Health insurance is a contract with an insurance company, which agrees to pay some or all of your medical bills based on your “coverage,” or the terms of your policy. In exchange, the insurer is paid a set amount of money — a “premium” — on a regular basis. Most Americans have private health insurance, either through their employer’s group plan or through buying their own individual policy. Others are covered under public “safety net” programs such as Medicare and Medicaid.

It’s no secret that health care is expensive today. The government says the cost to treat a broken leg can run $7,500 and an average three-day hospital stay can set you back $30,000. Without insurance, many Americans would be one health setback away from financial ruin. Regularly paying a set premium for health coverage assures that money will be available to defray the cost of everything from routine checkups to catastrophic medical bills. And, today, some of you must pay a tax penalty if you do not have ACA-compliant insurance. 

All three are medical charges you must pay out of your own pocket, even if you have insurance. Your deductible is the initial amount you must pay each year for covered health services before your insurer will start to chip in. Plans may have separate individual and family deductibles and/or deductibles for separate services such as hospitalization. A copayment is a fixed amount you pay toward each medical service, such as $25 for a checkup. Coinsurance is a fixed percentage, rather than a flat amount, that you pay toward each service. 

The Patient Protection and Affordable Care Act, commonly known as Obamacare, was signed into law by President Barack Obama on March 23, 2010. It includes a broad range of reforms designed to make health insurance better and more affordable, rein in health costs and expand coverage among America’s nearly 50 million uninsured. The act requires most Americans to have health insurance or face a penalty. It also makes it illegal for insurers to set dollar limits on coverage, drop you if you get sick or charge more or deny coverage because of a pre-existing condition.

The Affordable Care Act’s “individual mandate” requires all Americans, with a few exceptions, to have health insurance that typically offers “minimum essential coverage.” Going without insurance could bring a tax penalty. For 2014, that penalty is 1 percent of your annual income or $95, whichever is higher, and $47.50 for each uninsured child, to a family cap of $285. The penalty increases to the greater of 2.5 percent of income or $695 per person by 2016. The penalty will show up as an additional tax or a reduction in your federal tax refund.

No, the rates on or off the Marketplace are the same whether you use an agent to help and guide you or if you go direct to www.healthcare.gov.

Open Enrollment for 2016 starts 11/1/15 and ends 1/31/16. Currently, if you don’t not have coverage, if you have canceled your current plan by request to cancel or for non-pay, or if you did not enroll in COBRA or if you canceled it, you will not be able to get insurance that is ACA-compliant until Open Enrollment. If, however, you have a Qualifying Life Event, such as the loss of your employer-provided coverage, divorce, permanent move from a service area, etc., you’ll have 60 days to acquire insurance that will be retroactive to the date you lost your prior coverage.

This chart at healthcare.gov will let you know if a subsidy is possible. If so, Daniel will help you through the Marketplace process at Open Enrollment or during a Special Enrollment Period to maximize your subsidy.

If you wind up making more money than you estimated on your application, you could have to pay back some or all of the premium tax credit you’ve received. You would make this payment with your next tax return.  If you wind up making less money than you estimated on your application, you could qualify for a higher tax credit. You would get this money refunded on your next tax return.

The consensus is “no,” an employer cannot pay for an individual policy.  This downloadable file is one of the best assessments of the situation.  

Yes, once your ACA-compliant individual plan is effective you are covered for pre-existing conditions which is one reason Open Enrollment will occur only once a year. Otherwise, why buy insurance before you get sick?

Rates are based on the increased cost of health care, your getting older each year, and claims of all members in your insurance company.

No, not for ACA-compliant policies.

Yes

Children up to age 19 must have the ACA-compliant Pediatric Dental benefit if they have an ACA metallic medical plan.  Dental insurance is available to other family members also.

Employers with 50 or more full-time equivalent employees in the prior calendar year that do not offer insurance, offer insurance that is unaffordable, or offer coverage that does not meet a minimum value standard will be subject to fees.

Yes, most insurance companies require that you pay at least 50% of the employee only premiums and that 75% of employees not covered by another group plan enroll.

Generally you can start a group health insurance plan effective the 1st or the 15th of any month.

The consensus is “no,” an employer cannot pay for an individual policy. This downloadable file is one of the best assessments of the situation.

Rates are based on the increased cost of health care, your employees and any covered dependents getting older each year, and claims of all members in your insurance company or claims within your group if you have 50+ employees.

Yes, there are no more waiting periods before pre-existing conditions are covered.

Yes, if an employer group has 20+ employees whether they are on the health insurance or not in a calendar year, COBRA must be offered the first of the next year.  This is an employer rather than an insurance law with COBRA penalties and fines for improper administration.  We recommend you outsource this requirement, letting the experts assume your liability for notifications, collections, etc.

Groups with fewer than 20 employees must offer up to 9 months of coverage to a terminated employee who chooses this option and continues to pay the premium.  If a group is eligible for COBRA, 6 more months of coverage must be offered at the end of the COBRA period.  

The Affordable Care Act requires that each newly hired employee and all existing employees at renewal be given a Summary of Benefits and Coverages for the employer-sponsored group health plan.

One of the unintended consequences of healthcare reform is that compliance with previously unenforced laws, like this SPD requirement, is now in the spotlight.   A Summary Plan Description (SPD) “informs” your employees about all their benefit plans.  Will your group health insurance company provide your SPD?  No, because that document must cover all your benefits, including dental, disability, term life, retirement and any other employer-sponsored welfare plan.  Plus this is a federal law and requirement but insurance companies are subject to state insurance rules. We recommend you contact us about services that provide the template for ERISA compliance.

Yes, Group medical plans do NOT cover work-related injuries or illnesses for employees or owners. Owners, officers and partners are eligible for Workers’ Compensation but sometimes exclude themselves from coverage.  If you have done so, you are not covered while performing work-related duties. If you do not have Workers’ Compensation insurance on your employees, you are a non-subscriber to Workers’ Compensation, and you must file that you are in non-compliance with the Texas Workers’ Compensation Commission.  Forms and information are available here. Workers’ Compensation also covers loss of time from work following a work-related injury or illness, a death benefit for work-related deaths, and stands between the employer and the employee in the event of a lawsuit based on a WC-covered event.

You have 30 days from the date the employee’s coverage is to be effective.

When you terminate an employee from your plan, the employer is to pay the premium for the remainder of that insurance month. Sounds simple, but what if the employee terminates on the last day of the month and you do not or cannot notify the carrier until the next day – a new month? What if you pay only 50% of the employee only premium – who pays the other 50% when the employee leaves without notice? This bulletin from the Texas Association of Health Underwriters will explain much about the process. If you terminate an employee in the last 7 days of the month (can be the 1st or the 15th depending on your policy “month” with the insurance company), you must notify the insurance company within the first THREE BUSINESS days of the next month or you’ll owe all the premium for that next month. If you send me an email with the employee’s name and reason for the termination of the insurance, I’ll do the termination and send you a receipt. However, if it’s one of the last days, please contact me or Daniel by phone to make certain that you meet the deadline. Remember too that you can terminate/add employees at the online employer portal for most of the carriers.

Unlike medical insurance, the lack of dental insurance would not lead to financial ruin for your employees, but this is a frequently used, appreciated benefit.  And, more and more, dental health is being connected to general medical health.

These are group plans that offer low cost protection for your employees’ income in the event of a non-work disability due to an injury or illness.  Short Term plans generally start on the 8th day of disability and pay for up to 13 weeks.  Long Term plans generally start on the 90th days of disability and pay as long as the employee is disabled up to the Normal Social Security Retirement Age for that person.

In most cases, yes.  This is another low cost but valuable benefit.  An employer can provide up to $50,000 of Life and AD&D insurance, tax-free to each employee.

You can think of an HSA as a 401(k) or an IRA dedicated to paying for your medical expenses. Your contributions are tax-deductible and can be invested much like your retirement savings (investment options vary by financial institution), which allows for compounded growth of your savings over time.  When you have qualified medical expenses, you can use the money you’ve built up in your HSA to pay for them without incurring any tax consequences.  

To be eligible for an HSA, you need to have medical coverage under what’s called a high-deductible health plan (HDHP). All eligible expenses will be subject to the deductible except Preventive Care which is covered at 100%.

For 2015, the maximum amount you and/or your employer can contribute to an HSA is $3350 for individuals and $6650 for families. Those age 55 or older can make additional catch-up contributions of up to $1000 for 20015.  These amounts will probably increase each year.  As with IRA contributions, you have until April 15 of the following year to make your annual contributions.  And as I mentioned above, your unused contributions aren’t lost if you don’t use them within a given year. Rather, they simply remain in your HSA and continue to grow over time with interest or investment earnings (depending on how you have them invested) until you use them.

Many of the expenses you can pay for with money from your HSA go to cover the high deductible you must meet before your insurance starts paying. But you can also use the funds in your HSA to pay for other medical expenses not typically counted toward your deductible — such as some dental care, vision expenses, hearing aids, COBRA insurance, or qualified long-term care insurance.  You can find a complete list of qualified medical expenses in IRS Publication 502.  If you’re younger than 65, you can use the money in your HSA for anything other than these qualified expenses; however, much like with an IRA, you’ll be responsible for ordinary income taxes — and there’s a 10 percent tax penalty on the amounts you use.

Who hasn’t felt confined by their HMO or PPO plan when they need to see a doctor who isn’t in the plan’s network?  Paying for your doctor visits through an HSA also encourages smart consumers to actually start asking doctors about their fees. This, in turn, could even create an incentive for medical providers to keep their fees competitive.  Another huge benefit of HSAs is that they’re portable from employer to employer, or from one provider to another. When you leave your job, you get to take the balance of your HSA with you and either roll it over to your new employer’s HSA plan or open an individual plan with another provider. With an HSA, you’re in control of your money.

Let’s say you contribute to your HSA for years and years, and actually have lower medical expenses than you expected. When you turn 65, you can start tapping into your HSA for any reason, not just qualified medical expenses. You’ll still pay ordinary income taxes on non-qualified expenses because you funded it with pre-tax dollars, but there’s no penalty.

I know, all that alphabet soup can be confusing. Let me break it down for you. HRAs are health reimbursement accounts much like HSAs, with two major differences: Only employers fund HRAs, and HRAs aren’t portable. In other words, if you change jobs or health insurance companies, you may lose any balance in your HRA. FSAs are flexible spending accounts, and there are generally two types. First is the health care spending account, which is used almost identically as an HSA, but with one major difference: Whatever you don’t use at the end of a calendar year is forfeited (commonly known as a “use it or lose it” plan). Next, there’s the dependent care spending account, which is used for tax-advantaged payment for child- or elder-care. Neither of these plans are portable from one employer to another.

You do, if:

• You have a spouse, children or other dependents (an elderly parent, for example) who rely on you for financial support.
• Your death would disrupt someone’s life preventing that person from working or functioning normally for a period of time.
• You want to leave a legacy to your alma mater, a favorite charity, or a political cause.
• You want a safe savings account for your retirement.
• You want a reliable source of funds to borrow or use as you see fit . . . your own “bank.”
• You might do any of the above in the future . . . buy now to guarantee access later in the event of a change in your health.

That depends. It depends on when you die and why you needed the insurance in the first place. If you need help with this decision, please contact us. We’ll ask questions and help you decide on the right options for you and your family.

Buying life insurance, like any other financial purchase, is an individual decision based on your particular needs.  For example, term insurance may be suitable if you are young and want to make sure a spouse and young children would be taken care of if you were to die unexpectedly. For the older, more established family, the fixed premium and the build-up of cash value in whole-life policies might be more attractive.  If you purchase whole-life insurance, ensure that the policy is needed and intended to be maintained over a long period. It can be quite expensive if you allow it to lapse in the early years.

Term Insurance

Term insurance provides for payment of the death benefit only if the person insured should die during the term of the policy. If the insured survives the “term” or period of time covered by the policy, there will be no coverage or the premium will escalate to an unaffordable amount.

Features include:

• Low premium initially or for a guaranteed period (5, 10, 15 or 20 year term)
• Protection for a specific period of time
• May be renewable and/or convertible
• Premium increases with each new term

Whole-Life Insurance

The whole-life insurance policy provides for a death benefit for the insured for his or her “whole life.” Premiums are normally paid throughout the life of the insured, although cash values can sometimes be used to offset the premiums.

Features include:

• Protection until the end of the life of the insured
• Fixed premium, usually for the life of the insured
• Cash value accumulation
• Higher initial premium than term
• Should be purchased with the intention of keeping for life or for a long period of time.

Accident Insurance

An accident policy only pays a death benefit IF you die in an accident.  Since most people die of an illness, even young people, these policies are inexpensive but they don’t really give you the protection you need.

This, of course, is only a summary of what is available. The main issue is, “do you need to protect yourself and your family?”  If so, how best to do this?