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HSA's Save You Money

If you are considering an HSA plan for your group insurance benefits, you will be encouraged by the results of two separate surveys.

The surveys, conducted by Buck Consultants, an independent subsidiary of ACS, were conducted this past spring. Results show that employers and account holders are satisfied with the coverage they got by using Health Savings Accounts (HSAs) and HSA-qualified health plans. They feel that they can better control costs and so are spending less, thus saving for potential future medical expenses. They believe that they are more involved in managing their health benefits.

The highlights of the results of the surveys are:

> 84% of account holders said their HSA-qualified plans are affordable.

> 72% of account holders said they pay the same or less than with a traditional type of health plan.

> After moving to an HSA, more than half of account holders said they more closely monitor their health care costs. Forty-eight percent read their medical bills more closely than when they did not have an HSA, 46 percent have a better understanding of where their money goes, and approximately 40 percent more closely evaluate costs before electing medical services.

> 81% of account holders said the ability to personally control health care costs is an important factor that caused them to select an HSA.

> Of the employers offering HSAs for more than three years, 86 percent indicated that plan costs were the same or less than the previous year.

> 96% of employers claimed that HSAs allow the company to continue offering group-sponsored health insurance.

HSAs can reduce employer health care costs almost immediately, and because the deductible is higher, the premiums are lower for the employees than those of more traditional plans.

Here is an overview of the benefits of enrolling in an HSA:

> HSA contributions are tax-free, account interest accumulates tax-free, and dollars spent on qualified medical expenses are tax-free.

> HSA dollars can be used for current qualified health care expenses, including co- pays, deductibles, and doctor and hospital visits, and can also be saved for future expenses, such as Medicare premiums, on a tax-free basis.

> HSAs can provide account holders with a valuable source of retirement income alongside a 401(k) and Individual Retirement Account (IRA) if the account holders.

If you haven’t yet signed up for an HSA for your group, call your insurance agent today to discuss how an HSA can benefit you and your employees.

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Creating a Healthy Workplace

With the rising costs of healthcare and group health insurance, more and more attention is being focused on employee wellness. Healthier employees mean less absenteeism, fewer medical needs and ultimately lower medical costs and health insurance premiums.

Initially, programs were launched to encourage employees to live a healthier lifestyle by eating better and exercising to lose weight; by quitting smoking; by decreasing alcohol consumption; and finding ways to reduce stress.

Professionals now realize that additionally an important facet of any employee wellness program is to create a healthy workplace.

Creating the healthy workplace includes good health management on site, active group wellness activities, a supportive environment for employee wellness programs, and open communications systems.

Depending on the size of your business and your resources, creating a work environment to promote the health and well being of your employees can be as simple as doing the following:

Encourage employees to move more through using scheduled breaks or lunchtime to walk or be physically active, rest, or get sunshine or fresh air.

Suggest a “walking meeting” when meeting one-on-one with a staff member or small employee workgroup.

Use staff meetings and other regular communication venues, such as bulletin boards and newsletters, to promote ways to improve employee health, safety, and fitness.

Evaluate work stations for their ergo dynamics. Workday activities that require repetitive motion may lead to discomfort and injury. Look at what can be done to relieve symptoms and avoid serious injury.

Make sure that employees who work on a computer give hands and wrists a quick break every 30 minutes.

Ensure that healthy food and beverage choices are available for meetings and catered events.

Foster a culture of wellness within the workplace; share your enthusiasm for creating a comprehensive employee wellness program and for health improvement programs.

Model healthful behaviors. Leadership is the key to an effective work site wellness program.

Just doing these few things will get you started on an employee wellness program for you and your employees.

Voluntary benefits cover expenses not paid for by traditional health insurance. Voluntary benefits include disability, accident, critical illness, cancer and supplemental health insurance and cover expenses such as loss of income, travel to treatment centers, child care and the like in the event of unexpected illness or injury.

With the rising cost of health insurance, voluntary benefits are becoming more popular for both employers and employees.

Voluntary Benefits from the Employer’s Point of View:

• Employers can offer their employees more comprehensive coverage.
• Since voluntary benefits are 100% employee paid, there are no additional costs to the employer.
• The employer’s payroll taxes may be reduced if the employee’s contribution is paid with pre-tax dollars.

Voluntary Benefits from the Employee’s Point of View:

• Employees don’t have to use their savings while recovering from an unexpected illness or accident.
• Benefits are paid directly to the employee when they need them.
• Premiums for the voluntary benefits are based on group rates and so are lower than if the employee purchased the coverage on an individual basis and are typically just a few dollars per month per plan.
• Employees can save on payroll taxes in many cases because the premiums are paid with pre-tax dollars.

Thus, voluntary benefits are a good idea for both employees and employers and is something that you should consider.

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Health Care Now

According to answers.com, the definition of health care as a noun is:

“The prevention, treatment, and management of illness and the preservation of mental and physical well-being through the services offered by the medical and allied health professions.”

As an adjective, health care is defined as:

“Of or relating to health care: the health care industry.”

So, as you can see, it includes a wide range of health related topics ranging from your personal health care to health insurance plans and medical service providers.

Just how much do you know about your health care related issues?

Cigna has teamed up with the Water for People Organization to create a game that lets you test how much you know about your health care. When you answer three questions correctly, you help provide a days worth of water to children in developing countries.

My first question was:

What is bruxism? Do you know the answer?

• Tooth grinding
• Thumb sucking
• Fear of the dentist
• Root canal

I correctly answered “Tooth grinding” and was on my way to helping to provide a days worth of water.

Won’t you take a moment to test your health care knowledge, learn something you didn’t know previously and help provide clean water for students in developing countries?

Insurance Brokers

A friend of mine owns a café here in town. My husband and I were in there the other evening and I overheard him talking to another patron about group health insurance. Of course, my ears perked up.

When he came over to say hello to us, I asked him if he was looking for insurance for he and his employees. He said yes, but that he was just going to go ahead and sign up for it on the Internet.

“You don’t want to do that Michael.”

“Why not?”

If you feel like my friend Michael and choose to go that route, chances are that you will not get the best coverage for the best price for you and your employees and you will waste a lot of time doing your research. This is time that could be better spent on your business.

Why Use a Group Insurance Broker?

• They have the knowledge and resources to provide you with quotes from multiple insurance carriers within a short period of time.
• They may save you money by making sure that all of the information is correct on the application and that your group is rated correctly by the insurance company.
• They will help you complete the master application and advise you on how to have your employees complete their applications.
• They will communicate directly with the insurance company on your behalf to assure that the enrollment process goes smoothly and completed in a timely manner.

Additionally, even after you are enrolled in your group plan, your broker will continue to assist you with enrolling new employees, understanding your COBRA responsibilities, answer questions from your employees and help you consider alternative plan options during your annual open enrollment period.

To get the best group insurance plan for you and your employees, consult an experienced group insurance broker. If you do not know of an experienced broker in your area, ask other business owners for a referral.

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Many insurance carriers are reporting that they are seeing a sharp increase in the issuance of short term health insurance policies.

What is Short Term Health Insurance?

Short term health insurance plans (also called temporary health insurance), offer coverage for major hospital, medical, and surgical expenses. It really is aimed at healthy individuals and families as it does not cover pre-existing conditions. These plans offer a temporary solution to a short-term insurance gap.

Most plans last one to six months and can be renewed for a total of 36 months. Thus, unlike traditional health insurance plans, these plans have an expiration date.

Pre-Existing Conditions:

As noted above, these plans do not cover pre-existing conditions. Pre-existing conditions are normally defined as any condition you had during the 36-month period prior to the start of coverage. This 36-month period is called the “look-back” period and while the typical is 36 months, this period can vary from state to state. Your insurance agent can tell you what laws apply in your state.

What Do These Plans Cover?

Typically, coverage is provided for daily hospital room and board, miscellaneous hospital services, surgical services, anesthesia services, in-hospital services, and out-of-hospital care. As with standard health plans, payment for these health care expenses is subject to any deductibles, rate of payment provisions or other limitations and exclusions outlined in the policy.

Who Are Short Term Health Insurance Plans For?

Individuals who are temporarily out of work and have lost their group coverage and do not want COBRA.

Employees who are newly hired and have a waiting period before they are eligible for their company’s group health plan.

Recent college graduates or others who have lost dependent status and are no longer eligible to be included on their parent’s plan.

People waiting to qualify for a standard health insurance policy.

People on strike, military discharge and early retirees or anyone else who is temporarily without insurance for some other reason other than the reasons listed here.

The Downside of Short Term Health Insurance:

As we’ve already discussed, it does not cover pre-existing conditions. So, it is important to answer the health questions on the application honestly. Otherwise, you could wind up with a denial of any treatment related to any pre-existing condition.

Also, these policies have an expiration date. If you don’t obtain traditional coverage by the end of the plan term, you may need to apply for another short term policy. That sounds okay right? And it is okay as long as you didn’t have any medical services during the term of the first temporary plan.

If the short term plan has paid for any medical services, these become pre-existing conditions when you apply for a new temporary plan. So, if you need continued medical services related to the primary event, the new policy will not pay for those costs.

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I posted the following question in one of the insurance forums I belong to:

Do you have health insurance? If so, are you covered under your employer’s plan or do you have an individual plan?

I asked this question because I wanted to try to get a sense of the truth to the numbers being published about the number of uninsured people in the US.

I received a very comprehensive answer about the cost of insurance from John K. Arnold, a Managing General Agent in the health insurance business based in Orlando, FL.

I’m posting his answer here because I think it is important that you understand why health insurance costs what it does and it is this cost that leads so many people to not get the coverage they need.

Insurance rates reflect the costs of claims and the regulatory and taxation costs. For example, the monthly payment on a $60,000 car would be higher than the costs on a $10,000 car. A lot of confusion and emotion comes in because health insurance is not insurance in the pure sense of insurance. Insurance is to help protect against an uncertainty and risk. There is no other type of insurance that takes on certain risks and costs.

Insurance costs are high in the US because healthcare costs are far and away the highest in the world. Our insurance rates reflect our healthcare costs. Healthcare costs go down and insurance would go down. Health insurance companies operate on very small margins. Many companies leave the business because they lose money. They are required to have large reserves to cover losses.

Cobra rates are what the employer rates are. If a family rate is $1200 for the employer, then the COBRA would be the same or up to 2% more, no higher. This is a shock to many people as they only see their portion of the costs.

This brings us to what causes a lot of confusion. Most of what people see is really employee benefits, which is a form of compensation. It may include health insurance, but should be seen in a different light. It is part of an employee’s compensation. The employer is compensating the employee with healthcare benefits.

BTW, turning 50 and being a member of AARP will not lower your rates. AARP is not an insurance company. It is an association. Insurance rates are regulated by the state departments of insurance and the same plan offered through AARP or not through AARP has the same rates by law.

You can visit John’s websites here: Florida Health Insurance and Insurance Network

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Section 125 Plans are also known as cafeteria plans, flexible benefit plans or mini-flex plans. Section125 of the Internal Revenue Tax Code defines these plans with strict guidelines.

These plans were originally added to the tax code in 1978, but didn’t become popular until 1986 when additional tax laws were added that gave employees’ more tax advantages.

They were created as tax savings plans wherein participants could save tax dollars. With these flexible benefit plans, group health plan premiums and eligible healthcare and dependent care expenses are paid for with “untaxed” dollars.

Deductions are taken from the participant’s paycheck and placed into a separate bank account as contributions to the participant’s flexible benefit plan. The participant submits legitimate claims to whoever is administrating the account and they are reimbursed for expenses.

The key is that the money deducted from the participant’s paycheck is never taxed. Thus, the participant’s net take home pay is higher because they don’t pay taxes on these funds.  They get the funds via reimbursement for legitimate expenses and don’t pay taxes on those funds.

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Health insurance premiums are directly affected by what is called the “area factor”. To you and me that means in what zip code do I live?

The cost of medical care varies from one geographical area to another and the differences in cost are considered when monthly premiums are determined.

So, what leads to these differences? This variation is based on to the general cost of living of the area, differences in medical practices, the degree of specialization of services and the amount of competition in the area.

Risk also plays a role in the cost of medical care. For instance, in an urban area that frequently has accidents and more health risks the costs would be higher than costs of a suburban area that has fewer accidents and less health risks.

Each insurance company has their own actuaries that calculate the area factor. So, if you live in an area with elevated medical costs, you may want to try to find an insurance company that offers the best coverage at the lowest price for your particular zip code.

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