(CNN) – The requirement that businesses provide their workers with health insurance – a key provision contained in President Barack Obama's sweeping health care law – will be delayed by one year, the Treasury Department said Tuesday. The delay came after business owners expressed concerns about the complexity of the reporting requirements, the agency said in its announcement. Under the Affordable Care Act, businesses employing more than 50 full-time workers that don't provide them health insurance will be penalized. “We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so. We have listened to your feedback. And we are taking action,” Mark J. Mazur, assistant secretary for tax policy, wrote in a post on the Treasury Department's website. He said the extra year before the requirement goes into effect will allow the government to assess ways to simplify the reporting process for businesses. Penalties for businesses not providing health coverage to employees will now begin in 2015. Supporters of the employer mandate note that most employers already provide health insurance to full time workers, and downplay the effect the requirement would have on small businesses, citing figures showing the vast majority of small businesses employ fewer

than 50 workers. But opponents claim the employer mandate is a potential job killer, saying businesses near the 50-worker cutoff will be unlikely to ramp up hiring if it means they're required to provide employees health insurance.

Obama's administration has previously expressed openness to making the health care law easier to implement, and acted to shorten applications for health insurance on government-run exchanges from 21 pages to three. Republicans have continued to attack the measure as confusing and bad for business, and voted again to repeal the law this spring. Some Democrats have also voiced concern about the roll-out of the health law – Sen. Max Baucus, a key Democrat who helped craft the legislation, expressed serious anxiety in April about its rollout. “The administration's public information campaign on the benefits of the Affordable Care Act deserves a failing grade. You need to fix this,” Baucus told Health and Human Services Secretary Kathleen Sebelius at a hearing.

“I just see a huge train wreck coming down,” he added later

July 1, 2013

On Wednesday, the Supreme Court overturned the Defense of Marriage Act. Back in 1996, President Clinton signed DOMA into law, explicitly defining marriage in the United States as a union between a man and a woman. By ruling the 1996 law unconstitutional this week, SCOTUS established that same-sex marriages sanctioned by individual states will now be recognized by the federal government. Prior to the ruling, same-sex couples could not take advantage of federal rights extended to married couples, such as shared benefits, Social Security benefits or inheritance rights, like opposite sex couples could. Now, in the nine states across the country and the District of Columbia that allow for same-sex marriage, all married couples will enjoy the same federal rights, including those related to healthcare.

Clearly, the DOMA ruling has some health-reform implications, as it impacts determinations as to who is eligible for Medicaid and who is eligible for federal health insurance premium and cost-sharing subsidies within the

exchanges. Overall family income as it relates to the Federal Poverty Level is the key factor in determining eligibility for federal assistance; the poverty line varies by size, gradually increasing as the family grows larger. Now, with the federal government recognizing same sex marriages as one family unit and not individuals, their eligibility determinations could change. For example, if one person in a same-sex marriage is earning below the FPL and the other earns more, their salaries are now added together and the person earning below the FPL will no longer be eligible for federal healthcare-purchasing assistance.

The ruling also has implications for employer-sponsored group benefit plans. When DOMA was the law of the land, a same-sex couple had to pay more for workplace health coverage even if they were legally married – because the partner’s health benefits were treated as taxable income. The change in the law now raises a couple of key questions for employers. First, how do employers now treat the taxability of employer-sponsored benefits for same-sex spouses that are already on the

group plan? Is there an immediate change in the tax treatment of benefits, and how is that handled with IRS? Also, what about employers with locations and employees in multiple states? A same-sex employee that was legally married in one state now must be treated as legally married in all. If the employer did not previously offer benefit to same-sex couples but did offer coverage to spouses, now they must extend coverage offers to legally married same-sex spouses.

But when will the same-sex couples be able to enroll their spouses in their health plans? As we know, employees usually have to wait until open enrollment before enrolling a spouse in their health plan unless there’s a “qualifying life event.” If the Supreme Court decision is treated as qualifying life event, employees may be able to add their spouses to their health plans pretty soon. Right now, though, we need to watch for guidance from the IRS and HHS fully implementing DOMA, so stay tuned.

Los Angels Times by Chad Terhune –

June 12, 2013:

In California”s new state-run health insurance market, Kaiser Permanente will cost you.

The healthcare giant has the highest rates in Southern California and some other areas of the state, surpassing rivals such as Anthem Blue Cross and other smaller competitors. The relatively high premiums from such a strong supporter of the federal healthcare law surprised industry analysts, and it has sparked considerable debate about the company”s motives.

Some experts say Kaiser intentionally bid high to avoid drawing too many customers next year who are sick or who have been uninsured for years and may be costlier to treat. Others suspect Kaiser was worried that lower premiums would bring an influx of newly insured patients that could overwhelm its in-house roster of doctors and hospitals.

Making health insurance affordable is a crucial factor in the expansion of coverage to an estimated 5 million Californians — many of them lower-income and the uninsured — who will be eligible for a state-run exchange next year. Price will be paramount to many consumers, even for those who receive federal subsidies to help lower their costs.

In one key barometer of rates, Kaiser has the most expensive premiums for a 40-year-old in Los Angeles, Orange, San Bernardino and Riverside counties for a mid-level Silver plan. Statewide, the nonprofit company has the highest or second-highest premiums for a Silver plan in 12 of the 18 regions where it”s selling HMO policies in Covered California, the state market that opens for enrollment Oct. 1.

Kaiser”s Silver plan premium for a 40-year-old in southern Los Angeles County is $325 per month, 34% higher than the cheapest policy in the area, from Health Net Inc., at $242.

“Kaiser is not as low cost as many people think,” said Glenn Melnick, a USC health policy professor. “They appear to be protecting themselves because the people signing up in the first year are likely to be the sickest ones.”

For its part, Kaiser says it was as surprised as others were when the state announced the 13 winning health insurers and their proposed rates for 19 regions last month. These rates are scheduled to be finalized this month after a regulatory review. Individual premiums will vary based on people”s age, location and family size.

Despite its higher rates, Kaiser said it wants to enroll a large number of people in the state exchange. It blamed its lackluster showing, in part, on rivals offering cheaper plans that give consumers far less choice of doctors and hospitals.

Blue Shield of California, for instance, is offering 36% of its physician network in Covered California plans.

“We were surprised to see some of the rates,” said Bill Wehrle, Kaiser”s vice president of health insurance exchanges. “We were surprised at what looked like very narrow networks from our competitors. We don”t cut off any slice of our network.”

Of course, for years Kaiser has served as a model for the limited networks other insurers are now rushing to adopt. Kaiser is a unique healthcare system because it operates its own hospitals, physician offices and insurance company for its 9 million members nationwide.

“Blue Shield or Anthem could be a little more selective in putting together a network for this new market. Kaiser is one size fits all,” said Marian Mulkey, director of the health reform and public programs initiative at the California HealthCare Foundation. “The question now is will people find gramerbonus.org Kaiser attractive enough compared to their other options. This could put pressure on Kaiser to be less expensive.”

Overall, Kaiser is the state”s biggest health insurer with a 40% share of the market, according to 2011 data from Citigroup. Anthem Blue Cross, a unit of industry giant WellPoint Inc., was second with a 23% share of employer and individual customers.

More than 5 million Californians who don”t get insurance through work are expected to participate in the state”s new market. About half of those people will qualify for federal premium subsidies because they are low or moderate income.

Individuals earning up to about $46,000 a year and families making $94,000 or less will qualify for government help with their premiums. Even with that financial boost,

however, most consumers are expected to look for the cheapest plans available.

“I think the lowest and second-lowest plans will really be attractive,” said Lucien Wulsin, executive director of the Insure the Uninsured Project, a nonprofit research group in Santa Monica. “I”m sure being at the low end of the spectrum puts you more on the receiving end of everybody.”

One of the bigger unknowns in the federal healthcare expansion is how many people will sign up initially and who will they be. Patients with preexisting medical conditions or chronic illnesses who have been denied insurance for years should be eager to enroll. Younger, healthier people may not see much reason to buy, content instead to pay a modest penalty.

Starting in January, most Americans must have health insurance or pay a fine. The penalty starts at $95 per adult or 1% of income, whichever is greater. The penalties increase over time.

“Kaiser has structured this so they don”t get a

lot of the poorer and potentially sicker people,” said Steve Valentine, president of the Camden Group, an El Segundo healthcare consulting firm.

“Some people have been unemployed and underemployed for years, and they may have a lot of healthcare needs. There could be a lot of pent-up demand, and Kaiser may be trying to dodge that bullet,” Valentine said.

For years, some consumer advocates have faulted Kaiser for not doing more for the state”s poorest residents on Medi-Cal, the state Medicaid program, and for building many of its hospitals and medical offices in more affluent areas.

Kaiser defends its record of charity care and denies any effort to duck certain customers. Last year, the Oakland company said it provided care to more than 560,000 Californians enrolled in Medi-Cal and other safety-net programs.

“There is a lot of uncertainty about whether the healthy show up as well as the sick,” Wehrle said. “We are very competitive on rates in some regions, which is a pretty strong indication we are not trying to avoid anything. There is no question we want to grow in the exchange, and I think we will.”

Mulkey of the California HealthCare Foundation said Kaiser has regretted being the low-cost option at times in the past

and being overrun by too many members at one time. Other insurers may have more flexibility to add doctors and hospitals to their network as enrollment builds.

Kaiser, on the other hand, could face the costly decision to contract with outside hospitals to absorb some of its overflow.

“We are focused on sustainable prices for the long haul,” Wehrle said. “If you make a large mistake in this environment, it can be hard to recover.”

NaHU – National Association of Health Underwriters June 7, 2013

California Exchange Shows Lower Premiums – Or Does It?

Last week, the state of California claimed that its version of Obamacare’s health insurance exchange would actually reduce premiums. “These rates are way below the worst-case gloom-and-doom scenarios we have heard,” boasted Peter Lee, executive director of the California exchange. But the data that Lee released tells a different story: Obamacare, in fact, will increase individual-market premiums in California by as much as

146 percent.

One of the most serious flaws with Obamacare is that its blizzard of regulations and mandates drives up the cost of insurance for people who buy it on their own.
This problem will be especially acute when the law’s main provisions kick in onLee’s claims that there won’t be rate shock in California were

repeated uncritically in some quarters. “Despite the political naysayers,” writes my Forbes colleague Rick Ungar, “the healthcare exchange concept appears to be working very well indeed in states like California.” A bit more analysis would have prevented Rick from falling for California’s sleight-of-hand.

Here’s what happened. Last week, Covered California—the name for the state’s Obamacare-compatible insurance exchange—released the rates that Californians will have to pay to enroll in the exchange.

“The rates submitted to Covered California for the 2014 individual market,” the state said in a press release, “ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions.”

That’s the sentence that led to all of the triumphant commentary from the left. “This is a home run for consumers in every region of California,” exulted Peter Lee.
January 1, 2014, leading many to worry about health insurance “rate shock.”

Except that Lee was making a misleading comparison. He was comparing apples—the plans that Californians buy today for themselves in a robust individual market—and oranges—the highly regulated plans that small employers purchase for their workers as a group. The difference is critical.

Obamacare to double individual-market premiums

If you’re a 25 year old male non-smoker, buying insurance for yourself, the cheapest plan on Obamacare’s exchanges is the catastrophic plan, which costs an average of $184 a month. (By “average,” I mean the median monthly premium across California’s 19 insurance rating regions.)

The next cheapest plan, the “bronze” comprehensive plan, costs $205 a month. But in 2013, on eHealthInsurance.com (NASDAQ:EHTH), the median cost of the five cheapest plans was only $92.

In other words, for the typical 25-year-old male non-smoking Californian, Obamacare will drive premiums up by between 100 and 123 percent.

Under Obamacare, only people under the age of 30 can participate in the slightly cheaper catastrophic plan. So if you’re 40, your cheapest option is the bronze plan. In California, the median price of a bronze plan for a 40-year-old male non-smoker will be $261.

But on eHealthInsurance, the median cost of the five cheapest plans was $121. That is, Obamacare will increase individual-market premiums by an average of 116 percent.

For both 25-year-olds and 40-year-olds, then, Californians under Obamacare who buy insurance for themselves will see their insurance premiums double

Impact highest in Bay Area, Orange County, and San Diego

In the map below, I When the game ends, the amount of money left in your pot will determine your blackjack gratis Game Score. illustrate the regional variations in Obamacare’s rate hikes. For each of the state’s 19 insurance regions, I compared the median price of the bronze plans offered on the exchange to the median price of the five cheapest plans on eHealthInsurance.com for the most populous zip code in that region. (eHealth offers more than 50 plans in the typical California zip code; focusing on the five cheapest is the fairest comparator to the exchanges, which typically offered three to six plans in each insurance rating region.)

As you can see, Obamacare’s impact on 40-year-olds is steepest in the San Francisco Bay area, especially in the counties north of San Francisco, like Marin, Napa, and Sonoma. Also hard-hit are Orange and San Diego counties.

According to Covered California, 13 carriers are participating in the state’s exchange, including Anthem Blue Cross (NYSE:WLP), Health Net (NYSE:HNT), Molina (NYSE:MOH), and Kaiser Permanente. So far, UnitedHealthCare (NYSE:UNH) and Aetna (NYSE:AET) have stayed out.

Spinning a public-relations disaster

It’s great that Covered California released this early the rates that insurers plan to charge on the exchange, as it gives us an early window into how the exchanges will work in a state that has an unusually competitive and inexpensive individual market for health insurance. But that’s the irony. The full rate report is subtitled “Making the Individual Market in California Affordable.” But Obamacare has actually doubled individual-market premiums in the Golden State.

How did Lee and his colleagues explain the sleight-of-hand they used to make it seem like they were bringing prices down, instead of up? “It is difficult to make a direct comparison of these rates to existing premiums in the commercial individual market,” Covered California explained in last week’s press release, “because in 2014, there will be new standard benefit designs under the Affordable Care Act.” That’s a polite way of saying that Obamacare’s mandates and regulations will drive up the cost of premiums in the individual market for health insurance.

But rather than acknowledge that truth, the agency decided to ignore it completely, instead comparing Obamacare-based insurance to a completely different type of insurance product, that bears no relevance to the actual costs that actual Californians face when they shop for coverage today. Peter Lee calls it a “home run.” It’s more like hitting into a triple play.

Obama attacked insurers in 2010 for much smaller increases

That Obamacare more than doubles insurance premiums for many Californians is especially ironic, given the political posturing of the President and his administration in 2010. In February of that year, Anthem Blue Cross announced that some groups (but not the majority) would face premium increases of as much as 39 percent. The White House and its allies in the blogosphere, cynically, claimed that these increases were due to greedy profiteering by the insurers, instead of changes in the underlying costs of the insured population.

“These extraordinary increases are up to 15 times faster than inflation and threaten to make health care unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy,” said Health and Human Services Secretary Kathleen Sebelius. “[Anthem’s] strong financial position makes these rate increases even more difficult to understand.” The then-Democratic Congress called hearings. Even California Insurance Commissioner Steve Poizner, a Republican running for governor, decided to launch an investigation

Soon after, WellPoint announced that, in fact, because of lower revenues and higher spending on patient care, the company earned 11 percent less in 2010 than it did in 2009. So much for greedy profiteering.

So, to summarize: Supporters of Obamacare justified passage of the law because one insurer in California raised rates on some people by as much as 39 percent. But Obamacare itself more than doubles the cost of insurance on the individual market. I can understand why Democrats in California would want to mislead the public on this point. But journalists have a professional responsibility to check out the facts for themselves.

Small Businesses and Health Care Reform – What Now?

May 29, 2013

The Patient Protection and Affordable Care Act (health care reform) seeks to change the way health insurance premiums are established, just as the Act Providing Access to Affordable, Quality, Accountable Health Care did in Massachusetts. As CPAs’ small business clients begin to implement the requirements of health care reform, CPAs need to understand two significant ways in which their small business clients, and their own small practices, may be affected.

The Small Group Insurance Market and Increasing Premiums

The first big change that health care reform brings is the prospect of “merging” (formally or via rating rules) the small group insurance market with the individual insurance market. The individual market typically has the highest costs of all the health insurance markets due to the actuarial risk of a single covered life and the time and expense of selling

single policies. The small group market, historically 50 employees or less, but in the case of health care reform, 100 employees or less (mandated to expand the risk pool base of small businesses who might also absorb the cost of the merged individual market), is significantly less risky and thus has lower premiums. As has been the case in Massachusetts, if the formal merger of the two markets’ risk pools takes place in your state, it may cause small business premiums to increase dramatically. If you or your client presently have more than 50 employees and are covered in your state’s existing large group market risk pool, premiums could rise once the small group level increase to 100 employees becomes effective in 2014.

Individual market premiums will go up, even if the merged small group market is absorbing a lot of the cost, because the policies historically sold in the individual market had lower benefits than those sold through employers; health care reform no longer allows the lower benefit limits. Just as having a lower deductible and higher limits on your auto insurance policy results in a higher premium, health care reform requires more expensive policies. The mandated benefits also drive the cost of small business premiums higher. It is important to note, however, that regulations issued by the Department of Health and Human Services late in 2011 granted the states considerable flexibility in designing their own mandated benefits or benchmark plans. This, in turn, will result in the mandated benefits varying from state to state, something that was not contemplated when the legislation passed. Thus, practitioners need to look closely at what their individual state is doing. The National Conference of State Legislatures maintains a website tracking the state-by-state changes.

Premium Limits for Older Individuals and Smokers

In addition to the permitted merger of the individual and small group health insurance markets, the other two most significant changes to insurance premium rate settings involve the following:
•limiting the amount insurers can charge older individuals to no more than three times what they charge younger individuals; and
•limiting to 1.5 times what insurers can charge smokers versus nonsmokers.

When I wrote my book on the reform legislation in 2011 (with Greg Anderson, CPA/ABV), I developed an example that suggested premiums for those under age 30 would go up 32.5%. As the flood of actuarial analysis on the market in 2013 now indicates, 30% to 40% is the range of likely increase for the 20 to 30 year old crowd–many of whom

are still dealing with the recession and the burden of student loan debt.

This has significant added impact on small businesses that employ a lot of young people.