The Wild Card That Could Destroy Your Retirement

Here is an excerpt of an outstanding article we read on Yahoo finance:

Could you withstand a half million dollar or more hit to your retirement savings? Even for many one percenters that could be the difference between a comfortable retirement and destitution. Yet, the odds that you may someday get this hit are uncomfortably high.

Long-term care costs are a wild card that can wipe out the most careful lifetime investment planning. And the event is so random and capricious that it’s difficult to impossible to simulate in a financial plan. And no matter how carefully you have saved, how good your asset allocation plan and investment strategy is, the results may be ruined if you, your spouse, or another family member need long-term care.

Click here for the entire article from Yahoo finance – this link will re-direct you to Yahoo’s site which will open a new tab.


Obamaco$t brings Unpleasant Surprise – Focus, Large Group Renewals

Early 2014 large group renewals have come in for fully-insured and self-insured plans. Many employers are going to have an unpleasant surprise. A surprise to many who have had the belief that the postponement of the mandate postponed everything. Are you ready for this?

Example 1: A colleague of mine reports a 400 life group with a 77% loss ratio received an 8.5% increase, but it was actually a 21% increase. – How could this be? Answer: ACA fees are 4.00%, reinsurance fee $5.40 pmpm and insurer fee of 2.5%; no surprise, this was expected. Here is the surprise; 7.5% benefit adjustment added on top of the premium for the benefits to become ACA compliant – meaning all medical and RX expenses now apply to the maximum out-of-pocket limit. ACA by itself accounts for an 11% increase. My colleague’s client knew the benefit adjustment was coming but was expecting it next year since pay or play was pushed back. – Without Obamacare the increase was 8.5%.  With Obamacare the renewal increase is 21%!

Example2: A self-funded plan with 531 enrolled has done well managing costs with no increase to health insurance premiums in 2013 or deductible changes. They report beating the national averages in all but one of the last 6 years. The additional reinsurance fees, taxes, etc. alone will add over $131,000 dollars to their plan. The group has a cost sharing arrangement with their employee that includes the premium, deductible, and coinsurance.  The cost share will equal $85,000; and will need to be passed on in addition to any cost trend. That is $160 on each enrolled associate, before cost trend.

In announcing the postponement, the IRS took pain to note that only the employer shared responsibility mandate was postponed, everything else would become effective in accordance with the law’s requirements.

Let us know what you are experiencing.

Obamaco$t comes with Obamacare

Have you heard federal officials sate “Premiums before tax credits will be more than 16 percent lower than projected?” They are referring to the weighted average of the second lowest cost silver plan for 48 states (including DC) based on the ASPE-derived Congressional Budget Office.

Sounds good, until you dig deeper. The key word is projected. It does not say the cost will decrease; only the cost are going up, but not as much as anticipated.

What they fail to mention are the reasons. One big reason, insurers are significantly limiting the choices of doctors and hospitals available to consumers. In most states, Individual Medical premiums will soar for the under-50 crowd, including the vast majority who maintained continuous coverage and maintained their health. Some of those people simply cannot afford Obamaco$t, and in 2014 will drop their health insurance.

How much are cost going increasing and why? According to a study cited by America’s Health Insurance Plans (AHIP), it is estimated that in 2014, restrictions on age rating could result in premium increases up to 42 percent for people aged 21 to 29 and up to 31 percent for people aged 30 to 39. In addition to age rating restrictions, ACA also imposes new taxes, fees, and required benefits that could result in further premium increases. Making matters worse is a study from the Columbia School of Business that found more than 80 percent of consumers unknowingly will choose a higher cost health care plan than they need.

Adding to the cost, the US Treasury has ruled that an individual who is covered by an eligible employer-sponsored plan would not be eligible to receive a premium tax credit. According to the letter, an individual cannot benefit from both the exclusion from taxable income for employer-provided health coverage and the premium tax credit provided by the ACA. The law also would not allow an employee who was offered minimum essential coverage under an eligible employer-sponsored plan that provided minimum value and was deemed “affordable” to receive a premium tax credit, even if the employee declined the coverage.

Two Court Cases pose significant threat to PPACA

Employee Benefit Advisors has been following two court cases that have been falling under the radar. These cases could dismantle health care reform as we know it.


Excerpts from Employee Benefit News September 27, 2013 by Serena Yee and Christie Daly

The ACA requires the creation of a health insurance exchange in each state that will serve as a competitive marketplace where individuals and small businesses can purchase private health insurance. If a state refuses to establish an exchange then the federal government is taking over the implementation.

Section 1401 of the ACA provides that premium assistance is available to taxpayers who are enrolled in coverage through an exchange established by the state under Section 1311 of the ACA. Nonetheless, the Internal Revenue Service promulgated a regulation that bases eligibility for premium assistance subsidies on enrollment in coverage through any exchange, including a federally-established exchange. Specifically, the regulation states that subsidies shall be available to anyone “enrolled in one or more qualified health plans through an exchange,” and subsequently defines an exchange to mean “a state exchange, regional exchange, subsidiary exchange and federally-facilitated exchange.”

Potential impact

Since a majority of the states, 34 to be exact, have refused to establish a state exchange, a ruling in favor of the plaintiffs could seriously jeopardize the future of the ACA since the subsidies are key to the operation of other parts of the law, including the calculation and collection of the individual and employer mandate penalties.

read full article»

PPACA: It’s Oct 2 – Now what?

October 1 was a very significant date for the implementation of PPACA as the individual exchanges went live. However, there were reports from many states with problems with the rollout and not all exchanges were activated on schedule. Both the online small business markets known as SHOP exchanges and the Spanish language exchange are delayed. Going forward, there are several key provisions that will impact employers.

Guaranteed availability/renewability – requires carriers to accept all groups applying for coverage
Waiting periods – requires waiting periods to be no more than 90 days
Auto enrollment – employers enroll their full-time employees in a health plan
Health care excise taxes – New taxes for health insurance and pharmaceutical companies, plus medical devices

Originally effective 2014, employers with more than 50 Full Time Equivalent employees are now required to offer affordable health insurance

PPACA imposes the Cadillac excise tax on rich benefit plans

Medicare Part D coverage gap is reduced to 25 percent

Reminder: Medicare Part D Creditable Coverage Notice Due by October 15th

With all the attention to the ACA requirements for 2013 and 2014 it’s easy to lose sight of other benefit and human resource requirements.

The Medicare Part D Creditable Coverage Law affects all employer-sponsored group health plans. Entities are required to notify Medicare eligible policyholders whether or not their prescription drug coverage is creditable.

Creditable Coverage means that the coverage is expected to pay, on average, as much as the standard Medicare prescription drug coverage. Notice is due by October 15th.

There are two required disclosure notices for qualifying entities:

  • The first requirement is to provide a written discloser.
  • The second requirement is for entities to complete the Online Disclosure to CMS Form to report the creditable coverage status of their prescription drug plan.

Employee Benefit Advisors is able provide links to model notices.

Useful Apps – HealthAdvocate

ad·vo·cate (verb – used with object)  to act in support or in behalf of another; intercessor
Synonyms – champion, proponent, backer

Do your employees need help navigating the healthcare system? Are they spending valuable time on hold trying to manage their health care needs? Family member needs? Losing productivity? This App is for you. Use the app to explore:

  • Finding the right doctors
  • Scheduling appointments
  • Help resolving insurance claims
  • Assistance with eldercare
  • Obtaining cost estimates
  • Working with insurance companies
  • Answering questions
  • Assistance in transferring medical records

No smartphone? No problem! Health Advocate members can access Health Cost Estimator and other features online through their member website, or by calling Health Advocate for personalized support.

Bonus – Services are extended to employee, spouse, dependent children, parents and parents-in-law.


Know of a useful app in the health care, LTC, Rx or related industry? Send it to us, we may blog about it.

(Excerpts taken from Health Advocate marketing material.)

IRS Clarifies PEOs Position on Eligible Employer-Sponsored Plans

Final IRS regulations clarified PEOs can offer eligible employer-sponsored coverage on behalf of an employer.  In the introductory statement to the final regulations  it unambiguously states that organizations such as PEOs can offer coverage under an eligible employer-sponsored plan on behalf of an employer, yet not be viewed as the employer by reason of offering such coverage. This is true for group fully-insured and self-funded health insurance coverage offered on behalf of an employer to an employee.

Excerpts from The National Law Review Posted August 30, 2013

Exchange Notice Deadline is Oct 1 – What you need to know

Employers must notify employees about health insurance available through state and federal exchanges by October 1, 2013.

Who gets notified

You must send a notice to all full- and part-time employees, whether or not they are on your group health plan. You do not have to notify employees’ dependents or others who are eligible for coverage but are not employees. New employees hired on or after October 1, 2013, must receive this notification within 14 days of their start dates.

Employers can use a template

The U.S. Department of Labor (DOL) created model notices.

Minimum value standard question

If your group health plan does not meet the minimum value standard, your employees may be able to get a tax credit by buying health insurance on a federal or state exchange. Therefore, you must show on the model notice whether your group health plan meets this minimum value standard. Please note: Your health plan meets the ACA’s minimum value standard if it pays for at least 60 percent of each covered employee’s health care costs.


The penalty for not distributing the notice is $100 per worker per day.

DOL Release Sept 11 – If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.

The Mouth-Body Connection

Open wide! – Your mouth can tell a lot about your body’s health. It is a window into many health issues throughout the body.

More than 3 out of 4 American adults suffer from various forms of periodontal (gum) disease and many don’t know it. This is concerning because infections can be caused by periodontal bacteria entering the bloodstream and travel to major organs.

Some of the risks include:

  • Heart disease, the nation’s leading cause of death. Studies have shown links between cardiovascular disease and key bacteria in periodontal disease.
  • A 4.3 times greater chance of stroke than those with mild or no periodontal disease.
  • Diabetes, approximately 95% of Americans with diabetes also have periodontal disease.
  • A sevenfold increase in the risk of pregnant woman delivering preterm, low birth weight babies.

A significant percentage of people will not visit a physician for medical care during the year. However, many will see a dentist.

What if by visiting the dentist employees are made aware of potential health risks? How might catching these potential health problems early affect absenteeism, employee overall health, and employee satisfaction with their benefit package?

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