires insurance companies to accept all comers, even people who are already sick, it requires healthy people to buy coverage as well.

Otherwise, economists say, insurance premiums would likely rise sharply because people would wait until they were sick to seek coverage.

The victories are emboldening Republicans in Congress who see attacking the law as a key strategy for retaking the White House in 2012. "This ruling confirms what Americans have been saying for months: The health spending bill is a massive overreach," said Senate Minority Leader Mitch McConnell (R., Ky.)

In his 78-page ruling, Judge Vinson wrote that the entire law must be voided because the individual insurance mandate is "not severable" from the rest of the law. Some laws contain what's known as a severability clause that says the rest of the law stands should a judge strike down a piece of it. But Democrats left it out.

The judge said he didn't believe an injunction to stop the health overhaul was appropriate, because it is generally understood that the executive branch will obey a federal court. The government, however, doesn't believe the ruling requires it to stop implementing the overhaul.

In court filings and testimony before the judge, the Obama administration argued that requiring Americans to carry insurance was within its constitutional powers, particularly those of the Commerce Clause that allows it to regulate economic activity. It argued that the health-care market is unique since all Americans receive medical care at some point. Requiring them to buy insurance is just a way of regulating how they pay for it, the administration said.

Judge Vinson rejected that view. Under the Obama administration's logic, he wrote, "Congress could require that everyone above a certain income threshold buy a General Motors automobile-now partially government-owned-because those who do not buy GM cars (or those who buy foreign cars) are adversely impacting commerce and a taxpayer-subsidized business."

Judge Vinson ruled in favor of the Obama administration on a secondary part of the suit, saying that the law's expansion of the Medicaid federal-state insurance program for the poor doesn't violate the Constitution.

The states argued that the law's addition of 16 million Americans to the Medicaid rolls violates the Spending Clause of the Constitution by burdening them without giving them room to opt out of the program.

But Judge Vinson said states clearly have the option to withdraw from the program, even though states "have little recourse to remaining the very junior partner in this partnership."

Critics say the law's implementation has been undercut by waivers the administration granted to various parties to avoid aspects of the law. For example, the administration has temporarily exempted some companies that provide bare-bones "mini-med" insurance plans from meeting a requirement in the law that says insurers must spend a certain portion of premiums on medical care.

The Obama administration says such waivers are only a bridge until 2014, when the full law takes effect and employers have more options for providing affordable coverage.

In addition to the House vote for repeal, Republicans are drafting a series of bills targeting particularly unpopular pieces of the law, including its requirement that larger employers provide coverage or pay a fee. They're also laying plans to choke off funding to hire federal workers to implement the law.

Under the law, most Americans who do not carry insurance starting in 2014 will pay a penalty. It eventually tops out at $2,085 a year for families lacking insurance.

Health policy experts say one alternative to the provision would be to make insurance more expensive for those who wait to buy coverage, providing an incentive for the uninsured to get covered early. But lawmakers from both parties agree that it would be complicated, and risky, to pull out such a central piece of the law without driving up insurance premiums.

Intersting Statistics to Help Your Companies Marketing Objectives

2011-01-26T12:14:00.000-08:00

Some interesting statistic’s for those of you looking at our under and over age 65 population.

This could help direct your companies future marketing objectives.

38.9 million was the number of people 65 and older in the United States on July 1, 2008.
88.5 million is the projected number of people 65 and older in 2050.
$29,744 was the median 2008 income for householders 65 and older. The corresponding median income for all households was $50,303.
$239,400 was the median net worth for families in 2007 whose head of household was between 65 and 74. The corresponding median net worth for all families was $120,300.
80% of those 65 and older owned their homes in 2008.
What’s it mean?
The Senior population is growing like wild as Baby Boomers hit 65 and will continue to grow!
Although Seniors’ incomes are less than other population groups, their net worth is considerably higher.
A large percentage of Seniors own their homes, making them a stable population group.
Seniors have money and stability.

Source: http://seniorjournal.com/; http://en.wikipedia.org/wiki/Homeownership_in_the_United_States

What about purchasing life insurance on a spouse and on children?

2011-01-04T16:04:00.000-08:00

Question: What about purchasing life insurance on a spouse and on children?

Answer:

In certain circumstances, it may be advisable to purchase life insurance on children; generally, however, such purchases should not be made in lieu of purchasing appropriate amounts of life insurance on the family breadwinner(s).
It is of utmost importance that the income-earning capacity of the primary breadwinner be fully protected, if possible, through the purchase of the required amount of life insurance. This should be done before contemplating the purchase of life insurance on children or on a non-wage-earning spouse. Life insurance on a non-wage-earning spouse is often recommended for the purpose of paying for household services lost due to this individual's death. In a dual-earning household, it is important to protect the income earning capacity of both spouses.

Transportation Benefit Limits Unchanged for 2011

2011-01-02T19:19:00.000-08:00

In 2011, personal exemptions and standard deductions will rise and tax brackets will widen due to inflation, the Internal Revenue Service announced in Revenue Procedure 2011-12 on December 23.

These inflation adjustments relate to eight tax provisions that were either modified or extended by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 that became law on Dec. 17. New dollar amounts affecting 2011 returns, filed by most taxpayers in early 2012, include the following:
The value of each personal and dependent exemption, available to most taxpayers, is $3,700, up $50 from 2010.

The new standard deduction is $11,600 for married couples filing a joint return, up $200, $5,800 for singles and married individuals filing separately, up $100, and $8,500 for heads of household, also up $100. The additional standard deduction for blind people and senior citizens is $1,150 for married individuals, up $50, and $1,450 for singles and heads of household, also up $50. Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.

Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $69,000, up from $68,000 in 2010.

The maximum earned income tax credit (EITC) for low- and moderate- income workers and working families rises to $5,751, up from $5,666 in 2010. The maximum income limit for the EITC rises to $49,078, up from $48,362 in 2010.The credit varies by family size, filing status and other factors, with the maximum credit going to joint filers with three or more qualifying children.

The modified adjusted gross income threshold at which the lifetime learning credit begins to phase out is $102,000 for joint filers, up from $100,000, and $51,000 for singles and heads of household, up from $50,000.
Several tax benefits are unchanged in 2011. For example, the monthly limit on the value of qualified transportation benefits (parking, transit passes, etc.) provided by an employer to its employees, remains at $230. Details on these inflation adjustments can be found in Revenue Procedure 2011-12.
By law, the dollar amounts for a variety of tax provisions, affecting virtually every taxpayer, must be revised each year to keep pace with inflation. Most of the new dollar amounts, including retirement-plan-related adjustments, were announced in October. To avoid confusion, the eight provisions released today were not included in the October announcements, due to the anticipated impact of extender legislation. For more details you should contact your accountant or tax specialist. http://www.winthropgray.com/

wellness benefits for plan years beginning after September 23, 2010

2010-12-10T08:14:00.000-08:00

Question:

If an employer maintains a grandfathered health plan, can it maintain a $500 annual limit on preventive and/or wellness benefits for plan years beginning after September 23, 2010?

Answer:

No. Lifetime dollar limits are prohibited and annual dollar limits are first restricted (then, later prohibited)-but only on the value of "essential health benefits."

The IRS, DOL, and HHS have jointly issued interim final regulations (effective August 27, 2010) to implement the rules regarding lifetime and annual dollar limits. These regulations clarify that an exclusion of all benefits for a condition is not considered to be a lifetime or annual dollar limit. However, if any benefits are provided for a condition, then the annual and lifetime prohibitions apply.

"Essential health benefits" include minimum benefits in general categories and the items and services within those categories (to be determined by HHS), such as-

·         Ambulatory patient services,

·         Emergency services ,

·         Hospitalization,

·         Maternity and newborn care,

·         Mental health and substance use disorder services, including behavioral health treatment,

·         Prescription ,

·         Rehabilitative and habilitative services and devices,

·         Laboratory services,

·        Preventive and wellness services and chronic disease management , and

·         Pediatric services, including oral and vision care.

Until HHS issues regulations, there is no way to precisely determine which benefits will be considered "essential" within the categories listed above. Many plans have lifetime and annual limits on certain benefits such as infertility coverage and chiropractic services. For purposes of enforcement, until such regulations are issued, the agencies will take into account "good faith" efforts to comply with a reasonable interpretation of "essential health benefits," but a plan must apply this definition consistently.

Small business health care tax credit for 2010

2010-12-05T10:05:00.000-08:00

The Internal Revenue Service released final guidance for small employers eligible to claim the new small business health care tax credit for the 2010 tax year. The release includes a one-page form and instructions small employers will use to claim the credit for the 2010 tax year.

New Form 8941, Credit for Small Employer Health Insurance Premiums, and newly revised Form 990-T are now available on IRS.gov. The IRS also posted on its website the instructions to Form 8941 and Notice 2010-82, both of which are designed to help small employers correctly figure and claim the credit.

Included in the Affordable Care Act enacted in March, the small business health care tax credit is designed to encourage both small businesses and small tax-exempt organizations to offer health insurance coverage to their employees for the first time or maintain coverage they already have.

The new guidance addresses small business questions about which firms qualify for the credit by clarifying that a broad range of employers meet the eligibility requirements, including religious institutions that provide coverage through denominational organizations, small employers that cover their workers through insured multiemployer health and welfare plans, and employers that subsidize their employees' health care costs through a broad range of contribution arrangements.

In general, the credit is available to small employers that pay at least half of the premiums for single health insurance coverage for their employees. It is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.

Small businesses can claim the credit for 2010 through 2013 and for any two years after that. For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax-exempt organizations. Beginning in 2014, the maximum tax credit will increase to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible tax-exempt organizations.

The maximum credit goes to smaller employers -- those with 10 or fewer full-time equivalent (FTE) employees -- paying annual average wages of $25,000 or less. The credit is completely phased out for employers that have 25 or more FTEs or that pay average wages of $50,000 or more per year. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, employers that use part-time workers may qualify even if they employ more than 25 individuals.

Eligible small businesses will first use Form 8941 to figure the credit and then include the amount of the credit as part of the general business credit on its income tax return.
Tax-exempt organizations will first use Form 8941 to figure their refundable credit, and then claim the credit on Line 44f of Form 990-T. Though primarily filed by those organizations liable for the tax on unrelated business income, Form 990-T will also be used by any eligible tax-exempt organization to claim the credit, regardless of whether they are subject to this tax.

What is considered a rescission?

2010-11-12T11:02:00.000-08:00

On June 22, 2010, the Departments of the Treasury, Labor and Health and Human Services ("HHS") released interim final regulations for group health plans and health insurance coverage relating to status as a preexisting conditions, lifetime and annual limits, rescissions, and patient protections under the Patient Protection and Affordable Care Act ("Affordable Care Act"). These regulations are under Section 9815(a)(1) of the Internal Revenue Code ("Code"), Section 715(a)(1) of the Employee Retirement Income Security Act ("ERISA") and Section XXVII of the Public Health Service Act (26 CFR 54.9815-2704T,2711T, 2712T, and 2719AT, 29 CFR 2590.715-2704, 2711, 2112, and 2719A and 45 CFR 147.108, 126, 128 and 138, The following will summarize the provisions of the regulations.

Prohibitions on Preexisting Condition Exclusions
Group health plans and insurance companies will be prohibited from excluding individuals from coverage on the basis of any pre-existing condition exclusion. This rule will apply with respect to enrollees under the age of 19 for plan years beginning on or after September 23, 2010. For enrollees age 19 and over, the prohibition will apply for plan years beginning on or after January 1, 2014. This prohibition on pre-existing condition exclusions will also apply to grandfathered health plans. In addition, a blanket prohibition is created on pre-existing condition exclusions for all individual insurance policies and employer plans.

What is not considered a Preexisting Condition? These regulations make it clear the prohibition applies not just an exclusion of coverage of specific benefits associated with a preexisting condition in the case of a participant, but a complete exclusion from such plan or coverage, if that exclusion is based on a preexisting condition. These regulations do not prohibit a plan or a policy from excluding benefits if the exclusion applies regardless of when the condition arose relative to the effective date of coverage. Such exclusion will not be considered excluding a preexisting condition.

Lifetime and Annual Limits
Group health plans, and insurance companies are also prohibited from providing coverage that contains a lifetime limitation on the dollar value of "essential health benefits" for any participant or beneficiary. Similarly, group health plans and insurance companies are prohibited from imposing annual limitations on the dollar value of "essential health benefits" to any participant or beneficiary. This provision is otherwise applicable for plan years beginning on or after September 23, 2010, and it will apply to grandfathered health plans. Prior to January 1, 2014, however, a group health plan is free to establish a "restricted annual limit" on the dollar value of an individual's benefits that are part of "essential health benefits" as determined by HHS. Additionally, group health plans and insurance companies will remain free to impose either lifetime or annual limits on benefits that will not constitute "essential health benefits."

Additionally, group health plans and insurance companies will remain free to impose either lifetime or annual limits on benefits that will not constitute "essential health benefits."

What are Essential Health Benefits? The regulations define "essential health benefits" by referencing Section 1302(b) of the Affordable Care Act, but do provide any detail. Regulations on Section 1302(b) of the Affordable Care Act have not been released. However, Section 1302(b) of the Affordable Care Act provides that these items must be included:

*Ambulatory patient services.
*Emergency services.
*Hospitalization.
*Maternity and newborn care.
*Mental health and substance use disorder services, including behavioral health treatment.
*Prescription drugs.
*Rehabilitative and habilitative services and devices.
*Laboratory services.
*Preventive and wellness services and chronic disease management.
*Pediatric services, including oral and vision care.
What Plans are excluded? Certain account-based plans are exempt from the restriction on annual limits. Health Flexible Spending Accounts, Medical Savings Accounts and Health Savings Accounts are specifically exempt. Health Reimbursement Accounts ("HRA") are specifically exempt if they are integrated with other coverage as part of a group health plan. The regulations also exempt retiree-only HRAs. The regulations reserve judgment on standalone HRAs.

Are full exclusions of conditions still possible? The regulations clarify that the prohibitions from providing coverage that contain a lifetime limitation on the dollar value of "essential health benefits" does not prevent a plan or an insurance company from excluding all benefits for a condition, but if any benefits are provided for a condition, then all of the requirements will apply. An exclusion of all benefit for a condition is not considered to be an annual or lifetime dollar limit.

What are the limits on "restricted annual limits"? In order to mitigate the potential for premium increases for all plans and policies, while at the same time ensuring access to "essential health benefits", the regulations adopt a three-year phased approach for restricted annual limits. Under these regulations, annual limits on the dollar value of benefits that are "essential health benefits" may not be less than the following amounts for plan years (in the individual market, policy years) beginning before January 1, 2014:

*For plan or policy years beginning on or after September 23, 2010 but before September 23, 2011, $750,000;

* For plan or policy years beginning on or after September 23, 2011 but before September 23, 2012, $1.25 million; and

* For plan or policy years beginning on or after September 23, 2012 but before January 1, 2014, $2 million.
As these are minimums for plan years (in the individual market, policy years) beginning before 2014, plans or insurance companies may use higher annual limits or impose no limits. Plans and policies with plan or policy years that begin between September 23 and December 31 have more than one plan or policy year under which the $2 million minimum annual limit is available; however, a plan or policy generally may not impose an annual limit for a plan year (in the individual market, policy year) beginning after December 31, 2013.

How do these limits apply? The minimum annual limits for plan or policy years beginning before 2014 apply on an individual-by-individual basis. Thus, any overall annual dollar limit on benefits applied to families may not operate to deny a covered individual the minimum annual benefits for the plan year (in the individual market, policy year). These interim final regulations clarify that, in applying annual limits for plan years (in the individual market, policy years) beginning before January 1, 2014, the plan or health insurance coverage may take into account only "essential health benefits".

How do these restricted annual limits apply to mini-med plans? The restricted annual limits provided in these regulations are designed to ensure, in the vast majority of cases, that individuals would have access to needed services with a minimal impact on premiums. So that individuals with certain coverage, including coverage under a limited benefit plan or so-called "mini-med" plans, would not be denied access to needed services or experience more than a minimal impact on premiums, these regulations provide for HHS to establish a program under which the requirements relating to restricted annual limits may be waived if compliance with these regulations would result in a significant decrease in access to benefits or a significant increase in premiums. Guidance from HHS regarding the scope and process for applying for a waiver is expected to be issued in the near future.

Is there a new notice requirement for those who now eligible because of the repeal of life time limits? These regulations also provide that individuals who reached a lifetime limit under a plan or health insurance coverage prior to the issuance of these regulations and are otherwise still eligible under the plan or health insurance coverage must be provided with a notice that the lifetime limit no longer applies. If such individuals are no longer enrolled in the plan or health insurance coverage, the employer's plan or insurance company must provide an enrollment (in the individual market, reinstatement) opportunity for such individuals. In the individual market, this reinstatement opportunity does not apply to individuals who reached their lifetime limits on individual health insurance coverage if the contract is not renewed or otherwise is no longer in effect. It would apply, however, to a family member who reached the lifetime limit in a family policy in the individual market while other family members remain in the coverage. These notices and the enrollment opportunity must be provided beginning not later than the first day of the first plan year (in the individual market, policy year) beginning on or after September 23, 2010. Anyone eligible for an enrollment opportunity must be treated as a special enrollee. This means that they must be given the right to enroll in all of the benefit packages available to similarly situated individuals upon initial enrollment.

Prohibition on Rescission
Group health plans and insurance companies will generally be prohibited from rescinding coverage with respect to an enrollee once such enrollee is covered. The exceptions will be for fraud or intentional misrepresentation by the enrollee, nonpayment of premiums, termination of the plan, or loss of eligibility. This standard applies to all rescissions, whether in the group or individual insurance market, and whether for insured or self-insured coverage. These rules also apply regardless of any contestability period that may otherwise apply. This new rule is effective for plan years beginning on or after September 23, 2010, and will apply to grandfathered health plans.

How do these new standards apply? These regulations include several clarifications regarding the standards for rescission. First, these regulations clarify that these rescission rules apply whether the rescission applies to a single individual, an individual within a family, or an entire group of individuals. Thus, for example, if an insurance company attempted to rescind coverage of an entire employment-based group because of the actions of an individual within the group, the standards of these regulations would apply. Second, these regulations clarify that these rescission rules apply to representations made by the individual or a person seeking coverage on behalf of the individual. Thus, if a plan sponsor seeks coverage from an insurance company for an entire employment-based group and makes representations, for example, regarding the prior claims experience of the group, the standards of these regulations would also apply.

What is fraud? These regulations clarify that, to the extent that an omission constitutes fraud, that omission would permit the plan or issuer to rescind coverage under this section. An example in these interim final regulations illustrates the application of the rule to misstatements of fact that are inadvertent.

What is considered a rescission? For purposes of these regulations, a rescission is a cancellation or discontinuance of coverage that has retroactive effect. For example, a cancellation that treats a policy as void from the time of the individual's or group's enrollment is a rescission. As another example, a cancellation that voids benefits paid up to a year before the cancellation is also a rescission for this purpose. A cancellation or discontinuance of coverage with only a prospective effect is not a rescission, and neither is a cancellation or discontinuance of coverage that is effective retroactively to the extent it is attributable to a failure to timely pay required premiums or contributions towards the cost of coverage.

When coverage is rescinded, must advance notice be sent? In addition to setting a new Federal floor standard for rescissions, the new law also adds a new advance notice requirement when coverage is rescinded where still permissible. Specifically, the new law provides that coverage may not be cancelled unless prior notice is provided. These regulations provide that a group health plan, or insurance company offering group health insurance coverage, must provide at least 30 calendar days advance notice to an individual before coverage may be rescinded. The notice must be provided regardless of whether the rescission is of group or individual coverage; or whether, in the case of group coverage, the coverage is insured or self-insured, or the rescission applies to an entire group or only to an individual within the group. This 30-day period will provide individuals and plan sponsors with an opportunity to explore their rights to contest the rescission, or look for alternative coverage, as appropriate.

Patient Protections
Group health plans and insurance companies will be subject to several "patient protection" requirements. A plan that requires the designation of a participating primary care provider will be required to allow participants to choose any such provider who is available (including the choice of a pediatric specialist as the primary care provider for a child). Additionally, group health plans that cover emergency services will be required to cover such services without the need for prior authorization and without regard to any term or condition of the coverage, or whether the provider participates in such plan. Group health plans also will not be able to require authorization or a referral before a female participant/beneficiary could seek obstetrical or gynecological care from a professional specializing in such care. These requirements will be effective for plan years beginning on or after January 1, 2014, but will not apply to grandfathered health plans.

Choice of Health Care Professional: Under these regulations, the plan or insurance company must provide a notice informing each participant (or in the individual market, the primary subscriber) of the terms of the plan or health insurance coverage regarding designation of a primary care provider. Accordingly, these regulations require such plans and insurance companies to provide a notice to participants (in the individual market, primary subscribers) of these rights when applicable. Model language is provided in these regulations. The notice must be provided whenever the plan or insurance company provides a participant with a summary plan description or other similar description of benefits under the plan or health insurance coverage, or in the individual market, provides a primary subscriber with a policy, certificate, or contract of health insurance. The following model language can be used to satisfy this disclosure requirement:

(A) For plans and issuers that require or allow for the designation of primary care providers by participants or beneficiaries, insert:
[Name of group health plan or health insurance issuer] generally [requires/allows] the designation of a primary care provider. You have the right to designate any primary care provider who participates in our network and who is available to accept you or your family members. [If the plan or health insurance coverage designates a primary care provider automatically, insert: Until you make this designation, [name of group health plan or health insurance issuer] designates one for you.] For information on how to select a primary care provider, and for a list of the participating primary care providers, contact the [plan administrator or issuer] at [insert contact information].

(B) For plans and issuers that require or allow for the designation of a primary care provider for a child, add:
For children, you may designate a pediatrician as the primary care provider.

(C) For plans and issuers that provide coverage for obstetric or gynecological care and require the designation by a participant or beneficiary of a primary care provider, add:
You do not need prior authorization from [name of group health plan or issuer] or from any other person (including a primary care provider) in order to obtain access to obstetrical or gynecological care from a health care professional in our network who specializes in obstetrics or gynecology. The health care professional, however, may be required to comply with certain procedures, including obtaining prior authorization for certain services, following a pre-approved treatment plan, or procedures for making referrals. For a list of participating health care professionals who specialize in obstetrics or gynecology, contact the [plan administrator or issuer] at [insert contact information].

Emergency Services: These regulations require that a plan or health insurance coverage providing emergency services must do so without the individual or the health care provider having to obtain prior authorization (even if the emergency services are provided out of network) and without regard to whether the health care provider furnishing the emergency services is an in-network provider with respect to the services. The emergency services must be provided without regard to any other term or condition of the plan or health insurance coverage other than the exclusion or coordination of benefits, an affiliation or permitted waiting period applicable or cost-sharing requirements. For a plan or health insurance coverage with a network of providers that provides benefits for emergency services, the plan or insurance company may not impose any administrative requirement or limitation on benefits for out-of-network emergency services that is more restrictive than the requirements or limitations that apply to in-network emergency services.

Cost-sharing requirements expressed as a copayment amount or coinsurance rate imposed for out-of-network emergency services cannot exceed the cost-sharing requirements that would be imposed if the services were provided in-network. Out-of-network providers may, however, also balance bill patients for the difference between the providers' charges and the amount collected from the plan or issuer and from the patient in the form of a copayment or coinsurance amount. The Affordable Care Act excludes such balance billing amounts from the definition of cost sharing, and the requirement that cost sharing for out-of-network services be limited to that imposed in network only applies to cost sharing expressed as a copayment or coinsurance rate.

Because the Affordable Care Act does not require plans or issuers to cover balance billing amounts, and does not prohibit balance billing, even where the protections in the statute apply, patients may be subject to balance billing.

To avoid the circumvention of these new protections, it is necessary that a reasonable amount be paid before a patient becomes responsible for a balance billing amount. Thus, these regulations require that a reasonable amount be paid for services by some objective standard. In establishing the reasonable amount that must be paid, a wide variation had to bet taken into account in how plans and insurance companies determine both in-network and out-of network rates. Accordingly, these regulations consider three amounts: the in-network rate, the out-of-network rate, and the Medicare rate. Specifically, a plan or issuer satisfies the copayment and coinsurance limitations in the law if it provides benefits for out-of-network emergency services in an amount equal to the greatest of three possible amounts:

1)    The amount negotiated with in-network providers for the emergency service furnished;
2)    The amount for the emergency service calculated using the same method the plan generally uses to determine payments for out-of-network services (such as the usual, customary, and reasonable charges) but substituting the in-network cost-sharing provisions for the out-of-network cost-sharing provisions; or
3)    The amount that would be paid under Medicare for the emergency service.
Each of these three amounts is calculated excluding any in-network copayment or coinsurance imposed with respect to the participant, beneficiary, or enrollee.

In applying the rules relating to emergency services, the law and these regulations define the terms emergency medical condition, emergency services, and stabilize. These terms are defined generally in accordance with their meaning under the Emergency Medical Treatment and Labor Act ("EMTALA"), section 1867 of the Social Security Act. There are, however, some minor variances from the EMTALA definitions. For example, both EMTALA and PHS Act section 2719A define "emergency medical condition" in terms of the same consequences that could reasonably be expected to occur in the absence of immediate medical attention. Under EMTALA regulations, the likelihood of these consequences is determined by qualified hospital medical personnel, while under the new law the standard is whether a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in such consequences.

Question: What is coinsurance?

2010-11-04T05:28:00.000-07:00

Question: What is coinsurance?

Answer:

Insurance underwritten jointly with another or others. Coinsurance is the portion of the medical bill that is shared by both the insured and the insurer. For example, if you had an 85% to $5000 coinsurance, you would be responsible for 15% of the medical expense while the insurer would be responsible for the other 85%.

Under the Privacy Rule, employer health plans that are not in compliance can face new civil and criminal penalties.

2010-11-02T05:44:00.000-07:00

These penalties are based on a tiered approach, as follows:

· No Knowledge. Where a person does not know, and by exercising due diligence would not have known, that the person violated HIPAA's administrative simplification provisions; the minimum penalty is $100 per violation, with a cap of $25,000 for violations of an identical requirement or prohibition. The maximum penalty is $50,000 per violation, with a cap of $1.5 million for violations of an identical requirement or prohibition.

· Reasonable Cause. Where a violation is due to "reasonable cause" and not "willful neglect," the minimum penalty is $1,000 per violation, with a cap of $100,000 for violations of an identical requirement or prohibition. The maximum penalty is $50,000 per violation, with a cap of $1.5 million for violations of an identical requirement or prohibition.

· Willful Neglect (but Corrected). Where a violation is due to "willful neglect," but was corrected, the minimum penalty is $10,000 per violation, with a cap of $250,000 for violations of an identical requirement or prohibition. The maximum penalty is $50,000 per violation, with a cap of $1.5 million for violations of an identical requirement or prohibition.

· Willful Neglect (but not Corrected). Where a violation is due to "willful neglect," but was not corrected, the minimum penalty is $50,000 per violation, with a cap of $1.5 million for violations of an identical requirement or prohibition. Additionally, there can be individual penalties of as much as $25,000 per violation or up to $250,000 or 10 years in prison for information knowingly and wrongfully disclosed.

A new survey shows an average worker with a family plan pays nearly $4,000 a year

2010-10-28T15:06:00.000-07:00

A new survey shows an average worker with a family plan pays nearly $4,000 a year, up 14% from 2009. Meanwhile, the average employer contribution to a family plan hasn't increased at all.

As employers struggle with rising healthcare costs and a sour economy, U.S. workers for the first time in at least a decade are being asked to shoulder the entire increase in the cost of health benefits on their own.

The average worker with a family plan was hit with 14% premium increase this year, pushing the bill to nearly $4,000 a year, according to a survey by the nonprofit Henry J. Kaiser Family Foundation and the Health Research and Educational Trust.

That is the largest annual increase since the survey began in 1999 and a marked change from previous years, when employers generally split the rise in the cost of premiums with their employees.

The average employer contribution to a family plan did not go up at all this year, meaning the entire increase was borne by workers.

At the same time, nearly a third of employers reported that they either reduced the scope of benefits they are offering this year or increased the amount that workers must pay out of pocket for their medical care.

Workers saw average copayments for routine office visits increase 10% and deductibles continue their surge upward.

In 2010, more than a quarter of American workers with employer-provided health coverage were in plans with deductibles of at least $1,000.

"It's really bad news for everybody," said Helen Darling, president of the National Business Group on Health, an organization of large employers that provide coverage to about 50 million workers, retirees and dependents.

Overall, premium growth slowed slightly this year to 3%, with the average annual cost of a family health plan reaching $13,770. Workers picked up 30% of that bill. The average plan for an individual cost $5,049.

The squeeze, reported by employers between January and May, largely reflects the fallout of the ongoing economic slowdown and may be ameliorated in future years as the new healthcare law is implemented.

But it could further complicate the Obama administration's efforts to rally support for the law, which is expected to do relatively little in the short term to contain rising medical bills.

"There have been times when employers have been able to absorb costs. This is not one of those times," said James Gelfand, health policy director at the U.S. Chamber of Commerce, a leading critic of the new law.

The law, which focused on expanding coverage for Americans who don't get insurance through work, was designed to largely preserve the existing employer-based healthcare system.

Independent analyses of the law estimate that most Americans will continue to get insurance through their employer, as about 157 million do now.

Administration officials Thursday pointed to two new studies from the Rand Corp. and the Commonwealth Fund that predicted small businesses in particular would probably expand coverage in coming years, in part with help from billions of dollars of in new tax credits.

"We have really just begun our efforts," said Nancy-Ann DeParle, director of the White House Office of Health Reform, emphasizing the growing number of tools government regulators have to control insurance premiums.

The Kaiser survey found that the percentage of firms offering health benefits rose to 69% from 60% this year, an unexpected increase that analysts speculate may reflect the failure of many businesses that didn't offer benefits.

But the survey suggests that the coverage workers are being offered is becoming increasingly unattractive as employers try to control their costs in the down economy.

"We were all so focused on the reform debate that I think we took our eyes off the fact that what we call heath insurance in this country is changing," said Kaiser foundation President Drew Altman. "What workers get looks less and less like the comprehensive coverage their parents had."

Since 2005, workers' contributions to insurance premiums have shot up 47%, far outpacing the 18% increase in wages over the same period, according to the survey.

The squeeze on employees at small and medium-sized businesses has been particularly intense, as these employers face the biggest challenges providing their workers with health benefits.

Nearly half of all workers at firms with fewer than 200 employees are now in plans with deductibles of $1,000 or more.

The bleak statistics do not reflect some more-promising changes in the way employers are designing their health benefits, said Paul Fronstin, senior research associate with the nonpartisan Employee Benefit Research Institute.

Some large companies, for example, are raising copays for specialist care while lowering them for primary care in a bid to encourage workers to use more preventive care, which is typically less expensive in the long run.

"There are more things going on than just slashing benefits," Fronstin said.

The new law may also help bolster the benefits workers get from employer-provided coverage by prohibiting plans from imposing lifetime benefit limits and by requiring them to cover dependent children under age 26.

If employers substantially raise deductibles and copays or scale back their contribution to employees' premiums by more than 5 percentage points, the health benefits would be subject to even more mandates.

These include covering preventive services such as cancer screenings with no copays or other cost sharing.

The added protections for workers have been widely praised by consumer advocates. They are expected to further push up premiums, at least for the short term, however.

And businesses and workers probably will have to wait longer for the benefits of provisions in the new law designed to improve care and make it more efficient.

That will require patience, said Kaiser's Altman.

"Health reform may not be perfect," he said. "But when it comes to cost containment, it is the only game in town, as opposed to the current strategy, which by default seems to only be shifting more costs onto workers."

The Affordable Care Act's New Patient's Bill of Rights

2010-10-26T18:29:00.000-07:00

A major goal of the Affordable Care Act - the health insurance reform legislation President Obama signed into law on March 23 - is to put American consumers back in charge of their health coverage and care. Insurance companies often leave patients without coverage when they need it the most, causing them to put off needed care, compromising their health and driving up the cost of care when they get it. Too often, insurance companies put insurance company bureaucrats between you and your doctor. The Affordable Care Act cracks down on the some of the most egregious practices of the insurance industry while providing the stability and the flexibility that families and businesses need to make the choices that work best for them.

Today, the Departments of Health and Human Services (HHS), Labor, and Treasury issued regulations to implement a new Patients Bill of Rights under the Affordable Care Act - which will help children (and eventually all Americans) with pre-existing conditions gain coverage and keep it, protect all Americans' choice of doctors and end lifetime limits on the care consumers may receive. These new protections apply to nearly all health insurance plans.1

How These New Rules Will Help You

* Stop insurance companies from limiting the care you need.

For most plans starting on or after September 23, these rules stop insurance companies from imposing pre-existing condition exclusions on your children; prohibit insurers from rescinding or taking away your coverage based on an unintentional mistake on an application; ban insurers from setting lifetime limits on your coverage; and restrict their use of annual limits on coverage.

* Remove insurance company barriers between you and your doctor. For plans starting on or after September 23, these rules ensure that you can choose the primary care doctor or pediatrician you want from your plan's provider network, and that you can see an OB-GYN without needing a referral. Insurance companies will not be able to require you to get prior approval before seeking emergency care at a hospital outside your plan's network. These protections apply to health plans that are not grandfathered.

Builds On Other Affordable Care Act Policies

These new protections complement other parts of the Affordable Care Act including:

* Reviewing Insurers' Premium Increases. HHS recently offered States $51 million in grant funding to strengthen review of insurance premiums. Annual premium hikes can put insurance out of reach of many working families and small employers. These grants are a down-payment that enable States to act now on reviewing, disclosing, and preventing unreasonable rate hikes. Already, a number of States, including California, New York, Maine, Pennsylvania and others are moving forward to improve their oversight and require more transparency of insurance companies' requests to raise rates.

* Getting the Most from Your Premium Dollars. Beginning in January, the Affordable Care Act requires individual and small group insurers to spend at least 80% and large group insurers to spend at least 85% of your premium dollars on direct medical care and efforts to improve the quality of care you receive - and rebate you the difference if they fall short. This will limit spending on overhead and salaries and bonuses paid to insurance company executives and provide new transparency into how your dollars are spent. Insurers will be required to publicly disclose their rates on a new national consumer website - HealthCare.gov.

* Keeping Young Adults Covered. Starting September 23, children under 26 will be allowed to stay on their parent's family policy, or be added to it. Group health plans that are grandfathered plans can limit this option to adult children that don't have another offer of employment-based coverage. Many insurance companies and employers have agreed to implement this program early, to avoid a gap in coverage for new college graduates and other young adults.

* Providing Affordable Coverage to Americans without Insurance due to Pre-existing Conditions: Starting July 1, Americans locked out of the insurance market because of a pre-existing condition can begin enrolling in the Pre-existing Condition Insurance Plan (PCIP). This program offers insurance without medical underwriting to people who have been unable to get it because of a preexisting condition. It ends in 2014, when the ban on insurers refusing to cover adults with pre-existing conditions goes into effect and individuals will have affordable choices through Exchanges - the same choices as members of Congress.

New Consumer Protections Starting As Early As This Fall

The new Patients Bill of Rights regulations detail a set of protections that apply to health coverage starting on or after September 23, 2010, six months after the enactment of the Affordable Care Act. They are:

* No Pre-Existing Condition Exclusions for Children Under Age 19. Each year, thousands of children who were either born with or develop a costly medical condition are denied coverage by insurers. Research has shown that, compared to those with insurance, children who are uninsured are less likely to get critical preventive care including immunizations and well-baby checkups. That leaves them twice as likely to miss school and at much greater risk of hospitalization for avoidable conditions.

* A Texas insurance company denied coverage for a baby born with a heart defect that required surgery. Friends and neighbors rallied around the family to raise the thousands of dollars needed to pay for the surgery and put pressure on the insurer to pay for the needed treatment. A week later the insurer backed off and covered the baby.2

The new regulations will prohibit insurance plans from denying coverage to children based on a pre-existing conditions. This ban includes both benefit limitations (e.g., an insurer or employer health plan refusing to pay for chemotherapy for a child with cancer because the child had the cancer before getting insurance) and outright coverage denials (e.g., when the insurer refuses to offer a policy to the family for the child because of the child's pre-existing medical condition). These protections will apply to all types of insurance except for individual policies that are "grandfathered," and will be extended to Americans of all ages starting in 2014.

* No Arbitrary Rescission's of Insurance Coverage. Right now, insurance companies are able to retroactively cancel your policy when you become sick, if you or your employer made an unintentional mistake on your paperwork.

* In Los Angeles, a woman undergoing chemotherapy had her coverage cancelled by an insurer who insisted her cancer existed before she bought coverage. She faced more than $129,000 in medical bills and was forced to stop chemotherapy for several months after her insurance was rescinded.3

Under the regulations, insurers and plans will be prohibited from rescinding coverage - for individuals or groups of people - except in cases involving fraud or an intentional misrepresentation of material facts. Insurers and plans seeking to rescind coverage must provide at least 30 days advance notice to give people time to appeal. There are no exceptions to this policy.

* No Lifetime Limits on Coverage. Millions of Americans who suffer from costly medical conditions are in danger of having their health insurance coverage vanish when the costs of their treatment hit lifetime limits set by their insurers and plans. These limits can cause the loss of coverage at the very moment when patients need it most. Over 100 million Americans have health coverage that imposes such lifetime limits.

A teenager was diagnosed with an aggressive form of leukemia requiring chemotherapy and a stay in the intensive care unit. He reached his family's plan's $1 million lifetime limit in less than a year. His parents had to turn to the public for help when the hospital informed them it needed either $600,000 in certified insurance or a $500,000 deposit to perform the bone marrow transplant he needed.4

The regulation released today prohibits the use of lifetime limits in all health plans and insurance policies issued or renewed on or after September 23, 2010.

* Restricted Annual Dollar Limits on Coverage. Even more aggressive than lifetime limits are annual dollar limits on what an insurance company will pay for health care. Annual dollar limits are less common than lifetime limits, involving 8 percent of large employer plans, 14 percent of small employer plans, and 19 percent of individual market plans. But for people with medical costs that hit these limits, the consequences can be devastating.

*One study found that 10 percent of cancer patients reached a limit of what insurance would pay for treatment - and a quarter of families of cancer patients used up all or most of their savings on treatment.5

The rules will phase out the use of annual dollar limits over the next three years until 2014 when the Affordable Care Act bans them for most plans. Plans issued or renewed beginning September 23, 2010, will be allowed to set annual limits no lower than $750,000. This minimum limit will be raised to $1.25 million beginning September 23, 2011, and to $2 million beginning on September 23, 2012. These limits apply to all employer plans and all new individual market plans. For plans issued or renewed beginning January 1, 2014, all annual dollar limits on coverage of essential health benefits will be prohibited

Employers and insurers that want to delay complying with these rules will have to win permission from the Federal government by demonstrating that their current annual limits are necessary to prevent a significant loss of coverage or increase in premiums. Limited benefit insurance plans - which are often used by employers to provide benefits to part-time workers - are examples of insurers that might seek this kind of delay. These restricted annual dollar limits apply to all insurance plans except for individual market plans that are grandfathered.

* Protecting Your Choice of Doctors. Being able to choose and keep your doctor is a key principle of the Affordable Care Act, and one that is highly valued by Americans. People who have a regular primary care provider are more than twice as likely to receive recommended preventive care; are less likely to be hospitalized; are more satisfied with the health care system, and have lower costs. Yet, insurance companies don't always make it easy to see the provider you choose. One survey found that three-fourths of OB-GYNs reported that patients needed to return to their primary care physicians for permission to get follow-up care.

The new rules make clear that health plan members are free to designate any available participating primary care provider as their provider. The rules allow parents to choose any available participating pediatrician to be their children's primary care provider. And, they prohibit insurers and employer plans from requiring a referral for obstetrical or gynecological (OB-GYN) care. All of these provisions will improve people's access to needed preventive and routine care, which has been shown to improve the health of those treated and avoid unnecessary health care costs. These policies apply to all individual market and group health insurance plans except those that are grandfathered.

* Removing Insurance Company Barriers to Emergency Department Services. Some insurers will only pay for health care provided by a limited number or network of providers - including emergency health care. Others require prior approval before receiving emergency care at hospitals outside of their networks. This could mean financial hardship if you get sick or injured when you are away from home or not near a network hospital.

The new rules make emergency services more accessible to consumers. Health plans and insurers will not be able to charge higher cost-sharing (co payments or coinsurance) for emergency services that are obtained out of a plan's network. The rules also set requirements on how health plans should reimburse out-of-network providers. This policy applies to all individual market and group health plans except those that are grandfathered.

Benefits of Consumer Protections

The new rules will bring immediate relief to many Americans and provide peace of mind to millions more who are only one illness or accident away from medical and financial chaos.

The new ban on lifetime limits would affect group premiums by 0.5% or less and individual market premiums by 0.75% or less. The restricted annual limit policy would affect group and individual markets by roughly 0.1% or less (grandfathered individual market plans are exempt). And, the prohibition of preexisting conditions exclusions for children would affect group health plans by just a few hundredths of a percent. For new plans in the individual market, this impact would be roughly 0.5% in many states. In states with community rating, (roughly twenty states), the impact could be up to 1.0%. These costs are before taking into account benefits.

In addition, the rules will achieve greater cost savings by:

* Reducing the"hidden tax" on insured Americans: By making sure insurance covers people who are most at risk, there will be less uncompensated care and the amount of cost shifting among those who have coverage today will be reduced by up to $1 billion in 2013.

* Improving Americans' health: By making sure that high-risk individuals have insurance, the rules will reduce premature deaths.6 Insured children are less likely to experience avoidable hospital stays than uninsured children7 and, when hospitalized, insured children are at less risk of dying.8

* Protecting Americans' savings: High medical costs contribute to some degree to about half of the more than 500,000 personal bankruptcies in the U.S. in 2007.9 These costs borne by individuals might be assumed by insurance companies once rescission's are banned, annual limits are restricted, lifetime limits are prohibited, and most children have access to health insurance without pre-existing condition exclusions.

* Enhancing workers' productivity: Making sure that kids with health problems have coverage will reduce the number of days parents have to take off from work to care for family members. Parents will also be freed from "job lock," which occurs when people are afraid to take a better job because they might lose coverage for themselves or their families.10

____________________________________________________________________

1 Limits on pre-existing conditions and annual limits will not apply to existing "grandfathered" plans offering individual coverage. For details, see the Fact Sheet and interim final regulations released on the topic on June 14.

2 Jarvis, Jan, "Under Fire, Blue Cross Blue Shield of Texas Offers to Cover Medical Expenses for Crowley Baby," Houston Star-Telegram, (March 31, 2010).

3 Girion, Lisa "Health Net Ordered to Pay $9 million after Canceling Cancer Patient's Policy," Los Angeles Times (2008), available at: http://www.latimes.com/business/la-fi-insure23feb23,1,5039339.story

4 Murphy, Tom. "Patients struggle with lifetime health insurance benefit caps," Los Angeles Times, July 2008.

5 See "National Survey of Households Affected by Cancer." (2006) accessed at http://www.kff.org/kaiserpolls/upload/7591.pdf

6 See, for example, Almond, Doyle, Kowalski, Williams (2010), Doyle (2005), and Currie and Gruber (1996).

7 Keane, Christopher et al. "The Impact of Children's Health Insurance Program by Age." Pediatrics 104:5 (1999), available at: http://pediatrics.aappublications.org/cgi/reprint/104/5/1051 ..

8 Bernstein, Jill et al. "How Does Insurance Coverage Improve Health Outcomes?" Mathematica Policy Research (2010), available: http://www.mathematica-mpr.com/publications/PDFs/Health/Reformhealthcare_IB1.pdf

9 David Himmelstein et al, 2009.

10 Gruber, J. and B. Madrian. "Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature." (2001).