Category News

Health Care Reform feesWe know you don’t want to pay anymore money than absolutely necessary for health insurance, but there are a few fees that are going to implemented in the new health care reform law. Under the Affordable Care Act (ACA), there will be new fees and taxes assessed on all Indianapolis commercial (group)  health insurance plans. These fees and taxes are to fund some of the changes mandated by the new health care reform law.

Fully Insured Health plans will see the following fees prorated into their premiums over 12 months:

1. Patient-Centered Outcome Research Institute (PCORI) Fee: The ACA imposed a new fee on group health plans and self funded health plans of $1 per member for the 1st year, $2 per member the second year and then indexed to medical inflation there after.

2.Insurer Fee: This fee is collected from health issuers based on the net premium of the group health plan. This is a permanent fee and is estimated to be about 2.5% of the fully insured premium. The Insurer fee will fund premium tax subsidies for people that buy insurance through the exchange.

3. Transitional Reinsurance Fee: Between 2014-2016, the ACA will impose a fee on fully insured  and self-funded group health plans. This fee is to help offset the initial claims that the health insurance industry is expected to take on at the beginning of 2014. The money will spread the financial risk that the health insurance industry takes on in the individual market. The fee is $5 per member per month on both fully-insured and self-funded group plans.

4. Risk Adjustment Fee: This fee is to spread the risk so that adverse selection does not occur.  The fee is $1 per member per year.

The total cost of the all the new fees is estimated at 3.8% of the fully insured premium. If your group plan is $100,000 a year you now have to pay about $3,800 a year to help fund health care reform. These fees are just one aspect that will impact rates.



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A company wellness program is set up in the workplace to offer employees a kind of comprehensive health service, to encourage employees to adopt healthier lifestyles and to take measures aimed at preventing the worsening or onset of illnesses.

In the last five years, wellness programs were supposed to bring the most amount of savings for group health insurance. These small group wellness programs have had obstacles to overcome:

  • The cost of implementing a true wellness program has been difficult to budget for most small companies.
  • Obtaining a positive return on investment have been very difficult to achieve. 10% of groups usually represent 80% of the claims on a group health insurance plan, so the health insurance premiums can continue to sky rocket even with strong participation in wellness.

In a small group, there are just not enough premium dollars to offset large claims.  It only takes one complicated condition to create a large loss ratio, which in turn creates a large rate increase at renewal.

But, there is something a wellness program creates that is not in the numbers: Company Morale!

When all of the employee are active in a wellness program, you create a healthy environment.  People are eating healthy lunches and taking the stairs for additional exercise. Employees are taking walks at lunch time or wearing pedometers. Your employees come together on a common goal and it creates a positive work environment.

With careful planning, your company can create a well-designed wellness program to contribute to your employees’ healthier lives, increased productivity, reduced absenteeism and reduced health care costs.


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With Health Care Reform there is a lot of uncertainty in the market place.

You do have options!

The 1st option is to go with a fully insured health plan. As you may know there are only a few companies that are competitive. We will deliver you the most competitive plan. Our relationships with the carriers create savings for our clients. We also provide a high level of service to both owner and employee.

The 2nd option is to look at the Self Funded or Partially Self Funded Market.  There are new options that are hitting the market place.  We are now seeing self funded plans for groups as small as 10 lives.  We would design a plan where you take on a certain amount of risk by paying a portion of the claims your employee have.  We would broker Stop Loss Insurance which would reduce your risk.  Stop Loss Insurance is exactly what it sounds like. Stop the Losses!   There are also Self Fund options that have a feel of a fully insured plan but can deliver premium back to the group.

The 3rd options you may only here about from Nefouse & Associates. Drop your group benefits and go Individual. With health care reform, the individual market now has guaranteed issue. Meaning no one can be denied. We also will be selling the health Insurance exchange.  Your employee may be eligible for subsidies that would pay a large portion of their premium.  We can also offer broker out a Health Reimbursement Arrangement that can still provide a benefit to the employees. If you are under 50 full time employees this may be a very attractive solution.

No matter what your philosophy is for group health insurance we can deliver you a solution.

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CMS is starting to issue more and more guidance on the Federal Facilitated Exchange that will operate.

The enrollment process could look like this:

1. Consumer Submits application to the exchange:




In Person

2. The Exchange/Marketplace verifies and determines the eligibility:

The step will determine the eligibility for:

Enrollment in a qualified health plan (QHP)

Tax credits and cost Sharing reductions

Medicaid or CHIP

3. Eligible Consumer now enrolls In a QHP or Medicaid/CHIP

There will be online comparison tools to view different health plan designs.

Premium tax credits and cost-Sharing reductions are sent to the Health Insurance Carrier

Enrollment into the QHP or Medicaid/CHIP


CMS is making the enrollment process sound easy. There will be a lot of Hoosier that are going to be eligible for the tax credits which will reduce their monthly premiums. Some Hoosiers will even qualify for cost sharing reductions if income is under 250% of Federal Poverty Level. This means that medical expenses could be reduced by subsidies.  Though the exchange you could have a very reduced premium along with a very low out of pocket.

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We are starting to see projections of the rate increase fully insured group health plan can expect.

30%-50% increases in fully insured premiums under the health care reform laws. These are huge increase that very few small group or large group plan will be able to afford.

These increase are due to different aspect of the law.

1. The Essential Health Benefits (EHB) provision of the Affordable Care Act of 2010 (ACA)
created 10 general categories of benefits:
} Ambulatory patient services
} Emergency services
} Hospitalization
} Laboratory services
} Maternity and newborn care
} Mental health and substance abuse services, including behavioral health treatment
} Prescription drugs
} Rehabilitative and habilitative services and devices
} Preventive and wellness services and chronic disease management
} Pediatric services, including oral and vision care

2.  Deductible caps cannot exceed $2,000 for individual and $4,000 for a family.

The deductible caps will have a huge increase on premiums. Most fully insured plans have a 3x single deductible and now they will have to be moved to 2x single.

3. Reinsurance Fee

The reinsurance fee is a per member per month assessment of approximately $5, which will vary by state. Now this is per member, so a family could be assessed an additional $20 a month in premium.

4. Insurance Fee

Industry sources have estimated that the amount to be collected under this provision will represent 2.3 percent of total premium. The 2.3% will be added in with the health insurance premium.

5. Adjusted Community Rating

Adjusted community rating, guaranteed availability (issue), guaranteed renewability, single risk pool, catastrophic plans and rate review provisions. The insurance industry can no longer underwrite against risk.

These are some of the aspect of the law that are impacting fully insured health insurance premium. The impact is insane!

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There has been a lot of news about the government trying to replace Health Insurance Agents with non-licensed, non-insured and in-experienced “navigators” whom will be paid by the government and have less than 20 hours of training. The government has now realized they cannot successfully implement this extremely complicated law without agents. The government is now going to allow insurance agent to enroll people both inside and outside the health insurance exchanges. This will impact millions of Hoosiers. Insurance agent’s advice is free and we will continue to offer out advice for free.

Health insurance premiums are the same if you use an agent or go direct with the carrier. This will continue to be the case if you buy a policy through the Indianapolis health insurance exchange which is going to be run by the federal government.

We have spent our entire career getting clients the best deal in the insurance market. We have also provided the highest level of customer service when it comes to claims and administration.  We will continue to offer this level of service in 2014 and beyond.

We believe that we will still offer the best solutions for your company or your family.

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Employer Mandate Calculator

Many people have heard of the employer mandate. Under Health Care reform, employers with more than 50 full time employees to offer health insurance to their employees.
IF they don’t they will have to pay a penalty that is not tax deductible.
They may also have to pay a penalty if any of their employee get subsidies through the health insurance exchange.
This calculator will help you determine if you fall under the employer mandate.

1. Count the employees who worked at least 30 hours per week each month (including seasonal employees) in the prior calendar year.
2. Count the employees considered full-time by adding the number of hours worked by all part-time employees (as well as seasonal) and dividing by 120.
3. Add the monthly totals of steps 1 and 2 and divide by 12.

What are the penalties?

There are different kinds of penalties, based on what part of the rule the employer didn’t follow.

Employers have to pay a penalty for:

1. Not offering health coverage to full-time employees and their dependent children to age 26, and if any full-time employee gets government aid to lower the cost of coverage. The  annual penalty is $2,000 x the number of full-time employees, minus the first 30 employees.
2. Offering health coverage for only part of the year. The penalty is based on the number of full-time employees and the number of months coverage was not offered.
3. Offering health coverage to 95% of full-time employees but one or more full-time employees gets government aid to lower the cost of their coverage because the coverage is not considered affordable. The annual penalty is $3,000 per employee getting government aid.


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Here is a great article about how complex and difficult health care reform is.

Under the ACA, all medical practices have to go to Electronic Medical Records (EMR). The thought behind this is that it would help end any unnecessary test and improve the out come of patients care.

CMS thinks, that EMR may be leading to a increase in health care charges. In the past written doctors records could leave some doubt into what is the next step of treatment. This can be known as under coding. Maybe a patient had symptoms but the Doctor was not ready to diagnosis yet. With EMR, this speeds up the process of diagnosis, which could lead to more health care claims. Since the Doctor may be using some type of digital template, once the information is submitted to the system, the system then prompts for additional medical services.

The Electronic Medical Records is a concept of health care reform that is suppose to reduce costs and now may be a reason why costs go up,


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The President of the United States recently spoke about the new health care law.

He stated that the public does not know about the benefits of the new law.  Most of Congress does not know about the benefits of the new health care law.

Anytime you have a 2,000 page law and then another 15,000 pages on explanation it may be a bit difficult to get the message out.

There are positives to the new law and there are negatives to the new law.

The positive aspect of the new law is we are going to have guaranteed issue in the individual market. In 2014, no one can be declined a individual health insurance policy. This is one of the essential parts of health care reform. It has been viewed that it is not fair for the health insurance industry to be able to cheery pick the lowest risk individuals.  So a individual that need treatment of any kind will be eligible for the coverage.

The negative aspect of guaranteed issue is the premium are going to increase. The one major tool the individual market used to control cost was underwriting. Now that they no longer have that tool, they will have to increase prices to offset all the claims they are going to take on.

The health care law has a positive for the cost of the policy and that is the development of the exchange.  With in the exchange a individual or family can apply for federal subsides to help pay the premium. If you do not have access to a group health plan you may qualify for the subsidy.  A family of 4 living in Indianapolis, making under $70,000 a year, could end up paying $500 a month for a policy that cost $23,000 year.

The negative aspect of the exchange is if you don’t qualify for subsidies, you may not be able to afford the premium. Thus we could see a new class of uninsured in the state and that would be the upper middle class.

There may be a real disconnect in Washington D.C. and what is really going to happen in the health insurance markets.



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Potential Employer Penalties Under the
Patient Protection and Affordable Care Act (ACA)
Summary of important items and definitions to know:
1. ACA imposes penalties on “large” employers, if at least one full-time employee obtains a premium credit through the newly established exchange. Employers are not subject to a penalty if their full-time employees are eligible for Medicaid or CHIP.
2. ACA sets out a two-part calculation for determining, first, which firms are subject to the penalty and, second, which workers within the firm the penalty is applied.
A. Full-time employees are employees that work 30 hours or more a week.
B. Part-time employees are included in what is called a full-time equivalent
calculation to determine if an employer has at least 50 full-time equivalent employees (FTEs) and is thus considered large for the purpose of applying the penalty.
1. Example: A firm with 35 full-time employees and 20 part-time employees who work 24 hours per week (equaling 104 hours per month) would equal the equivalent to 51 total FTEs, making this firm a “large” employer. (20 part-time employees X 104 hours) = 2080 hours divided by 130 = 16
C. Independent Contractor: An individual who controls what will be done and how is will be done and the contract dictates the desired result of the work.
D. Temporary Worker: A worker that is not an employee of the firm he or she is “leased” to but rather an employee of the temporary agency.
E. Seasonal Worker: Seasonal worker differs across the two-part calculation. The seasonal worker definition varies depending on whether it is used in the first part of the calculation, which determines whether an employer is considered “large”, or the second part of the calculation, which determines how many employees are considered full-time for purposes of setting the dollar amount of the penalty.
1. First Part Calculation: If a seasonal employee works less than 120 days during a year, he or she is not included in the FTE calculation. In this definition, the seasonal worker is not limited to agricultural or retail workers.
2. Second Part Calculation: The 120 day period is not used to determine whether someone is a seasonal worker. Instead, IRS Notice 2012-58 provides that at least in 2014, employers are permitted to use instead a reasonable, good faith interpretation of the term “seasonal employee”. However, the notice further states that it is not a reasonable, good faith interpretation of the term “seasonal employee” to treat an employee of an educational organization, who works during active portions of the academic year, as a seasonal employee.
F. Controlled Groups: An employer of multiple entities (such as a franchise owner with several restaurants) is treated with respect to the 50-FTE requirements, as all of those franchises are essentially considered one entity. More specifically, for the purposes of the 50-FTE rule, employees in each of the franchises must be added together to determine the number of FTEs.
G. The proposed regulations provide employers some flexibility to designate certain “measurement” or look back periods (up to 12 months) during which they will calculate whether a worker is full-time or not.
1. Administrative Period: Period of identification and enroll full-time employees
2. Stability Period: Period in which penalty may be due relative to employees found to be full-time during the “measurement” period.
In order for employers who provide health insurance coverage to avoid paying a penalty, health insurance coverage that is both “affordable” and “adequate” must be offered to the employee and his/her dependents.
1. A dependent is defined as a child of an employee who has not attained age 26. A dependent does not include a spouse.
2. Coverage is considered “affordable” if the employee’s required contribution to the plan does not exceed 9.5% of the employee’s household income for the taxable year.
3. A health plan is considered “adequate” if the actuarial value (i.e., the share of the total allowed costs that the plan is expected to cover) is at least 60%.
4. Penalty for large employers offering coverage: The “monthly” penalty assessed to an employer for each full-time employee who receives a premium credit will be one-twelfth of $3,000 for any applicable month but is limited to the “total” number of the firm’s full-time employees minus 30, multiplied by one-twelfth of $2,000 for any applicable month.
Penalty for Large Employers Not Offering Coverage
A. Individuals who are not offered employer-sponsored coverage and who are not eligible for Medicaid or other programs may be eligible for premium tax credits for coverage through an exchange. Eligible individuals will generally have income of at least 100% and up to 400% of the federal poverty level (FPL).
B. For 2014, the “monthly” penalty assessed to an employer who does not offer coverage will be equal to the number of its full-time employees minus 30 (penalty waives the first 30 full-time employees) multiplied by one-twelfth of $2,000 for any applicable month
Effective Dates for Employer Penalty
A. Under the ACA, the employer penalty is effective for months beginning after December 31, 2013. Employers that intend to utilize the look-back measurement period for determining full-time status for ongoing employees for 2014 will need to begin their measurement period in 2013 to have a corresponding stability period for 2014.
B. Guidance states that employers who use a full 12 month measurement period are not required to begin the measurement period before July 1, 2013
Reporting and Other Requirements
A. The Department of Labor has delayed release of regulations requiring employers to provide employees written notice concerning:
1. The existence of an exchange (including services and contact information)
2. The employees potential eligibility for premium credits and cost sharing subsidies
3. The employers potential loss of an employer contribution if the employee purchases a plan through the exchange.
B. The Department of Labor expects the timing for distribution of notices will be late summer or fall of 2013 which will be coordinated with the open enrollment period for the Exchanges
C. Beginning in 2014, large employers will have certain reporting requirements with respect to their full-time employees:
1. Provide return including the name, address, and employer identification number
2. Certification as to whether the employer offers its full-time employees (and dependents) the opportunity to enroll in minimum essential coverage under the eligible employer-sponsored plan
3. The length of any waiting period
4. Months coverage was available
5. Monthly premiums for the lowest-cost option
6. The employer plans share of covered health care expenses
7. The number of full-time employees
8. The Name, address, and tax identification number for each full-time employee
9. Additionally, an offering employer will have to provide information about the plan for which the employer pays the largest portion of the costs (and the amount for each enrollment category).
10. The employer must also provide each full-time employee with a written statement showing contact information for the person required to make the above return, and the specific information included in the return for the employee.
D. Firms with more than 200 full-time employees that offer coverage must automatically enroll new full-time employees in a plan (and continue enrollment of current employees). Automatic enrollment programs will be required to include adequate notice and the opportunity for an employee to opt out. The Department of Labor has concluded that it’s automatic enrollment guidance will not be ready to take effect until 2014.
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