Archive for the ‘health insurance’ Tag

Concerns about the Affordable Care Act   2 comments

Some of the reasons why the Affordable Care Act (ACA) gives me a great deal of concern about it’s potential economic impact:

  • Employers are required to provide coverage if they have 50 or more full-time employees, or face paying taxes and fines
  • Individuals are required to carry coverage, or face paying taxes and fines
  • A 5% Affordable Care Act tax to subsidize uninsured individuals
  • Limits employer contribution to flexible spending account to $2500
  • Confusing definitions on who is an employee vs sub-contractor
  • An excise (read: sales) tax will be charged on “Cadillac” health plans starting in 2018

The two really serious kickers to the whole program:

  •  Health insurance companies will be required to spend at least 80% of premiums collected on the provision of care, drastically limiting how much revenue can be used for administrative costs and profit.  This will likely create incentive for companies to reduce overhead expenses, such as customer service and claims-processing employees.

AND THE MOST CONTROVERSIAL POINT OF ALL:  

  • Starting in 2014, health insurers cannot charge higher rates to those who will use more medical services (and thus costing insurers more money)!!  This creates a subsidy situation where customers who don’t use medical services very often will still pay increased premiums to pay for the medical services of those who use them more often.

In other words, forget underwriting, forget being able to charge more for the customers who will cost more.  EVERYONE is going to have to pay more in order to subsidize those who are more expensive to the insurance companies – for example, people who have pre-existing conditions and, usually, women.  I certainly have nothing against women.  But if the reality is that insuring a woman is more expensive that insuring a man, then a comparable plan for a woman should cost more than a man’s.  That, unfortunate though it may be, is how insurance works – if you cost more, you pay more.  This will no longer be the case under the Affordable Care Act.

Not charging more for those with pre-existing conditions would be comparable to an auto insurance company not being allowed to charge more for drivers who have prior claims.  So even though people with pre-existing conditions will cost carriers more money than those without pre-existing conditions, they cannot be charged more.  Top that off with the 80% premiums-for-care requirement, and we are facing a situation where a health insurer cannot hire the most qualified individuals (because they are not allowed to divert the money from revenue for care), cannot provide the best services (by hiring more customer service representatives, adjusters, billing employees, etc), and cannot charge people based on their potential cost to the company.

Dog Blog ACA

The Insurance Dogger is not looking forward to 2014 or the implementation of the ACA….

A review of business coverages – Part 2   Leave a comment

Workers Compensation

Injured at work? Work Comp is what you need!

Good afternoon one and all!  Today I’m going to give you a brief break down of one of the more straight-forward coverages for your business – Workers Compensation.  To put it simply, Workers Compensation is in place to pay for expenses due to a work related injury, illness, or death.  In addition, it will also replace any income lost if an employee is not able to work due to any of those three things.

Virtually every employer (and employee thereof) is required to partake in Workers Compensation in the state of Pennsylvania (I won’t be covering any information for any other states).  It can be purchased by any business in the state – whether through a private company or The State Workers’ Insurance Fund or SWIF.  Coverage is written on an annual basis, and is rated based on annual payroll amounts.

Payroll is divided into class codes based upon the type of work that employees perform.  When you first write a policy, the class code is initially determined by your agent, and will be confirmed by the PA Rating Compensation Bureau or PCRB.  Final determination will be made by the PCRB and will be enforced upon all insurance companies, including SWIF.  You can always appeal the class code(s) assigned to your business.

Each class code has a rate, as determined by base rates each company files with the state.  Simply put, your WC premium is determined by multiplying your payroll amount (divided by 100) times the applicable rate, and then adding in the PA Employer Assessment (which functions similar to a tax).  If you write your coverage through any company other than SWIF, you will also pay a flat Expense Constant.

At the end of each policy term, your policy will be audited – either by your insurance company or an independent auditor hired by your company.  Not every company audits every year, but most do.  Audits, especially for small businesses, are typically a short form that’s mailed to you to complete and return.  The audit is used to determine the actual payroll for the prior policy term (not calendar or business year), and typically requires W2 or other tax form verification.  Occassionally, an auditor will actually come to your business to review your information, but it is still often a simple process.

I feel like I’ve bored you enough.  Work Comp is generally a very dry, straight forward coverage to discuss.  I hope that you stayed awake, and if you have additional questions on how it works, PLEASE feel free to call or email us!

PS – we are running a contest on Facebook.  Every person who likes my page in the month of February is entered into a drawing to win a $100 gift card to either Darden Restaurants or Big Burrito Group.  Already liked my page?  NOT TO WORRY!  For every person that you refer to my page, you are entered to win a $50 gift card to the same!  (everyone can “enter” to win this card – new and old “likers”)  If they are picked as the winner for the $100 gift card, and you referred them, then YOU WIN the $50 card!  Need another link, in case you missed the first one?   Here’s another one…  LINK   or was it LINK

Anyway, have a good day, and don’t hurt yourself!

Pittsburgh!

This picture has absolutely nothing to do with Workers Compensation. But I love our city. And you’re probably tired of hearing about WC

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