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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.

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