Small Business Medical Insurance and the Impact of Health Care Reform

The Patient Protection and Affordable Care Act (PPACA), otherwise known as the “Health Care Reform Act” was signed into law on March 23, 2010 by President Obama. Most of the initial provisions did not go into affect for 6 months, or September 23, 2010. The bill is a whopping 2000+ pages long, with a 14-page Table of Contents! It’s no wonder that most employers have little comprehension of what is contained in the bill, and less understanding of how the bill will affect their business. To understand the impact of the bill on your business, you should contact a specialist who is an expert on small business medical insurance plans and is familiar with the Act.

In the meantime, we will take a cursory view of health care reform, and a year-by-year snapshot of changes to come. Hopefully, it will provide a starting part for discussion.

The Act contains five key provisions:

1. The requirement for all US citizens and legal residents to have health insurance;

2. Penalties for employers who do not offer health insurance for their employees;

3. State Based Health Exchanges created to offer cost effective insurance options

4. Premium credits for low income individuals;

5. Eliminates pre-existing condition and annual/lifetime benefit limits

A Year by Year Look at Health Care Reform

Some changes went into effect in 2010, such as coverage for adult dependents (dependents until age 26), and several more will happen in 2011. The most significant changes, however, will not go into effect until 2014. Below is a snapshot of key changes that will be going into effect in the coming years:


· No pre-tax reimbursements from “health accounts” for non-prescribed, over the counter medications,

· 20% tax on nonqualified HSA withdrawals,

· Reporting the value of employer sponsored coverage on w-2’s (delayed)

· Automatic enrollment in long term care program, employer may opt out (delayed),

· Drug company fees: $2.5 billion in 2011, $4.2 billion in 2018


· Uniform explanation of coverage,

· Pre-enrollment document sent explaining benefits and exclusions,

· 60 day notice for material modifications, if not provided in uniform explanation of coverage,


· FSA contributions limited to $2,500,

· New federal employer tax, $2.00 per covered individual per plan year

· Medicare payroll tax increase from 1.45% to 2.35%,

· Employer notice to employees of exchanges, premium subsidies, and free choice vouchers,


· Individual mandate – every citizen must have coverage,

· Individual penalties for not purchasing coverage,

· Guaranteed issue,

· State health exchanges effective

· Standard benefit plans, (bronze, silver, gold, platinum),

· Waiting period not more than 90 days,

· Employer penalties for not offering coverage or at least one FTE receives a tax credit,

· Health insurance company fees: $8 billion 2014, $14.3 billion 2018, 2019 prior year amount increased by premium growth rate.


· Cadillac Tax. 40% tax on plans value in excess of $10,200 single, $27,500 family.

Penalties for Non-Coverage

As stated, most of the act’s important provisions will become effective in 2014. The most relevant law for employers is the penalty they will face for non-coverage of employees. The exact penalties are complicated to calculate, base on numerous factors. Some of the basic guidelines are outlined below:

Employers with more than 50 employees:

· If coverage is not offered by the employer and even one full-time employee (FTE) receives a premium tax credit, the employer will pay a fee of $2,000 per FTE, excluding the first 30 ee’s.

· If “affordable” coverage is not offered and one FTE receives a premium tax credit, the employer will pay the lesser of $3,000 for each employee receiving a tax credit, or $2,000 for each FTE. Affordable coverage is defined as an employee cost of health insurance, less than 9.5% of household income and the actuarial value of plan is at least 60%.

· A Voucher will be required if the employee contribution exceeds 8% of household income.

All Employers:

· Employers that offer coverage are required to provide a free choice voucher to employees with incomes less than 400% of the Family Poverty Level (FPL), whose share of premium exceeds 8% but less than 9.8% of their income and who chose to enroll in a plan in the Exchange.

· A Voucher equals to what the employer would have paid to provide coverage under the employer’s plan. Employers providing free choice vouchers are not subject to penalties.

Employers with 200 or more employees

· Required to automatically enroll employees into health plans offered by employer. Employees may opt out.

If the provisions of the health care reform act sound complex, they are! We highly recommend you consult with a specialist who is an expert on small business medical insurance plans and is familiar with the Act. Feel free to contact CPEhr’s benefits specialist with any health care reform questions.

How to Make Medical Insurance More Affordable

One of the things that can really throw a small operation into chaos is an accidental injury or a sudden illness. When the number of employees is few, almost everyone who works in the business is a key person. Even in countries where there is a pubic health service, waiting times for a consult or treatment are a real problem. This makes a health insurance plan a practical necessity for many types of business. The ability to buy expert medical help when it is most needed can keep the business safe and well. Yet, the premiums for medical insurance have been rising faster than inflation for the last two or three years. There are a number of reasons for this. The most important are the rising fees charged by hospitals and doctors, the cost of using many of the new “high-tech” diagnostic tools, the price of medications, and so on (not forgetting that insurance companies maintain their own profits to keep their stockholders happy). As a result, many smaller businesses have been forced to cut back on their cover, often coming down to provision against the more rare but catastrophic accidents and diseases.

Cutting back on the cover or running the risk of doing without is acceptable so long as everyone is young and healthy. But you never know what tomorrow will bring. It only takes one traffic accident and a long delay before effective treatment gets the key person back to work. So small businesses are defending their interests by banding together. There are insurance groups forming within established chambers of commerce. New trade alliances and associations are being formed to approach insurance companies directly. The more businesses come together, the more powerful their buying power. If one business with twenty employees asks for a health plan, that’s small potatoes. If several hundred businesses, each with twenty employees, approach the same insurance company, they get listened to when it comes to discounts. When the association does its own negotiating, the members also avoid paying commission to agents which helps the bottom line even more.

In the small business insurance market, the insurers prefer to pick off the businesses individually. That way, there’s no effective limit on the pace of premium increases. Once businesses pool their cover, it’s the same premium rate per plan member for all within the pool and so more difficult for the insurer to push up premiums without all complaining (and, potentially, everyone moving on to another insurer). There are various legislative proposals to force insurance companies to more actively support small businesses. These include making policies more portable between insurance companies, requiring the development of more clinics and other medical resources to improve access to care and treatment outside the emergency room system, and so on. All these efforts should be supported so that business insurance costs can be brought under more transparent control.

Warning to Health Insurance Experts – Dangerous Prospect Questions

A person’s goal in purchasing health insurance is to get the best possible coverage at the best possible price. Almost all life/health insurance representatives are more than glad to sell you a policy. Frequently selling you one with as high of a premium that you will agree to.

QUESTION:   HOW MANY COMPANIES OFFERING MAJOR MEDICAL DO YOU REPRESENT?   Truthful answer, 70% of agents represent one, 20% represent two, and only 10% are licensed with three or more. In most states, there are a minimum of 200 major medical insurers, HMOs, and PPOs. An insurance person claiming to be very knowledgeable or an expert would have access to numerous insurers right then and there. Within a major medical plan there are so many variables including doctor co-pays, specialists, deductibles, outpatient care, ambulance, prescriptions and many more.

Do you know many insurance companies will not pay for a $500 ambulance transport unless it turned out to be a matter of life and death? If a person is having serious chest pains, or multiple stroke symptoms, you are going to call an ambulance. Most often, only GOD, not the insurance company can determine what would have happened if an ambulance was not used. How often do you expect the claim will go in your favor?

QUESTION:  HOW DO MAJOR MEDICAL, MAJOR HOSPITAL, HMOs and PPOs DIFFER AND WHICH DO I CHOOSE? If the agent can answer this, and ends up with major medical preferred (which could be the right answer), ask another question immediately. Can you also offer me right now an HMO or  PPO plan? You are testing the agent’s knowledge and ethics. Tremendous amounts of agents selling health insurance are paid 3 times as much to sell you major medical. They often do not bother being licensed with say a Blue Cross HMO or a PPO provided. These plans are often crucial to individuals with pre-existing health conditions that require a 3 month, 6 month or longer waiting period.

QUESTION: DO YOU HAVE A HIGH DEDUCTIBLE MAJOR MEDICAL & WILL IT SAVE ME MONEY?   You have 200 to 300 major medical insurers available to you. Chances are very high your agent is not polished on the details nor has a high deductible plan in his or her portfolio. There are likely around 40 major medical insurers in your coverage area with high deductible options. Many of these same insurers have co-pay options of 70% or 80% to a maximum where it becomes 100% coverage. This plan is often referred to as HDHP, High Deductible Health Plan. You may be shocked by how much you can lower your rates.

QUESTION: CAN YOU EXPLAIN TO ME WHAT AN HSA IS, & DO YOU KNOW HOW I CAN SET ONE UP?   Correct answer passing rate on this question would be 5% on the high side. 20% on the bluffing side. A HSA stands for Health Savings Account. It is NOT an insurance policy. President Bush approved the act of setting up an HSA in 1993. Simply put an HSA is a savings plan alternative that you set up, pay into, draw out of for uncovered health expenses, and let accumulate on for future costs on a tax-free basis. For the self-employed, some tax benefits do not currently apply. Your bank, insurance company, credit union, etc can set it up.

SUPER QUESTION: WOULD YOU EXPLAIN WHICH WOULD BENEFIT ME THE MOST, A MAJOR MEDICAL PLAN OR A COMBINATION HDHP AND HSA?   Only a health insurance expert can do the job on answering this question, plus the ability to put the honest answer into effect. I have been studying insurance agent traits and abilities for over 25 years, and my best estimate would be one percent. Now where are you going to find that one percent? The yellow pages are probably only going to provide imposters, even though some have the best intentions.

Here is how to find the one percent. I used a major internet and typed in the following four words: hsa hpip major medical. The first 30 listings not only provided sources, but a bonanza of information not contained here. Insurance Agents, try this internet search and promote yourself to being a true health insurance expert.

Pet Health Insurance – What to Consider Before Purchasing Pet Medical Insurance?

Pet health insurance is not a new idea. It has been available for more than 20 years. But there are still some people that find pet health insurance is still relatively new.

Currently, there are many options. While some pet owners are doubtful, some fear that adding insurance to veterinary medicine will follow the path of insurance red tape and problems found in human health care fields.

Pet health care policies are in some ways similar to human insurance policies. There are annual premiums, deductibles and different coverage plans based on what the owner chooses. Plans are based on species, age, pre-existing conditions and in some cases, even upon the lifestyle of the pet.

According to some experts, the best time to purchase pet insurance is when the animal is still young. Many pet health insurance plans do not cover pre- existing conditions. Insuring early can also provide coverage for certain initial veterinary procedures such as vaccinations and spaying.

When looking for a pet health insurance, consider the company stability. Even if pet health insurance has been available for more than 25 years and has grown to become a strong industry, there are few companies who have been on the market for a while. So, when shopping for pet insurance, do your research about the insurance company. Know how long it has been in business and if it is financially solid.

Make sure that the company has in-depth veterinary knowledge. A quality pet health insurance provider should have knowledge of the veterinary and insurance industries. It should have trained veterinary professionals on their staff. It pays if your veterinarian actually recommends the pet health insurance.

When looking for a pet health insurance, check for the wellness coverage. Preventive care is important for the long-term health of the pet. In order to encourage and remind pet owners to take their pet to the vet on a regular basis, there are pet insurance plans offering coverage for common preventive treatments and procedures like wellness exams, vaccinations, heartworm protection, neutering, teeth cleaning, prescription flea control and many more.

Aside from wellness coverage, also check the broad coverage for illnesses. Policies should include coverage for prescription drugs, dental illness, allergies and diabetes. Also check if your pet has insurance coverage even if it is away from home. A good pet insurance should cover your pet no matter where you are.

Also check if it is possible to have your own veterinarian. Some pet owners would rather have their own veterinarian including veterinary specialists such as oncologists, neurologists, and allergists.

If pet health insurance is not for you and your pet, there are other options that you can choose from to keep your pet healthy.

You can check with your veterinarian. There are some hospitals that offer wellness packages. They offer discount prices on vaccinations, spay/neuters and similar medical attention. Some even have geriatric health check up packages you can check on.

Discount programs like Pet Assure is another option. This national program offers 25 percent savings on veterinary services. They can sometimes offer as much as 50 percent on pet supplies. They have a network of participating veterinarians and pet vendors where you can take advantage of their services and discounts.

Some human and non-profit organizations offer financial aid to pet owners. Some veterinary offices even keep an emergency fund for pets in the event they have an emergency situation. But even if there is an option like this, pet owners should still primarily provide or cover financial cost brought about by emergency situations.

Pet health insurance is something that can help pet owners provide the best possible care for their pets in time of need.

However, health insurance is not the only option that pet owners have. Still the most important thing is tender loving care.

Cheap Online Health Insurance – Facts to Note Before Applying For Medical Insurance

Small companies are known for depriving their workers the opportunity to good health plans. These small companies do not really care about the well being of its workers. Most times, they expect their workers to search for health insurance deals themselves.

On the other hand, companies that are after the well being of its workers will get the best health plan for them. Experts advise that it is beneficial to search for health plans online.

Health care plans are of two major types and they are the PPOs and HMOs. The meaning of PPO is Preferred Provider Organization and the meaning of HMO is Health Maintenance Organization. The PPOs have doctors and hospitals that they deal with. This health care system is quite expensive. The good thing about the Preferred Provider Organization is that you have a choice to select the kind of hospital you want. This means that you have the right to choose your own doctor and the location where you want to be treated.

The Health Maintenance Organization (HMO) is restrictive in its service. Unlike the PPO where you can choose your doctor and hospital, you can not freely choose with the HMO. The hospital and the Doctor are given to you by the organization. The Doctor is solely in charge of your health condition and you can not go to another hospital for treatment.

You are still free to search for other individual health policies. It is not difficult to get the real health plan you need. On the internet, there are many health insurance websites; the only task is getting and comparing health insurance quotes.

Where To Get Trusted Health Cover Providers and Compare Their Free Quotes Online?