Uh Oh

EBN has included the best discussion I have yet found on the non-discrimination provisions of PPACA relating to carveout's. Kudos to Vanessa Scott for getting it right.

The Internal Revenue Service recently issued Notice 2011-1 regarding the application of the nondiscrimination rules under Internal Revenue Code (Code) section 105(h) to non-grandfathered insured group health plans pursuant to the Patient Protection and Affordable Care Act.According to the Notice, the IRS will not require insured plans to comply with nondiscrimination rules until further guidance has been issued. Furthermore, to allow insured plans adequate time to comply with the rules, it is likely that future guidance will not apply until plan years beginning at some time after the date that the guidance is issued.


Thus, plan sponsors will not be required to pay excise taxes associated with noncompliance with the nondiscrimination requirements until then. The Notice also requested comments on a number of issues that may be addressed in future guidance.

I personally feel that every federal worker or citizen who exposes an instance where federal regulations lead to confusion, job loss, higher costs and havoc being wrought on the citizens should get a free uh oh! hat. The initiative would be privately funded of course lest we bankrupt the Treasury. By the time the superbowl was played the entire stadium could be filled with patriotic hats.

PPACA In The Real World

Queen Sheila was bucking for some sound bites today for the evening news. Evidently, in her reality, repealing ObamaCare will result in citizens dying. As if the whole POS was not adopted  rife with flaws on a party line vote which required the fixes to be passed using reconciliation, In that spirit let me add just a few real life repercussions of PPACA from the front lines where business people must live.

A client called today seeking assistance with finding a child only individual health insurance policy. Ju8st a responsible parent trying to make sure her child was covered with health insurance. It seems they had tried finding a policy online with no success. Both parents are covered at work but the cost for their child to be covered was prohibitive. Unfortunately, PPACA leaves many Americans without a market for individual major medical child only policy options since dependent children now must be covered with no pre-existing condition exclusion. Many elected not to offer policies which were guaranteed to lose money and since the mandates do not kick in until 2014 the risk pool will be contaminated prior to then and their stockholders and customers may not understand. So today many Americans find themselves with no access to inexpensive (relative to Group policies) individual health insurance on a child only basis. How many of them will die due to the self-serving liberal Democrats like Rep. Sheila Jackson Lee who voted for PPACA which left them without a viable child only market? Care to answer that Queen Sheila?

Then there is the group client who covers management with a major medical policy while providing non-management employees with a mini-medical policy for those in minimum wage jobs. Since the company is non-unionized, located in a right to work state, with owners who would have been very unlikely to contribute to democratic politicians, what are the odds HHS gives their limited medical plan a waiver? What are the odds the non-management personnel get a free mini-med in 2014?  I am sure there are some readers thinking well in 2014 they will have to pay or play so they will be required to either provide health care or pay the fine and that is true if the mandate proves to be constitutional, which is highly debatable. However, do the math for yourself its a simple calculation; Either you pay $2,000 per employee as a fine or you pay for $5,000 per employee to provide health insurance. Lets say you are retail business, how do you possibly choose the latter and stay in business? Can you answer that Queen Sheila?

And lets discuss the impact of passing a 40% payroll cost increase through to the public on our nation from an inflationary perspective in the middle of a recession? And PPACA is not a job-killer? Does no one in the Democratic Party take economics? Have you no common sense whatsoever Democrats? And by the way what is the client to do until 2014 since your precious PPACA has further eliminated all remaining markets for management only carve-outs in the group market Madam Congressman Lee? And by the way how many jobs did PPACA kill at Principal Financial Group & Humana when your ill-conceived carve-out killer passed? I heard a businessman today spell out he could either pay $140,000 in fines beginning in 2014 or $250,000 to provide health care or he could just shut down one location get below 50 employees and solve the whole problem until representatives with an ounce of common sense held majorities in the House and Senate. Which do you think he is leaning toward?

Its long past time for the American people to tell the Democratic Party to drop the crack pipe and pay attention. Stop Spending our freaking money! Stop helping us!  Your precious PPACA is killing jobs and restricting options today in the real world.  November elections were no accident. People all over the nation will contribute to the opponents of the embarrassing representatives like Sheila Hackson Lee who pontificate about matters like PPACA without any real understanding of the damage they have already brought to average American's. Unlike that nut job in AZ we will do so at the ballot box Queen Sheila you arrogant windbag,

States Warn of $2.5 Trillion Pension Shortfall

If you think you 401(k) is doing poorly take a peek at what state pensions look like in the US.

See Ya!

Merry Christmas To All

UnConstitutional Mandate

Virginia's Attorney General discusses the unconstitutional nature of the individual mandate in PPACA

Have You Ever Been Experienced?

"That Case is A Dog With Fleas." This is what an underwriter will say just before issuing a decline to quote letter or a bid 20% over your renewal rates. Over the years I have heard the phrase and used it myself while working on the carrier side to discuss a group with appallingly bad loss experience. A carriers underwriting methodology is designed to account for the results whatever the cause of poor experience. In other words the carrier does not care why the experience is bad only that they are accurately pricing the bad experience. So what makes a dog a dog when it comes to group claims experience. Is it bad hring practices or a poor corporate culture? Some insights are available froma respected source.

It Seems that Tom Rath and Jim Harter  of The Gallup Company have coauthored a bestselling Book, Wellbeing:The Five Essential Elements.

Career Wellbeing: how you occupy your time and liking what you do each day.


Social Wellbeing: having strong relationships and love in your life.

Financial Wellbeing: effectively managing your economic life to reduce stress and increase security.

Physical Wellbeing: having good health and enough energy to get things done on a daily basis.

Community Wellbeing: the sense of engagement and involvement you have with the area where you live.

These five elements of wellbeing are measured by Gallup’s Wellbeing Finder, an assessment with scores that range from 0-100. When Gallup compared overall wellbeing indexs for those employees who were struggling (defined as 50-59th Percentile) they found an average annual cost associated with sickdays of  $6,168 based on a median wage of $200/sickday. Comparably, those employees who were thriving (defined as 70-79th percentile) had an average annual cost associated with sickdays of  $2,784. For those keeping score that is a difference of $3,384 per employee per year which for a company with 1000 employees would translate into $3,384,000 annually. If one were to drop down to the 40th-49th percentile the average annual cost associated with sickdays is $7,560 which is a differential of $4,776 or $4,776,000 for the fictitious 1000 life company.
 
Traditional wellness targets physical wellbeing like diagnoses of hypertension, high cholesterol, back pain, diabetes, depression, sleep apnea and insomnia. Looking at the the employees who with such diagnoses were struggling(50-59th) incurred an average of  $6,763 in disease burden annually just based on these diagnoses which compared to $4,929 (70-79th) a per person differential of $1,834 or $1,834,000 for our fictitious 1000 life company. For those keeping score the combined we are now up to an annual cost of $5,218,000 just for sick days and disease burden associated with chronic conditions.
 
Gallup then took the disease burden a step further in order to pinpoint the annual increase in disease burden costs just year over year. Based on new cases of disease burden only (and adjusting for demographic differences), the average annual new disease burden cost for people who are thriving is $723, compared with $1,488 for those who are struggling/suffering — a per-person difference of $765. Based on these figures, those who are struggling/suffering realize two times higher new medical costs due to disease burden (2008-2009). For those keeping score the combined we are now up to an annual cost of $5,983,000 annually just for sick days, legacy and new disease burden associated with chronic conditions.
 
If you are not completely depressed yet do read on. Among randomly selected U.S. workers, a mere 28% are engaged in their jobs. People in disengaged workgroups are nearly twice as likely to be diagnosed with depression, have higher stress levels, and are at greater risk for heart disease.
 
There are many employers who will no doubt believe ardently that their employees social wellbeing has no connection with their job. Gallup results bear out this opinion.
 
Just 5% of workers strongly agree when asked if their organization helps them build stronger personal relationships, while most employees disagree with this statement.  



People in disengaged workgroups are nearly twice as likely to be diagnosed with depression, have higher stress levels, and are at greater risk for heart disease.
Gallup has extensively studied the impact of friendships on an organization’s productivity. By asking more than 15 million workers if they have a “best friend at work,” we discovered that people who have high-quality friendships on the job are seven times as likely to be engaged in their work. Without a best friend, work can be a very lonely place: Those without a best friend in the workplace have just a 1 in 12 chance of being engaged. Social relationships at work have also been shown to boost employee retention, safety, work quality, and customer engagement. It seems that like it or not management has a strong need to assure all employees are encouraged to thrive. Good managers know this but why on earth would a smart company not institutionalize the expectation that the integration of all employees into the social fabric of the company is the expected standard for those managing people?

Like most Gallup research the book is painstakingly footnoted and the data is statistically significant.

If you are an employer that has taken a massive rate increase on your group Health or Group Disability due to poor losses you have been "experienced." The underwriters do not care why your experience is so bad they just want no part of your risk and they price accordingly. While that may be bad news the ability to implement sound human resource countermeasures along with coordinated employee benefit design plan changes and strategies to hire and  assist more employees in thriving in the 5 areas of wellbeing just might pay enormous dividends in stabilzing benefit costs and boosting productivity and profitability. Or you could just do nothing while complaining your insurer is ripping you off and all those large claims will not happen again next year .

We all laugh when R. Lee Ermey impersonates a therapist in the Geico Commercial. There are without question many executives who will view the Gallup research on wellbeing and conclude its just another voyage to namby pamby land. Many of these executives will will have invested in health insurance, wellness, EAP's, short and long term disability. How could just 8% of those surveyed agree their organization helps them improve their physical health as the Gallup research shows? Easy. They are not engaged. Some executives are eyeing 2014 when they can dump their employee population into the Obamacare Exchange and take the savings to the bottom line. One might ask whether it makes more sense to craft a strategy now that can lower health costs in order to gain a profound human capital advantage over competitors planning to dump their populations into the exchanges. The hard reality employers must face is that the issues this Gallup survey brings into focus on wellbeing persist whether your employees are in the exchange or not. It will certainly be impossible to access disease management data in aggregate for an employers population in an exchange in the era of HIPAA.