Disability Insurance is Important Purchase

Planning for disability is so important because a serious accident or illness can occur at any age, and happens more frequently than most people realize.  In fact, one in five individuals will experience a disability, according to the U.S. Census Bureau. 

A study released by the census bureau reveals that more than 152 million Americans between the ages of 21 and 64—prime working years—have some form of disability.

 The following statistics come from the Council for Disability Awareness' Personal Disability Quotient risk calculator: 

• A typical health, non-smoking man or woman age 35 has more than a 20% chance of becoming disabled for three months or longer during a working career. 
• There is a 38% chance a disability will last five years or longer.
• The average disability lasts 82 months.
• Less than 5% of disabling accidents are work-related. (which means the other 95% are not covered by worker's compensation)

Knowing this - how long could you afford to be without a paycheck?  This is a bit like your mother telling you not to go outside in the snow without gloves when you were a kid.  It is easy to think - "I don't need my gloves, mom - I will be FINE."  Parents tell their children things to keep them safe or to teach them about life.

Good insurance agents do the same. Their job is to protect you and your family from the "big whammy."  They do it by recommending things like disability or other supplemental because they know, it is possible one incident could negatively impact your life forever.  Sure, it may not happen to you - but what if it does?  

Again - how long can you afford to be without a paycheck - especially if you are adding medical bills on top of monthly living expenses.

Disability premiums are not the cheapest - so it will pay to do your homework and shop around.  Visiting HBUS Inc online is a great place to start. We will assess your situation with you - taking the guesswork out of the equation.

Here are a few suggestions you should consider regarding disability insurance:

1. Look for nan-cancelable coverage or at least "guaranteed renewable"
2. Ask for quotes for different benefit periods - if you can afford a policy that will pay until age 65 buy it -but don't overlook shorter terms (2,3 or 5 years) if you can't afford longer benefit periods.
3. Make sure your emergency funds will last long enough to cover the policies waiting period you select
4. Pay attention to the definition of disability in the policy you are considering - some can be limiting. It is wise to consult with an insurance professional on this point.
5. Integration with Social Security can save you premium dollars.

Don't be afraid to move forward - contact HBUS Inc today for a free consultation and explore the right disability package for you.

Do you See A Trend Here? Group Dumping is Rearing it's Ugly Head

Health Benefits US Inc is seeing a trend in our market areas of North Carolina, South Carolina, Virginia, Maryland, Georgia and Florida.  

We wrote about this back in September, you can read that article in full here. 

The trend is not going away. The question is - "What do you have as your solution - whether you are on the agent or consumer end of the deal?"

Empire Blue Cross/Blue Shield to Dump Most NY Small Group Plans
reposted from November 4, 2011

By Lonely Conservative Comments are off for this post

The worst aspects of Obamacare haven’t reared their ugly heads yet (the Democrats did that on purpose – they wanted to put off the pain until after the 2012 election) but here’s a preview of what’s to come. In New York, Empire Blue Cross/Blue Shield has confirmed that they will be dumping most of their small group health insurance plans.

Empire Blue Cross Blue Shield, the largest health insurer in the region, announced to health insurance brokers on Friday that it will eliminate most of its small group plans in the New York market effective April 1, 2012, and is slashing its financial incentives for brokers to sell those products—a move one industry insider has said would be “catastrophic” for the insurance marketplace.

In a statement, Empire said it will reduce the number of plans offered to small groups and will offer fewer PPO, HMO and EPO plans, but claimed it has no intention of withdrawing from the market—a point with which brokers disagree.

New York has a plethora of mandates that have driven up the cost of health insurance. Get ready for this on a national scale.

Eventually, this will lead to health insurers going out of business and the government taking over. Then all of those mandates will disappear and the rationing will begin. We’ll all be on Medicaid.

Are You Eligible for the Small Business Health Inusrance Tax Credit?

Somebody asked me the other day if the new law (well, it's not that new anymore...2010) will require small businesses to provide insurance. No, it won't.  But what a business owner needs to know is that the 'new law' will provide such businesses with tax credits if they choose to provide insurance to their employees.  

The tax credit is designed to both support those small businesses that provide coverage today as well as those that newly offer such coverage.  

That's big.

Effective January 1, 2010, tax credits became available to qualifying small businesses that offer health insurance to their employees. So if your business qualifies for a tax credit, you are eligible right now. 

About 4 million small businesses will be eligible to receive tax credits if they provide insurance.

The tax credit is worth up to 35 percent of the premiums your business pays to cover its workers – 25 percent for nonprofit firms.  In 2014, the value of the credit will increase to 50 percent – 35 percent for nonprofits.

Your business qualifies for the credit if you cover at least 50 percent of the cost of health care coverage for your workers, pay average annual wages below $50,000, and have less than the equivalent of 25 full-time workers (for example, a firm with fewer than 50 half-time workers would be eligible). 

The size of the credit depends on your average wages and the number of employees you have.  The full credit is available to firms with average wages below $25,000 and less than 10 full-time equivalent workers.  

It phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers. To learn more about the small business tax credit, you can also visit IRS.gov

Supreme Court talking Obama HealthCare today - What You Need to Know

Employers, we can answer your questions now - don't wait for the Supreme Court.   HBUS Inc is an industry leader and expert on health care reform and how it affects small businesses - we are saving businesses up to 40% without negatively affecting employees.

 

The Supreme Court said today it will rule on the constitutionality of President Obama's health care law, a case with historic implications for government social policy and the 2012 election.


The court is expected to issue a decision by late June, right in the middle of the presidential election year.
A health care legal challenge was one of the appeals the Supreme Court reviewed in a private conference last week; this morning, the justices will disclose the list of cases they will hear later this term.

The legislation, whose passage consumed much of President Obama's first year in office, extends insurance coverage to more than 30 million Americans through various measures including the expansion of Medicaid and a mandate that most Americans buy health insurance by 2014.

Obama says the law is critical to improving medical care nationwide, but Republican critics warn it would put new financial burdens on states, hurt small businesses and undermine individual choices about care.


WHAT YOU NEED TO KNOW:

• Individuals who have shunned insurance need to know whether they will be forced to buy coverage or face a tax penalty.
  
• Government agencies need to know what regulations to put in place.
• Employers need to know what incentives or penalties they might have related to employee coverage.
• And states need to know their costs under Medicaid, the federal-state program for the poor, as eligibility expands.

read full article
Contact HBUS Inc for more information

Employers Committed to Offering Health Care Benefits

Health care costs expected to increase 5.9% in 2012, but benefit offerings will begin to shrink. A recent survey conducted by Towers Watson which measured the likelihood of employers continuing offering a sponsored health plan brought about some interesting results. 

The survey polled 368 midsize companies regarding their current plan and what changes they plan to make in 2012.

Some of the eye-opening results include: 

• 29% are unsure if they will continue sponsorship of a health plan
• 45% will rethink their health care strategy in 2012 
• 54% will discontinue benefits to both pre-65 and post-65 retirees 

The survey also found that while employer health care costs will rise at a noticeably lower rate during 2012 compared with 2011 (5.9% versus 7.6%, respectively), the vast majority of employers (88%) are planning to take steps to control their costs and avoid the impact of health care reform's excise tax. 

Roughly half (45%) will rethink their long-term health care strategy during 2012, and many are uncertain how they will respond to the looming impact of state-based insurance Exchanges in 2014.

If your company is not thinking like the 88% that are taking steps to control costs without cutting benefits completely out - pick up the phone and call Health Benefits US Inc today - or drop us an email.   

It is not too late to get it right for 2012!

What’s Driving Health Care increases for America's Companies?

This analysis points to several factors. First, employers continue to experience an increase in the quantity and cost of catastrophic claims, as slower levels of hiring have resulted in slightly older workforces who are more prone to costly medical conditions.

Also, generally poorer health – leading to increases in costly conditions such as diabetes and heart disease – make it difficult for employers to deploy tactics that drive short-term cost savings.


As a result, employers continue to ask employees to absorb increases through a combination of out-of-pocket cost and increased payroll contributions.

Furthermore, against this backdrop, employers are focused on ways to mitigate these “unhealthy” trends over both short- and long-term, while awaiting further regulations related to health care reform. “In addition to sharing costs with employees, organizations are implementing more aggressive ‘incentive’ strategies to get [workers] to understand, and manage, their health,” noted Jim Winkler, large market segment leader with the health & benefits practice at Aon Hewitt.

“Some employers are adopting the mindset that says, ‘if you are going to spend a lot of house money, you need to play by house rules,’ including completing a health-risk questionnaire, participating in prevention and wellness plans, and better managing chronic conditions,” he added.

At the end of the day, however, companies and workers alike are facing big dollar hikes in terms of health care costs – and that sure doesn’t help the bottom line of any industry, much less those involved in the trucking business “In what continues to be an uncertain economic environment, organizations cannot afford health care costs growing at 7% each year,” noted John Zern, executive vice president and practice director for health & benefits-the Americas, for Aon Hewitt.

“While health care reform continues to represent potential systemic change in a few years, employers will continue to shift cost to employees in order to keep company costs to a manageable level,” he added.

Rising Health Care costs Leaves Millions Uncovered

Note:  HBUS Inc offers a REAL solution to the problem being discussed in this post. 
Contact HBUS Inc today to learn more.


The rising cost of health insurance is leaving more Americans without coverage and driving businesses overseas.

A national organization for health care organizations, Families USA, has analyzed the issue and found disturbing trends.  Since 2000, there has been a “huge erosion” in the portion of the U.S. population that has employer-sponsored health insurance.

“Between 2000 and 2009, the portion of the population with job-based health insurance has diminished from 64.2 percent to 55.8 percent, a significant drop of 8.4 percentage points,” it said.

At the same time, the U.S. population has increased to 304 million from 278 million. However, the number of people, including family members, with employer-sponsored health insurance has dropped from 179.4 million to 169.7 million.

The reason for the decline is the high cost of health coverage for businesses.

An annual family premium for job-based health coverage has doubled since 2000 to $13,375 from $6,438.

To offset the cost, there’s also been a painful side effect: Employers are subcontracting work so they don’t have to provide health benefits or they are outsourcing jobs to countries where the government provides national health care.

Families USA also found that the number of uninsured Americans in 2009 grew from 38.4 million to 50.7 million and one in six Americans can’t afford to buy health insurance.

Whatever happened to the promise made by President Franklin Roosevelt about America’s Four Freedoms, especially freedom from want and fear? How can one live in peace knowing a loved one may not receive health care when it could be a matter of life and death?

This is shameful.

Editorial courtesy of the Macomb Daily, a Journal Register Company newspaper.

Employers "Dumping" Group Insurance OK IF They Plan to Offer Benefits Another Way

The passing of Health Reform in the United States in 2010 marks the beginning of the end for defined benefit group health plans for small businesses. 

Let's look back for a moment - by the mid 1980s the majority of small business pension plans in the United States were 401k, or defined contribution plans.  They were attractive because they gave more flexibility to employees and were less costly to employers.

Just as retirement fund managers switched from group to personal (401k and IRA) plans, employers should now prepare employees for personal policy funding through Defined Contribution Employee Health Plans .  

The following facts should make group health plans for small businesses obsolete in the very near future:

    Employers can now contribute to their employees individual health insurance costs.
    Employer defined contributions are 100% deductible to the company as a business expense.
    Employer contributions are 100% tax-free to employees.
    Individual health insurance plans now cost considerably less than group plans.
    Employers can contribute different amounts to different employees.
    Employers, not insurance companies, define eligibility in a defined contribution plan.
    Employers who implement a defined contribution plan are freed from annual rate increases.

Small businesses need to provide good benefits to attract and retain employees but for years have been wrestling with ever increasing health insurance costs and decreasing benefit levels. 

"Dumping" the old group health insurance concept and implementing defined contribution health benefit plans instead not only reduces and controls business costs but also provides better benefits. 

A revolution, indeed!  HBUS Inc has been paving the way for the past 5 years in this area.  We have done the research and can offer businesses a permanent benefits solution that won't break the bank. In fact, it will SAVE the business thousands.  We are seeing it everyday.  Call HBUS Inc today to learn more.

What are People Paying for Health Insurance?

The average monthly individual health insurance premium in the United States in 2010 was $215 per person.

The average group health insurance monthly premium for a single employee in 2010 was over $420, while the average group health insurance monthly premium for a family approached $1,200 (See Kaiser 2010 Employer Health Benefits Survey).

According to a recent report published by Kaiser Family Foundation, the states with the lowest average individual health insurance premiums were Alabama ($136), California ($157), Arkansas ($163), Idaho ($167), and Delaware ($169).

What about family coverage and the average family premiums being paid?  

For NC, the average family coverage premiums come in around $3,400, about $400 less than the national average.

 

 

Where does your state fall?

Click here to see the average monthly premiums by state and a whole lot more information about health care costs.

What Happens to My HSA When I Die?

 

Today's post covers issues related to beneficiaries for your HSA. What happens to my HSA when I die? You can name beneficiaries on your HSA and your beneficiaries will receive any funds in your HSA if you die. HSAs are payable on death accounts which means that we can pay the beneficiary without waiting for the estate to complete probate. What if my beneficiaries die before me? You can also name contingent beneficiaries that will get the money in the situation where your primary beneficiaries pre-decease you. Do I have to name a beneficiary? No. You do not have to name a beneficiary and if you die before naming a beneficiary, your HSA will go to your estate. Can I change my designation of beneficiary or add a beneficiary? Yes. You can change your designation at any time by completing a change of beneficiary form. You can also use this form to add beneficiaries if you did not do so when you opened your HSA. Can my beneficiaries continue to use the HSA as an HSA? The answer depends upon whether or not you name a spouse as your beneficiary. Spouse Beneficiaries. A spouse beneficiary can treat the HSA as his or her own. Basically, your HSA becomes your spouse's HSA after you die and your spouse can continue to use the HSA as an HSA. Your spouse will not owe taxes or penalties on the HSA provided your spouse uses the HSA for eligible medical expenses. Non-Spouse Beneficiaries. Non-spouse beneficiaries are not entitled to use the HSA and must take a full distribution in the year of death. Non-spouse beneficiaries will have to pay income taxes on the HSA amount they receive, but they will not have to pay the 20% penalty for non-eligible distributions from an HSA.  Is it better to name a spouse than a non-spouse for an HSA? Spouses get more favorable tax treatment than non-spouses as beneficiaries for HSAs, so from that perspective it makes more sense to name a spouse. Whomever you name; however, will get your HSA assets after you pass away. A non-spouse beneficiary will just have to pay taxes on the amount and will not be able to use it tax-free for eligible medical expenses as a spouse could. Can my beneficiary use my HSA to pay for my medical expenses incurred before death?  Yes, a beneficiary can use money in the HSA to pay for the deceased HSA owner's medical bills incurred prior to death provided the beneficiary does so within one year of the date of the HSA owner's death. The beneficiary would not have to include the amount used to pay for the deceased HSA owner's medical expenses in income.  Can I name my trust as my beneficiary? Yes; however, there are tax implications of naming a trust as a beneficiary so please seek tax advice before doing so. If your spouse is your ultimate beneficiary of the trust, your spouse may lose the ability to continue to use the HSA as an HSA because you named a trust as the beneficiary rather than your spouse directly (only spouse beneficiaries are allowed to treat the HSA as their own). In some circumstances for Individual Retirement Accounts; however, the IRS has allowed the ability to "look through" the trust at the ultimate beneficiary. This same ability may be available for HSA spouse beneficiaries.

Health Reform Explained Simply: VIDEO

Health Benefits US Inc is a leading industry expert on Health Care Reform. HBUS Inc is helping individuals and businesses understand the new rules so they can actually benefit from them.   Contact HBUS Inc today to start saving money while getting the best health coverage available.

Confused about how the new health reform law really works?

This short, animated movie narrated by Cokie Roberts -- featuring the "YouToons" -- explains the problems with the current health care system, the changes that are happening now, and the big changes coming in 2014.




Video Written and produced by the Kaiser Family Foundation. Narrated by Cokie Roberts, a news commentator for ABC News and NPR and a member of Kaiser's Board of Trustees. Creative production and animation by Free Range Studios.




Trouble Viewing this Video?  Try this Link Health Reform Hits Main Street - Kaiser Health Reform

Exploring Ways Employers can Lower Health Care Costs

Employers are continuously faced with the challenge of the escalating costs of health insurance and providing a comprehensive employee benefit plan to their employees.

According to a recent report by the Kaiser Family Foundation, in 2009 the average annual premium for employer sponsored health insurance was $4,824 for single coverage and $13,375 for family coverage.

We know it hasn’t gotten any cheaper to offer traditional group health plans…

To address the cost of health insurance, employers have responded with any of the following strategies:

1. Adjusting the premium cost share,
2. Increasing the cost for health care services (deductibles, co-payments, or coinsurance),
3. Restricting eligibility for benefits, and/or
4. Introducing a tiered physician and/or hospital network

It is without question that adjusting an employee's cost share for health insurance or their access to health care services does not provide a long term solution toward reducing the cost of health insurance - it is simply a temporary solution.

For employers to have a long term impact of the cost of health insurance, they must recognize that an average of 85% of health insurance premiums is paid to health care providers(physicians, hospitals, etc.).

As a result, for employers to have a lasting impact on health insurance premiums - a focus on health care costs will provide the employer with a more effective solution.

Employers must consider that over 70% of health care costs are the result of preventable health care conditions and an estimated 66% of U.S. adults are either overweight or obese. It is imperative for employers to embrace the opportunity to improve the health of their employees and their dependents to reduce the cost of health insurance.

Comprehensive wellness programs have proven successful to reduce expenses influenced by the health and wellness of employees, improve productivity, and reduce absenteeism. A study by the Center for Prevention and Health Services shows that employers get back $3.48 in reduced health care costs and $5.82 in lower absenteeism for every dollar invested in employee wellness.

For any wellness plan to be successful, it must include certain key elements.

Contact Health Benefits US Inc for a complete copy of this post with wellness program recommendations.

Employers Saving 20 to 40% on Health Benefits Offered

If there was a way that you could provide great benefits to your employees and control and fix that cost, would you want to know about it? Well of course you would. I'm Rob Ferguson, I own Health Benefits US. January 1st of 2009 brought about significant tax law changes, which allows you as a business owner to provide your employees a defined contribution. This can be used to purchase their own individual plan; this can be done in a very strategic way and we're often finding that employers are cutting their costs by as much as 20 to 40 percent. So I challenge you today to visit our website and learn more.

Study: How Many Small Businesses are Likely to Offer Coverage by 2014?

Note: None of this should be taken as legal or tax advice.

More than half of small companies who currently offer health care plan to drop their coverage for employes by 2014.  But of the small employers that are likely to drop health coverage, 100% also said they would continue to provide coverage to employees if a "tax-excluded contribution" solution existed...

Employers take note - the tax-excluded contribution solution exists via defined contribution health plans!

Call us today to learn more...we are helping companies in NC, SC, VA, GA, FL, MD and D.C. with their health care reform programs.

The Study

In July 2011, the National Federation of Independent Business (NFIB) released a new study, "Small Business and Health Insurance: One Year After Enactment of PPACA", focused on the affect health reform has had on employee health benefits. The study predicts that less than 25% of small businesses will offer group health insurance in 2014.  

According to the study:

• 42% of small employers offer group health insurance today.
• 57% of those small employers are likely to drop health coverage by 2014.  
• 100% of the small employers that are likely to drop health coverage, also said they would continue to provide coverage to employees if a "tax-excluded contribution" solution existed (the tax-excluded contribution solution exists via defined contribution health plans).

Click here to read the full NFIB report.

Federal Cobra Subsidy Phasing Out Means Increases of 186% for Insured

The federal COBRA subsidy, introduced in March 2009, covered 65% of the cost of COBRA health insurance premiums for up to 15 months. In order to qualify for the subsidy, recipients must have originally become eligible for COBRA as the result of an involuntary termination of employment occurring between September 2008 and May 2010. The subsidy's last group of recipients -- those who began receiving assistance in May 2010 -- roll off the subsidy in August 2011.

As a result, they face a 186% increase in their monthly COBRA premiums...

Unless they are eligible to enroll in a new employer-based health insurance plan, former subsidy recipients who do not wish to go uninsured may opt to pay their COBRA premiums at the increased rate for an additional three months, until their COBRA eligibility ends.

Alternately, they may search for more affordable options in the individual & family health insurance market.

Insurance is designed to protect your risk financial risk., some plans are better than others for you and your family's health insurance needs.

The best thing we can do is to make sure you are equipped with the right questions, and assist you in finding the right plan for you and your family with multiple health insurance quotes.

Contact  Health Benefits US Inc today and see insurance in a new way - a way that saves you money, a lot of money compared to COBRA, without reducing the benefits your family is accustomed to receiving.

Humor Helps Illustrate Need for Employee Education of Healthcare Costs

Sometimes a quick joke illustrates an important point better than anything else.  Here's one I heard that is particularly salient on the issue of controlling corporate medical costs.


A woman brought a very limp duck to her vet.  As she laid her pet on the table, the vet pulled out his stethoscope and put it to the bird's chest.  After a moment or two, the vet shook his head and sadly said, "I'm sorry, your duck, Cuddles, has passed away."

Distraught, the woman cried, "Are you sure?"

"Yes," the vet said, "you're duck is dead."

"How can you be so sure," she said.  "You haven't done any tests or anything.  He might just be in a coma."
The vet excused himself, and left the room.  A minute or so later, he returned with a Labrador retrieiver.  As the duck owner looked on in amazement, the dog stood on its hind legs, put its paws on the examining table, and sniffed the duck.  He then looked at the vet, and with sad eyes, shook his head.

The vet left the room again, but soon returned with a cat.  The cat jumped on the table and likewise sniffed the bird from head to foot.  Quietly, he sat back on his haunches, meowed softly and then jumped down and left the room.

The vet looked at the woman and said, "I'm sorry, but as I told you before, this duck is definitely, 100% certifiably, dead.

The vet turned to his computer, punched a few keys and printed a bill.  Handing it to the woman, he said, "That will be $150.00."

The woman, now in greater shock than before, said "150.00?  Just to tell me that my duck died?"  The vet shrugged his shoulders and said, "I'm sorry, if you had just taken my word for it, the bill would have only been $20, but with the lab report and the cat scan, it's now $150.00"

Understanding utilization, and it's impact on medical costs, is important.  In fact, it's possibly more important than the discounts your plan may be getting from its network arrangements.  If your administrator isn't providing you with tools to keep down unnecessary medical costs, or to control those costs that are necessary, it won't matter how good the discounts are, your organization will be spending money it shouldn't.

Companies should have programs in place to educate their employees on the appropriate use of the healthcare system.    HBUS Inc has a great program in place to help you address this and all issues with health care reform.  Contact us today for more information. 

Health Care Reform - Timeline for Small Businesses

The new healthcare reform law will be implemented over much of the next decade. From 2010 to 2013, changes largely involve new taxes, fees and mandates on individuals and small business. Most healthcare system changes begin in 2014 and later years.

This article presents a timeline of some major provisions. 

Please note:  The timeline goes well into 2018, due to space limitations we didn't list the entire timeline in this post. Please contact your HBUS Inc representative for a copy of the entire timeline.

 

2010

• Small business tax credit: A temporary small business tax credit is available for some firms who provide qualified health coverage. However, the credit puts small business owners through a series of complicated tests to determine the actual amount of the credit. (1) Very few small firms will receive the full credit (only firms with 10 employees or less). For firms with 11-25 employees, the credit is reduced per employee. Firms with more than 25 employees get NO credit. (2) Only firms who pay their workers an average of $25,000 or less are eligible for the full credit. The credit is reduced as the average wage goes up, stopping when it reaches $50,000. (3) Only firms covering 50% or more of insurance costs will be eligible. (4) The credit is only available for a maximum of six years. There are additional provisions for start-up firms beginning business after the enactment of this law.
• Age 26: Children may stay on their parents’ policies until age 26.
• Tanning salon tax: A 10% excise tax on indoor tanning services begins July 1.
• Economic substance doctrine: The bill alters long-standing judicial doctrine in ways that could reduce tax-planning options and increase litigation.

2011

• W-2 reporting: Employers will be required to report employees’ health benefits on W-2s.
• Brand-name drug tax: Manufacturers and importers of brand-name drugs will pay a tax of $2.5 billion in 2011, $3.0 billion per year for 2012 through 2016, $3.5 billion for 2017, $4.2 billion for 2018, and $2.8 billion for 2019 and thereafter.
• HSA & FSA limits: Consumers are prohibited from using HSA and FSA funds to purchase non-prescribed items, including over-the-counter medication (except insulin).
• HSA penalty: The penalty for using HSAs for non-qualified purchases increases to 20%.
• Federally subsidized long-term care: Employers may voluntarily participate in the CLASS long-term care program. Participating firms’ employees will be automatically enrolled and subject to payroll deductions unless they choose to opt out. This program will almost certainly cost the federal government far more than what the payroll deductions will cover. So this entitlement is yet another unfunded liability to add to federal deficits for decades to come.
• Cafeteria plan safe harbor rules added: Employers will have to meet minimum contribution requirements to receive protection from nondiscrimination requirements under cafeteria plans.

2012

• 1099 reporting: Businesses will have to send Form 1099s for every business-to-business transaction of $600 or more – a tremendous new paperwork burden for small business.

2013

• Medical device tax: Manufacturers and importers of certain medical devices will face a 2.3% excise tax.
• Fewer deductible medical expenses: New limits are placed on the deductibility of medical expenses on individual income tax returns. This provision raises the 7.5% AGI floor on medical expenses deductions to 10%. The AGI floor for those 65 and older (and their spouses) remains at 7.5% through 2016.
• “Medicare” payroll taxes: The Medicare payroll tax on wages and self-employment income in excess of $200,000 ($250,000 joint) will increase to 2.35% and is not indexed to inflation. This tax marks the first time that funds designated for Medicare will be diverted elsewhere – specifically to pay for the insurance policies of people under the Medicare age. This establishes a precedent for treating this payroll tax as a revenue raiser for other purposes.
• “Medicare” investment tax: In addition to the payroll tax, there will be a 3.8% tax on investment incomes for higher-income taxpayers (“higher-income” is based on wage and self-employment income plus other factors). Like the payroll tax, these funds are officially designated for Medicare but will be spent elsewhere.
• FSA limits: Cafeteria plan FSAs will be limited to a maximum of $2,500 (inflation-adjusted after 2013).

A Transformed Employer Health Care Market

Yes! We are helping companies reform
and save thousands of dollars.

Health care reform fundamentally alters the social contract inherent in employer-sponsored medical benefits and how employees value health insurance as a form of compensation. The new law guarantees the right to health insurance regardless of an individual’s medical status. In doing so, it minimizes the moral obligation employers may feel to cover the sickest employees, who would otherwise be denied coverage in today’s individual health insurance market. Reform preserves the corporate tax advantages associated with offering health benefits—except for high-premium “Cadillac” insurance plans.

Starting in 2014, people who are not offered affordable health insurance coverage by their employers will receive income-indexed premium and out-of-pocket cost-sharing subsidies. The highest subsidies will be offered to the lowest-income workers. That reduces the social-equity advantage of employer-sponsored insurance (ESI), by enabling these workers to obtain coverage they could not afford on today’s individual market. It also significantly increases the availability of substitutes for employer coverage.

As a result, whether to offer ESI after 2014 becomes mostly a business decision. Employers will have to balance the need to remain attractive to talented workers with the net economics of providing benefits—taking into consideration all the penalties and tax advantages of offering or not offering any given level of coverage.

What the law says

Health care reform imposes several new requirements on employer health benefits. Some changes will be incremental; for example, annual and lifetime limits on care must be eliminated, and coverage must be offered to dependents through age 26. Plans with premiums above certain levels will be subject to a so-called Cadillac tax.¹

Other requirements are game changing and could prompt employers to completely reconsider what benefits they offer to employees. Reform requires all employers with more than 50 employees to offer health benefits to every full-timer or to pay a penalty of $2,000 per worker (less the first 30).

The benefits must provide a reasonable level of health coverage, and (except for grandfathered plans) employers will no longer be able to offer better benefits to their highly compensated executives than to their hourly employees. These requirements will increase medical costs for many companies. It’s important to note that the penalty for not offering coverage is set significantly below these costs.

Reform also offers options for workers to obtain affordable insurance outside the workplace. Individuals who are unemployed or whose employers do not offer affordable health coverage, and whose household incomes are less than 400 percent of the federal poverty level,² are eligible for subsidies toward policies they will be able to purchase on newly created state insurance exchanges. These will offer individual and family policies of set benefit levels (bronze, silver, gold, and platinum) from a variety of payers.

The subsidies will cap the amount lower- and middle-income individuals and families will have to spend on health coverage, to 9.5 percent of household income for those at 400 percent of the federal poverty level and less for those at lower income levels. The subsidies will keep the cost of insurance coverage from the exchanges below what many employees now pay toward employer-sponsored coverage, especially for those whose earnings are less than 200 percent of the federal poverty level.

For more information and to get a complete, free copy of a recent Health Care Reform survey, contact  Health Benefits US, Inc today.

Do the New FHA Loan Limits Spell Trouble?

Most people don’t realize that on Oct. 1, we will see the maximum loan sizes for FHA loans reduced back to the original loan levels prior to the run-up in home prices. While this may seem insignificant, realtors, buyers and sellers would be best advised to follow this change carefully and plan accordingly.

While many want to cast their vote for fiscal responsibility and praise this move, there are many others who understand that the housing market drives the economy and anything that prohibits getting the inventory sold will surely slow the recovery of housing.

Make no doubt about the position I am in. As a mortgage banker who relies on home sales to make a living, I do understand the economics of these changes and what it will do to existing homes for sale, especially in the $300,000 range.

This is the sector of our market that is being hurt most. Homes under this price range are being picked off by investors and those who can still afford the 3.55 percent down payment, while the remaining homes stand idly by waiting for a buyer. These were the 2003-06 homes that people flocked to.

But let’s not focus entirely on the new loan limits. They are only one of the many initiatives that threaten our recovery. The real issue is that while government stood haplessly by allowing the meltdown to occur and then rewarded those who created the 36-48 month disaster, they are again looking at ways to scale back the ability of buyers to come into the market.

Consider the many variables that are now beginning to create a barrier to home buying. The United States has allowed thousands upon thousands of jobs to go overseas.  The United States has allowed manufacturing to practically die. The boomers from up north have watched their pensions be erased or shrink to nothing.

The housing disaster will produce more non-buyers than in any time, and further consider that the proposed home mortgage interest tax deduction is on the table as a loophole and eyed to be cut.

The lowering of the HUD (FHA) loan limits is but one of many changes headed our way and combined could spell disaster for an economy in dire need of a housing rebound.

There are no simple answers to our ailing economy, but watching how some became multi-billionaires and those same people want to now lobby for us to cut back the opportunities to the lower and middle classes somehow does not sit well in my camp.

My advice is to watch the politicians carefully as they will decide whether housing ever recovers.

Christopher Murray, Sr. Loan Officer at CIMG, Inc., can be reached via email.

How US Health Care Reform Will Affect Employee Benefits

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The shift away from employer-provided health insurance will be vastly greater than expected and will make sense for many companies and lower-income workers alike. 

US health care reform sets in motion the largest change in employer-provided health benefits in the post–World War II era. While the pace and timing are difficult to predict, McKinsey research points to a radical restructuring of employer-sponsored health benefits following the 2010 passage of the Affordable Care Act.

Many of the law’s relevant provisions take effect in 2014. Our research suggests that when employers become more aware of the new economic and social incentives embedded in the law and of the option to restructure benefits beyond dropping or keeping them, many will make dramatic changes.

The Congressional Budget Office has estimated that only about 7 percent of employees currently covered by employer-sponsored insurance (ESI) will have to switch to subsidized-exchange policies in 2014.

However, an early-2011 survey of more than 1,300 employers across industries, geographies, and employer sizes, as well as other proprietary research, found that reform will provoke a much greater response. More information about the survey methodology is available on the McKinsey & Company Web site.

• Overall, 30 percent of employers will definitely or probably stop offering ESI in the years after 2014.
• Among employers with a high awareness of reform, this proportion increases to more than 50 percent, and upward of 60 percent will pursue some alternative to traditional ESI.
• At least 30 percent of employers would gain economically from dropping coverage even if they completely compensated employees for the change through other benefit offerings or higher salaries.
• Contrary to what many employers assume, more than 85 percent of employees would remain at their jobs even if their employer stopped offering ESI, although about 60 percent would expect increased compensation.

As employers consider their post-2014 options, they should take a dynamic view by considering how competitors for talent—other employers—and their own employees will react. Many employers will be shifting from ESI; it is unlikely that only one company in an industry or geography will move away from it.