Results of the California Health Care Foundation Survey Released

According to the recently released 2010 California Health Care Foundation survey of health care trends, there are some significant changes to premium costs and employer contributions in 2010. 

The annual survey, based on interviews with 805 California employee benefit managers,  includes the following findings:  

  • Sixty-nine percent of California employers  offer health coverage, identical to the national rate.
  • Health Insurance Premiums increased 8.1% in 2010, compared with a 1.8 percent increase in overall consumer prices.
  • Since 2002, premiums have increased 134.4%, more than five times the 24.5% rise in California’s overall inflation rate.
  • Single coverage premiums in California average $5,463 annually, a great deal higher than the national average of $5,049. Premiums for family coverage were $14,396.
  • Twenty-four percent of the employers surveyed paid 100% of the employee premium costs.
  • Twenty-eight percent of California firms either reduced benefits or increased cost sharing for employees in 2010 as a result of the economic downturn, up considerably from the 15% who did so in 2009.
  • Four percent of California employers now say they are very likely to drop coverage completely, compared to just 1% as recently as 2008.

So what may happen in the future regarding health care for employees?  Some employers report that they are “very likely” to increase the portion of premiums paid by employees.  Four percent of respondents report that they probably will drop health coverage, compared with one percent of employers stating this in 2008.

For the complete survey click here

Details on Tax Withholding Guidelines Released by the IRS

The Internal Revenue Service  released instructions on Friday December 19th to help employers implement the 2011 cut in payroll taxes that were included as part of the tax cut legislation passed by Congress, along with new income-tax withholding tables that employers will use during 2011. 

Notice 1036 contains the tax withholding tables and other information needed to implement the changes.  This notice, as well as Publication 15, the “Employer’s Tax Guide” should be available on the IRS website, www.irs.gov, by the end of this week.

U.S.  Workers should see their take-home pay rise during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a 2 percentage point payroll tax cut for employees, reducing their Social Security tax withholding rate from 6.2% to 4.2% of wages paid.  This reduced Social Security withholding will have no effect on the employee’s future Social Security benefits. The new law also maintains the income-tax rates that have been in effect in recent years.

Employers should start using the new withholding tables and reducing the amount of Social Security tax withheld as soon as possible in 2011 but not later than Jan. 31, 2011. Employees will not need to complete new W-4 forms for this change to occur.

We do suggest, however, that employers ask their employees to review their W-4 adjustments annually, in case their are changes to the family status that may effect the amount employees wish to withhold from taxes.

IRS Releases Small Employer Tax Credit Guidance

The Internal Revenue Service has released final guidance for small employers eligible to claim the new small business health care tax credit for the 2010 tax year.   Under the Patient Protection and Affordable Care Act,  employers with less than 25 employees who earn a maximum of $50,000 per year may qualify for a tax credit for the employer’s portion of health care premiums.  The new Form 8941, “Credit for Small Employer Health Insurance Premiums,” and newly revised Form 990-T are now available on IRS.gov. The IRS has also posted on its website the instructions to form 8941 and Notice 2010-82, both of which are designed to help small employers correctly figure and claim the credit.

More information about the credit, including a step-by-step guide to claiming the credit and answers to frequently asked questions, is available on the affordable Care Act page at IRS.gov.

Applying for an individual plan? Better be a Broker!

I have a friend (I will call her Karin Korach), who is applying for an individual plan through an unnamed carrier (I will call it Blue Shield of California).   My friend is very grateful that she is a broker, because if she wasn’t, she never would have known how to navitage the system to find out any information on her application, much less solve issues that have arisen.  My (oops,  HER) tale of woe is detailed below:

1. October 2010 – the application was completed online.   Long and complex.  On the plus side, easier to complete than most government forms.

2.  Telephone interview completed.  Confirmed that memory problems exist that were not requested on the application by virtue of having to try and remember every doctor visit for the last 10 years.  Telephone interview requested from 19 year old daughter.  Not sure if my friend wants to know about the daughter’s anwers on alcoholic beverages consumed….

3.  Called the unnamed carrier at the end of November for status.  Was advised that a request for medical records was issued at the beginning of November, but was not completed.  Doesn’t anyone follow up on these things???  My friend contacted her Doctor and had the records faxed to the carrier.  No help given by the carrier.  Thanks Dr. S.

4.  After a minor tantrum on the part of my friend the Broker, finally got ahold of a very nice person in underwriting who was able to expedite the application on a 3 day turnaround.   Received a verbal approval from the phone rep.

5.  The same day as #4,  received a letter requesting a signature for the 19 year old, and that her status was pended until this was received.  Made furious phone call to the unnamed carrier requesting clarification.   Faxed requested signature.

6.  Received call from Copy Service assigned by carrier for medical records faxed over 2 weeks ago.

7.  Called the next business day and spoke to a very nice rep named Rachel (my friend promised her a favorable mention in the blog)  who informed the red faced and frustrated applicant that it will be another 15 days at most until the signature is reviewed and processed.

In case you haven’t guessed by now, the frustrated applicant is me, and this is my tale of woe.  In the grand scale, this is a minor mess and will be resolved.  However, as I was going through all of this hassle I kept wondering how an applicant without knowlege of the system and having the leverage that a broker has deals with all of this.  Surely my experience can’t be all that unique.  In spite of the unfavorable reputation of brokers today (think of the movie Groundhog Day), we do serve a valuable purpose to insureds, and potential insureds.  We can save others from dealing with the messes dealt by the carriers.  We can save you the time and frustration of dealing with applications, benefit and claims questions.  We can help you, based on the experience ank knowledge we have of the industry. 

Isnt it better if we are red faced and frustrated and not you?