Unimproved Hospital Admission vs. Observation Update

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Here’s an update to a situation that has unfortunately not improved

As posted in previous EHB Insurance Group newsletters, the “observation” vs. “admitted” status of Medicare age people being denied benefits of Medicare Extended Care (skilled care) because their paperwork had not been coded as “admitted” during their hospital stay is still suspended somewhere in time.  This scenario happened to 1.6 million people in 2011, and the problem has grown.  CMS issued its “two midnight rule” this summer, which was supposed to guide hospitals in their interpretation of whether to admit, or code as observation.

So, here’s the update that is a three-fold problem.  First, hospitals are finding the CMS rule confusing, and are unsettled about what CMS actually wants from the hospitals that improves the admitted/observational problem.  Secondly, a lawsuit to remedy the situation (by eliminating the three-day admitted rule) was brought forth by fourteen individuals in Connecticut, a few months ago.  This week, a federal judge dismissed the lawsuit, so even though it would have been beneficial to Medicare enrollees, it can not go forward.  And, third, this week, more than 100 members of the US House called for a six-month delay in implementing the CMS rule described in “First” above, so hospitals are in even greater confusion as to how to interpret the rule, and the problem goes on and on while many people remain in a wait-and-see mode regarding their Extended Care benefits. 

This is troublesome for the patient who has no idea until they are dismissed that they may be required to pay thousands of dollars for any stay in the nursing home–regardless of how long it is–and for how much.  This is an excellent reminder to contact EHB Insurance Group about Short-Term Care or Long-Term Care Insurance now, before being caught in a situation. It’s  extremely important!

Early Look at PPACA Premiums

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WASHINGTON (AP) — The No. 1 question about President Barack Obama’s health care law is whether consumers will be able to afford the coverage. Now the answer is coming in.

The biggest study yet of premiums posted by states finds that the sticker price for a 21-year-old buying a mid-range policy will average about $270 a month. That’s before government tax credits that act like a discount for most people, bringing down the cost based on their income.

List price premiums for a 40-year-old buying a mid-range plan will average close to $330, the study by Avalere Health found. For a 60-year-old, they were nearly double that at $615 a month.

Starting Oct. 1, people who don’t have health care coverage on their job can go to new online insurance markets in their states to shop for a private plan and find out if they qualify for a tax credit. Come Jan. 1, virtually all Americans will be required to have coverage, or face fines. At the same time, insurance companies will no longer be able to turn away people in poor health.

The study points to the emergence of a competitive market, said lead author Caroline Pearson, a vice president of the private data analysis firm. But it’s a market with big price differences among age groups, states and even within states. A copy was provided to The Associated Press.

The bottom line is mixed: Many consumers will like their new options, particularly if they qualify for a tax credit. But others may have to stretch to afford coverage.

“We are seeing competitive offerings in every market if you buy toward the low end of what’s available,” said Pearson, a vice president of Avalere.

However, for uninsured people who are paying nothing today “this is still a big cost that they’re expected to fit into their budgets,” Pearson added.

The Obama administration didn’t challenge the study, but Health and Human Services spokeswoman Joanne Peters said consumers will have options that are cheaper than the averages presented. “We’re consistently seeing that premiums will be lower than expected,” she added. “For the many people that qualify for a tax credit, the cost will be even lower.”

With insurance marketplaces just weeks away from opening, the Avalere study crunched the numbers on premiums filed by insurers in 11 states and Washington, DC.

Eight of them are planning to run their own insurance markets, while the federal government will run the operation in the remaining four. There were no significant differences in premiums between states running their own markets and federal ones.

The states analyzed were California, Connecticut, Indiana, Maryland, New York, Ohio, Rhode Island, South Dakota, Vermont, Virginia and Washington. No data on premiums were publicly available for Texas and Florida — together they are home to more than 10 million of the nation’s nearly 50 million uninsured people — and keys to the law’s success.

However, Pearson said she’s confident the premiums in the study will be “quite representative” of other states, because clear pricing patterns emerged. Official data for most other states isn’t expected until close to the Oct. 1 deadline for the new markets.

The study looked at premiums for non-smoking 21-year-olds, 40-year-olds and 60-year-olds in each of the 11 states and the District of Columbia.

It compared four levels of plans available under Obama’s law: bronze, silver, gold and platinum. Bronze plans will cover 60 percent of expected medical costs; silver plans will cover 70 percent; gold will cover 80 percent, and platinum 90 percent.

All plans cover the same benefits, but bronze features the lowest premiums, paired with higher deductibles and copays. Platinum plans would have the lowest out-of-pocket costs and the highest premiums.

Mid-range silver plans are considered the benchmark, because the tax credits will be keyed to the cost of the second-lowest-cost silver plan in a local area.

The average premium for a silver plan ranged from a low of $203 a month for a 21-year-old in Maryland to a high of $764 for a 60-year-old in Connecticut.

The silver plan premiums for 40-year-olds were roughly $75 a month higher than for 21-year-olds across the states. But the price jumped for 60-year-olds. The health law allows insurers to charge older adults up to three times more than younger ones. That’s less of a spread than in most states now, but it could still be a shock.

“It’s striking that the curve increases quite dramatically above age 40,” said Pearson. “As you get older and approach Medicare age, your expected health costs start to rise pretty quickly.”

But older consumers could also be the biggest beneficiaries of the tax credits, because they work by limiting what you pay for health insurance to a given percentage of your income.

For example, an individual making $23,000 would pay no more than 6.3 percent of their annual income — $1,450 — for a benchmark silver plan.

That help tapers off for those with solid middle-class incomes, above $30,000 for an individual and $60,000 for a family of four.

The study also found some striking price differences within certain states, generally larger ones. In New York, with 16 insurers participating, the difference between the cheapest and priciest silver premium was $418.

Retirees Need Advisors’ Help in Transition to Medicare

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For retired workers and those just beginning the transition from employee to retiree, securing health care coverage is new territory. Fewer employers are providing benefits for retirees than just a few years ago, according to a survey released by Allsup.

Data from the Kaiser Family Foundation shows just a quarter of employers offered health benefits to retired workers in 2012, Allsup found, down from 32 percent in 2007.

“At many companies, retiring used to mean transitioning from your employer’s health plan to a retiree health plan,” Paula Muschler, manager of the Alsup Medicare Advisor, said in a statement. “Now, rather than selecting from one or two employer-provided options, more and more individuals are faced with trying to navigate through dozens of different Medicare plan options.”

Muschler stressed the importance of advisors discussing Medicare planning with clients before their 65th birthday and throughout their retirement.

“Since fewer employers offer retiree coverage, it’s important that people begin to study their options early enough to make good choices based on their needs,” she said.

Pre-retirees have the three-month period before and after their 65th birthday to select their Medicare plan without penalties. “If a client is past their initial enrollment period, then Medicare advisors can intervene to help them make wise choices going forward,” Muschler added.

Allsup noted retirees have an average of 31 plans for prescription drug coverage, 20 Medicare advantage plans, and 15 medigap/supplement plans. Retirees can also be covered by a spouse’s employer plan or veterans’ benefits, which could affect the type of Medicare plan they choose.

Workers who are older than 65 and already enrolled in Medicare may be able to apply for supplemental coverage. “Retiree coverage is secondary to Medicare, so they already would have Medicare Part A and Part B, but losing their retiree group health coverage triggers thei option to buy a Medigap/supplement,” Muschler said.

“Health care is one of the primary financial concerns for seniors and Medicare financial advisors can reassure their clients with careful preparation and expert Medicare assistance,” Muschler said.


How to Choose a Reputable Charity

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One of the key hopes for most people setting up an estate plan is to leave a legacy. It is embarrassing and hurtful for people to see that legacy sullied by a charitable organization that squanders or misuses the gifts.

Too many charities these days pay themselves or their executives much more than they give to their purported beneficiaries — if they benefit the people they claim to help at all.

Earlier this year, the Tampa Bay Times, in conjunction with the Center for Investigative Reporting, produced a list of America’s 50 worst charities. The report provides a lot of insight into the tricks some charities play to hide their true nature, and what to look for in a charity to make sure it’s reputable.

Here are some of the tricks these charities use:

– Much of their money goes to huge salaries for their executives or other insiders. The report cited one cancer charity that paid its CEO an annual salary of $18 million a year. Another medical charity issued its biggest grant to a company owned by the charity’s president.

– Others earmark just a tiny portion of their proceeds to the charities they support. Among the 50 bottom charities the report cited, just 4 percent of their donated money, on average, was devoted to direct cash aid. One charity, the Committee for Missing Children, paid 90 percent of the $27 million it raised over the past decade to telemarketers raising money for the charity; it paid out just $21,000 a year.

– They try to imitate other, better-known charities in the hopes of confusing people. A charity called Kids Wish claims to provide similar services to the Make-a-Wish Foundation, which grants wishes for terminally ill children. Kids Wish raised $18.6 million last year, much of it through telemarketing, and spent just $240,000 on the kids it was supposed to help. Make-a-Wish — which never uses telemarketers — raised just $3.1 million last year, but spent $1.8 million on helping children.

Nonprofit organizations need to be transparent about how they raise and spend their money, so it’s not hard to find out how your legacy will be spent. Any charity you are considering for a donation should be willing to provide you with a detailed breakdown of spending and tell you how much of the donation will go to fundraisers as opposed to beneficiaries.

Most charities will have goals that are concrete and measurable. Vague promises like “raising awareness” could mean just about anything and cost next to nothing. If you want to give generous gifts, you should be able to determine exactly what you re getting for your money. If a charity claims to raise money for a local children’s hospital, for example, you could call up the hospital and verify how much it’s been receiving from the charity.

There are several online resources for vetting charities.

Guidestar.org can be exceptionally valuable from a financial standpoint because it houses IRS Form 990s for thousands of charities. It also offers tips for investigating charitable organizations.

Another valuable resource is Charitywatch.org. This website reports on the amounts that hundreds of charities spend on their flagship programs as well as how they raise their money. It might be worth investing in a $50 membership to receive the site’s rating guide, which is published three times a year and contains much more information than is available on the site.

The key is to be proactive. As soon as you decide on considering a gift, do some research.

The absolute best way to learn about a charity, all the experts agree, is to volunteer. If you are looking for a place to establish a legacy, find a locale that suits your needs and spend time there. Not only will you learn whether the charity will make good use of your donation, but ideally, you could grow to love the place, in a way you wouldn’t with just a monetary gift. 




Employers Weigh Shifting Retirees to Medicare

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Now that employers are getting comfortable with strategies for extinguishing their long-term pension commitments to employees, they are focused on offloading other retirement obligations. Chief among those are the costs of retirees’ health care.

That’s what Aon Hewitt found when it surveyed 548 companies about their plans for managing retiree health coverage costs.

“We saw tremendous pension settlement activity during 2012, and that trend is continuing in 2013. Companies who are looking to shrink benefit liabilities on their balance sheet may explore the viability of settling their retiree health care obligations as well,” said Milind Desai, retirement actuary at Aon Hewitt. “At present, there are a number of tax, legal and market hurdles that limit the feasibility of settling retiree medical program commitments in a cost-effective manner, but this may change in the future.

As employers found with pension obligations, where there’s a will, there’s a way. And the Patient Protection and Affordable Care Act may represent the solution they have been seeking, says Aon.

In response to rising health care costs and the requirements of the PPACA, Aon reports, “many U.S. organizations have or are seriously considering sourcing post-65 retiree health care benefit coverage through the individual Medicare plan market.

More than 60 percent of employers are reassessing their long-term retiree health strategies due to the PPACA.”

Aon says more than a quarter of companies would consider a retiree health care settlement strategy for all or a portion of their retiree group, “if the market environment could support it on a cost-effective basis.”

“Companies appear to favor “a retiree benefit ‘buy-out’ that enables organizations to fully or partially eliminate their ongoing retiree medical commitment.”

Examples include:

-Purchasing life annuities to provide a fixed-income stream in lieu of ongoing medical coverage;

-Establishing and funding a VEBA trust to support continued retiree benefits;

-Making direct cash lump-sum payments to retirees.

“Of those companies that have already decided to make strategy changes for their post-65 retirees, more than 40 percent have moved forward with one that will direct retirees to the individual market for coverage, oftentimes accompanied by a defined contribution subsidy. Of those companies expecting to make changes to their post-65 retiree strategies in the future, more than half indicate strong interest in this approach,” Aon reports.

“With the PPACA legal and political landscape generally clarified, employers are looking to control cost, manage risk and source coverage through the most efficient means possible,” said Maureen Scholl, CEO of Health Care Exchanges for Aon Hewitt.

“Individual market-based retiree health care sourcing strategies can create significant savings opportunities for all stakeholders. We expect to see many employers apply these strategies where possible and supplement them with modified group-based programs for those retiree populations where individual strategies do not make sense.”




Social Security: It’s Not All Gloom and Doom

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It happens every year, just like the State of the Union address. The board of trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds sends an update on how things are going to the president and Congress.

This year’s report, released May 31, is not exactly considered “light” reading at a hefty 254 pages. It is the 73rd such document created by an ever-changing board of trustees.

The release of this document is always a newsworthy event. Each year, it provides fresh insight into two of the most important government programs in existence in the United States. Statistical evidence in this report for year-end 2012 confirms that:

1. Social Security benefit payments are made to about 57 million people — 40 million retired workers and their dependents, 6 million survivors of deceased workers, and 11 million disabled workers and dependents of disabled workers.

2. Approximately 161 million people paid taxes into the Social Security system.

3. The Social Security system paid out $786 billion to covered workers.

To put things in perspective about the importance of this program, the number of people who voted for either President Obama or former Gov. Mitt Romney in 2012 is about equal to the number of people who pay taxes into the Social Security system.

The trustees’ report states that the system now pays out more in benefits than it receives from the combination of the FICA taxes and interest on its investments. The trustees project that the combined Retirement and Disability Trust Fund will be exhausted by 2033. By the way, the trustees’ report for 2011 reported the same thing.

Doom and gloom? Is 2033 the end of the road for all the people paying into the system? Is taking as much as one can from the system now a good idea since it will all be gone by 2033?

Fortunately, the trustees’ report also offers a little good news!

A very important quote from page four of the report states, “At the time of reserve depletion, continuing income to the combined trust funds would be sufficient to pay 77 percent of scheduled benefits.”

Look at this from a different perspective. If nothing is done to fix the system, it will not be gone, but people will have to take 23 percent less in benefits. The good news is that there are many ways to fund the shortfall.

Some of the ideas under consideration include increasing the full retirement age, increasing the FICA wage base, increasing the Social Security tax rate and/or reducing the payments by means-testing.

Clearly, some combination of each will fix the problem and provide benefits for th next 75 years.

Remember that the number of people who vote for elected officials is about the same as those who pay into the Social Security system. It is clear Social Security benefits are here for the long-term because those voters like and depend on Social Security.

Changes are coming, but the basic integrity of the system is intact.

Look for the trustees’ report at this time next year. We are moving in the right direction if the life of the trust fund extends to 2034, 2035, 2036 or beyond. On the other hand, if the numbers head lower, it is imperative to let our elected officials know the time to fix the problem must not be delayed.

When you combine legislative corrections with individual initiative, retirement is really not a doom-and-gloom story.

What is a doom-and-gloom story is failing to act at all. It’s just a matter of being active on both fronts to make sure it does not happen.