Archive for Health Insurance

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.

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

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.