Carter's Benefits

eNewsletter Volume 3, Issue 12 December 2010

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If you have any unused money in your Flexible Spending Account (FSA) now is the time to look around for ways to use it up so you do not loose it. Now is also a good time to make sure you have funded your Health Savings Account (HSA) if you have one of these instead of an FSA. You can fund up to $3050 for an individual, $6150 for a family, and if you are over the age of 55 you can add an additional $1,000 as a catch up contribution.

Don't forget, starting January 01, 2011 you will no longer be able to use your FSA, HSA, HRA or Archer MSA funds for over the counter medicines, unless you have a doctor prescription. Now is a good time to stock up on OTC medicines before the new law takes effect.

Be aware starting January 01, 2011 the penalty for distributions from HSAs that are not for qualified medical expenses increases from the current 10% to 20%.

Now is a good time to start thinking about the small business tax credit. Eligible small business will begin to qualify for phase one of the small business premium tax credit. Eligible small businesses (those that have no more than 25 Full Time Equivalent Employees, pay average annual wages of less than $50,000 and provide qualified coverage) are eligible. Small employers will receive a maximum credit, based on number of employees, of up to 50% of premiums for up to 2 years if the employer contributes at least 50% of the total premium cost.

Finally, we need to remind you to be sure and comply with they myriad of new notices you are required to provide your employees as a result of recent legislation such as:

Medicaid and the Children's Health Insurance Program (CHIP)
Model Notice can be found at

Special Enrollment Notice of Dependent Coversage for Children to Age 26
Model Notice can be found at

Special Enrollment Notice for Individuals Who Reached Lifetime Limits
Model Notice can be found at

If your plan is grandfathered, Notice Regarding Grandfathered Plan Status
Model Notice can be found at

Notice of Patient Protections (this notice is more of a carrier notice and should likely come from the carrier).
Model Notice can be found at

Individual Coverage Creditable Coverage Disclosure Notice for individuals eligible for Medicare
Model Notice can be found at

Recent News

  1. Big Changes Coming To Flexible Spending Accounts.
  2. Federal Judge Rules Insurance Mandate In Healthcare Law Unconstitutional.
  3. Exchanges Keep Rolling Along.
  4. HHS Definition Of "Unreasonable" Insurance Rate Hikes Expected Soon.
  5. NAIC To Vote On Rules For Standardizing Health Policy Descriptions.
  6. Six Health Systems To Collaborate On Improving Care, Cutting Costs.
  7. Lawmakers To Seek Repeal Of Small Business Tax-Reporting Provision Next Year.
  8. HHS Releases New Guidance For "Mini-Med" Health Plans.
  9. AEI Says Defined Contributions May Help Lower Healthcare Costs.
  10. Data Show Drop In US Life Expectancy.
Big Changes Coming To Flexible Spending Accounts.

HealthDay (12/8, Goodwin) reported on a significant change coming next year, when consumers will "no longer be able to pay for most over-the-counter medications using a flexible spending account (FSA)." This "means if you're used to paying for your allergy or heartburn medication using pre-tax dollars, you're out of luck unless your doctor writes you a prescription." One concern "is there's the potential for people to head to the doctor asking for prescriptions for drugs they used to buy without one, a costly move." The people who will most "feel the pinch are those with chronic health conditions who have lots of out-of-pocket costs."

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Federal Judge Rules Insurance Mandate In Healthcare Law Unconstitutional.

Media reports, including stories on all three network newscasts, depicted yesterday's court ruling on the healthcare reform law as a serious political blow for the Administration. While a number of analyses point out that the legal battle will -- as expected all along -- be decided by the Supreme Court, they also indicate that a high-profile political debate on the law -- which continues to be described as unpopular -- is not in the Administration's best interests.

The New York Times (12/14, A24, Stolberg) reports, "By the numbers, President Obama is beating opponents of his signature health care bill two to one in federal court. Of the three district court judges who have ruled on the merits of constitutional challenges to the landmark Affordable Care Act, two have sided with Mr. Obama." However, "from a political standpoint, the only case that really matters is the one Mr. Obama lost on Monday," and "Judge Henry E. Hudson's decision leaves the White House playing defense for the foreseeable future on an issue it once thought would secure Mr. Obama's legacy," providing "another rallying point for conservatives as they make the case that government is overreaching and must be reined in."

ABC World News (12/13, story 3, 2:30, Sawyer) referred to a "major legal blow" to "the historic healthcare reform law." ABC (Tapper) noted that "the healthcare bill that...Obama signed into law in March requires that every American who can afford it buys health insurance," and on Monday "Hudson...called that requirement 'unconstitutional.' What's called an individual mandate, he said, 'exceeds the constitutional boundaries of Congressional power."

The CBS Evening News (12/13, story 4, 2:25, Crawford) reported, "The White House hailed it as a once-in-a-generation reform," but "in a 42-page ruling Monday, a Federal judge in Virginia had another word for the landmark health care legislation: unconstitutional." NBC Nightly News (12/13, story 4, 1:35, Williams) called the ruling "a pointed reminder that the battle over healthcare is far from over." NBC (P. Williams) added that "while this doesn't stop the law for now, it does tee up a mammoth legal battle to come." The judge "endorsed the claim made by conservatives and Tea Party groups nationwide, that Congress did not have the power to pass the Obama health care law. It's a victory for the state of Virginia, which argued that the heart of the law requiring everyone to buy insurance was unconstitutional."

The AP (12/14, Sherman, Werner) reports that Obama's "historic health care overhaul" was "thrown into doubt by a federal judge's declaration that the heart of the sweeping legislation is unconstitutional," in a ruling that "handed Republican foes ammunition for their repeal effort." USA Today (12/14, Wolf, Biskupic) also reports that the ruling "boosted efforts by opponents who want it repealed, stripped of funding or struck down by the US Supreme Court, a battle that could take years."

The New York Times (12/14, A1, Sack) reports on its front page, "Thus far, judges appointed by Republican presidents have ruled consistently against the Obama administration while Democratic appointees have found for it." And "that has reinforced the notion -- fueled by the White House -- that the lawsuits are as much a political assault as a constitutional one."

The Washington Post (12/14, Aizenman) reports that for the Supreme Court, "the issue comes before a court evenly divided between liberals and conservatives, with moderate conservative Justice Anthony M. Kennedy often holding the deciding vote. So how might the justices rule? Both sides can point to precedents that bolster and hurt their chances on two key questions." Bloomberg News (12/14, Schoenberg, Fisk), the Washington Times (12/14, Seper), the Wall Street Journal (12/14, Adamy, subscription required), the Washington Post (12/14, Klein), The Hill (12/14, Millman) Healthwatch blog, The Atlantic (12/14, Good), the Boston Herald (12/14, Chabot, McConville), the NPR (12/14, Memmott) The Two-Way blog, the CNN (12/14, Mears) AC360 blog, the CNN (12/14) The Chart blog, the Forbes (12/14, Van Horn) Second Opinion blog, the New Republic (12/14, Chait), the Baltimore Sun (12/14, Cohn) Picture of Health blog, and the Time (12/14, Pickert) Swampland blog also report on the ruling.

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Exchanges Keep Rolling Along

HHS, along with the individual states and insurance regulators, continues to work to implement health insurance exchanges at the state level prior to the January 1, 2014 deadline spelled out in PPACA. This week, the HHS Office of Consumer Information and Insurance Oversight hosted more than 150 officials from 44 states and the District of Columbia for a two-day meeting to discuss exchange implementation issues in Washington, DC. State regulators attending the meeting reported that the sessions were more of an information exchange between the states rather than a source of advice and guidance from HHS. Read More

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HHS Definition Of "Unreasonable" Insurance Rate Hikes Expected Soon.

The Hill (12/17, Millman) reports in its Healthwatch blog, "Highly anticipated regulations defining what constitutes 'unreasonable' health insurance premium increases are expected any day now that federal regulators have sent them to the Office of Management and Budget for final review." The healthcare "law requires health plans to publicly justify 'unreasonable' rate hikes starting with 2010 plan years, and gives states power to shut health insurers out of state health insurance exchanges starting in 2014." It also "requires the Department of Health and Human Services (HHS) to establish a process for reviewing unreasonable premium increases," and several months ago, HHS Secretary Kathleen Sebelius "announced $46 million in grants to 45 states and the District of Columbia to strengthen their rate review processes."

        OMB Reviewing Regulation On Premium Rate Increases. CQ HealthBeat (12/17, Norman, subscription required) reports, "The Office of Management and Budget on Thursday was reviewing a regulation that would define 'reasonable' premium rate increases as well as the kinds of financial and other information that insurers with unreasonable increases would have to make public." The "regulation by the Department of Health and Human Services is required by the health care law...and its development is being watched closely by the industry, consumer advocates and states." HHS is also "considering which information to require from insurers, and it could include material that has not previously been readily available to the public."

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NAIC To Vote On Rules For Standardizing Health Policy Descriptions.

The Los Angeles Times /Kaiser Health News (12/16, Jaffe) reports, "Choosing a health insurance policy should be easier" with standardized information that the National Association of Insurance Commissioners (NAIC) is "expected to approve today." Under a provision in the ACA, insurers will be "required to provide their benefits information on a standardized chart" using plain English to "help shoppers understand and compare complicated policies." The provision directed the NAIC to "form a group to develop the materials and specified that the group include state insurance regulators, consumer and patient advocates, insurance companies and health care providers." After today's vote, the materials, which the working group "adopted unanimously," will be sent to HHS and the Labor Department.

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Six Health Systems To Collaborate On Improving Care, Cutting Costs.

The Hill (12/16, Pecquet) reports in its Healthwatch blog, "Six of the nation's leading healthcare systems announced Wednesday that they're banding together to share data on outcomes, quality and costs in a first-of-its-kind collaborative effort." These "six health systems -- Cleveland Clinic, Dartmouth-Hitchcock, Denver Health, Geisinger Health System, Intermountain Healthcare and the Mayo Clinic -- have a combined patient population of more than 10 million people. They'll be joining the Dartmouth Institute for Health Policy and Clinical Practice, a leading research institute that tracks disparities across the country in how patients are treated and at what cost."

        The AP (12/16) reports, "Though several of the institutions have been working together for years, the new collaboration represents the first time they've shared so much data or turned it around so quickly." Notably, beginning "with knee replacements and moving on to other common conditions and treatments, the participants will analyze the data and the spread the word about which approaches result in the best outcomes at the lowest costs. The goal is to spend six months on each condition then move on, said Dr. James Weinstein, director of the Dartmouth Institute for Health Policy and Clinical Practice."

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Lawmakers To Seek Repeal Of Small Business Tax-Reporting Provision Next Year.

CQ Today (12/14, Ethridge, subscription required) reports, "Although both Democrats and Republicans have pledged to repeal an unpopular tax-reporting requirement in the health care overhaul, members acknowledge they have run out of time to reach an agreement this year." Still, "lawmakers on both sides say they will return to efforts to abolish the requirement soon after Congress reconvenes next month." The lawmakers proposed "amendments in November to repeal the provision, which requires businesses to file a 1099 form with the IRS for every vendor they pay more than $600 to in a year."

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HHS Releases New Guidance For "Mini-Med" Health Plans.

The National Journal (12/10, DoBias, subscription required) reports that on Thursday, HHS "released new guidelines that require issuers of so-called 'mini-med' plans to explicitly and 'in plain language' explain the financial and coverage limitations inherent in them. Insurers must also direct consumers to a government website,, where they can obtain additional information about the product types." The department "also issued a guidance that severely restricts the sale of such plans by the 222 insurers, unions and employers offer the more-restrictive plans." Commenting on the announcement, HHS Secretary Kathleen Sebelius "said the decision is a direct benefit from the new health care law," and added, "Now, we're taking an unprecedented step to ensure consumers are informed when they purchase policies that offer limited coverage."

        The Hill (12/10, Millman) reports in its Healthwatch blog, "Health insurers offering so-called 'mini med' plans must notify customers in plain language and within 60 days that their insurance plans offer extremely limited benefits, according to new Department of Health and Human Services guidance released Thursday." According to HHS, the "guidance...ensures that consumers in plans with low annual limits are notified of the quality of their health plan so that they can make informed decisions about whether mini-med coverage is right for them."

        CQ HealthBeat (12/10, Bunis, subscription required) reports, "Federal officials made it clear on Thursday that only under two limited circumstances can insurers who have received waivers to continue offering so-called 'mini-med' health plans sell more of these policies." And, "as of 2014, these mini-med plans will be outlawed. 'Unfortunately, today,' HHS Secretary Kathleen Sebelius said in a news release, 'mini-med plans are often the only type of private insurance available to some workers.'"

        The Chicago Tribune /Kaiser Health News (12/10, Appleby) notes, "Under the [healthcare] law, the Department of Health and Human Services can grant waivers for some policies if meeting the new limits would lead to significant premium increases or cause substantial numbers of workers to lose their insurance." To date, "222 insurers, unions and employers with policies covering 1.5 million people have been granted such waivers, including insurers Aetna and Cigna, and employers such as McDonald's, Waffle House and Darden Restaurants."

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AEI Says Defined Contributions May Help Lower Healthcare Costs.

CQ HealthBeat (12/10, Reichard, subscription required) reports, "Aiming to develop a more compelling alternative than proposals bandied about by Republicans so far, the American Enterprise Institute this week launched a 'Beyond Repeal and Replace' project that will emphasize rebuilding health insurance as a 'defined contribution' system." Notably, the "AEI approach appears to hinge on a single unifying idea to pull market-based changes together: defined contributions." AEI says that "it's easier to hold down costs if enrollees are given a fixed sum of dollars to buy coverage rather than a specific set of benefits. It allows Medicare, Medicaid, and employers to better predict and manage health care budgets. It gives people a pocketbook incentive to shop for plans that are a better bargain." It also "sharpens the marketplace pressure on insurers to line up doctors and hospitals that deliver more efficient care."

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Data Show Drop In US Life Expectancy.

The AP (12/10, Nano) reports, "US life expectancy has dropped slightly -- by about a month -- after mostly inching up for many years, the government reported Thursday." In fact, "the preliminary report indicates that a baby born in 2008 can expect to live to 77.8 years if current trends continue. That's down a bit from an all-time high of 77.9 years for 2007. A similar dip occurred in 2005, and life expectancy also dropped in 1993." The data were "released Thursday by the National Center for Health Statistics, which is part of" the CDC.

        Bloomberg News (12/10, Lopatto) reports, "Life expectancy of Americans fell for the first time in 15 years, as the nation's oldest adults died from heart disease, cancer and respiratory ailments, according to a report by the National Center for Health Statistics." This "drop in expectancy was largely the effect of increased mortality among the oldest adults -- those at least 85 -- and a rise in age-related ailments such as Alzheimer's, high blood pressure, kidney disease, flu and pneumonia, according to the report. Infant mortality declined, as did deaths among all age groups under 85." Report author Arialdi Minino said, "It's hard for us to tell exactly what's driving this," since the "number of older people who died 'has been going up consistently, and in this particular year, there was a little more of that than we usually see.'"

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How does Carter's Benefits help ?
We continue to stay on top of changes in this industry. In a consultative role, Eddie Carter has begun hosting live seminars to update employers and Human Resource Managers on these changes. If you would like to host a meeting with your local community or civic organization, please contact me for details.

Eddie Carter, Consultant Eddie Carter,
Benefit Consultant
If you have questions or would like more information please give us a call or send us an email.  Our email address is Questions@CartersBenefits.Com

Carter's Benefits
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