Client Alert - More Updates!
Healthcare Update
2nd Qtr 2010 Rates
The April, May & June 2010 rates for small groups with less than 50 employees have still not been settled. As previously reported, the carriers went to court asking for their submitted rates to be approved, but were rejected. Here is a link to a story from the Boston Herald. The main reason given was that "plaintiffs have not exhausted their administrative remedies".
If carriers have no approved rates, how are they billing customers who renew during this quarter? They are billing them based on the 2009 approved rates as determined by another court. Link to that story in the Boston Globe.
Businesses renewing during this quarter will need to budget accordingly until the rates are approved. Any rates released come with a disclaimer: They are not guaranteed and upon final resolution, the customer may be backcharged - retroactive to their anniversary. Here is an example, a small business renews April 1st and receives a $5,000 monthly bill, based on the 2009 approved rates. In August, final rates are approved and and the new premium is $6,500 per month.
The September bill, however, will not be $6,500 but $13,000:
September $6,500
August $1,500 retro-active bill
July $1,500 retro-active bill
June $1,500 retro-active bill
May $1,500 retro-active bill
April $1,500 retro-active bill
We recommended that groups renewing during this quarter stay with their current carrier, and review the plan again when rates are resolved. Many people do not realize that you can change plans anytime you want. Basically we will start the quote process all over again for you when the rates are approved!
Sincerely,
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| COBRA Subsidy Updates
Confusing at times
| Blue Cross has a great summary of the COBRA subsidy from inception through the current date. The subsidy is available to anyone who has an involuntary termination through the end of this month Click here.
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| Federal Reform Changes Dependent Status
Thru Age 26
| Currently a dependent can stay on the employee's plan as long as they are either a 1) full-time student or 2) claimed within the past 2 years as a dependent on the employee's tax return within the past 2 years, but not past age 25. Effective September 23, 2010, the new Federal Health Care Reform is changing to: Age 26 irregardless of their student or dependent filing status.
The carriers will reflect these changes once your policy renews after the effective date, September 23, 2010. So, if you have an employee who wants to add his uninsured 26 year old son or daughter on September 23, 2010, they must wait until the policy renews.
At the same time Blue Cross effective June 1, 2010, will allow dependents, who are already insured to stay on the plan up to age 26.
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| Small employer health insurance premium tax credit
Consult with your CPA
| This credit will apply to premiums paid in taxable years beginning after December 31, 2009. It will give certain qualified small employers with less than 25 full time equivalent employees, pay average wages of less then $50,000, and provide qualifying coverage of at least 50% of the total premium cost, a credit. The credit can be up to 35% of the premium, but increases to a maximum of 50% in 2014!!
This matter is something you need to bring up to your CPA. Here is a brief bulletin from the IRS.
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