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S&S Benefits.....Opinion, Hearsay & News Review

S&S Benefits Consulting, Inc.  219 Darien , Dundee , IL 60118   Phone: 847-428-5353, Fax:847-428-9876

Email : jseiler@ssbenefits.net                                               http://www.ssbenefits.net/   April 2010 Issue

Ok, they passed the Health care reform bill. That’s bad enough, but now we have to listen to the President campaign about how great it is? Sorry, but the lies are becoming intolerable. They want everybody to have coverage, but raise the percentage of salary that medical expenses must exceed in order to have those expenses be deductible. What about just making individual health insurance tax deductible, the same as it is for group insurance? How about something unworkable for employers? In 2014, there is a $3,000 penalty on employers with 50+ employees for each full time worker whose premium exceeds 9.5% of Family income if that employee receives coverage through one of the state insurance exchanges (that are apparently going to spring out of nowhere). Uh huh? So, do employers now have to track family income of their employees? Who gives them that right? (Imagine- “Hey Julie, how much does your hubby make? Do your kids work? How you doing on investment income?)  Or does one of the 16,500 new IRS agents come into an employer’s office and drop a bill on the CFO’s desk after the family files their income tax return?

Or, how do employers deal with the little nugget about having to offer coverage to employees’ adult children up to age 26, if no other plan is available. If employers hate dealing with proof of insurance for dependent children who are students, they’ll really like dealing with this in 2011. But don’t worry, it’s temporary. In 2014, coverage must be offered to employees’ adult children up to age 26, even if other coverage is available.

Like most government programs, this one has many incomprehensible provisions that will be left up to regulators. We have sent out the majority of the provisions in prior emails. Once the aspects of the “reconciliation’ package become available, we will publish the best summaries of the information available. If we want to know what is in store for us nationally, take a look at Massachusetts . The insurance premiums in MA are the highest in the country and per capita health spending is now 27% higher than the national average! Hang in their MA, the rest of us will soon catch up!

Oh, did we mention the LTC plan that is part of the bill? That should be real affordable, until claims catch up to the premiums. Illustrative of that is major LTC providers (Prudential, Met, Genworth, UNUM, Mutual of Omaha, Bankers, Allianz and Transamerica and Hancock) have sought rate increases ranging from 18% to 25% on policies written a decade ago according to Investment News. The policies used to be affordable due to investment income, but that is drying up. “How’s that stimulus workin out for ya?”

Due to the healthcare reform, Caterpillar announced it will cost an additional $100 million in the first year. Verizon said it will have to cut health care benefits to offset new costs. AT&T announced it will record a $1 Billion non-cash expense in the first quarter to account for Obamacare. Most of the charges are due to the elimination of subsidies the government has provided to companies which cover expenses normally allowed under Medicare Part D. Those will be going away. Henry Waxman and House Democrats immediately said they would haul these companies before Congress for a hearing on April 21st, basically saying the companies are lying. However, the FASB accounting rules do call for companies to immediately account for their retiree liabilities. Of course, since Waxman thinks Obamacare will bring costs down, he is totally puzzled and frustrated by this new development. Hey Henry, wake up before the truth rolls over you like a Prius with a stuck accelerator.

If you wish to be added or removed from the distribution of this newsletter, please email jseiler@ssbenefits.net

Following the Illinois Supreme Court striking down medical malpractice reform, a study by Milliman says malpractice insurance costs will rise by 18%.

While costs rise, cash is pouring in at big Chicago hospitals. Patient revenue is up 12.4% at Advocate and 7.6% at Northwestern and 9.3% at Rush University .

Prudential is buying AIG’s Asian life insurance unit, but at home is reportedly facing a nationwide class-action lawsuit on behalf of LTD claimants who are appealing denied disability income benefits. Pru has declined to comment.

MultiPlan has completed an all stock acquisition of Viant, Inc. ( Beech Street , Preferred Payment Systems).

Before they are outlawed, here are some facts from a survey of 370 organizations. 44% offer a CDHP. Of those, 56% use an HSA model and 35% use an HRA model while 9% use both. Sixty-three percent of employers have more than 10% of their employees participating in a CDHP and 38% of employers use the CDHP model to control costs.