Archive for May, 2013

What Does It Mean if Your Employer Has Self-Insurance?

Tuesday, May 28th, 2013

It costs a lot of money for employers to offer health insurance coverage to their employees.  Even so, they do it for many reasons including to remain a competitive employer, to show that they care for their employees, and often, because it is required by law.  In 2014, as even more employers will be required to offer insurance plans to their workers, they will also be hit with a healthcare tax from the Affordable Care Act.  In the Med City News article, “Why self-insurance is the best way to reduce the hit of the Obamacare tax,” Joseph Berardo discusses why so many companies are now self-insuring rather than using health insurance carriers.  This type of insurance gives employers more flexibility and allows multiple cost-cutting measures.  Companies can make a specific plan that works for their workforce, they are able to maximize their cash flow because they don’t rely on prepayment of claims, they save up to 3% right away with an exemption from state taxes, and they save money by not paying extra carrier charges like profit sharing.

Catastrophic claims are challenging for self-insured plans, so most companies buy stop-loss insurance that will cover unexpected catastrophic claims like the cancer treatment of an employee.  Small group insurance plans and individual health insurance plans could end up seeing greater increases in their premiums as more large employers start to self-insure and avoid tax increases.  This new health insurance tax will increase each year based upon the cost of premiums.  The Congressional Budget Office says the new taxes are likely to be passed on to consumers through increasing premiums rather than paid for by the insurance companies to which they are directed.  Increases will be around 2% next year and closer to 4% by 2023.

Those in the individual insurance market could see decade long increases of $5,000 for family coverage.  Family coverage increases for small group plans in the same time frame is around $6,800.  Larger employer premium increases for family plans over a decade are more than $7,000.  In addition to the increasing taxes, employers face some other challenges with the passing of the Affordable Care Act.  They have to offer more essential health benefits, more comprehensive coverage, they’re under the jurisdiction of the state, and they have to make sure that employees are getting a certain value for each dollar spent.  But self-insured plans avoid a lot of the downsides worrying employers about the changes starting next year.  Just as we mentioned in our blog earlier this month, many large employers are self-insuring to avoid following state regulations and taxes as well.  I don’t know if this is any type of solution to the health insurance crisis in America, but it is a trend likely to continue.

Autism Health Insurance Coverage Increases In Minnesota

Wednesday, May 22nd, 2013

Good news for parents with autistic children can be difficult news for health insurance companies.  In Minnesota, the state Legislature passed an autism insurance mandate forcing companies to cover expensive treatments that they were previously denying.  Unfortunately, according to Maura Lerner’s article in the Minneapolis Star Tribune, this mandate only covers around 14% of the residents of Minnesota.  “Autism Insurance Mandate Wins in Minn.” points out that state insurance mandates only have to be followed with employers who have more than 50 employees AND state-regulated health plans.  Most larger employers offer health plans that are self-insured and do not have to follow the state regulations for coverage.  But still, this autism coverage will extend to 750,000 residents of Minnesota that might not have gotten it before the mandate.

The specific therapy that will now be covered is called early intensive behavioral intervention and can cost up to $100,000.  That is an amount that most people just cannot afford to pay if it isn’t covered by insurance.  Insurance companies voiced concerns over both the cost and the effectiveness of the specific therapy, but autism advocates fought hard in their “Autism Votes” red t-shirts to get this legislation passed.  They are confident that this legislation will be the driving force between changing the coverage of the rest of Minnesota’s health insurance plans as well.  Companies who are forced to cover this treatment will likely have increased health care costs that they may pass on to their customers.  It could also drive some companies to become self-insured to avoid the current mandate as long as it remains only for state-governed plans.

Autism Speaks, a national autism awareness group, says that Minnesota is the 33rd state to have an autism coverage mandate.  All state-regulated plans in Minnesota now have to cover treatments until kids turn 18 that are deemed medically necessary.  Very intense autism programs provide in home care on a personal basis for up to 40 hours each week.  Low income families who receive health insurance through the State Medical Assistance program will also receive this coverage if it is federally approved.  Parents with autistic children are thrilled to have this new coverage to ease the worry that their child’s care will be forfeited.  But those working for large employers who are unaffected by this legislation are holding out hope that they will receive the same coverage from their health insurance plan.

Do You Know How Much You’ll Be Spending on Health Care in Retirement?

Thursday, May 16th, 2013

Almost all Americans are underestimating the amount of money that they will be spending on health care costs in their retirement.  According to The Street’s Brian O’Connell, “Expect Your Health Care in Retirement to Hit $200,000.”  You read that right; $200,000.  Even worse that the fact that the average American couple will be spending $220,000 on their health care during retirement is the fact that 90% of them have grossly underestimated that amount already.  The Mayo Clinic and Aviva USA co-sponsored the Wellness for Life study which found that retirees will be spending 30% of their retirement income on health care costs.  But a full 90% of those surveyed said that they expect their health care costs to account for 20% of their income in retirement.  And 70% of people actually only estimate 10% of their income in retirement will be needed to pay for health care.

While the number of $220,000 on health care costs seems staggering, the good news is that Fidelity Investments has actually come up with this number.  Having the knowledge that you need to prepare for health care in retirement is the first step to actually being prepared.  This number was calculated for a 65 year old couple retiring today and does not include any stay in a nursing home.  While this is undoubtedly a large sum of money that will be spent on health care in retirement, the number actually decreased 8% from last year.  That has only happened once in the last decade, this past year.  Typically, health care costs increase an average of 6% each year.  Part of the reason for the decrease last year is the fact that people have been using fewer health services overall.  Another reason may be that insurance companies are giving smaller payment increases to providers to cover care.  While we can hope for more decreases in the future, the best bet is for all Americans to prepare for increasing health care costs in retirement and plan for it accordingly.

Unique Concierge Health Insurance Services Lower Costs

Wednesday, May 8th, 2013

Throughout the United States, individuals, companies, and health insurers are trying to find ways to lower health insurance costs and keep Americans healthier.  There is a new innovative company focusing on small employers and their workers that is looking to change the way health care works.  According to Med City News’ Veronica Combs, “Maxwell Health offers complete insurance experience from broker to concierge to coach.”  Maxwell Health’s CEO and co-founder, Veer Gidwaney, says that the company is focused on the entire realm of health care.  They aren’t looking to just sell you health insurance and then forget about you.  Their care goes from the sale to finding health care providers and keeping members healthy.  Customers calling in with questions about making claims or which providers to use will speak with same person who helped them purchase their insurance to simplify the process.

Maxwell Health started launching programs in March and is currently operating in seven cities.  Their focus is on small employers with 70 or fewer workers and helping them offer these benefits to their employees.  They want companies who realize the benefits of insurance programs and wellness programs, those who see this as a great investment in their own company’s future.  With insurance brokers, technology associates, and designers working on their team, Maxwell Health looks to cover all facets of health care for their customers.  By running a private exchange, they give employers detailed plans to run their insurance program.  Maxwell helps with claims, recommends doctors, helps with prescription drugs, and is working on maintaining an on-call nurse.

Daily Feats is the first extra program that they have introduced.  This program uses social networks to help encourage healthy behaviors through the web.  Maxwell’s overall concierge service can help you find out where to get the least expensive medical tests and keep you healthy so that you avoid hospital stays and help save money for everyone.  One of their clients offers rewards for employees who get fit; they can receive gift cards based on how many points they earn.  This particular company says that they can offer more benefits to their employees at a lower cost.  By offering concierge service, insurance, and wellness programs, Maxwell Health has a unique service to offer small employers that they believe will catch on and help lower overall health insurance costs.