Insurance Insights

Your Health Insurance: Why it Costs More Every Year

Fri, 18 May 2012 20:12:00 GMT

By Joey Giangola

A very important service I like to provide my clients with is a yearly health insurance renewal evaluation. This process is essential for anyone who wants to keep their health insurance costs under control, which should include just about everyone. Otherwise, if your health insurance was left unattended year after year, at some point, you will end up overpaying for that plan.

It’s never fun picking up the phone to tell someone they have to pay more for the same thing they already have. It is however, the realistic nature of health insurance and part of my job. What makes it easier for you is understanding why your rate has increased and more importantly what you can do about it.

Usually I am treated with one of two standard response when talking to a client about their renewal. The first, I like to call, the defeated acceptor. This group is getting smaller and smaller each year. However, they will say, “It’s because I’m a year older, isn’t it?” The answer, yes and no. Or you have the constant denier, who says, “That’s ridiculous, I didn’t have a single claim last year.” Both groups have valid points and are highlighting things that do have a slight effect on their yearly renewal.

However, neither of which are the main reason you find yourself in a fit of rage each year come renewal time. For that, you can thank the dynamic duo of medical inflation and overall risk pool health.

I know a lot of people like to think that insurance companies charge arbitrary high premiums for no apparent reason. While there are sporadic instances where this might happen (usually due to extreme health conditions or an aging/deteriorating risk pool) health insurance rates are largely reactive to the increasing cost of medical care and the group (or risk pool) of people you are insured with. I can’t remember the last time I saw a doctors office advertising a buy one get one free physical examination sale. The truth of the matter is, medical services are expensive. Doctors and hospitals are not going to be taking a pay cut or start offering great deals anytime soon.

That means, the greater the risk (or potential cost for medical services), the more expensive it is to insure that risk. As long as MRI tests cost more then a trip to Europe and major surgeries more then a modest home, It doesn’t matter where you get your health insurance from, it will always cost more then you want it to.

Your risk pool is going to have the most significant effect on your yearly health insurance renewal. The fundamental principal of insurance is to transfer the risk of one individual by spreading it out across a larger group of people. This means, if the 7,000 out of the 10,000 people you are insured with ended up having a rough year medically, the insurance company will have paid out substantially more in claims then they anticipated. Thus leading to the necessity for that company to recoup those funds in order to keep the risk pool and company solvent, or capable of paying claims.

What can you do about it?

You should have an insurance broker (preferably an independent agent) review your health insurance renewal each year. They will be able to tell you if the renewal is average, even if it seems high to you, or if your current company got a little greedy this year and that you can do better. If the later is true, they will more then likely suggest you consider switching companies, if you are in a position to do so. If not, you can always make a plan change with your current company to lower your premium.

There is no magic formula to keeping your health insurance premiums down. The best thing you can do is to find a health insurance broker who will review your policy each year. This will allow you to ensure that you are always paying a rate you are satisfied with.

Joey Giangola is an independent insurance agent for Giangola Insurance Agency and specializes in health and life insurance. You can email him at joey@giangolainsurance.com, or follow him on Facebook, Twitter and Google+ to receive the latest insurance news and tips.

When Should You Consider a Short-Term Health Insurance Plan?

Tue, 28 Feb 2012 16:51:00 GMT

By Joey Giangola

Short-Term health insurance fills a very specific need for individuals who might find themselves in one of the situations it was created for.

The Basics

Short-Term health insurance is just what it sounds like, insurance coverage for a very specific, or “short” amount of time. This of course, is different from the traditional, open ended, coverage provided by standard insurance policies, which stays in force until the insured cancels or stops paying the premium.

Generally a Short-Term policy can be purchased for up-to six months at a time and features a much quicker application and underwriting process. While a traditional insurance plan requires extensive medical information and can take as long as two to three weeks to be approved. Short-Term insurance requires the completion of four or five medical questions and can be processed within 24 hours.

The Benefits

Short-Term insurance is never going to be confused with a “top of the line” insurance plan. Its coverage will vary from company to company and generally feature a wide range of deductibles, however it will most likely have reduced coverage compared to standard plans. The biggest omission is the exclusion of all pre-existing conditions. That means anything you have been previously treated for will not be covered by a short-term policy.

The Need

Chances are you might never run-in to a situation that would require, or make sense for you to purchase short-term health insurance. However there are a handful of areas where this type of coverage can be a life saver.

The first and most common need is for someone who is between jobs. While stints of unemployment seem endless these days, short-term coverage is flexible enough to handle even the most extended hiatuses from the workplace.

This type of coverage is also great for recent graduates who might have a short period of time to fill until they can jump on their new employers health plan.

Lastly, short-term coverage can also come in handy for someone who has been declined for a standard health insurance plan. Because the policy has a very general application process and time of coverage is only guaranteed for a set amount of time, this allows someone with moderate health issues to get coverage.

The Cost

Of course, probably the most important benefit of all is that short-term health insurance is going to be much easier on the wallet. Because of the limited benefits we discussed earlier and the specified duration of coverage, monthly premiums are only going to be a fraction of the cost of standard insurance plans.

Again, chances are most people might never find the need for such a policy. However if you do find yourself in a situation where short-term coverage makes sense, it is a very affordable way to provide you with the protection you need.

Joey Giangola is an independent insurance agent for Giangola Insurance Agency and specializes in individual health insurance and term life insurance. You can email him at joey@giangolainsurance.com, or follow him on Facebook, Twitter and Google+ to receive the latest insurance news and tips.

A Few Reasons You Need Life Insurance Now, Not Later.

Thu, 16 Feb 2012 16:18:00 GMT

By Joey Giangola

I have lost count of how many times I have talked to middle aged married couples that say, “We are getting to that age where we probably should have life insurance."

The truth of the matter is, they needed that life insurance 20 years ago. Now that doesn’t mean there is not a need for life insurance in a middle age couples plans. The purpose of life insurance is to protect the financial well-being of your spouse and children in the event you are no longer around to do so.

However, a young, newly married couple starting their lives together is probably in a much more vulnerable position financially (Mortgage, Children, Car or Student Loans) then that empty-nest middle aged couple who has already raised their children and paid off most of their debts.

Stop for a moment. Think about all the outstanding financial commitments you currently have. Now, do some quick math. What is your number? If it’s even a little bit scary, and there is someone or multiple someone’s in your life that could find themselves responsible for your number, life insurance should have just made its way to the top of your priorities list.

I’m sorry for continuing to fuel your anxiety attack, but here are a couple of questions to consider. Do you have children? If so, how much do you spend on them a year? What about college? How much is your spouses annual income? Will he or she still be able to work those hours and take care of your family if you are no longer around to help out? Can your spouse afford to keep your family in the home you built together? Alright, I think you get my point. I will stop the train of despair there for now. However, as you can see, the scope of your absence is much wider then you probably ever imagined.

This is not an exercises in how to inflict panic via blogging. It is simply an important step in realizing how to appropriately protect your family. If you want some good news after all that, life insurance is almost always cheaper the earlier you buy it. Also, keep in mind that if you ever run into a serious or semi serious health problem you may not be able purchase life insurance after that. If you can, it will be much more expensive. I know, this was suppose to be the good news section.

Bottom line: Will the need still exist for life insurance when you become that middle aged married couple? Sure. It just probably won’t be as great.

Life insurance will never replace your spouse or the role they fill in your life, but it will make a lot of things a lot easier if the worst were to happen.

Joey Giangola is an independent insurance agent for Giangola Insurance Agency and specializes in individual health insurance and term life insurance. You can email him at joey@giangolainsurance.com, or follow him on Facebook, Twitter and Google+ to receive the latest insurance news and tips.

Employers: Save Money by Going Individual With Your Health Insurance

Thu, 16 Feb 2012 15:45:00 GMT

By Joey Giangola

A growing trend among small business owners is to ditch their bloated and expensive group health insurance plan in favor of individual health policy’s for their employees.

Individual health plans in the workplace can deliver two major benefits upfront. One, it will give each employee a much wider range of plans to select from, instead of the one or two options a traditional group plan might offer. And two, it will allow you, the small business owner, an opportunity to save 30-50 percent on your health insurance costs.

This option also presents an opportunity for businesses that currently do not offer health insurance the ability to do so at little or no cost to the employer. Since there are no contribution requirements with individual health insurance an employer can pay as much or as little as they desire for their employees health insurance.

Options, options, options.

Employees would have the ability to select a wide range of plans from multiple carries throughout the state. While Anthem Blue Cross Blue Shield might be priced best for one employee, Medical Mutual of Ohio might work better for another. When making such a decision employees will be able to consider a company’s network of doctors, different plan options/benefits and monthly price.

Put it in the bank.

Business owners are always about the bottom line and hands-down individual plans will cut a tremendous amount off any business owners health insurance budget. Because group plans are guarantee issue and include certain state mandated benefits, they are, on average going to cost twice the amount of a standard individual plan.

While those two very attractive reasons might already have you reaching for the phone, there are a few drawbacks you should know about first before seriously considering this option.

What do you mean I have been declined?

The main reason this will never be a slam dunk idea (at least until 2014) is due to a little something called medical underwriting. Right now every employer sponsored health plan comes standard with guarantee issue. This allows any employee, regardless of medical history, to be accepted on your group health insurance plan. Something (again, at least until 2014) individual health insurance cannot offer. Chances are the more employees you have the better chance you run of someone not being able to get through underwriting.

Batteries not included.

There are also certain benefit mandates a group health plan is required to cover that an individual plans can exclude to lower cost. The most notable benefit is maternity coverage for women. Maternity can be added to an individual policy, however it does not come standard (sometimes only available on certain plans) and is expensive enough that you will only want to add it if an employee is serious about starting or adding on to their family.

No tax deduction?

When you dip your toe in the individual health insurance market you are allowing your employees to not just have complete control of what type coverage they want, but also which company works best for them. If you have employees scattered across several different insurance companies it might be difficult to set up billing that will allow you to tax deduct the expense. Employers are not allowed to directly pay for an individual health insurance plan.

What’s a List Bill?

If you can get several employees to land with the same company (minimum two) you can set up something called a list bill for automatic payroll deductions. This will allow you to facilitate payment for each employee’s plan. Otherwise the employee will be responsible for handling each monthly payment themselves.

While there are some very appealing aspects for a small business owner to consider, this solution will not work for everyone. However it does provide a relatively small business, not concerned with guarantee issue, an opportunity to trim a significant amount off their monthly health insurance cost.

Joey Giangola is an independent insurance agent for Giangola Insurance Agency and specializes in individual health insurance. You can email him at joey@giangolainsurance.com, or follow him on Facebook, Twitter and Google+ to receive the latest insurance news and tips.

Take Control of Your Health Care Costs: At Least Anthem Wants you To.

Wed, 12 Oct 2011 14:12:00 GMT

By Joey Giangola

Anthem Blue Cross Blue Shield has rolled out their highly innovative online tool called Anthem Care Comparison that will finally give people the valuable information needed to make informed, cost conscience decisions about how they spend their health care dollars.

This new technology will allow Anthem members the opportunity to compare the price and quality of near by medical faculties for certain diagnostic testing such as MRI’s and CT scans.

Anyone who has had a doctor order a diagnostic test generally allows him or her to do so at whatever facility they desire, with little or no questioning. However, people are not aware of the fact that the cost associated with such testing can vary greatly, hundreds even thousands of dollars from facility to facility ,often times with no drop off in quality.

What Anthem is attempting to do is give its members more power by providing this knowledge. People who have opted for a higher deductible plan know the importance of shopping their medical costs. If they are faced with a $5,000 deductible and require a CT scan that can be done for $1,500 instead of $3,000, with the same quality of care, that is money they will gladly put in their pocket.

This is the first major effort to get serious about trying to control our out of control medical costs. The entire system, (doctors, hospitals, insurance companies and the America people) has taken a “don’t ask, don’t tell” approach to the cost of their health care for a bit to long. A method that is fine and dandy as long as someone else is picking up the bill. With medical inflation raising more and more each year, this is an issue that can no longer be ignored.

Joey Giangola is an independent insurance agent for Giangola Insurance Agency and specializes in individual health insurance. You can email him at joey@giangolainsurance.com, or follow him on twitter and Google+.

How to select individual health insurance by answering only two questions.

Tue, 20 Sep 2011 13:36:00 GMT

By Joey Giangola

Most people have never had to deal with the sometimes frustrating, and almost always confusing process of selecting an individual health insurance plan. For those that have, or are about to, you only need to be able to answer two questions to adequately identify coverage that is right for you.

At first glance the laundry list of insurance terms can be intimidating, with deductibles, coinsurance, copays, premium, PPO, HSA, out-of-pocket maximums and coinsurance maximums. It’s easy to see how people can become overwhelmed with learning a whole new language. However there are only two terms listed above that you should initially concern yourself with. Those two terms are premium and out-of-pocket maximum.

To start the qualification process take those two terms and turn them into questions.

What do I want my monthly premium to be? Translation: How much do I want to pay for insurance each month?

How high of an annual out-of-pocket maximum am I comfortable with? Translation: How much money do I want to be responsible for in a given year for medical treatment?

If you are able to provide honest answers to both of these questions you will have already narrowed down your options from hundreds of plans to just a handful. All the extra terms that were listed, and commonly referenced when discussing insurance, are not nearly as important as identifying the two above.

The idea behind this two question evaluation is simple. First, just like everything else you buy, you need to know what you can afford. You don’t walk into an electronics store looking for a new TV and head straight for the 65 inch flat screen TV with every imaginable bell and whistle, do you? OK, so maybe you do. But after you enjoy your moment of entertainment bliss your haze of love lifts to reveal a hefty price tag. As a result you quickly shuffle down the line to find a more modestly price option.

This concept still applies when shopping for health insurance. Just because you want something does not mean you are going to be able to afford it. And just because you can’t afford what you want doesn't mean you shouldn’t buy anything at all. Also, the nice thing about health insurance, unlike TV’s, is the most expensive options is not always the best.

The second part of our little test helps identify when payments stop being your responsibility. Plain and simple the annual out-of-pocket maximum is the total amount of money your health insurance plan requires you to pay for covered medical services each year. This is important because some health insurance plans have low deductibles but relatively high out-of-pocket maximums. It is always a good idea to know the total potential cost associated with your yearly medical treatment.

While there are other factors to consider when selecting the right health plan, your monthly premium and annual out-of-pocket maximum remain the most important building blocks when assembling a strong individual health insurance plan

Joey Giangola is an independent insurance agent for Giangola Insurance Agency and specializes in individual health insurance. You can email him at joey@giangolainsurance.com, or follow him on twitter and Google+.

Guaranteed Issue Coverage for Children: Why it’s Not That Simple.

Wed, 21 Sep 2011 20:38:00 GMT

By Joey Giangola

Let’s first start by removing the 15-ton elephant from the room as quickly as possible. There isn’t a single person in the country who wants to deny children access to quality medical treatment. If for some reason there are a few radical extremist groups who think otherwise, then we might need to bring Jack Bauer out of retirement for one last go around.

On a more serious note, as of September 23, 2010 the Patient Protection and Affordable Care Act, or Health Care Reform Bill, activated the first wave of laws aimed at improving our bloated health care system. Among the handful of new policies is a mandate that no child 19 or under seeking individual health insurance can be denied coverage due to a pre-existing condition. This of course, sounds like a good thing. Any sane, rational person can see the necessity of this law; however, that argument only holds up when analyzing the new law in a vacuum and fails to acknowledge the second requirement needed to effectively provided children with this benefit.

The law, as it is currently written, is sending out a giant, oversized invitation of adverse selection to the American public. This is a fancy insurance term that means bad stuff can happen. To give an example of adverse selection as it relates to the no pre-existing condition law for children, let’s go back and look at everyone’s favorite American family Mr. and Mrs. Tom Smith and their two children.

Tom’s four-year-old son has been diagnosed with a congenital heart defect that will require surgery. Tom is self-employed and has his own individual health insurance policy. However, since the new law passed, Tom removed his children from the policy to save money on the premium and figured he could add the children back on when needed. Now faced with a procedure that could easily exceed $50,000, Tom will be able to call up his insurance agent as he is leaving the doctor’s and add his son back on the policy.

You are probably asking yourself, “What is wrong with that?” This seems like an ABC Family happy ending; Tom was able to put his son back on his insurance and will no longer be faced with the possibility of paying for the procedure himself.

Not so fast.

Before you reach for the nails and wooden cross, let’s take a step back and look at the big picture for a moment. First, insurance companies do not print money. Insurance, by definition is the transfer of risk; meaning, that in exchange for your small to moderate premium payment, you receive protection from large, unforeseen bills. What a lot of people don’t understand is that a large percentage of a person’s monthly premium goes towards paying claims for people with serious medical conditions.

Tom purchased his $3,000 family deductible Health Savings Account plan back in July 2010 and is paying a monthly premium of $493.19. By removing his children from the policy, Tom was able to save $193.07 a month, $2,316.84 annually and $11,584.20 over a five-year period. When you look at these numbers on an individual level they pale in comparison to the average cost of major medical procedures. However, if you were to take those numbers and multiply them by every insured family in America, then you are talking about some serious money; money that would have paid for thousands of heart surgeries for children just like Tom’s son.

This has forced all insurance companies to do away with child-only policies. Now, children must apply with a parent over the age of 19 to be considered for coverage. Even with the abolition of child-only policies, insurance companies still face the very real possibility of insured American families jumping on the adverse selection bandwagon. This, ultimately, could lead any insurance company into a financial disaster. A disaster that would render the company incapable of paying claims for any of its members.

How do you we provide children with guarantee issue coverage without destroying everyone’s insurance?

The answer is actually pretty simple. The law needs to include an open enrollment period where once- or twice-a-year parents have the option to add or remove their children from the policy. This simple amendment would prevent someone from adding their child to the policy on the way to the hospital and only paying one month’s premium in exchange for thousands of dollars in claims. This easy adjustment to the law has been brought up to the necessary officials; however, no further action has been taken.

We can all agree that the law in the purest form has the best intentions; however, we all wish the implementation was handled with a little more care and expertise. So, the next time you hear someone rambling about the “big, bad insurance companies” trying not to provide children with health insurance, take a minute and inform them of the potential ramifications of the new law as it’s currently constructed.

Joey Giangola is an independent insurance agent for Giangola Insurance Agency and specializes in individual health insurance. You can contact him at joey@giangolainsurance.com or by phone at 888-718-2999 for a consultation.

Employer Penalties Under Healthcare Reform

Tue, 20 Sep 2011 00:25:00 GMT

By Joe Giangola

One of the most misunderstood areas of Healthcare Reform has been the mandating of coverage and the associated penalties for employers. There is a lot of confusion as to who the mandates will apply to, when they will begin and who must be covered. Fortunately the mandates do not begin until 2014, which should give employers ample time to prepare.

Company Size and Who is Affected?

Let's take a look at who will be affected by the law. The PPACA (Patient Protection & Affordable Care Act) mandates will apply to companies with 50 or more full time employees.

How exactly is the company size determined? The employer must employ 50 or more full time employees for 120 or more days in the preceding calendar year. So your number of employees in 2013 will determine whether the law applies in 2014.

An employee is considered full time if they work an average of 30 or more hours per week. The law also takes into account part time employees as they are counted as full time equivalents. Part time employees are used to help determine who must comply with the law but are not used in the calculation of the penalties.

Who and what must be covered?

In 2014 an employer must offer minimum essential coverage to all of it's full time employees and their dependents. Failure to comply will subject the employer to a $2,000 per year penalty per employee over 30 employees. This can also result if any full time employee receives subsidized coverage through an Exchange.

What will be considered minimum essential coverage?

The Federal Government's office website, healthcare.gov , defines Minimum Essential Coverage as follows:

"The type of coverage an individual needs to have to meet the individual responsibility requirement under the Affordable Care Act. This includes individual market policies, job-based coverage, Medicare, Medicaid, CHIP, TRICARE and certain other coverage."

As you can see the law is not clear as to the level of coverage required, your current plan may exceed or fall short of the law's required level of benefits.

Will offering a plan make my company compliant with the PPACA?

First, your plan must meet the, to be determined, essential level of coverage. Second, your plan must be considered "affordable" and offer "minimum value".

Employees who are eligible for coverage through work are able to receive subsidized coverage through the Exchanges created by the PPACA. An employee may qualify for a subsidy if their income falls below 400% of the Federal Poverty Level, $88,200 per year for a family of four or $43,320 per year for an individual. The employer must pay 60% of the allowed costs of the coverage and the employees contribution may not exceed 9.5% of their household income. This number will be virtually impossible for employers to determine since spouses income will be unknown.

The penalty for non-compliance is $3,000 per employee over the first 30. The penalty cannot be greater than $2,000 per employee for failure to provide coverage. After 2014 the penalty can be indexed.

Many questions remain unanswered at this time leaving business owners helpless to prepare for the upcoming changes. Be sure to check back often as I will be keeping a close eye on the developing regulations from the Department of Health and Human Services and will help explain the pending clarifications as they are released.

Joe Giangola is a Certified Employee Benefits Specialist (CEBS) for Giangola Insurance Agency. You can contact him at joe@giangolainsurance.com or by phone at 440-964-8211 for a consultation.

Dependent Age Limit Extended to 26 Nationaly, 28 in Ohio.

Tue, 20 Sep 2011 00:26:00 GMT

By Joe Giangola

One of the first provisions of The Patient Protection and Affordable Care Act to take effect is the extension of coverage to dependents up to the age of 26. This provision will allow children to remain on their parents plan in hopes to cut down on one of the biggest segment of the uninsured - young adults.

The law will effect group plans as well as individual policies on the next plan anniversary after 9/23/10. Dependents are NOT required to live with their parents and do NOT have to qualify as dependent on their parents income taxes. The student requirement has also been eliminated. You can cover your child whether they are married or single but that coverage does NOT extend to your child's spouse or children.

Children become ineligible for coverage under their parents plan once they become eligible for their own coverage through their employer.

The law also states that employers cannot charge a premium for the coverage unless adding the dependent causes a change in the rating class. For example if the parent already has children coverage and this additional child does not change the premium charged by the insurer, then there is no additional cost to the employee.

If the dependent is over 19 and has not been covered for the last 63 days then a pre-existing condition waiting period of 12 months may be applied.

Ohio HB 1

Ohio allows for coverage to age 28 after the federal eligibility has been exhausted. However the rules are somewhat different.

To receive benefits up to age 28, the unmarried child must be: 1) the natural child, stepchild, adopted child of the employee; 2) a resident of Ohio or a full-time student at an accredited public or private institution of higher education; 3) not employed by an employer that offers any health benefit plan under which the child is eligible for coverage, and 4) not eligible for coverage under Medicare or Medicaid.

Both of these provisions should go along way in reducing the number of uninsured young adults.

A Look at Healthcare Reform's Impact on Employers

Tue, 20 Sep 2011 00:26:00 GMT

By Joe Giangola

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act. Along with the Health Care and Education Reconciliation Act of 2010, this legislation will make significant changes to our current health care system

The Act adds new responsibilities for employers and insurance carriers. While most of the provisions will start in 2014 or later, some provisions are effective right away or within a short period of time after enactment.

Effective 2010

Small-Business Tax Credit. A tax credit of up to 35 percent of the employer's health care contribution is available for qualified small employers (any employer with no more than 25 full-time employees and average wages of less than $50,000). This tax credit will increase to 50% starting in 2014 once exchanges are operational.
Early Retirees. A temporary reinsurance program is provided to employers that offer coverage to early retirees between the ages of 55 and 64.
Health Plan Changes. 1) Plans must offer unlimited lifetime benefits and annual benefit limits will be restricted. 2) Pre-ex conditions will be prohibited for children under 19. 3) Recissions are prohibited except in the case of fraud. 4) Plans must cover certain preventive health services at no cost to the insured. 5) Dependent coverage age limit extended to 26. Federal High Risk Pool. Temporary establishment of a high risk health insurance pool for individuals unable to find insurance elsewhere.

Effective 2011

W-2 Reporting. Employers must report value of health care benefits provided on employee w-2s, but not as taxable income.
Higher Penalty Tax on Non-Qualified Health Savings Account (HSA) Withdrawals. Non-qualified withdrawals will be taxed at 20% versus the current 10% penalty.
Cafeteria Plans. A new Simple Cafeteria Plan is created through which small employers (less than 100 employees) can easily provide tax-free benefits to their employees without the administrative burden of sponsoring a cafeteria plan.
Standardized Definition of Qualified Medical Expenses. Costs for over-the-counter medications obtained without a prescription will no longer be considered a qualified medical expense.

Effective 2013

Flexible Spending Account Limits. Annual contribution limits are reduced to $2,500 per year, with CPI increases available in future years.
Itemized Deduction for Medical Expenses. The Act increases the income threshold for claiming the itemized deduction for medical expenses from 7.5 percent to 10 percent. Individuals over age 65 would be able to claim the itemized deduction for medical expenses at 7.5 percent of adjusted gross income through 2016.
Higher Payroll Taxes for High Income Earners. The hospital insurance tax rate will be increased 0.9 percentage points for wages over $200,000 for individuals and $250,000 for those filing jointly.

Effective 2014

Employer Coverage Mandates. Employers with 50 or more employees who do not offer employee health coverage will pay $2,000 annually for each full-time employee, excluding the first 30 full-time employees. The penalty is increased to $3,000 for any full-time employee receiving a federal tax credit for coverage, because his or her employer health coverage is considered "unaffordable." Coverage is considered “unaffordable” where the employee contributes more than 9.8 percent of his or her income, or the employer contributes less than 60 percent of the actuarial value of the plan.
Insurance Exchanges. Exchanges are created at the state level starting in 2014, where individuals and small employers can shop for health coverage. Initially, the exchanges would be available to individuals and small groups (less than 100 employees), unless the state opts to cover only groups with up to 50 employees. Starting in 2017, states could open the exchanges to larger groups.
Wellness Programs. Employers can offer larger rewards, up to 30% of the cost of coverage, to employees for participation in a wellness program or for meeting certain health-related goals.
Individual Tax Credits. Credits are available for people with incomes up to 400 percent of the poverty level for insurance purchased through an exchange.
Health Plan Changes. 1) Insurers cannot refuse to issue coverage on any individual due to pre-existing conditions. 2) Higher rates cannot be charged to any individual based on health status, gender or other demographic factors. 3) Coverage cannot be non-renewed or dropped because an individual participates in a clinical trial.

Effective 2018

High Value Plan Excise Tax. A nondeductible excise tax of 40 percent is imposed on any health insurance plan with combined annual employer/employee premiums exceeding $10,200 for individual coverage and $27,500 for family coverage. The tax would only apply to premiums in excess of the threshold.

Joe Giangola is a Certified Employee Benefits Specialist (CEBS) for Giangola Insurance Agency. You can contact him at joe@giangolainsurance.com or by phone at 440-964-8211 for a consultation.

Why you might want to think twice about copay’s.

Tue, 18 Oct 2011 21:26:00 GMT

By Joey Giangola

We’ve all experienced it – you walk into the doctor’s office for an appointment and the receptionist kindly greets you by asking for your insurance information. After you’ve presented the proper credentials, the receptionist informs you the amount of your copayment (if any) that is due at the time of service. Since you have planned for such a request, you handover your preferred method of payment and take a seat in the waiting room. As you sit there, flipping through a six month old issue of Golf Digest, you can’t help but think you have made out on the deal. “A modest fixed fee to see the doctor whenever I want” you think to yourself. That has to be the best deal going, right?

Not so fast.

The only time it’s cost effective to consider a plan with a copay is if you expect to see a doctor in excess of four or five times a year or are currently taking several brand name medications that don’t offer a generic alternative. Otherwise, you’re spending extra money each month in your premium (monthly insurance payment) for a benefit you aren't using. It’s like paying extra each month for HBO and only watching it two or three times a year. The cable company isn’t going to give that money back because you didn’t watch, just like the insurance company won’t if you don’t go to the doctor.

Unlike cable consumption, you don’t want to be using your health insurance 24/7. As a matter of fact, it’s generally a person’s goal to go to the doctor as little as possible throughout the year. So why has everyone become obsessed with wanting to pay for something they don’t want to use?

The answer is that’s what people have become accustomed to from years of coverage through their employer-sponsored health insurance. The primary focus of insurance has shifted from insuring catastrophic events, such as an extended hospital stay or major surgery, to nickel and diming every imaginable upfront cost. A good analogy for attempting to insure non-catastrophic health related events is like trying to insure oil changes for your car. It’s a common and accepted fact that, if you own a car, you are going to need to take it into the garage every three to four months for an oil change, which on average will set you back 40 to 50 dollars a pop.

The question that begs asking is why do people willingly accept to pay small fees up front to maintain the health of their automobile, but are unwilling to do so for their own body? If I had to guess, I would say it’s because no one is telling them that they shouldn’t have to pay for such a service.

Let’s take a minute to look at some hard facts. We’ll use the recently unemployed Tom Smith and his family of four: a 42 year-old male, 38 year-old female, eight-year old daughter and four-year-old son, as an example. If they wanted to purchase an individual health insurance plan similar to Mr. Smith’s previous coverage through work, they would be faced with a $656.75 monthly premium. That premium would net them a plan with a $1,500/$3,000 deductible, 80/20 coinsurance, $30 office visit copay, prescription drug coverage with copays and an $8,000 total out-of-pocket maximum.

On the other hand, if the family were to consider a plan without those upfront copays, otherwise known as a Health Savings Account (HSA) plan, they could enjoy a savings of $163.56 month or $1,962.72 annually for a total premium of $493.19. The HSA plan would offer the same $3,000 deductible, with the only main difference being the exclusion of copayments for doctor’s office visits and prescription medication. Instead, the Smith’s would be responsible for the full negotiated price for doctor’s office visits and prescription medication. They would also enjoy a much lower out-of-pocket maximum of $3,000, reducing their total financial liability for a catastrophic medical claim by $5,000.

That might have been a bit of an overload on the insurance lingo, so lets take a step back and focus on the most important aspects.

The deductible is the annual amount of money the Smiths’ are required to pay out-of-pocket before their insurance policy starts paying claims. It’s also important to note that their monthly premium and copayments will not count toward the deductible. Meaning, the Smiths’ would be responsible for the same amount of money upfront for both plans.

When you hear someone refer to the full negotiated price in regards to medical bills, they are talking about the discounted price the insurance company has agreed to reimburse that facility for their services. On average, that discount is between 40 and 50 percent and could be as high as 70 or 80 for certain services.

I like to tell people that buying any insurance plan is like being able to carry around an unlimited 50 percent discount card for your favorite retail store. Let’s examine this a little more closely. Dr. Tom Jackson is the Smiths’ primary care doctor and Mrs. Smith needs to see the doctor because she thinks she has a sinus infection. Dr. Jackson sees Mrs. Smith and sends her a bill for $100. Mrs. Smith receives the bill and sees that Dr. Jackson has billed her $100 for the visit, but her insurance company is only allowing him to charge $50 for said visit. This ladies and gentlemen, is the negotiated rate. So now, Mrs. Smith would pay Dr. Jackson the $50 which would apply to her $3,000 annual deductible.

Keeping these numbers in mind, doesn’t it seem completely reasonable that the $163.56 the Smiths’ would save each month with a HSA would be enough to cover any unexpected doctor’s office visits over the course of the year? Also keep in mind, if everyone in the family stays healthy, the Smiths’ can pocket an extra $2,000 instead of throwing that money away to the insurance company. Remember, they are not going to give that extra money back if you decide to go for the more expensive plan.

The maximum out-of-pocket is the total amount of money the Smiths’ are financially liable for on an annual basis. The maximum out-of-pocket limit comes into play after the Smiths’ have satisfied their deductible and have paid a certain or “maximum” amount through coinsurance. Once they’ve paid the required amount out-of-pocket the insurance company pays 100 percent of any remaining covered medical service received that year.

In the case of the HSA the Smiths’ would only be required to pay the $3,000 deductible, after that they would receive 100 percent coverage. The traditional copay plan on the other hand, requires the Smiths’ to meet their $3,000 family deductible, but also pay an additional $5,000 at 20 percent through their coinsurance, on top of paying $163.56 more each month.

In the end, a health savings account plan will always offer the lowest monthly premium and out-of-pocket maximum when compared to a traditional copayment plan. Is it going to be the best fit for everyone? No. But it does offer a wide range of people a great opportunity to save money.

I don’t know how many times I have had people tell me, “Well, I want good insurance” or “I had great insurance, it paid for almost everything.” This shouldn’t be about good or bad and right or wrong coverage. Instead it should simply be about finding a health insurance plan that is, above all else, smart for you or your family’s individual needs.

Joey Giangola is an independent insurance agent for Giangola Insurance Agency and specializes in individual health insurance. You can email him at joey@giangolainsurance.com, or follow him on Facebook, Twitter and Google+ to receive the latest insurance news and tips.