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Don’t Like Your Plan? You May Have to Keep It

Written by dreilly. Posted in Blog, health care reform, PPACA, premium costs

The President said “if you like your health plan, then you can keep it.  We heard it over and over during the health reform debate.  More recently we’ve heard it over and over again, only now it’s to point out the inaccuracy of that statement. 

Millions of individual policies are set to terminate on January 1st because they do not meet the new requirements established by the Affordable Care Act.  Millions more face the same as small businesses also learn their policies are no longer available.  We all now know the statement was false.  You really can’t keep your health plan if you like it. 

What we also now know is that millions and millions of people are forced to select new plans, not to mention the millions of uninsured the ACA is supposed to newly enroll.  Additionally, higher costs associated with the newly qualified small business plans will shift a large percentage of small business policies to the individual market over as we proceed through 2014. 

All of these members will select a new plan.  And many will select plans they don’t like.  Some will make hasty decisions due to the shortened open enrollment window created by the website difficulties.  Many won’t understand the meaning of higher deductibles and other out of pocket expenses.  Many won’t realize their access to doctors may be limited.  Many will find higher pharmacy costs.   

So that begs the question.  What if you don’t like your plan?  The ACA creates an annual open enrollment for individual policies beginning in November and ending in December of each year.  Enrollment outside this annual window is not allowed without a qualifying life status change.   This means if you decide that you don’t like your plan, then you’ll just have to keep it, at least until the next open enrollment period. 


Smartphone to be Taxed as Medical Device?

Written by dreilly. Posted in Blog, health care reform, PPACA, premium costs


ObamaCare imposed a tax on medical device manufacturers.  Items like wheelchairs, crutches, and leg braces are included.   So are things like tongue depressors, syringes, and latex gloves.  The tax, at 2.3%, increases the cost of just about every medical item you might see in a doctor’s office or emergency room, including…… your smartphone? 

That’s right.  The Food and Drug Administration is considering whether to designate smartphones, tablets, and apps as medical devices subject to the new tax!  Millions of us use apps to measure calories, track weight loss, stick to drug regimens, monitor diabetes, etc.  We might soon pay the price. 

So, should the use of an app determine whether a smartphone or tablet is subject to the 2.3% medical device tax?  Well, that’s exactly what the Committee on Energy and Commerce would like to know.  They’ve sent a letter to the FDA and requested a response by March 15th.


Rates to Increase for Young People, For All

Written by dreilly. Posted in Blog, health care reform, premium costs

Warning over the weekend from the National Association of Health Underwriters……

“Rates could rise significantly for small employers and younger individuals in the individual and small group markets. An Oliver Wyman study shows that rates for young participants in the individual market would increase 45% and a survey of insurers conducted by the American Action Forum shows that rates could go up for young, healthy individuals by 189%.”

The reason?  Recently published rules established by the Department of Health and Human Services limit the ability of insurance policies to charge younger members lower costs than older members. 

Under current rules, in many cases, the oldest policy-holder can be charged as much as 5 times as much the youngest policy-holder.  Effective in 2014 the new rule will limit the difference to 3 times.  This means younger members will see a significant increase to rates as the outer limits of the rate tables squeeze inward.  

With this in mind it makes sense that older members should see lower rates, but this may not necessarily materialize.  As rate shock sets in for millions of young, statistically healthy, policy-holders in 2014, it’s expected many will forego the more expensive coverage and opt instead to pay the much-lower $95 annual tax penalty.

As this occurs, the variety of State-based risk pools will see a demographic shift to an older, statistically more-unhealthy population.  This will lead to higher claim costs relative to premium dollars received, so naturally rates must rise to keep pace.

Fortunately this rate shock should be short term as the market will eventually adjust to higher costs.   Then we can get back to the normal significant increases.


IRS: Family Health Plan Cost $20K in 2016!

Written by dreilly. Posted in Blog, health care reform, PPACA, premium costs

A recently released IRS final regulation makes an assumption that the average cost for a family health insurance plan in 2016 under ObamaCare will be $20,000.  And that’s for the lowest plan benefit!   

Beginning in 2014, the individual mandate, upheld by the Supreme Court last summer, requires U.S. citizens to either carry qualified health coverage or pay a tax.  Qualified plans are established as metal options, with a bronze design offering the lowest benefit availability and platinum offering the highest.  Silver and gold fall incrementally in between. 

In an effort to help educate consumers about the potential for tax penalty under the law the regulation provides several situational examples.   Making the assumption “The annual national average bronze plan premium for a family of 5 is $20,000,” IRS goes on to explain how that same family of five (2 adults, 3 children) with household income of $120,000 would face an annual tax penalty of $2,400.  

For the uninsured, a new $20,000 health plan or a $2,400 tax….what’s a family to do? 

For those of us who are insured….The Kaiser Family Foundation showed family premiums topped $15,000 a year in 2011.  IRS now projects $5,000 more, or 25%, by 2016.  So what happened to the ObamaCare promise of  “a health care plan that would save the average family$2,500 on their premiums?”


Child Health Insurance Open Enrollment

Written by dreilly. Posted in Blog, education, premium costs


January 1, 2013 marks the beginning of an important open enrollment period for children’s health insurance policies in Maryland.

During the month of January two insurance carriers, CareFirst Blue Cross Blue Shield and Kaiser Permanente of the Mid-Atlantic, will accept applications for children under the age of 19.  This is one of two scheduled open enrollments that allow application for coverage in 2013.  The other occurs in July.  New policies for children are unavailable at any other time, at least until health reform changes teh rules in 2014. 

Policies are available on a guaranteed issue basis without exclusion for pre-existing conditions.  The effective date for those who apply in January is February 1st.  The effective date for those who apply in July is August 1st.    

Health insurance is often provided through employer based coverage, and employers typically subsidize employee premiums.  But as healthcare costs continue to rise, trends show employer subsidies for family and dependent coverage continue to decline. 

If you have family coverage through your employer you may want to look at the cost to provide separate coverage for your children.  Often the total premium of separate policies is lower than that of one family policy offered at work.  Here are the reasons.  Fewer employers subsidize family premiums and employer plans are usually rated based upon the demographics of the group participants, where employee ages can have a large impact.  Rating for child policies are based on the child’s age, which is lower age than the ages of employees in an employer plan.  This means child policies are almost always lower cost.

The same strategy can be applied to spouse plans too, but the rate differences amay not be as attractive, and medical underwriting applies for adults.  

Whether separating a child or spouse policy will lower your monthly cost depends upon the level of employer subsidy.  It’s easy to determine however.  Just bookmark this page and run the rate sets for Maryland’s available child plans after January 1stRates for spouse plans are available now.  It’s free and only takes a minute.


5 Taxes to Increase Health Premiums

Written by dreilly. Posted in Blog, education, health care reform, PPACA, premium costs

You might think the goal of health reform is to make healthcare more affordable.  The bill after all is called the Patient Protection and Affordable Care Act.  

Well the truth is this.  Affordability is a key component.  But sadly for many of us who already have health insurance, we won’t reap the benefit of lower costs.  Premiums will rise for many of us to offset the massive costs of federal subsidies designed to help the uninsured, as well as many currently insured, pay for coverage.   But subsidies must be paid for. 

Back in 2009 when the politic debate raged over the legislation, Congress and the Administration realized the public would never support sweeping taxes on individuals to finance the bill.  So instead they raised taxes on the large healthcare corporations that, they argued, could more easily absorb the costs.  

Well, let’s take a look at a few financing mechanisms that begin between in 2013 and 2014 and consider how these requirements will assist in the goal of affordability.   

1)      Big Pharma will be required to kick in between $2.3 to $4.8 billion from the profits they receive from selling brand name prescriptions.  Let us not forget that U.S. pharmacy companies reap the benefit of U.S. laws that allow them to sell the same drugs to U.S. citizens at costs far above the costs they sell to citizens of other countries.  One can certainly argue they should pay the price for those protections.  However, the simple truth is that higher taxes on pharmaceuticals results in higher costs to health insurance carriers that pay claims.  Premiums will rise to cover.

2)      Medical device manufacturers will be charged a new 2.3% tax on the products they make.  So add 2.3% to the cost for things like crutches, braces, and titanium joint replacements, also items like tongue depressors and latex gloves.  Premiums will rise to cover.

3)      Health insurance companies will be required to pay a new Comparative Effectiveness Research Fee.  This is a relatively inexpensive fee, first payable as of July 2013 that is designed to fund studies to determine which types of procedures and treatments perform better than others.  Insurance carriers will pay just one dollar per participant per year to start.  The fee increases to two dollars per participant in year two and then indexes to medical inflation after that.  The fee is set to expire in 2019.  This of course assumes that a tax intended to end actually ends.  Although relatively inexpensive, it adds cost.  Premiums will rise to cover.

4)      Health insurance companies will be required to pay a new health insurance industry fee.  Fees are estimated to be between 2 to 2.5% of premiums beginning in 2014, rising to 3 to 4% of premiums in later years.   Premiums will rise to cover.

5)      Health insurance companies will be required to pay a reinsurance assessment fee.  This is which is estimated to cost between $60 to $90 per participant per year in 2014, $40 to $60 in 2015, and $25-$35 in 2016.  Premiums will rise to cover.   

Affordability in the Affordable Care Act is going to be tough to achieve.  We’ll have to hope for patient protection.


Wellness Programs in PPACA

Written by dreilly. Posted in education, health care reform, PPACA, premium costs

The debate over the Patient Protection and Affordable Care Act (PPACA) may have divided Congress and even theelectorate, but some areas of law have bi-partisan support.  One such area is the promotion of wellness initiatives.

It’s no secret that health costs in the United States have been increasing faster than wages or inflation for many years.  We’re on an unsustainable track.  But a close look at actual claims shows that as much as 75% of expenditures go toward the care and treatment for chronic illnesses like cancer, heart disease, asthma, blood pressure and cholesterol problems and the biggest one, obesity.   It’s been said that obesity is an epidemic in the Unites States and poor weight management can be blamed for a number of these other chronic illnesses.

But here’s the point.  Chronic diseases are often preventable, and if not, they’re at least controllable in most cases.  While many can point to genetics and heredity as root causes of disease, it’s obvious that lifestyle choices like smoking, alcohol abuse, poor eating habits, and lack of exercise are main causes for many people.

Promoting wellness as a means to change behavior isn’t a new concept, but provisions in PPACA will encourage better practices in this area.  For starters, small employers will be eligible this year for grants to launch wellness initiatives.  The program will offer up to $200 million to employers with fewer than 100 full time employees who did not have a wellness program in place when the law passed on March 23, 2010.  Details have yet to emerge, but the application process should be known by the end of the year.

Beginning in 2014 employers will be permitted to discount employee health premiums by as much as 30% for those who participate in wellness programs or for those who reach certain measurable health targets.  The discount could be increased to as much as 50% at the discretion of Secretary of Health and Human Services.  These allowances should encourage employers to support employees with wellness initiatives, which in turn could reduce health costs.

The Centers for Disease Control and Prevention will be tasked with providing technical support to employers as a means to assist employers launch and manage their programs.   Additionally, CDC will be responsible for reporting back to Congress about best practices as means for improving the law’s allowances.

The debate over PPACA is far from over.  Litigation, new legislation, funding, all are issues that could derail portions of the law or even the law itself.  But regardless of the outcomes here, it would be nice to see some true successes result from the practical wellness approaches included in the law.  We just might see some lower costs if we can get ourselves off the couch.  Fat chance?


CLASS Act be Repealed

Written by dreilly. Posted in Blog, health care reform, PPACA, premium costs

The Patient Protection and Affordable Care Act includes a provision to develop a federally sponsored long term care program known as the Community Living Assistance Services and Support Act(CLASS Act).  The law requires theDepartment of Health and Human Services to release details of the program by October 1, 2012.  The program will likely begin enrolling members in 2013.

Americans 18 and older and actively at work will be eligible to enroll.  Employers who elect to participate will automatically enroll workers but workers will have the ability to opt out.  With no exclusions for pre-existing conditions participation will be highly selective and the program will disproportionately attract unhealthy members.

The Congressional Budget Office estimated the monthly premium cost at $123 on average, yet according to a white paper released by The Cato Institute earlier this year premiums could actually be in the range of $180-$240.  Cost will dissuade participants as will a requirement that premiums be paid for five years before benefits become available.

Cash benefits will be paid directly to a qualified participant who experiences a loss of at least two activities of daily living (ability to eat, dress, bathe, etc).  Payments are expected to be no less than $50 per day on average and there is no provision to limit benefits on a lifetime basis.

Only 6% of the population is expected to enroll according to estimates provided by the American Academy of Actuaries.  This number could be much lower given the voluntary nature of the program, the expense, and the five year vesting period.

The CLASS Act is doomed.  Low participation and adverse selection will render the program unsustainable.  The CBO is concerned it becomes “a new federal entitlement program with large, long-term spending increases that far exceed revenues.” and the bipartisanCommission on Fiscal Responsibility and Reform suggests a repeal if the program cannot be “reformed” in short order.  Reform?  The healthcare law was supposed to be reform!  Repeal is better than reform, at least for the CLASS Act.


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'The commitment Reilly Benefits makes to our company to ensure our benefits and claims are handled promptly and correctly goes beyond that of any agency I have seen in my 20 years of working with insurance brokers.'

Karen Siebert, CFO
Great Mills Trading Post


Reilly Benefits, Inc. works with employers in a wide variety of industries. This allows us to understand the uniqueness of specific benchmarks within certain industries and among different market sizes.

Our ability to help employers compare and contrast a benefit plan to these benchmarks provides our clients an advantage in the ultimate goal to attract and retain quality employees.

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