Health Care Insurance Reform – How it Affects Insurance Agents and their Clients
March 25, 2010
Note: This article focuses only on the impact of H.R. 3590 and H.R. 4872 (“health care reform”) on the health insurance industry. It does not cover the thousands of changes to U.S. health care (vs health insurance) and should not be used as legal or tax advice.
The U.S. House of Representatives has passed H.R. 3590 – the Patient Protection and Affordable Care Act (the “Senate Bill”), and H.R. 4872 – the Health Care and Education Reconciliation Act of 2010 (the “Reconciliation Bill”) which makes changes to the Senate Bill. President Obama signed the Senate Bill into law today. The Reconciliation Bill must first pass the Senate before it can also be signed into law.
Below is a summary of the key points in the bills affecting the health insurance industry. These changes are divided into three major categories:
1.Changes Beginning in 2010
2.Changes Beginning in 2011
3.Changes Beginning in 2014.
During the next few days, and when health care reform is finalized, we (and you through your comments) will be discussing in detail the impact of each item on insurance agents, employers and employees.
1. Changes Beginning in 2010
Temporary High-Risk Pool
Senate Bill: In 90 days, a temporary national high-risk pool will be established to provide health coverage to individuals with pre-existing medical conditions. Individuals who have a pre-existing medical condition and who have been uninsured for at least six months will be eligible to enroll in the high-risk pool and receive subsidized premiums. Premiums for the pool will vary by no more than 4 to 1 due to age and maximum cost-sharing will be limited to the Health Savings Account (HSA) limit ($5,950/individual and $11,900/family in 2010).
Reconciliation Bill: same as above
Employer Subsidies — Phase 1
Senate Bill: Provide small employers with 25 or fewer employees and average annual wages of less than $50,000 with a tax credit if they purchase health insurance for employees. Beginning in the 2010 tax year and ending in 2013, Phase 1 of this subsidy will provide a tax credit of up to 35% of the employer’s contribution toward the employee’s health insurance premium if the employer contributes 50% or more of the total premium cost (or 50% of a to-be-established benchmark premium). The full credit will be available to employers with 10 or fewer employees and average annual wages of less than $25,000, but the credit will decline as the company size and average wage rates rise. Tax-exempt companies are eligible for tax credits of up to 25% of the employer’s contribution toward the employee’s health insurance premium.
Reconciliation Bill: same as above
Increased Dependent Coverage
Senate Bill: In 6 months, insurance companies must provide dependent coverage for children up to age 26 for individual and group health plans.
Reconciliation Bill: same as above
No Lifetime Maximum
Senate Bill: In 6 months, insurance companies will be prohibited from placing lifetime limits on individual and group health plans.
Reconciliation Bill: same as above
No Exclusions for Children
Senate Bill: In 6 months, insurance companies will be prohibited from placing pre-existing condition exclusions on a policy-holder’s children.
Reconciliation Bill: same as above
2. Changes Beginning in 2011
Health FSA Contribution Limit
Senate Bill: Beginning in 2011, the amount of contributions to health FSAs is limited to $2,500 per year.
Reconciliation Bill: Delays this provision until 2013.
Over the Counter Drugs Excluded from HRA/HSA/FSA
Senate Bill: Beginning in 2011, the costs for over-the-counter drugs not prescribed by a doctor will no longer be eligible for tax-free reimbursement through an HRA, FSA or HSA.
Reconciliation Bill: same as above
3. Changes Beginning in 2014
Individual Mandate
Senate Bill: Phasing in at smaller amounts from 2014-2016, individuals must have coverage or pay a penalty of the greater of $750 per year up to a maximum of three times that amount per family or 2% of household income. Exceptions will be made for religious objectors, those who cannot afford coverage and individuals who meet other special criteria.
Reconciliation Bill: Changes the penalty to the greater of $695 up to a maximum of three times that amount per family or 2.5% of income.
Individual Premium Subsidies
Senate Bill: Beginning in 2014, the federal government will give tax credits (called “premium credits”) to individuals with incomes between 100 and 400% of the federal poverty line (FPL) that cap an individual’s health insurance cost on a sliding scale from 2.8% to 9.8% of income respectively.
Reconciliation Bill: Increases the tax credits to individuals by reducing the cap on an individual’s insurance cost to 2% to 9.5% of income.
Employer Mandate
Senate Bill: Beginning in 2014, a company with more than 50 full-time employees that does not offer coverage and has at least one full-time employee receiving an individual tax credit (see Individual Subsidies above) must pay a penalty of $750 per full-time employee. An employer with more than 50 employees that does offer coverage that is “unaffordable” or does not meet the “minimum coverage requirement” and has at least one full-time employee receiving an individual tax credit, will pay the lesser of $3,000 for each employee receiving a credit or $750 for each full-time employee.
Examples: An employer with 50 full-time employees that does not offer health coverage will pay a penalty of $37,500 ($750 per employee for 50 employees). An employer with 100 full-time employees that does not offer health coverage will pay a penalty of $75,000 ($750 per employee for 100 employees).
Reconciliation Bill: Modifies the employer penalty for not offering coverage by subtracting the first 30 full-time employees from the payment calculation. The bill also increases the payment amount for firms that do not offer coverage to $2,000 per full‐time employee.
Examples: An employer with 50 full-time employees that does not offer health coverage will pay a penalty of $40,000 ($2,000 per employee for 20 employees). A 100-person employer not offering health coverage will pay a penalty of $140,000 ($2,000 per employee for 70 employees).
Employer Subsidies — Phase 2
Senate Bill: Beginning in 2014 and available for 2 years, small companies that purchase coverage through the state exchanges (see Health Insurance Exchange Mandate below) will be eligible for a tax credit of up to 50% of the company’s contribution toward an employee’s health insurance premium if the company contributes at least 50% of the total premium cost. In Phase 2, the full credit will only be available to companies with 10 or fewer employees and average annual wages of less than $25,000. Similar to Phase 1, the size of the credit will decrease as company size and average wage increases. Tax-exempt businesses are eligible for tax credits of up to 35% of the company’s contribution toward the employee’s health insurance premium.
Reconciliation Bill: same as above
Insurance Carrier Rating Rules
Senate Bill: Beginning in 2014, medical underwriting and pre-existing condition exclusions for individual and small group health insurance plans will be prohibited in all states. Insurers will be prohibited from denying coverage or setting rates based on gender, health status, medical condition, claims experience or other health-related factors. Premiums will vary by age (limited to a 3:1 ratio), family structure, geography, actuarial value, tobacco use (limited to a 1.5 to 1 ratio) and participation in a health promotion program.
Reconciliation Bill: Adds a provision to grandfather existing individual and group health plans with respect to the new benefit standards.
Health Insurance Exchange Mandate
Senate Bill: By 2014, each state must create an American Health Benefit Exchange and a Small Business Health Options Program Exchange, administered by a governmental agency or non-profit organization. The exchanges must provide a place where individuals and small businesses with up to 100 employees can purchase coverage that meets certain requirements (see Insurance Coverage Requirements).
Reconciliation Bill: same as above
Insurance Coverage Requirements
Senate Bill: Beginning in 2014, any health plan offered through the state-based exchanges must provide health benefits that include cost sharing limits. No out-of-pocket requirements can exceed those in Health Savings Accounts, and deductibles in the small group market cannot exceed $2,000 for an individual and $4,000 for a family. Coverage must be offered in four different benefit categories: Platinum (90% coinsurance), Gold (80% coinsurance), Silver – (70% coinsurance), and Bronze (60% coinsurance). Additionally, a catastrophic-only plan must be offered to individuals under age 30 and to others who are exempt from the individual responsibility requirement.
Reconciliation Bill: same as above
Miscellaneous Provisions
•One provision requires employers to disclose the value of the benefit provided by the employer for each employee’s health insurance coverage on the employee’s annual Form W-2
•The bill also provides provisions to establish a new employee benefit cafeteria plan to be known as a “simple cafeteria plan” that includes self-employed individuals as qualified employeesWr
Courtesy of ZanaBenefits.
Brainless Tips to Saving on Car Insurance
March 19, 2010
With over 10 years in the insurance industry, I notice that everyone wants to save money on the things they have to buy like car insurance. In fact, companies like GEICO, Allstate, and Progressive, have made the term, you can save money on your car insurance, a household phrase. As an insurance agent, I can say with all certainty that everyone that drives a care falls into two following categories:
A. People that think they pay too much for their insurance.
B. People that think their rates are just fine.
So if you fall into one of these two categories, I’ve come up with 10 brainless tipsi that will help you save money on your car insurance.
1. Shop Early. Most people don’t realize it, but shopping at the last minute actually costs you about 10% on the average. Typically, insurance companies give lower rates to people who shop at least 7 to 10 days ahead of their policy start date. In car insurance, the early bird really gets the worm!
2. Know Your Coverage. Generally, insurance companies offer lower rates based on the type of coverage you carry with your current insurance company. Also, that shows a level of responsibility.
3. Compare Rates with an independent agent. Independent insurance agents can shop several insurance companies for you.
4. Tell the whole truth. Really? Did you think you could get away with hiding a ticket or an accident? Now insurance agents and insurance companies can run your driving record as soon as you talk to them, but that costs time and money. Giving the agent your driving record up front will save the agent time and you money.
5. Keep a Clean Record. Face it. The better your driving record, the better quotes you’ll get. This goes for everyone. Drivers that require SR-22 filings are typically classified as high risk drivers. So slow down and stopping drinking you speed demon!
6. Carry higher coverage now for lower prices later. Many insurance companies give better rates for people with higher liability limits because they are grouped with good drivers. With these same companies bad drivers typically carry minimum coverage. Which do you prefer, the good driver group rates or the bad driver group rates?
7. Give the whole story. If you have more than one car, make sure and get a quote on ALL of your cars. Insurance companies always like numbers higher than 1. It will save you money with the multi-car and package discounts when you insure your 2 cars and your home with your 2 policies.
8. Ask for Education and Occupation discounts. Everyone knows that if a young student earns a B average in school, he can get a discount. Did you know that adults with college degrees can get discounts, and teachers get really good rates too?
9. Carpool. If you have a long drive to work, it might pay to carpool. By lowering the number of miles you put on your car, you also lower your insurance. Generally, if you drive less than 7500 miles per year you will get a lower rate.
10. If all else fails, get a horse. If none of these ideas work, then you may be a good candidate for a horse. Typically most people can save money with these tips. If none of them help you, then you may need a little intensive work.
Get connected to an independent insurance agent online by visiting Texas Insurance Pro.
David Berry is a freelance writer and licensed Texas Insurance agent. Visit him at http://www.txinsurancepro.com.
Getting the best insurance rates on your new car
March 7, 2010
When purchasing a new car and shopping for car insurance, it is unwise to purchase car insurance from a car dealership. For the most part purchasing a new car is an emotional decision. Purchasing car insurance is a logical decision. When making the decision to go from an old car to a new car can result in higher insurance premiums, but in many scenarios purchasing a new car can result in lower insurance rates. Getting the best insurance rates on your new car can be easy if you talk to the right people.
First of all, talk to someone who can give you several different rates. The discounts offered by different companies can be confusing. Many times, when a person goes from and old car with full coverage insurance to a newer car with full coverage insurance, car insurance companies will give you discounts on your auto insurance due to the safety features of your newer car. This varies based on your insurance company. So in this case, it would help for you to shop your car insurance online in order to get the best rates.
With today’s technology, shopping for insurance on the internet is easier than ever. Once you get your rate online, an agent can call you with the lowest rates on your car insurance. At the same time, with your permission, the agent can verify your driving record and claims history. Having a clean claims history and good driving record can earn you many discounts and benefits including, accident forgiveness, claims free, and safe driver discounts depending on the company.
Many times, people shop without looking at their entire insurance package. Insurance companies give better rates based on the number of cars and policies you insure with them. For insuring more than one car, you get multiple car discounts. For combining your home, boats, or recreational vehicles, insurance companies will give you multiple policy discounts. In many cases, having more than one policy could save you more than 30% on your monthly insurance premium (price).
Ultimately, saving money on insurance will come down to how well you do your homework. By talking to an independent insurance agent and by consulting with your friends and family, you can save tons of money when shopping for car insurance.
Locate the Best Auto Insurance Company
March 6, 2010
Everybody would love to have the “best” when it comes to just about anything and this should be especially true when it comes to car insurance companies. Consumers must take a moment to understand what makes up an ideal carrier before they can locate one and they must also realize that a good insurer for them may not be the right one for another individual. So if a friend or loved one refers you to a particular coverage provider that they are satisfied with it is a good idea to consider their recommendation, but the chances are that another carrier may be a better option.
In order for an individual to find the best auto insurance companythey must understand their needs and what they expect out of a carrier. There are a wide variety of companies out there to choose from and finding the right one will take narrowing down things such as price range, types of coverage and the limits desired. Many consumers decide to purchase the minimum coverage required by their state so pretty much any insurer will be able to offer the product that they are looking for since states usually do not allow a provider to sell policies that do not meet the requirements of the law, but if an individual is in need of more protection then the number of companies to choose from will begin to narrow down.
Finding the Best Car Insurance Companies
Before a motorist can find the ideal carrier they must determine what they are shopping for; as mentioned above some individuals will need more coverage than what the state requires. As an example, if a person lives in a state that follows the Financial Responsibility law then they will have a minimum limit of liability for bodily injury and property damage that must be purchased; not all companies will offer higher limits, therefore these companies will not be right for someone who needs more liability protection and can be eliminated them from their search.
The next thing that makes up a good insurer, and I am sure most will agree is cheap rates; if a person can get a quality product at a low price then all the better. It has been said over and over again by every consumer guide and state department of insurance, but it is absolutely true that finding the right coverage from the right company is best achieved by comparison shopping. When comparing the prices of companies it is very important that the same amount of coverage is compared with each company to ensure that a proper comparison is being conducted; comparing based on different levels of protection will only provide quotes which cannot be compared since prices will be based on different products.
After finding some good prices for the product desired do not make a haste decision and purchase the cheapest one, there is still a couple of steps to take to find the right company. Out of the cheapest rates found take a look into the companies offering them. The Texas Department of Insurance suggests to check licensing status, financial strength and complaint index; following these steps can help find the best company and avoid insurers who are not financially sound, unlicensed or lack good customer service.
Information about SR22 Texas Auto Insurance Policies
March 3, 2010
If you get caught driving without insurance or driving under the influence of drugs or alcohol (DWI/DUI), the consequences are somewhat severe. Not only will you have to pay surcharges to the state of Texas, but you’ll probably have to file an SR22 and keep that SR22 on file with Texas Department of Public Safety of several years.
A SR22 certificate is also known as a certificate of financial responsibility. That tells the state of Texas that if you are driving you have insurance in case of an accident. Typically, Texas car insurance companies add an additional surcharge or fee to your policy in order to file your SR22 in Texas. Texas also requires Texas car insurance providers to notify the state anytime an SR22 is cancelled. This cause a driver lots of time, heartache, and money.
Drivers that have to get SR22 insurance in Texas only have 2 options to saving money. The First option is that they can reduce coverage down to Texas state minimum requirements. The second option is to always have car insurance and never drink and drive. However, if you have to file an SR22, talk to an independent agent about your options. By picking a Texas independent insurance agent, you can save time and money by allowing the agent to shop your rates with several companies.
SR22 Insurance policies are typically considered high risk insurance policies. Therefore, if your agent cannot find a suitable company and you are rejected by 2 or more insurance companies, your agent can submit your application to the Texas Auto Insurance Plan Association.
If you need more information or Texas SR22 car insurance or the Texas Auto Insurance Plan Association, contact us at 214-717-4326.
Flood Insurance Program Extended by Congress
March 3, 2010
Home owners looking for flood insurance received a little good news from the U.S. Congress. Congress temporarily extended funding for the National Flood Insurance Program. President Barack Obama signed it into law late on March 2. Funding was extened until March 28.
According to a statement released by the National Association of Insurance Commissioners, “Without funding, the NFIP could not write new policies or renew existing policies for property owners, or pay claims. The delay in the extension also meant “short-term problems” for property owners waiting to close on a property within a Special Flood Hazard Zone.”
The NFIP is important because standard homeowners policies do not cover the flooding. For more information on Flood Insurance, visit www.floodsmart.gov or contact our offices at 214-717-4326.
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