Happy Days Are Here Again: Medicare Open Enrollment Begins October 15

It’s almost that happy time again for those of us who are chronologically challenged.  October 15 begins that golden period of open enrollment for Medicare Advantage plans across the country.  If you have Medicare Part A and Part B, then you can qualify for one of these typically low cost or zero premium plans available from carriers like Humana, Coventry, Aetna, Blue Cross, etc.  These plans include your Part D prescription drug benefits and typically cover those costs not covered by your Medicare Part B plan.

Here’s something most folks don’t know:  Medicare Part B leaves you open for 20 percent of medical costs with no cap.  In other words, it’s unlimited.  Think about it.  With a $100,000 bill for cancer treatment, you could be responsible for $20,000.  A Medicare Advantage plan or a Medicare Supplement plan would cover that cost.

Medicare Advantage plans are offered on a county by county basis and may or may not be available in your area.  Medicare Advantage plans have specific provider networks that you must utilize to maximize your benefit.  And Medicare Advantage plans do have an out-of-pocket maximum (this is not a deductible but a series of copays that you are responsible for).

How do you choose the best plan for you whether it’s a Medicare Advantage or Medigap (Medicare Supplement) plan?  The answer is an independent, AHIP (America’s Health Insurance Plans)-certified broker/agent who can show you your options and help you make the right choice.  And guess what it costs you to use an expert?  NOTHING!  Brokers go through 20+ hours of training a year before they can be certified with these products.  Do you really want to try buying one of these plans online or directly through an insurance carrier?  NOT REALLY.

Do the smart thing.  Save yourself a ton of grief and time by using an AHIP-certified independent agent who can help you make the right choice that fits your needs and your budget.

Cary Hall

America’s Healthcare Advocate

ObamaCare News for Employers


As the Affordable Care Act/ObamaCare dials in, the realities of more reporting, taxes and fines for employers who do not comply are starting to manifest.  With new fines ranging from $50 to $500 per form, it’s important to know what you as an employer are responsible for.  Your broker/consultant should be handling these issues for you.  But, be aware, if they’re not, the buck stops with you (no pun intended) because you are who the IRS will hold responsible.  Below are three specifics that apply to employers for the year 2015-2016:

  • Employers get another reason to gear up early for the health reporting rules: higher fines for incorrect forms.  A new law substantially raised the penalties for firms that file incorrect information returns.  The fines range from $50 a return if a mistake is corrected with 30 days of filing to $500 per return for intentional errors.  These penalties aren’t limited to 1099’s.
  • The increased fines also apply to health care information returns.  Employers with 50 or more full-time employees must report 2015 coverage data for each full-timer to IRS and workers on Form 1095-C, and give more information to IRS on Form 1094-C.  Companies with fewer than 50 employees that self-insure will use Form 1095-B and 1094-B for these purposes.  So with higher penalties, accuracy is paramount.
  • Firms will be able to seek filing extensions for the health reporting forms.  Employers can get an automatic 30-day extension for the Feb. 29, 2016, deadline (March 31 if e-filing) to file the 1094s and 1095s with the IRS by using Form 8809.  Companies needing extra time can ask the Revenue Service for 30 additional days.  The IRS will soon announce the procedures for firms that want to extend the Feb. 1 date to give 1095 forms to employees.  In that case, the maximum extension will be limited to 30 days, and businesses must give a valid reason why the extra time is needed.


Cary Hall

America’s Healthcare Advocate

Cadillac Tax Coming Down the Road


As The Kiplinger Letter so aptly states, the Cadillac tax may soon turn into the Chevy tax.  The 40 percent excise levy starts in 2018 for insurance premiums above $10,200 a year for an individual and $27,500 for families.  It’s important to note that the coverage ceiling is indexed to overall inflation and not to medical costs, which rise much faster (2.4 percent in 2014 compared with 0.08 percent in overall inflation).

So, over time, more moderately priced plans will bump up against the limit.  Initially about 14 percent of firms will pay the tax in the first year, but more than two thirds of businesses could be subject to it by 2023.  The purpose of the tax is to generate 80 billion dollars over the next 10 years to help finance the expansion of ObamaCare health care coverage.

Employers on fully insured plans will calculate their costs, and the insurance companies will pay; while employers with self-funded health insurance plans will be responsible to calculate the costs and pay the tax themselves.  However, most self-funded plans’ TPA’s will probably assist in this process.  And, if you’re wondering how this tax will be paid, here’s the good news:  the government has no forms or instructions available at this time.

In summary, employers will have to deal with these new costs by better managing their claims through aggressive wellness programs (thereby driving down the cost of health insurance) or require workers to pay more out of pocket toward the cost of the policy, offering less generous benefits and higher deductibles.

Cary Hall

America’s Healthcare Advocate

Long Term Care: 70 Percent Of Us Over Age 50 Will Need It And Less Than 10 Percent Actually Have It

Older Couple

70 percent of people over age 50 will need nursing home, assisted living or in-home care at some point in their lives.  The cost for these services can be devastating to your retirement nest egg and estate.  For example, The Wall Street Journal states an assisted living facility on average is $3,600 a month which represents $43,200 a year.  A nursing home with a private room is $7,500 a month or $83,000 a year.

Let’s contrast that with the actual cost of a long term care plan.  An individual female at age 55 would cost an average of $1,900 a year for a long term care policy while a male age 55 is $1,567 a year.  And a couple (both age 60) would cost an average of $3,050 a year.  Let’s compare that with this example:  premiums for 20 years would total $31,340 for a single male.  Yet, in one year, in an assisted living facility, you will blow through $43,200 and, in a nursing home, $83,000.

So why don’t people buy long term care insurance?  Here’s the biggest objection I typically hear.  What if I pay all this money, and I don’t use it?  Well, for 70 percent of the population that’s not going to happen—you’re going to use it.  For the remaining 30 percent there are return of premium options available if you don’t use the policy.

Here’s the deal:  long term care isn’t about long term care.  It’s about protecting your estate.  My mother was in a nursing home for 10 years.  Do the math.  At $43,200 a year, that’s $432,000 spent.  However, 10 years is an unusual length of time for people to stay in a nursing home–the average stay is about 2 ½ years.  At $83,000 a year, that’s a $166,000 spend vs. purchasing the long term care policy for 20 years at a cost of $31,340.  That seems like a pretty good return on your money if you ask me.

Here’s the other great misconception:  people believe they will qualify for government assistance to help them pay for their nursing home care.  In fact, the current rules for Medicaid nursing home assistance typically have a 5 year look back, and you have to meet very strict requirements, liquidating your assets to qualify.

Then there’s the dignity issue.  How would you feel about your son or daughter assisting you with a bath or a shower or your toilet functions?  Saddling a relative (be it your wife, your son or your daughter) with the caregiver role can be devastating to family members from a physical and psychological standpoint.  And, in America, we are not a society that likes to have parents move in with their children (unlike  Asian or European society).  The first order of business in most American families when Mom can’t take care of herself is to get her in a nursing home or an assisted living facility.  The next question is:  how long will the money last?

A long term care policy protects your estate, your dignity and your independence.  If you’re 55 and you haven’t purchased one, you’re probably making a big mistake.  And, when the chickens come home to roost, it won’t be a good time for you or your family.

Cary Hall

America’s Healthcare Advocate

Shockwave Premium Increases Predicted for 2016


We can expect the other shoe to drop regarding premium increases for health insurance policies as a result of ObamaCare later this year.  In two recent articles by The Wall Street Journal (“Health Insurers Seek Hefty Rate Boosts” and “More Health-Care Insurers Seek Big Premium Increases”) published within the last ten days, we see premium increases projected for New Mexico  at 51.6 %; for Maryland at 30.4%; for Tennessee at 36.3%; for Illinois at 29%; and for Pennsylvania at 30%.  Bob Laszewski at Health Policy and Strategy Associates LLC  notes, “We have a trend of the big market share companies asking for 15% to 35%.”

While these increases are associated with Affordable Care Act plans, you may rest assured that the small group market (200 employees or less) will see the same type of shockwave premium increases for 2016 as a result of the new community rating rules, ObamaCare taxes and a host of other changes that have taken place in the small group market.   Expect a knee jerk reaction from employers seeking to flee the fully insured small group marketplace to look for alternatives and rate relief offered by partially self-funded, captive and level premium plans.

What employers, brokers and agents must keep in mind is that plans offered by these alternative models are underwritten and are not guaranteed issue.  Expect underwriting guidelines for partially self-funded, captive and level premium plans to become tighter and more restrictive as more employers seek access.

Smart employers won’t get caught in the lemmings-to-the-sea phenomena that will begin occurring in about September of this year and will start exploring their options now to move to these models that can reduce costs by as much as 30 percent while providing benefits equal to the fully insured plans.

Gone are the days of switching carriers to lower premium and the lazy broker/agent sending over a spreadsheet asking the employer to pick his/her poison.  Employers can still offer good benefits at a reasonable cost, but it takes work and planning on behalf of the broker, agent and employer to make this happen.

Cary Hall

America’s Healthcare Advocate

Reflections On Memorial Day

congressional medal of honor

On this Memorial Day, I thought it was appropriate to reflect on the commencement address by Ryan Pitts, a U.S. Army Medal of Honor recipient who deployed twice to the war in Afghanistan.  Ryan Pitts’ commencement address held a special meaning for me, a Vietnam veteran who deployed in 1969-70 with the 483rd SPS K-9 division, as a message to young graduates.  Cary Hall, America’s Healthcare Advocate

Medal of Honor Lessons for Graduates

Durham, N.H.

On Saturday I attended my first commencement program in 61 years. The speaker drew me there: Ryan Pitts, addressing the University of New Hampshire’s class of 2015.

In an era when speakers are routinely disinvited from American colleges for the sin of challenging academic orthodoxy, I wanted to see how my alma mater would welcome a man who joined the U.S. Army out of high school, who twice deployed to war, and who in July 2008 was the last man alive in an observation post named Topside, above the village of Wanat in the Hindu Kush mountains of northeastern Afghanistan.

Wounded in the forehead, one arm and both legs, Sgt. Pitts defended that outpost with grenades and a machine gun until helicopter gunships could lay down supporting fire to clear the way for his rescue.

On first seeing the extent of his injuries, he told the 2,500 graduates and 20,000 guests on Saturday, “I thought I was out of the fight until I looked around and watched everyone else fighting with everything they had. My brothers were undeterred by the enemy fire raining down on us like the violent summer thunderstorms that come out of nowhere. . . . They would never let me down and I owed them the same. It was at this point that I crawled back to my fighting position and rejoined the fight.

“Standing wasn’t physically possible, but I was able to drag myself around and pull myself into a kneeling position when needed. I fought alongside my brothers like this for a while until our position sounded eerily quiet given the fight raging around us. I crawled around and it was at this point that I discovered that I was the only man left alive at the position.”

Twice, U.S. reinforcements ran from the village to Topside, but all were killed or wounded in the attempt. Sgt. Pitts kept lobbing grenades into a ravine 10 yards away, where the enemy fighters lay concealed—at some points, he said, he could hear them talking—and when the gunships arrived he radioed them to concentrate their fire onto the nearby ravine.

“You gotta be kidding,” a helicopter crewman replied, seeing how short the distance was between the American and his attackers. (The gunship video is on YouTube.) Despite the heroism involved that morning, the Army decided within days that Topside was no longer needed and the outpost was left to the enemy—a taste of what lay ahead for American policy in Afghanistan.

At 29, Mr. Pitts is no older than some of the graduates he addressed Saturday, 44 U.S. military veterans among them. He himself graduated two years ago with highest honors from UNH Manchester. The students, their parents and spectators gave him a standing ovation when his name was first mentioned, again when he was introduced, again when he finished his speech, and yet again when he was draped with the blue and white cape of Doctor of Humane Letters.

In July last year, President Obama draped Mr. Pitts with the Medal of Honor, America’s highest award for valor. The medal, as Mr. Pitts took pains to remind us, is “an individual citation for a collective effort.”

“Valor was everywhere that day,” he said Saturday, before drawing a moral for young people about to embark on their careers: “Courage is not the absence of fear; it is the ability to move forward in the face of it. There is beauty in this definition, because courage can exist in the decisions we make every day. Courage exists in the individual who accepts who they are and openly lives the life they want in the face of rejection. Courage exists in those who challenge their own perceptions in the face of accepting they are not infallible. Be courageous and appreciate courage in others who take action in the face of fear.”

He closed by saying: “The last thought I will leave you with is more a matter of character. Never forget those who helped you reach where you are.”

Then he named the men who died that morning, eight on Topside and one in the village of Wanat: “ Sergio Abad, Jonathan Ayers, Jason Bogar, Jonathan Brostrom, Israel Garcia,Jason Hovater, Matthew Phillips, Pruitt Rainey and Gunnar Zwilling. The advice here is simple: Appreciate the contributions of others and the impacts they make in your life. That’s it.”

Self-Funded vs. Fully Insured

Pareto Blog

Healthcare for employees and dependents–that thing that actually drives the cost of health insurance–does not span nice, neat 12-month increments. At the end of the 12-month period, the employer doesn’t hit a magic button and exchange all of his/ her employees like a person with a bad set of Scrabble tiles.

Rather,when an employer hires an employee, it tacitly agrees to pay for the majority of future healthcare costs for that employee (and his/her dependents),for as long as that employee remains with the company. This could be 12 months,12 years, or longer. While the employer accepts this liability, they rarely consider the totality of it.

Part of the reason this liability is often overlooked is because it doesn’t appear on their balance sheet.  This is because the employer has not explicitly or legally committed to cover these costs. Since it is just an implicit promise, GAAP doesn’t require its inclusion. But what if that liability was on the balance sheet of the employer?

Consider, for example, an employer with 100 employees. Using a national average of $11,000 per employee, this employer will spend about $1.1M in premium in the next year. What are the future costs that this employer has tacitly agreed to pay? If we assume that the fully-insured premium will increase at a rate of 9% per year, the total payments over the next 15 years are $32,300,000. It we discount that payment stream using a fairly conservative rate of 6%, we can calculate the net present value (in other words, the costs in today’s dollars) of the future liability is $19,100,000. That is a staggering number. Rather than asking how to cut costs next year, employers should be asking, “How do I reduce this massive $19.1M weight tied to my ankle?”

The first instinct of most is to reduce the cost. But that instinct is wrong. The best way to reduce the $19.1M figure isn’t to reduce cost; it’s to reduce TREND. If we take the same original assumptions but change the annual rate of increase from 9% to 7%, the net present value drops from $19.1M to $16.6M.  Said another way, decreasing the trend by just 2% increases the value – in today’s dollars – of the employer’s company by $2.5M.

Interestingly, reducing the upfront costs but not the long-term trend has a much smaller impact. The value of an upfront 5% cost reduction but with equal trend reduces the net present value by less than $1M. So if you’re ever given a choice between equal costs and lower trend, and lower costs and equal trend, you always want to go with the lower trend.

What is the fastest and most reliable way to reduce trend? Self-insure. Self-insured costs rise more slowly than fully-insured because they are not subject to the same level of tax– and those taxes continue to rise, leading to higher rates of trend.

The kicker? Self-insurance typically provides lower initial costs and lower long-term trend. An employer that is fully-insured and moves to self-insurance can typically reduce costs about

5% – due merely to reduced taxes (without factoring in the reduction of carrier profits or effective population health management efforts).

So what is the net present value of initial savings of 5% combined with a trend improvement of 2%? The combination of these things reduces the net present value of future payments by $3,300,000.

Ask any consultant if they think that self-insurance would typically save 5% in taxes and reduce trend by 2 or more percent. The overwhelming majority would tell you that this can be accomplished – probably without much difficulty.

So why are we still talking about 12-month rates when instead the consultant could walk in the door of the above employer and say, “I can add $3,300,000 of value to your company right now.” What employer doesn’t want to increase the value of their company by $3,300,000 with the wave of a hand?

You want a stretch goal? Reduce the costs by 10% and the trend by 4%. This will add $6,000,000 in value to the company!

Pareto’s consultant partners are successful because they’ve put away the 12-month cost comparison spreadsheets and instead focus on reducing trend.



Now That Open Enrollment Is Over, Can I Still Buy Health Insurance?

health insurance image

Millions of Americans think they cannot get health insurance if they missed the extended open enrollment period that closed on April 30.  Actually, that’s not true.  There are a number of ways that still allow you to purchase health insurance after open enrollment in case you didn’t know that you were required to buy a health insurance policy for the year 2015, or simply ignored it and now face additional penalties.

Here’s how it works.

You can still buy health insurance through the Marketplace or off the exchange if you had one of the following qualifying events occur this year:

  • You lost your group health insurance because your employer cancelled the plan.
  • You left your job or were terminated from your job and lost your group health insurance.
  • You relocated from one area of the country to another.  For example, you purchased your health insurance in Kansas City and then relocated to Savannah, Georgia.
  • You had a child, adopted a child or had a child placed with you for foster care.
  • You got divorced and your spouse carried the health insurance, meaning you lost yours.
  • A spouse or family member died.
  • You had a significant change in income.
  • You gained U.S. citizenship or lawful presence in the U.S.
  • You were released from incarceration (no longer a jail bird).

Many have found that navigating the government website and/or trying to do this on line or with a call center can be a nightmare.

Unfortunately, those who manage to navigate the exchange on their own tend to buy the cheapest policy in the Marketplace.  This can have disastrous effects if you’re purchasing a bronze level policy with limited access and a very high out-of-pocket maximum (which can be as high as $18,000 if you use an out-of-network provider, hospital or ER).

Here’s the good news.  Using a knowledgeable, exchange-certified broker or agent like those at Benefits By Design costs you nothing and doesn’t increase the policy price.  It will, however, guarantee that you get through the process, and that you will understand the policy you are qualifying for.

Think of it this way.  Would you take a brand new BMW 750Li costing $85,000 to Jiffy Lube for repairs?  Probably not.  So, if you develop cancer and your medical bills for treatment are going to be in excess of $200,000, it might be a good idea to have access to the best doctors and hospitals in your area.  That’s what making an informed decision is all about.

If you paid the penalty when you filed your taxes, you may think that you automatically were enrolled for health insurance.  No, you weren’t.  It gets worse:  if you become sick and need medical treatment, you will pay for that treatment out of your pocket, in addition to paying the penalty.

Don’t have a qualifying event and still don’t have health insurance?  Here’s another option.  You can buy a short-term, month-to-month policy with one of the major carriers that will cover you in case of a catastrophic illness.  We jokingly call this the “if you get hit by a bus” policy.  It doesn’t have first dollar coverage for doctor’s visits and prescription drugs, but it’s real health insurance in case you have a catastrophic illness or accident.

So, yes indeed, you still can buy health insurance after open enrollment for all the reasons we just explained.  If you don’t, be prepared to pay the consequences.

Cary Hall

America’s Healthcare Advocate

You Have A Second Chance for ObamaCare Health Insurance


The Centers for Medicare and Medicaid Services (CMS) has just announced a special enrollment period beginning on March 15th and continuing through April 30th.  Here is how you qualify:

  • You currently are not enrolled in coverage through the FFM for 2015,
  • You attest that when you filed your 2014 tax return you paid the fee for not having health coverage in 2014, and
  • You attest that you first became aware of, or understood the implications of, the Shared Responsibility Payment after the end of open enrollment (February 15, 2015) in connection with preparing your 2014 taxes.

This is a great opportunity for people who missed the original open enrollment period to obtain health insurance and avoid further IRS penalties.  It is our understanding that health insurance will be offered only through the Marketplace and that Off-Marketplace policies offered directly by the insurance carriers will not be available.  Of course, this is subject to change, and we will update our website as information becomes available.

Last but not least, it’s important for folks to understand that they don’t have to qualify for a subsidy in order to get health insurance on the government Marketplace during this special enrollment period. It also is important to remember that using a licensed, certified broker and agent like ours at Benefits By Design costs you nothing.  Our agents can guide you through the process and help you make an informed decision.  Keep in mind that we are there for you 24/7 after you buy the policy if you have a claims or provider issue, which is far different from trying to purchase health insurance yourself or off of some marketing company’s website.

This is a great opportunity for those who missed the boat on open enrollment the first time, and folks should definitely take advantage of this opportunity beginning March 15th.

Cary Hall

America’s Healthcare Advocate

Open Enrollment For ObamaCare Is Closed—That Means You Can’t Get Health Insurance, Right? WRONG!


So you are on vacation, taking a long winter’s nap or just not paying attention to the fact that you are now required by law to buy health insurance.  And, according to all of your friends and everyone you talked with, now you can’t buy health insurance because open enrollment ended February 15th.  Well, that’s not really true because here are some qualifying events that will allow you to buy health insurance after open enrollment has closed:

  • If you have lost your employer-sponsored health insurance
  • If your employer cancelled health insurance
  • If you’ve moved from one geographic location to another and your old health insurance plan doesn’t offer coverage in your new location
  • If you’re recently married
  • If you lose health insurance through a divorce
  • If you’re adopting a child or have a child born
  • If you’re economic circumstances have changed significantly from last year to this year and you cannot afford your previous health insurance plan

These are all qualifying events that would allow you to qualify for an on-exchange or off-exchange health insurance plan after the open enrollment period has closed.  And, if none of the above apply to you and you really were taking a long winter’s nap or just not paying attention, yes, you still have to pay the penalty but you can buy a short term health insurance policy that will cover you in the event of a catastrophic illness until open enrollment opens next year.  These short term plans are fairly inexpensive and offered by major carriers like Blue Cross and Blue Shield and Assurant as well as others.  They are the proverbial “if I get hit by a bus” policy, which means no doctor office copays or prescription drug coverage but they are real health insurance with real provider networks that can keep you from bankruptcy should you have a major medical expense.

So, if you missed the boat and didn’t get signed up during open enrollment, you still have a way to obtain health insurance either through a qualifying event or through one of these short term policies.

Cary Hall

America’s Healthcare Advocate