| Issue: # 3 |
November 28, 2007 |
Greetings!
Keeping you informed of the latest developments in the employee benefit marketplace.
Sincerely,
Bill & Vanessa
Advantage Benefits |
| HIRD Filings
518 Companies Incur Penalty |
A recent article in the Boston Globe states that 518 companies will be subject to a penalty after filing their Employer HIRD reports. Estimated revenues from the penalties are projected to be in the $5,000,000 range. The Commonwealth of Massachusetts, however, had budgeted $24,000,000 for revenues from penalties for this insurance initiative.
This proves that employers do a very good job providing health insurance to their employees. Most business owners see health insurance as a means to attract and retain employees. Certain advocacy groups, however, are arguing that a 33% employer requirement is too weak?
Concurrently the state subsidized plan, CommonwealthCare, enrollment has exceeded expectations and may cost $147,000,000 more then budgeted. In addition the Federal Government has proposed changes to Medicaid that may cut another $100,000,000.
Receiving $120,000,000 less in revenues, while incurring $147,000,000 more in costs are never a good combination. To date the Patrick Administration has declined to discuss how it will make up for the soaring costs on the Commonwealth of Massachusetts attempt at Universal Health Insurance.
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| The New Trend For 2008
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When you review your health insurance this year you may see a new co-payment for Imaging or Radiology. Co-payments vary from $25 to $100 and this appears to be the newest attempt from the carriers to keep the premiums from escalating.
Although this can get confusing for employers and their employees, the purpose of these changes is to attempt to decrease utilization and to hopefully slow down the increase in the premiums. Each year we have seen slight changes whether it be a separate co-payment for day surgery, three tiers for prescriptions or maybe a calendar year prescription deductible before co-payments begin.
We feel that this will become standard in all the plans in 2008.
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Group Life Insurance Over 50,000
PS 58 Cost
Employers can offer employees up to $50,000 of Group Life Insurance tax-free to the beneficiary of the employee. This does not mean that an employer sponsored Group Life Insurance plan can not provide more then $50,000 of protection. It does mean, however, that any benefits over the $50,000 threshold to the beneficiary will be taxable as ordinary income.
Can this be avoided? Yes it can! Employees receiving more then $50,000 of Group Life insurance through an employer sponsored plan should pay taxes on the economic benefit on any amounts over $50,000.
How is the economic benefit determined? PS 58 rates ; for example, the rates for an employee age 43 is $1.29 per thousand. In the event an employee was insured for $75,000, under the employer sponsored Group Life Insurance plan, he or she should declare $32.25 (25 times 1.29) as income.
Either pay taxes on the economic benefits on amounts in excess of $50,000 each year now or your beneficiary will pay taxes on any amounts received over $50,000. |
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