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

The Chairman of the medical loss ratio regulation work group at the American Academy of Actuaries issued a warning to the National Assoc. of Insurance Commissioners that the loss ratio rule proposed as part of the PPACA (health “reform” acronym) may force insurance carriers for individual policies out of business beginning as soon as June. If carriers feel they cannot meet the loss ratio rule or that the rebates they have to provide will make them insolvent, to get out of the market by January 1, 2011, they need to announce intent to withdraw at least six months prior to that date. A senior VP at Independence Holding Company also said the same may be true of small group insurance carriers.

The National Federation of Independent Business has announced that it joined 20 states in a lawsuit arguing that insurance coverage requirements in PPACA are unconstitutional. The NFIB has 350,000 members.

The Associated Press reports that the tax credits to help small business fall short of the “broad eligibility” that White House officials promoted. The credit is supposed to apply to firms with fewer than 25 workers and average annual wages under $50,000 (which cuts out a large number of businesses by itself). However, the credit drops off sharply once a company gets above 10 workers and $25,000 in average wages, which reduces the credit to near zero. In addition, the amount of the credit offsets the write off of the cost of coverage an employer normally takes.

Also lost in the fine print of PPACA is a new law requiring small business to produce 1099’s for any people or companies who sell them over $600 worth of goods and services. It may not seem like much, but almost every small business will now be issuing 1099’s to places such as Office Max or Staples, among others (and having to get their W-9’s to do so!). The time and expense of this will cost business dearly.

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JHA surveyed 33 insurance carriers regarding the group life and disability insurance market. Group life in-force premium remained stable in 2009 and short term disability and long term disability each decreased by 2% in premium volume. The number of employers offering life coverage declined by 4% while LTD declined by 1%, and STD was up by 1%.

A survey of over 17,000 plans offered by over 12,000 employers shows that CDHPs grew by 33.9% in the past year and now cover more employees than HMOs (15.4% vs. 13.6%). The survey also found that plans with wellness programs cost more, averaging $8,391 per employee per year compared to $7,539 per employee for plans without wellness programs. This could be caused by those employers with the least healthy employees being more likely to adopt wellness as a strategy, or by the actual cost of preventive programs (which hopefully may lead to lesser claims in the long run). The average employer contribution for HSA accounts went down from $642 PEPY to $621 PEPY for single and from $1,053 per family to $977.

In another survey, AHIP says that 10 million Americans are covered by HSA plans. Thirty percent (3 million lives) of those were in the small group market, 50% in large group and 20% on individual plans.

According to Workscape, some 70% of surveyed HR professionals believe their employees are more appreciative and aware of their benefits package since the recession hit.

In terms of long term care costs, the median daily rate for adult day care was $60. The national median assisted living facility cost $3,185 monthly. The nursing home semi-private room rate median daily rate was $185, with a private room costing $206 per day.

The newly-released annual Milliman Medical Index found that the average total medical costs for a typical family of four enrolled in an employer-sponsored preferred provider organization plan in the United States is $18,074, an increase of $1,303, or 7.8 percent, from last year, the largest increase since the Index began six years ago.  The Index also found that, for the first time, an employer’s share for a typical family of four is over $10,000, at $10,744.  However, the Index found that costs vary significantly among the 14 regions examined, from an average of more than $20,000 in Miami , New York and Chicago to $16,071 in Phoenix .  In addition, the Index found that hospital inpatient costs grew by 9.8 percent this year, compared with 7.7 percent last year.