Stories Causing Atlas to Shrug, Oct. 21st | 27% Premium Increases & Mind Numbing O'Care Rules for Employees Out on Disability

Family Healthcare Costs To Go Down By $2,500? Aetna has requested a 27.4% increase in health insurance premiums for small businesses in California.

Under the mind numbingly complex rules of Obamacare, an otherwise full-time employee who ceases active employment and is placed on paid short-term or long-term disability leave continues to accrue hours of service, and therefore, may still be a “full-time employee” who works on average 30 hours per week or 130 hours per month.

Death Spiral: PPACA Plans, already failing to attract enough customers to sustain themselves, lost 12% in 2014 despite a $7.9 billion taxpayer handout.

Another nonprofit, member-owned health carrier spawned by a taxpayer handout of $73 million under Obamacare says it will close its doors at the end of the year after reporting a $22 million net loss for 2014 on $6.6 million in premium revenue.

A 65-year-old couple who retires this year without employer-provided health insurance will need about $245,000 to pay future medical-related expenses.
 

I Would Be So Bummed if This Were My Signature Law

The New York Times points out some classic Obamacare flaws.   

• One business that was forced to offer what the Government deems affordable health insurance to 600 employees had only two employees sign up. 
• The employer mandate has predictably made no noticeable effect on the number of workers enrolled in employer-sponsored health plans but added tens of thousands in employer costs for compliance and reporting.  
• And this classic: 

Until this year, most insurers would not cover groups that fell short of their minimum participation requirements. The Affordable Care Act struck down that policy — a sea change for the industry — by prohibiting minimum participation rules from being used to deny coverage to any employer with 100 or more workers. But there is a big loophole: Insurers are required to issue the policies, but they are not required to renew them.

Mario K. Castillo, a lawyer in Houston who has extensively studied the new law, said it was poorly understood in the industry, and a bureaucratic nightmare.

“They have to issue you a policy, but dropping it after one year is perfectly legal,” he said. “If you’re in this space, you essentially have to shop for insurance every year.”

 

Stories Causing Atlas to Shrug, October 13, 2015 | Retirement Costs, Litigation Nation & More Bad Gov't Food Info

Retiring in Idaho only takes 40% of the cash that's required to retire in California.

Litigation Nation: Class action approved against LinkedIn when court found that members consented to importing their contacts and sending the connection invitation, but did not find that members consented to LinkedIn sending the two reminder emails.

Government Nutrition: Scientists who tallied diet and health records for several thousand patients over ten years found that, contrary to the government advice, people who consumed more milk fat had lower incidence of heart disease.

 

Stories Causing Atlas to Shrug, October 10, 2015

In California taxpayers pay 75% of premium for Obamacare recipients. Families making up to $96K qualify for the handouts.

The government is not prepared for the complicated 2016 Obamacare reporting required to determine who is eligible for premium handouts. As a result the IRS is going to assess penalties against employers even if an employer does not receive the legally required warning notice.

Governmental Budgeting Prowess: When held to private standards (without the ability or print money to borrow infinitely) this Obamacare fund will only be able to pay 13% of the money it owes under the statue.

The Federal Government decided that the old system of 13,000 medical codes wasn't enough and has commanded that all medical providers move to a new system with 68,000 so that we can have codes for repeatedly walking in lampposts and getting sucked into a jet engine.

If Governor Brown Signs California Assembly Bill 1305 an Entire Subset of HSAs Will No Longer Qualify As HSAs

• Update, this bill was approved by the Governor on 10/8/15. 

In its neverending quest to legislate away all bad things, California teeters on the edge of passing a law that will make many HSA-eligible plans illegitimate on January 1, 2016.

AB 1305 was presented to the Governor on September 18, 2015.  He has until Sunday, October 11th to sign it and is expected to do so.

There is no reasonable way to interpret the requirement for an embedded out of pocket maximum (OOPM) described below that would square with all HSA-eligible plans. The standard effective date for new legislation such as this is January 1st following the enactment.  This bill does not provide delayed effective dates for the embedded OOPM; only for embedded deductibles.

In a last-minute amendment, for large groups only, the Senate extended the effective date of AB 1305's required embedded deductible mandate out to a “plan issued, amended, or renewed on or after 1/1/17.”  See the blue text below.  However, the current issue is related to the embedded OOPM.  Please see subsection c (3) in yellow which was not delayed until 1/1/2017.

CA AB 1305 amends Section 1367.006 of the Health and Safety Code to read:

(a) This section shall apply to nongrandfathered individual and group health care service plan contracts that provide coverage for essential health benefits, as defined in Section 1367.005, and that are issued, amended, or renewed on or after January 1, 2015. 

(b) (1) For nongrandfathered health care service plan contracts in the individual or small group markets, a health care service plan contract, except a specialized health care service plan contract, that is issued, amended, or renewed on or after January 1, 2015, shall provide for a limit on annual out-of-pocket expenses for all covered benefits that meet the definition of essential health benefits in Section 1367.005, including out-of-network emergency care consistent with Section 1371.4. 

(2) For nongrandfathered health care service plan contracts in the large group market, a health care service plan contract, except a specialized health care service plan contract, that is issued, amended, or renewed on or after January 1, 2015, shall provide for a limit on annual out-of-pocket expenses for covered benefits, including out-of-network emergency care consistent with Section 1371.4. This limit shall only apply to essential health benefits, as defined in Section 1367.005, that are covered under the plan to the extent that this provision does not conflict with federal law or guidance on out-of-pocket maximums for nongrandfathered health care service plan contracts in the large group market. 

(c) (1) The limit described in subdivision (b) shall not exceed the limit described in Section 1302(c) of PPACA, and any subsequent rules, regulations, or guidance issued under that section. 

(2) The limit described in subdivision (b) shall result in a total maximum out-of-pocket limit for all covered essential health benefits equal to the dollar amounts in effect under Section 223(c)(2)(A)(ii) of the Internal Revenue Code of 1986 with the dollar amounts adjusted as specified in Section 1302(c)(1)(B) of PPACA. 

(3) For family coverage, an individual within a family shall not have a maximum out-of-pocket limit that is greater than the maximum out-of-pocket limit for individual coverage for that product. 

(d) Nothing in this section shall be construed to affect the reduction in cost sharing for eligible enrollees described in Section 1402 of PPACA, and any subsequent rules, regulations, or guidance issued under that section. 

(e) If an essential health benefit is offered or provided by a specialized health care service plan, the total annual out-of-pocket maximum for all covered essential benefits shall not exceed the limit in subdivision (b). This section shall not apply to a specialized health care service plan that does not offer an essential health benefit as defined in Section 1367.005. 

(f) The maximum out-of-pocket limit shall apply to any copayment, coinsurance, deductible, and any other form of cost sharing for all covered benefits that meet the definition of essential health benefits in Section 1367.005. 

(g) (1) (A) Except as provided in paragraph (2), if a health care service plan contract for family coverage includes a deductible, an individual within a family shall not have a deductible that is greater than the deductible limit for individual coverage for that product. 

(B) Except as provided in paragraph (2), if a large group market health care service plan contract for family coverage that is issued, amended, or renewed on or after January 1, 2017, includes a deductible, an individual within a family shall not have a deductible that is more than the deductible limit for individual coverage for that product. 

(2) (A) If a health care service plan contract for family coverage includes a deductible and is a high deductible health plan under the definition set forth in Section 223(c)(2) of Title 26 of the United States Code, the plan contract shall include a deductible for each individual covered by the plan that is equal to either the amount set forth in Section 223(c)(2)(A)(i)(II) of Title 26 of the United States Code or the deductible for individual coverage under the plan contract, whichever is greater. 

(B) If a large group market health care service plan contract for family coverage that is issued, amended, or renewed on or after January 1, 2017, includes a deductible and is a high deductible health plan under the definition set forth in Section 223(c)(2) of Title 26 of the United States Code, the plan contract shall include a deductible for each individual covered by the plan that is equal to either the amount set forth in Section 223(c)(2)(A)(i)(II) of Title 26 of the United States Code or the deductible for individual coverage under the plan contract, whichever is greater. 

(g) (h)  For nongrandfathered health plan contracts in the group market, “plan year” has the meaning set forth in Section 144.103 of Title 45 of the Code of Federal Regulations. For nongrandfathered health plan contracts sold in the individual market, “plan year” means the calendar year.
(h) (i)  “PPACA” means the federal Patient Protection and Affordable Care Act (Public Law 111-148), as amended by the federal Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), and any rules, regulations, or guidance issued thereunder.

Emphasis added.

The biggest issue with California's attempt to offer more friendly health insurance is that the above bill would make some HSA-compatible plans illegal on January 1, 2016.  HSAs are required to have a family deductible of at least $2,600.  However, this law would require a family HSA to have an individual OOPM of no more than the single OOPM offered.

Imagine an HSA plan with a deductible and OOPM of $1,500 for single employees and a deductible and OOPM of $3,000 for families.  I have clients with exactly such a plan. This law would require that the family HSA benefit have an embedded OOPM for individuals pegged at $1,500.  However, federal law requires that in order to qualify as an HSA the family deductible has to be no lower than $2,600.  $1,500 is lower than $2,600.  Houston, we have a problem.

In order to make this style of plan comply with the newly proposed California law and federal HSA rules, an employer would have to make an emergency change to its plan effective January 1, 2016 (even if they are not a calendar plan year) and increase the individual deductible and OPM up to $2,600 just so they don't run afoul of the convergence of these two rules.

Governor Brown's team has been made aware of these issues.  Now we just hope that they send this bill back for a common sense adjustment before it is enacted.  Stay tuned to this blog as we'll update the matter as soon as we know of the final resolution.

My Visit with Armstrong & Getty re: the Latest on Individual Mandate Costs, Obamacare Co-op Failures and Illegal Subsidies Oct. 2, 2015

My segment begins about 2 minutes in and runs to about the 14th minute.
 

Thank You Obamacare, May I Have Another?

This is from a business owner:

I just got the first year bill from my payroll company for the extra reporting we have to do each year vis a vis Obamacare:  $7195.50 for 2015.  Note that this adds absolutely no value -- this is not the cost of insurance or cost of any extra taxes sent to Uncle Sam.  This is merely the cost to handle all the new paperwork required in the law. 

I will repeat what I have said before -- the Republicans tend to focus narrowly on taxes and often tend to miss or downplay the regulatory issues, which I think actually loom larger in destroying economic growth.

And yep, he is right in line with every business out there.  We have 100s of clients that are all paying between $3,000 and $25,000 for this payroll reporting service depending on their size.  We'll never know how many people won't get hired, bonuses won't be paid or businesses won't be started due to regulatory dead-loss like this.  But it is a herculean burden on the economy.
 

CBO Report: Eliminating the Individual Mandate and Associated Penalties Would Reduce Deficit by $300 Billion

The CBO and JCT have completed a preliminary estimate of the net budgetary effect of eliminating the requirement that individuals purchase health insurance and associated penalties established by the Patient Protection and Affordable Care Act.  They estimate that eliminating that requirement and the associated penalties would reduce the deficit by about $305 billion over the 2015-2025 period. That total consists of a $311 billion decrease in direct spending partially offset by a $6 billion decrease in revenues.

How, you might ask?

Eliminating the individual mandate and the associated penalties would increase the number of people without health insurance coverage in 2025—relative to current-law projections—by about 14 million people, resulting in 41 million uninsured in that year. That increase in the uninsured population would consist of roughly

• 5 million fewer individuals with coverage under Medicaid or the Children's Health Insurance Program, 
• 1 million fewer individuals with employment-based coverage, and 
• 8 million fewer individuals with coverage obtained in the individual market (including individual policies purchased through the exchanges or directly from insurers in the non-group market). 

Similar changes in coverage would occur in most other years.

The savings generated from not having to buy other people healthcare in Medicaid, CHIP and the Exchanges more than offsets any associated national costs for uncompensated care.