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Health Care Costs for Families Doubled Since 2002

The cost of health care for a family of four has increased 7.3 percent in 2011, to $19,393, according to the Milliman Medical Index.

This is the lowest annual rate of increase in more than a decade, Milliman said. However, the typical family of four is paying $1,319 more this year for a preferred provider plan, which is the highest dollar amount increase in the history of the index.

“In 2002, American families had health care costs of $9,235, and those costs have now doubled in fewer than nine years,” said Lorraine Mayne, Milliman principal and consulting actuary. “As costs continue to grow and even as the cost trend decelerates  the total cost of care for American families constitutes a larger and larger portion of the household budget.”

Of the $1,319 cost increase, employers paid $641 while employees bore the remainder  $403 in payroll contributions and $275 in additional cost sharing.

The Milliman Medical Index also examined 14 geographical areas, and found six of the 14 cities studied exceeded $20,000 in total health coverage costs for a family of four. Phoenix had the cheapest coverage with an annual cost of about $17,300 for a family of four. Atlanta and Seattle also had less than $19,000 in total costs for a family of four.   Denver Colorado averaged $19,199 for a family of four.

2010 Review of Long Term Disability Claims

Since 2005, the Council for Disability Awareness (CDA) has conducted a proprietary annual review of long-term disability claims among the U.S. working population. The purpose is to identify continuing or emerging trends, and to share them with interested audiences. The 2010 CDA Long-Term Disability Claims Review summarizes quantitative and qualitative long-term disability insurance claims data from the annual CDA member long-term disability claims survey. Also included is selected worker disability data from the Social Security Disability Insurance (SSDI) program. Sixteen CDA Member Companies, representing roughly 75% of the commercial disability insurance marketplace, participated in the 2010 survey.

CDA Survey Findings: Summary of Key Findings from Proprietary CDA Member Company Data

$8.1 billion in long-term disability insurance claim payments was paid to disabled individuals by CDA Member Companies in 2009, representing a 2.9% increase over 2008.
Impact of the economic downturn on disability claims: Most reporting companies suggest they have observed little evidence that the recession has broadly impacted claims in any significant way. Most companies report little change in claim incidence or termination rates.
Impact of the economic downturn on worker psyche: The economic downturn has had a prolonged effect on U.S. workers. Swollen unemployment rolls and media coverage of out-of-work Americans has helped raise awareness of the importance of every worker’s income. Wage earners are holding onto jobs if they can, and savings rates increased in 2009 to over 4% for the first time in over a decade. A looming sense of economic vulnerability has elevated the importance of taking responsibility for planning for personal financial security. Eroded retirement accounts, continued economic volatility, news of home foreclosures and a stubbornly high unemployment rate have raised American workers’ awareness of financial risk and made planning for an income-limiting disability more important than ever.
About 100 million workers have no private disability insurance.

Other CDA Survey Findings

A record 627,000 disabled individuals received long-term disability insurance payments from CDA Member Companies in 2009, representing a slight increase over 2008.

disability payments graph

95% of reported CDA Member Company disability claims are not work-related.

31.2% of individuals receiving long-term disability insurance from CDA Member Companies in 2009 did not qualify for SSDI payments compared to 31.7% not qualifying for SSDI in 2008.

New cancer, nervous system–related and musculoskeletal claims trended up slightly from 2008 to 2009.

Accident-related claims dropped rather significantly as a cause of new disability claims from 2008 to 2009. This may be related to lifestyle changes, possibly driven by the economy.

Musculoskeletal/connective tissue disorderscontinue to rank as the leading cause of disability. (This category includes claims caused by neck and back pain; joint, muscle and tendon disorders; foot, ankle and hand disorders; etc.)

Cancer is the second leading cause of new claims but is the fourth leading cause of existing claims.

Cardiovascular/circulatory problems have increased slightly in 2009 as a cause of new claims after three years of declines, and are the third leading cause of new and existing disability claims. (Examples in this category include claims caused by heart and circulatory disorders, strokes, etc.)

Disabled worker population grows dramatically: The growth in the number of disabledworkers (i.e., the number of disabled workers receiving SSDI claim payments) continuesto dramatically outpace growth in the overall covered worker population. According tothe Social Security Administration, the covered SSDI worker population grew by 12%from 1999 to 2009, while the number of disabled workers receiving SSDI claimpayments grew by 60% during the same period, from 4.9 to 7.9 million.• 7.8 million workers — over 5% of the workforce — were receiving SSDI at the conclusionof 2009.• SSDI benefits applications surged in 2009: Significantly more workers are applying forSSDI claim payments than at any time in history. Applications for SSDI benefits rose to2.8 million in 2009, the most ever, and 21.4% higher than the previous record in 2008.Over the past 10 years, the number of applications for SSDI benefits rose dramaticallyby 135% while the percentage of applications approved (the approval rate) droppedfrom 52% in 1999 to 35% in 2009. The surge in new claim applications is expected tocontinue in 2010.• SSDI claim approval rate continues to decline: The SSDI percentage approval rate forapplications has been trending downward since the late 90s. (The approval rate is thepercentage of workers who apply for SSDI benefits whose initial claims are approved.)

35% of workers applying for SSDI disability claim payments in 2009 were approved; 10years ago, the approval rate for workers applying for disability was 52%. Approval rates in the past 5 years (ranging between 35% and 39% during 2005–2009) represent thelowest five out of the past 15 years. The highest approval rate in the past 15 years wasthe 52% in 1998. The 15-year median approval rate is 44.6%.

SSDI disability rate increases: The overall rate of disability is increasing amongboth men and women workers; in 1999, 3.6% of covered workers were receivingSSDI payments, while in 2009, 5.1% were receiving SSDI payments. Factors behind this dramatic rise include the aging of the U.S. workforce and the recent pooreconomic conditions.

• Disability rate increases more rapidly for women than men: The overall rate ofdisability among women workers is growing much more rapidly than among men.The percentage of female workers receiving SSDI payments in 2009 (5.1%) was 55%higher than 10 years earlier (3.3% in 1998), while the number of male workers receivingSSDI grew by 37% during the same period, from 3.8% to 5.2%.

• 78%: this is the increase in the number of disabled female workers receiving SSDIpayments over the past decade, compared to a 46% increase among disabledmale workers.

• The 7.8 million disabled workers who received disability payments from SSDI in 2009represent a 4.9% increase over 2008 and 60% higher than the 4.9 million disabledworkers receiving payments in 1999.• $110 billion was paid by SSDI to all disabled workers in 2009; this is more than twicethe $46 billion in disability payments paid in 1999.

• Monthly SSDI benefit amounts in 2008 broke down as follows:-

-11% of SSDI recipients received less than $500 monthly

– 56% of SSDI recipients received less than $1,000 monthly

– 84% of SSDI recipients received less than $1,500 monthly

-97% of SSDI recipients received less than $2,000 monthly

• More younger people have been applying for SSDI benefits than in the past.

• About one third of SSDI claims are for conditions related to mental disorders.

2008 Social Security “Quick Facts”

• 52: this is the average age of a disabled worker receiving SSDI benefits.

• 2.8 million: this is the number of disabled workers in their 20s, 30s and 40sreceiving SSDI benefits.

• 1.9 million: this is the number of disabled workers’ spouses and childrenwho also received SSDI payments in 2008.

• $1,064: this is the average monthly SSDI benefit for all disabled workers.•More than 90%: this is the amount of disabled workers receiving SSDI whodo not qualify for workers’ compensation.

• 3 in 10: these are the chances of a young worker today becoming seriouslydisabled before reaching retirement.


Survey participants included:

Assurant Employee Benefits

Berkshire Life

Guardian Life

The Hartford

Illinois Mutual

LifeLincoln Financial Group

MassMutual Financial Group


Mutual of Omaha


Prudential Life

The Standard

Sun Life Financia

lUnion Central Life


Specialty Benefits


CDA companies represent over 75% of the commercial disability insurance marketplace and providelong-term disability insurance coverage to 30.8 million workers, 28.9 million who are coveredthrough over 200,000 employer-sponsored benefit plans and 1.9 million who are insured throughindividually purchased disability policies.

Nursing Home Costs Now Over $75,000

Nursing home rates have climbed at an annual median rate of 4.5% for private nursing home rooms over the past 5 years, while the annual median increase has been just 1.7% for licensed home health aides and 2.4% for licensed homemaker services over that same period, according to Genworth, Richmond, Va.   The median increase in assisted living facility costs over the 5-year period was 6.7%, in part because the facilities were providing more intensive support for their residents, Genworth says.

Medical Loss Ratio Provision Letter To UHC Group Clients

Provisions of the Affordable Care Act (ACA) calling for a specific medical loss ratio (MLR) for the small and large group markets require UnitedHealthcare to survey customers to get data on the total number of employees to help determine the applicable MLR.

Beginning March 7, 2011, a mailing will go to all fully insured customers (posted above) requesting “the average number of employees as employed by the employer’s company during the preceding calendar year,” using the federal definition. The survey, which can be done online with a secure access code, asks for the employee count by month for all 12 months.

For each MLR reporting year, a health insurance issuer must provide a rebate to the employer and each enrollee if the issuer’s MLR does not meet or exceed the minimum MLR percentage established in the law: 

  • 80 percent for individual and small group markets.
  • 85 percent for the large group market. 

 The regulation defines small group as 1 to 100 and large group as 101+.

Customers will have 30 days from receipt of the mailing in which to respond to the survey. For those without online access, a form that can be faxed in response will be included with the mailing.

This data will be used to appropriately segment the group into the large or small group market according to federal guidelines and could have ramifications for rebate potential in 2012. 

Going forward, this data must be gathered and reported annually in order to comply with the ACA regulation and provide any applicable rebates in a timely manner.

Why Employers Aren’t Rooting for Health Care Reform to Die

Colorado regulators have done the math on health insurance premium hikes and are warning insurers and consumers that blaming steep increases on health care reforms is a convenient myth.

While insurers and politicians said new benefits and consumer protections were helping drive premium hikes of 10 percent to 30 percent for 2011, the actual requests for such new items in mandatory rate filings often required no increase at all.

The impact of the new benefits amounted to a 5 percent increase for some small-group new policies but topped out at 1.2 percent in large-group renewals, the state insurance division said.

The real driver of big insurance hikes remains high inflation for hospital care, doctor fees, new medical devices and increased testing, regulators and consumer advocates said.

"There's been a lot of hyperbole and a lot of hype about health reform driving up the cost of care," said Dede de Percin of the nonprofit Colorado Consumer Health Initiative. "Now that we have the facts, people really need to start paying attention to them and stop putting out misinformation."

Hospitals take most of the ongoing criticism for annual premium increases. A Milliman Medical Index report said costs rose fastest in outpatient hospital care for 2010, at 11.6 percent. Milliman said the hikes were not primarily from increased use but from jumps in the "unit price" of each individual service, device or drug.

Gross hospital charges in Colorado rose an average of 7 percent from September 2009 to September 2010, said Ron Zwerin of the Colorado Hospital Association. The top reasons include an aging workforce with more illnesses, expensive new technology and replacements of aging equipment, pharmacy costs and the use of costly emergency rooms for routine care, Zwerin said.

National requirements that went into effect this fall include expanding policies to cover children up to age 26, removing annual or lifetime limits on payouts, covering more preventive services and allowing pre-existing conditions for children 18 or under. More changes from the health reform law roll out in coming years, with controversial measures including the insurance mandate arriving in 2014.

The Colorado study found large-group insurers filed documents asking for increases of zero to 0.4 of a percent for covering children up to age 26, according to state Insurance Commissioner Marcy Morrison. Small-group insurers, up to 50 employees, said allowing pre-existing conditions for kids under 19 would cost them nothing.

Yet insurance companies are asking for annual premium increases up to 30 percent, Morrison said. A recent study said Colorado businesses face an average increase of 14.4 percent for health costs in 2011, higher than the national average.

Approving the rate requests is not automatic, with Colorado beefing up its review staff and enjoying expanded powers to deny increases. Morrison's reviews can now look at everything from illness levels of employee groups to an insurance CEO's salary to decide what is fair.

"Our folks are drilling down as best they can and looking at what is pushing that 30 percent" in the higher cases, Morrison said.

From the Denver Post November 10, 2010

IRS 2011 Limits For Health Savings Accounts and High Deductible Health Plans

The Internal Revenue Service has released the 2011 limits for health savings accounts (HSAs) and for high-deductible health plans (HDHPs), to which HSAs must be linked. The amounts for 2011 are unchanged from 2010.

Under the cost-of-living adjustment and rounding rules of Internal Revenue Code section 223, the 2011 amounts are unchanged from the amounts for 2010. The 2011 amounts are shown below.

2011 Limits for Health Savings Accounts and High-Deductible Health Plans

HDHP minimum deductible amounts

Individual: $1,200
Family: $2,400

HDHP maximum out-of-pocket amounts

Individual: $5,950
Family: $11,900

HSA statutory contribution amount

Individual: $3,050
Family $6,150

HSA catch-up contributions (age 55 or older)




From the Society For Human Resource Management


Part 1: The Qualified High Deductible Health Insurance Policy

The IRS considers a high deductible health insurance plan a policy with a minimum deductible of $1,200 for self-only coverage and $2,400 for family coverage, which are still relatively low. The maximum out-of-pocket (including deductibles and coinsurance) for allowed costs must be no more than $5,950 for self-only coverage and $11,900 for family coverage and preventive care can have first dollar coverage. This health insurance plan may be purchased without the savings account if you want. By doing this, you would just have a Colorado high deductible health insurance plan with relatively low premiums.


Part 2: The Tax-Exempt Individual Savings Account

The savings account is designed to cover routine medical expenses and provide savings. In any given year you may deduct the amount you contribute into your HSA from your gross income. Several banks offer free administration of the HSA plan.  Please contact us for a referral.  Thhe maximum you can contribute per year is $3,050 for self-only coverage and $6,150 for family coverage, excluding "catch up" contributions for those 55 years and older.   See for IRS approved expenses.

HSA's, FSA's and MSA's




Health Savings Accounts – HSAs

Fast Facts About Health Savings Accounts (HSA)

  • HSAs are similar to Medical Savings Accounts (MSA). However, MSAs have always been restricted to employees of small businesses and the self-employed. HSAs are open to just about anyone with a High-Deductible Health Plan (at least $1,200 for individuals and $2,400 for families).
  • HSAs are portable and move with you if you change employment.
  • HSA contributions can come from you, your employer, or both – all in the same tax year.
  • Contributions by an individual are tax deductible.
  • Employer contributions are not included in the individual's taxable income.
  • Unused contributions roll over from year to year and interest continues to grow on a tax-deferred basis.
  • HSA funds can be used to cover health insurance deductibles and any co-payments for qualified medical services.
  • "Catch-Up" Contributions – Individuals age 55 or older may contribute an extra $1000 per year to an HSA in 2010.
  • HSA funds can be used to purchase over-the-counter drugs and to pay health insurance premiums during any period of unemployment.
  • HSAs may be offered under an employer's cafeteria plan, allowing employees to contribute to an HSA with pre-tax salary reductions.
  • Any interest earned by the account is not taxable while in the HSA. Withdrawals for qualified medical expenses are not taxable.
  • Funds can be used for non-qualified purposes but are subject to taxes and a 10% penalty.
  • Once you reach age 65, you can withdraw the money for non-medical reasons without the 10% penalty.

Why Choose an HSA?

  • You can save as much as 50% on your insurance premiums.
  • 100% of your HSA contributions are deducted from your pre-tax income.
  • The interest earned by the money in your HSA is also tax-free.
  • You pay no taxes or penalties when you use your HSA for qualified medical expenses.

An HSA allows you to purchase a high-deductible insurance plan with lower-premiums, making it an excellent way to save money on healthcare. And because your contributions to the fund are tax-free, you can enjoy considerable tax savings. Plus, the interest is tax-free and tax-deferred, so you can use Health Savings Accounts to supplement your retirement income as well.

Top 10 Reasons to a Have a Health Savings Account

  1. Tax Savings – You can deduct your HSA deductions from your gross income on your federal tax return, even if you do not itemize deductions. Many states also allow the deduction from state income taxes.
  2. Earned Interest – Funds in your HSA grow with tax-deferred interest.
  3. Portability – You own your account, so even if you change jobs, your HSA funds go with you.
  4. Affordable Health Coverage – Use your Health Savings Account to cover 100% of the cost of routine medical expenses like office visits, lab tests, and over-the-counter drugs.
  5. Reduced Insurance Premiums – Your insurance premiums can be substantially lower when you change from a low-deductible plan to a high-deductible plan.
  6. Long-Term Savings – Because your funds can roll over from year to year, you can let the funds in your account grow tax-deferred. That's why HSAs have been referred to as the "Medical IRA."
  7. Retirement Bonus – After age 65, you may make withdrawals from your HSA for any reason without the 10% penalty imposed before age 65 for non-medical withdrawals. (Note: you'll still have to pay taxes on the money).
  8. Safety Net – There is no "use it or lose it" provision, so you can build up the savings in your HSA to use for major health events.
  9. Coverage for the "Extras" – You can also use your HSA funds for programs not usually covered by other health plans, including dental, optical, and much more.
  10. Empowerment – Take control of your routine healthcare decisions – you get to choose the healthcare and providers that you want.




In many ways, Health Savings Accounts resemble the Archer Medical Savings Accounts that have been around since 1997.

  • The account is specifically earmarked to pay for qualified medical expenses.
  • The individual owns the money in the account.
  • The previous year's contributions roll over into the next year.
  • The account is portable from one employer to another but that is where the similarities end.

Unlike an MSA:

  • For 2010, an HSA allows for a deductible as low as $1,200 for individual coverage and $2,400 for family coverage.
  • HSAs are not limited to the self-employed or businesses with 50 or fewer employees.
  • Anyone under the age of 65 with an eligible HDHP is eligible for an HSA. "Catch-Up" Contributions – Individuals age 55 or older may contribute an extra $1000 per year to an HSA.
  • HSAs allow employees to contribute 100% of their deductible, eliminating post-tax expense.
  • Both the employer and the employee can contribute to an HSA.

This new twist to the employee benefit arena creates exciting new possibilities when used in conjunction with the current Flexible Spending Accounts, Health Reimbursement Arrangements, and other employer sponsored reimbursement plans.

Who owns the money in the account?
Individual (subject to "use it or lose it" rule at end of plan year)
Can the money be invested with interest earned?
YES, tax-free
YES, tax-free.
How is the account funded?
.Deposited directly into the account.
Deposited directly into the account.
As an "IOU" by an employer to pay employee expenses.
Deposited directly into the account.
Is the fund portable?
Are the funds taxable?
Contributions are 100% tax deductible. Funds spent on medical expenses are tax-free for life. At 65, funds used to supplement income are tax-deferred.
Contributions are 100% tax deductible. Funds spent on medical expenses are tax-free for life. At 65, funds used to supplement income are tax-deferred.
Funds used to pay for medical expenses are not reported as income.
Contributions are 100% tax deductible.
Can the funds be used for non-medical expenses?
YES, but they are subject to taxes and a 20% penalty.
YES, but they are subject to taxes and a 15% penalty.
How can an employee access funds?
Employee has direct access to funds with credit card, debit card, checks, or withdrawal form.
Employee has direct access to funds with debit card, checks, or withdrawal form.
Employee provides receipt for services.
Employee provides receipt for services.
Who can contribute to the account?
Both employers and individuals.
Employers or individuals, but not both.
Employer only.
Both employees and employers.
What type of health plan is required?
One with a high deductible.
One with a high deductible.
No requirements.
No requirements.
Who is eligible?
Any employers or individuals under 65 who have a qualified High-Deductible Health Plan (HDHP).
Self-employed and small employers (50 or less).
Current and former employees. No restrictions on group size.
An employee who satisfies the eligibility requirements established by the employer.
Can the plan be included in a cafeteria plan?
Is there a "catch up" provision for older individuals?
Yes,its a $1000 per year.
Is there a maximum contribution per year?
100% of the annual deductible, not to exceed IRS-determined maximums. Pro-rated by the effective date of health plan.
65% of the annual deductible for individuals and 75% for families. Pro-rated by the effective date of the health plan.
NO. It is an arrangement by the employer to pay for medical expenses.




Forget About "Use It Or Lose It"…
HSAs Are "Use It Or Keep It!"

One of the strategic benefits of a Health Savings Account is that you own the account. The money is yours to keep, even if you don't use it all by the end of the year. And if you change jobs or health insurance coverage, the money goes with you.

You no longer have to worry about using all your funds for fear of losing them.
The "portability" of HSA accounts is a vast improvement over the rules that govern Health Reimbursement Arrangements (HRAs) and Cafeteria Section 125 Flexible Spending Accounts (FSAs), where any unused funds revert back to the employer at the end of the year or upon termination. HSA portability affords you more flexibility when it comes to your healthcare expenditures.

You can take your money with you if you leave your company.
If you remain covered under a High-Deductible Health Plan (HDHP), you can continue to access your HSA funds through individual coverage or you can "roll over" funds from one employer's HSA program to another employer's program (or from an Archer MSA to an HSA). Even if your new employer doesn't offer an HSA-compatible HDHP, you can keep the money in your HSA and continue to use the funds for qualified expenses. However, you can no longer add money to the account until you are again covered by an HDHP.

You can use your HSA like an IRA.
Withdrawals for qualified medical expenses can always be made tax-free (there's a 10% penalty, plus taxes, for non-medical expenditures). But if you don't use all the money by the end of the year, your money stays in your account until you need it. One financial benefit is that any leftover HSA funds earn interest tax-deferred… all the way into retirement. Then at age 65, you can make withdrawals from your HSA for any reason without penalty.

How 2010 Health Reform Changes May Impact You

How 2010 changes may impact you

Health Care Reform

Lifetime limits

Lifetime limits on the dollar value of essential benefits are now prohibited. This provision clarifies that nothing restricts the use of lifetime dollar limits for covered benefits that are not essential benefits. [Section 2711 of H.R. 3590/Section 2301 of H.R. 4872]Some Insurance Companies have "Grandfathered Plans"

Individual Yes

Insured Group Yes

Self-Funded Group Yes

Non-Grandfathered Plans

Individual Yes

Insured Group Yes

Self-Funded Group Yes

What most insurance companies are doing: Removal of lifetime limits from all plans, upon the next effective date or renewal date on or after Sept. 23, 2010. Check with your insurance companyAnnual maximums

Annual dollar limits are prohibited, except it allows for “restricted” annual dollar limits for essential benefits for plans years beginning prior to January 1, 2014. The regulations allow gradually increasing annual limits ($750,000 for plan year 2011; $1.25 million for plan year 2012; and $2 million for plan year 2013) until the limits are eliminated completely in 2014. It also clarifies that nothing restricts the use of annual dollar limits for covered benefits that are not essential benefits. [Section 2711 of H.R. 3590/Section 2301 of H.R. 4872]

Check with your insurance company for status of grandfathered vs. non grandfathered plans. The regulations establish restricted annual limits that increase until they are eliminated completely in 2014. HHS has agreed to waive the restricted annual benefit limit provisions in PPACA for qualified limited benefits plans until 2014, and we moved quickly to submit the necessary documentation to HHS to obtain waivers to preserve coverage for our limited benefits plan customers.

With the passage of the Patient Protection and Affordable Care Act (PPACA) in March 2010, the nation is moving closer to providing all Americans with access to health care coverage. The new health care reform law includes numerous individual and group comprehensive, major medical insurance market reform provisions that, for the most part, take effect in 2014 or later. Other provisions that are more in line with mandated benefits changes, rather than comprehensive reform, begin to become effective Sept. 23, 2010.

Rescissions and cancellations of coverage

Rescission are prohibited, except for fraud or intentional misrepresentation of material fact. It requires prior notice to the enrollee for cancellations. [Section 2712 of H.R. 3590/Section 2301 of H.R. 4872]Some Insurance Companies have "Grandfathered Plans"

Grandfathered Plans

Individual Yes

Insured Group Yes

Self-Funded Group Yes

Non-Grandfathered Plans

Individual Yes

Insured Group Yes

Self-Funded Group Yes

Check with your insurance company for status of grandfathered vs. non grandfathered plans

Small Business Health Care Tax Credit for Small Employers

The Small Business Health Care Tax Credit helps small businesses and small tax-
exempt organizations afford the cost of covering their employees.

Have You Received a Postcard from the IRS?
Millions of small employers will receive postcards from the IRS beginning the week of April 19, 2010 that alert them to the new Small Business Health Care Tax Credit and encourage them to check their eligibility. Even if you don’t receive a postcard, your business still may be eligible. Read more about this effort.

Eligibility Rules
Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.

Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
Average annual wage. A qualifying employer must pay average annual wages below $50,000.
Both taxable (for profit) and tax-exempt firms qualify.

Amount of Credit
Maximum Amount. The credit is worth up to 35 percent of a small business’ premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
Phase-out. The credit 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.

Three Simple Steps for Employers to Qualify
To determine if your small business or tax exempt organization qualifies for the Small Business Health Care Tax Credit, follow the three simple steps on the IRS fact sheet.

For More Information
New guidance makes it easier for small businesses to determine whether they’re eligible for the new health care tax credit under the Affordable Care Act and how large a credit they’ll receive.

Healthcare costs for U.S. companies seen rising 9 percent

NEW YORK (Reuters) – Healthcare costs for U.S. businesses are seen rising by 9 percent in 2010, according to a PricewaterhouseCoopers survey, which showed that employers will expect workers to pay more of the bill. PwC's annual "Behind the Numbers: Medical Costs Trends for 2010," released on Thursday, showed that one of the factors driving costs was more workers using health insurance plans if they expected to be laid off. And, it showed that as unemployment rises in the United States, leaving more people uninsured or underinsured, there will be a decline in membership in commercial plans and greater dependence on public programs, such as Medicaid. Mike Thompson at PwC's global human resource solutions group said that as more Americans turned to public healthcare programs, healthcare providers would look to private patients to make up lost revenue. According to PricewaterhouseCoopers, costs for healthcare products and services have risen by 9.2 percent in 2009 after rising 9.9 percent in 2008. More than 500 employers and numerous provider-based health plans were surveyed for common themes and trends expected to influence costs, PricewaterhouseCoopers said. The survey showed that: – 42 percent of employers would increase workers' share of healthcare costs – 41 percent of employers would increase medical cost sharing through changes to plans – More than two-thirds of employers offer wellness and disease management programs, but few said they were very effective at lowering costs. "The recession is creating a tug of war between upward and downward pressures on medical costs," said Jack Rodgers, managing director in the health policy economics group of PricewaterhouseCoopers. "With most prices holding steady or falling, health plans will put pressure on providers to hold the line on medical costs." PricewaterhouseCoopers said that in addition to the prospects of healthcare reform, some trends deflating spending on healthcare were increased use of generic drugs and wellness and disease management programs. It noted that patent protection on five blockbuster drugs is due to expire in 2010, with more in the next two years. It said that 40 percent of employees of businesses surveyed were enrolled in wellness programs such as for diabetes, asthma and cancer prevention, and 15 percent were in disease management programs for things like quitting smoking or losing weight. The survey showed that a growing number of Americans were in high deductible health plans, which are expected to lower use of health services, partly because people cannot afford medical procedures. One-fifth of employers said they would add a high deductible health plan over the next two years, according to the survey, and an increase in high-deductible plans is expected to discourage workers from using medical care

IRS Releases 2010 Adjusted HSA Amounts

IRS Releases 2010 Adjusted HSA Amounts Eligible individuals with self-only coverage under a high-deductible health plan (HDHP) may contribute an annual maximum of $3,050 to their Health Savings Account (HSA) for 2010. Eligible individuals with family coverage (coverage for two or more individuals) under an HDHP may contribute up to $6,150 to their HSA. Individuals age 55 or older who are not enrolled in Medicare may contribute more to the account per year. To be considered qualified for an HSA, the HDHP must meet certain IRS regulations. For 2010, to qualify as an HDHP:

  • The minimum deductible amount must be $1,200 for self-only coverage and $2,400 for family coverage; increased from 2009 requirements.
  • The out-of-pocket maximum must be no higher than $5,950 for individual or $11,900 for family coverage; increased from 2009 requirements.
  • The HDHP must be set up with a combined medical/pharmacy deductible. This deductible must apply to the out-of-pocket maximum; no change from 2009 requirements.
  • All medical and pharmacy services must be subject to deductible and out-of-pocket maximum except for preventive services.
Coverage Type Regulation 2009 2010
Self-Only Annual Contribution $3,000 $3,050
Deductible $1,150 $1,200
Out-of-Pocket Maximum $5,800 $5,950
Family Annual Contribution $5,950 $6,150
Deductible $2,300 $2,400
Out-of-Pocket Maximum $11,600 $11,900

View the 2010 HSA Reference Guidelines HDHP Verifier Tool Required for Plan Compliance Because these regulations change annually, all HDHPs with an HSA for new business, new business existing accounts, and renewal groups must run their HDHP plan through the HDHP Verifier – a tool that will ensure IRS plan compliance each year. While there is no specific deadline, verification should ideally take place before the plan is sold.