Monday, November 15, 2010

The 2011 Medicare health plan annual enrollment period starts today

Medicare's annual enrollment period begins November 15th and runs through December 31st. BTW - next year the annual enrollment will be from Oct. 15th through December 7th.

Some Background: Individuals become eligible for Medicare the first day of the month they become 65. A couple months prior to the 65th birthday it is recommended that an appointment be made with the retirement representative at the Local Social Security office. Each person turning 65 needs to make arrangements to enroll in Medicare's hospitalization coverage (Part A) and for physician and outpatient service (Part B). If a person plans to continue working the SS office needs to know.

What coverage is available?
Part A pays for hospital expenses using Medicare's rates except for the $1,132 deductible during 2011. There is not cost for this coverage if an individual has worked 40 or more quarters.

Part B pays 80% of Medicare's allowed amount for various types of outpatient related treatment. Part B's monthly premium will be $115.40 for individual who enroll during 2011. If someone elected to receive Social Security early this amount will be deducted from their monthly payment. It they plan to wait until eligible for full retirement benefits at age 66 the Part B monthly premium can be paid on a quarterly basis.

Once enrolled in Part A and Part B many people also enroll in additional coverage to cover the treatment costs Medicare does not fully pay. One option is a Medicare Supplement plan and another is a Medicare Advantage plan. Additional information on these options can be found on my web site -

Additional coverage is needed in one more area - outpatient prescriptions. This is Medicare's Part D. Medicare developed a base amount of coverage and most private companies that offer Part D plans provide more than the base coverage.

Now to the annual enrollment period (AEP). Each year a person enrolled in Medicare A and B can change their supplemental coverage or prescription plan during the AEP. Any changes, which are made, will be effective January 1st and stay in effect until the next years AEP.

Saturday, July 31, 2010

Small Business Tax Credit – not really what’s often reported!

P PACA, as the health reform law is being called, created a tax credit of up to 35% for small employers, which provide medical insurance coverage for their employees. The law indicates an employer here in Connecticut may qualify if:

+ It pays no less than 50% of the employee’s premiums.
+ It has less than 25 full-time employees.
+ The average wages of its employees must be less than $50,000 per year.

Note: Owners and family members in the business are not counted as employees for the tax credit.

This credit can be claimed on the organizations annual tax return for 2010 through 2013. The 35% maximum credit becomes 50% in 2014.

When reviewing the actual P PACA provisions we find:
+ The 35% maximum tax credit is only available for employers with 10 or fewer employees and whose average salary is $25,000 or less.
+ Firm’s with up to 25 employees whose average wages is up to $50,000 may qualify for a credit, which will be considerable lower. Firm with 25 employees & average salary of 50k will not receive any credit. Media coverage often implies the full 35% is available to firms with 25 or fewer employees.

Lets look at how this really works:

+ When an employer offers medical insurance they normally take a business deduction for the part of the premium they pay. IRS guidance however, indicates employers are not eligible for a deduction and a tax credit on the same amount.

+ The actual calculation to determine the credit has many details but at a high level the firm, at tax time, will add all their business info into the income tax software, the amount spent on employee medical insurance is included as a deduction, and the button to calculate tax due is hit. The software is opened again, the medical insurance deduction is removed, the button is hit again, and a higher tax amount is produced. The software would be opened again, the tax credit would be entered, the button is hit again to learn the tax due.
Note: One of the tax credit calculation details is the allowable annual premium is limited in Connecticut to $5,419 for single and $13,484 for family coverage. This could impact firms whose average age is about 50 or higher.

Bottom line - the real value, if any, to an employer will just be the difference to their tax obligation using the credit vs the tax due if the business deduction is used.

Wednesday, July 28, 2010

Will I find more affordable coverage in health reforms new Exchanges?

Various media reports have been bringing out people will have access to affordable coverage when the new Exchange starts in Connecticut in 2014.

Regretfully actual provisions in the new health reform law, on how the state based Exchanges will operate do not say this will happen. What the reform law, which is being called P PACA, does say is:

+ An insurance company that decides to participate must offer the same premium for the same plan whether it is purchased through the exchange or out side. Thus, where does the idea, medical insurance through the Exchange will become affordable, come from?

+ An insurance company has to combine their medical treatment claims from exchange plans with plans outside. What this says is - if four companies participate on Jan. 1, 2014 and each is covering 50,000 people the first person who goes to the Exchange and enrolls will join a "pool" of 50,000 - NOT a "pool" of 200,000. Thus, how does the person who creates the publicity, which says it will be affordable because it is bigger, think this is going to happen?

+ There is no requirement for a insurance company to offer all their current plans in the exchange. Plans available in the Exchange will be in four groups - Platinum - Gold - Silver - Bronze. Each of these will have different maximum out of pocket limitations. Thus, where does the idea people will have more choices than they do now come from?

+ P PACA gives states money to start up the Exchange - BUT the law also says the Exchange must be on its own with no money from the state after one year. Insurance companies may have to give the exchange some funds because of the work they do for marketing & enrollment. The big question then becomes - where will the additional money to run this extra layer come from?

+ P PACA does include complex provisions on how people, based on income level, will be able to receive financial assistance. The question becomes - where is the money going to come from to provide this assistance? More taxes for everyone?

It is important to understand the people who wrote P PACA do not really understand how the medical insurance market works. Consequently, I recommend anyone who sees media coverage about Exchanges having more affordable coverage and providing more choices to write a letter to the editor to challenge this. You may want to ask - how will more affordable plans and more choices really be accomplished?

Monday, July 12, 2010

Insights on new health reform law communications!

There has been considerable information coming from Washington DC in recent weeks on the new health reform law. However, much of this "PR" includes considerable "spin" on the actual provisions in the law.

For example, fact sheets and other releases contain frequent mention of "affordable and more choice" when referring to the new Exchanges, which start to operate in each state in 2014. However, the new law, which is being called P PACA, tells us:

+ Each medical insurance company is to have the same rates for a specific plan in the Exchange as they do outside the Exchange.

+ Each company is responsible to maintain one pool of medical treatment expenses for all their plans in and out of the Exchange. What this says is if say five companies are participating the Exchange will not combine the medical expenses of five companies into one big pool. Thus, an important question becomes - What about the exchange makes rates affordable!

+ There are no requirements for companies participating in the Exchange to offer all their plans in the Exchange. Thus, another important question becomes - What about the Exchange gives a person more choice than they now have.

+ People, based on level of income, will be able to get financial help when they buy medical insurance through the Exchange. The problem is there is no free lunch so someone is going to have to pay the extra cost to determine a persons qualification and more importantly when financial help is given to someone, someone else will have to pay more.

Bottom line - it is important for everyone to seek out the real facts and not accept all the PR and other media about what this new law will do. It certainly is a big change but one which will cost everyone more.

Please contact if questions about the new health reform law.

Saturday, June 12, 2010

A look at some reasons medical insurance is expensive!

How much is spent on medical treatment vs admin? Medical insurance companies in Connecticut now list, often on the enrollment form, what their medical loss ration (MLR) was during the past year. This number tell us the percent of each premium dollar paid to them that goes to pay medical treatment expenses. Most small group medical insurance companies here in Connecticut have a MLR of about 85%.

Note: The new health reform law will require companies in the small group market to have a MLR of at least 80%. The MLR of most medical insurance companies here in Connrcticut have not had excessive administrative expenses.

Why have medical treatment costs been increasing so rapidly? There are many reasons including new and more expensive procedures plus over utilization of treatment. All the reasons together mean medical insurance companies have been required to charge ever increasing medical insurance premiums so they can pay ever increasing treatment expenses.

A look at some over utilization specifics! Studies tell us, when looking at this from a high level, between 20% and over 30% of the tests/treatments a person receives when they have a medical problem are considered unnecessary! In addition to increased costs for all of us extra treatment also increases our risk of a negative side affect. Examples of extra treatment:

+ Over use of antibiotics: MDs tell patients to take an antibiotics for a cold when it is not the most effective since a cold is a virus vs an infection!

+ Stomach acid: A study found over half of 100 million or more prescriptions, such as Nexium, were given to people with this condition who did not need such a powerful medication!

+ Back pain: This is reported to be the most over treated condition. It is not unusual for patients to be asked to get repeated MRIs! Why? Extra test are done in an effort to try to pin point the problem the person is reporting when in fact they would have gotten better without the test!

What can we do about this? A couple ideas to control treatment cost and risk to your health:

+ Talk to your MD and seek out more information about effective treatment. For example, the Mayo Clinic has a very informative page on their web site, which I link to on my site. It’s easy to use and has lots of information about numerous medical conditions.

+ Look for the cost of any suggested procedures. Why? There is considerable variation even in small areas in what providers charge for certain medical treatments. When you enter your city and state at the top of this site, then select a procedure, the cost at various providers will be shown.

Questions about all this – send a note.