Carter's Benefits

eNewsletter Volume 4, Issue 1 January 2011

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Happy New Year

Last month we had a glitch with our mail server and some of our newsletter were not delivered. I am including these few paragraphs from the December 2010 newsletter since they are so important for 2011.

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.

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.

Also for the majority of individuals, your deductible resets January 01 each year. This question seems to always come up at the beginning of every year. There are some exceptions to the rule, but generally speaking most individuals deductibles will reset every year on January 01. If in doubt, check with your policy or your employer.

Recent News

  1. Big Changes Coming To Flexible Spending Accounts.
  2. Key Provisions Of Healthcare Law To Take Effect Jan. 1
  3. Increasing Number Of Small Businesses Providing Health Benefits To Employees.
  4. HHS Unveils New Rule For Insurance Premium Hikes.
  5. Study Shows Baby Boomers Would Benefit Most From Healthcare Law.
  6. Federal Judge Rules Insurance Mandate In Healthcare Law Unconstitutional.
  7. HHS, Walgreens Working To Provide Free Flu Vaccines For Uninsured.

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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Key Provisions Of Healthcare Law To Take Effect Jan. 1
The Hill (12/29, Millman) reports in its "Healthwatch" blog, "Key parts of the new healthcare law will go into effect on Jan. 1, just before a Republican-controlled House returns to Washington." Democratic lawmakers "frontloaded the law with a number of consumer-protection related provisions that they expect will boost support for the overhaul," such as "a requirement for healthcare plans that spend less than 80 percent of premiums on healthcare services to provide rebates to customers," and help for seniors who fall into the Medicare "donut hole." In fact, over "20 provisions of the reform law go into effect in 2011," but "Republicans taking over the House have vowed to repeal the healthcare law," or at least "try to withhold funding for the new law, which could impede its implementations." The Wall Street Journal (12/28, Hobson, subscription required) also covered the story.

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Increasing Number Of Small Businesses Providing Health Benefits To Employees.
The Los Angeles Times (12/27, Levey, Times) reports, "Major insurers around the country are reporting that a growing number of small businesses are signing up to give their workers health benefits, a sign of potential progress for the nation's battered healthcare system." This "increase, although not universal, has brought new security to thousands of workers, many of whom did not have insurance or were at risk of losing it." One "important selling point has been a tax credit that the nation's new healthcare law provides to companies with fewer than 25 employees and moderate-to-low pay scales to help offset the cost of providing benefits."

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HHS Unveils New Rule For Insurance Premium Hikes.
On Tuesday, HHS unveiled a long-awaited proposal to help regulate rate increases in the individual insurance market. Media sources characterized the regulation as not being particularly onerous for insurers, whose stocks rose following the announcement. The New York Times (12/22, A21, Pear) reports, "In a move to protect consumers, the Obama administration said Tuesday that it would require health insurance companies to disclose and justify any rate increases of 10 percent or more next year. State or federal officials will review such increases to determine if they are unreasonable, the administration said in proposing a regulation to enforce the requirement." This much-anticipated change "represents a major expansion of federal authority in an area long regulated by states." HHS Secretary Kathleen Sebelius "said the reviews would 'help rein in the kind of excessive and unreasonable rate increases that have made insurance unaffordable for many families.'"

        Politico (12/22, Kliff) reports that although double-digit "rates will not automatically be deemed 'unreasonable,' either state or federal regulators will have to review any proposed increases above the 10 percent threshold to determine whether they are justified." And, "while HHS does not have the power to deny or reject unreasonable rate increases, administration officials believe the greater transparency and scrutiny will discourage insurers from jacking premiums dramatically." According to Jay Angoff, director of the Office of Consumer Information and Insurance Oversight, "This does not give HHS authority to disapprove rates. ... On the other hand, it does something arguably more important: make insurers make public their proposed rate increases and the assumptions they're based on. If they know that they will become public, insurers will make sure their assumptions are reasonable and that they're submitting moderate increases. It gives greater incentive to improve quality and drive down cost."

The Wall Street Journal (12/22, Adamy, subscription required) says that according to HHS estimates, about 5,343 requests for rate increases would be impacted by the new rule, and approximately 773 of them may require a review. HHS also noted that ultimately, the 10% guideline would be replaced with specific ones for every state. Nevertheless, HHS underscored the fact that approving or denying rate increases is still the responsibility of states, not the federal government. The department said, "HHS's determination that a rate increase is unreasonable would not have any effect on the issuer's right to implement the rate increase, which is entirely a matter of state law."

        The Hill (12/22, Millman) quotes Sebelius in its "Healthwatch" blog as saying, "The federal government won't be doing review of rates where there is a thorough process at state level. ... We won't sit on insurance commissioners' shoulders and question what they're doing." But, "HHS can intervene and institute its own review if the department determines a state doesn't have an effective program in place."

        The Washington Post (12/22, Aizenman) notes, "Many states also have laws that do permit their insurance regulators to reject rate increases. And the federal health-care law was designed to spur more states to follow suit by offering $250 million in funding to help them strengthen their rate review systems." To date, "45 states have received $46 million in grants," and "eventually, state officials will also have the option of barring insurers that show a pattern of unreasonable rate increases from selling their plans on state-run exchanges."

        The AP (12/22) reports, "This rule only affects policies sold in the individual and small group markets. Steep hikes in those markets have been a hot topic since early this year, when reports of Anthem Blue Cross rates rising as much as 39 percent in California helped reignite stalled health care overhaul legislation." Notably, the "insurer later withdrew the increase."

        Reuters (12/22, Heavey), Bloomberg News (12/22, Armstrong), the CNN (12/22) "The Chart" blog, the NPR (12/22, Rovner) "Shots" blog, the Forbes (12/22, Whelan) "Health Dollars" blog, and Modern Healthcare (12/22, Barr, subscription required) also cover the story.

        Sebelius Praises Rhode Island's Efforts To Rein In Insurance Hikes. The Providence Journal (12/22, Salit) reports, "Federal officials held up Rhode Island as a model of health-insurance regulation and shined the spotlight on state Health Insurance Commissioner Christopher F. Koller during a news conference Tuesday announcing proposed regulations to better scrutinize insurer requests for rate hikes." Notably, HHS Secretary Kathleen Sebelius "invited Koller to Washington for the unveiling of a plan that would trigger a public review of rate-hike requests of 10 percent or more. States such as Rhode Island would continue to conduct their own reviews, she said, but the federal government would step in to analyze the validity of such requests in states lacking such rigorous regulatory processes."

        Former NAIC President Says HHS Needs To Clarify New Rule. The Hill (12/22, Millman) reports in its "Healthwatch" blog, "Federal regulators will need to flesh out more details on how states should set up acceptable processes to review unreasonable health insurance premium hikes, a National Association of Insurance Commissioners (NAIC) official said Tuesday." Although the "proposed rule describes four criteria for an effective review process...NAIC past president Sandy Praeger said the organization will work with HHS to develop clearer guidance." Praeger said, "We'll know at some point in the future. ... There may be some additional guidance from HHS about what they want states to be doing, and I think that's an ongoing process."

        Advocacy Group Says Proposed Rule Should Be Tougher. The Hill (12/22, Pecquet) reports in its "Healthwatch" blog, "A California-based consumer advocacy group said Tuesday that federal regulations on health insurance rates should be 'strengthened' to 'prevent insurers from imposing unreasonable premium increases on consumers.'" According to Consumer Watchdog, the new rule unveiled by HHS on Tuesday "doesn't go far enough...and states should pass legislation enabling them to modify or deny rates deemed excessive." Carmen Balber, of Consumer Watchdog, stated, "Tuesday's regulations give regulators a 'bully pulpit' to shame insurers into offering lower rates...but 'at the end of the day, consumers will not be protected unless regulators also have the authority to reject unreasonable rates.'"

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Study Shows Baby Boomers Would Benefit Most From Healthcare Law.
CQ HealthBeat (12/15, Norman, subscription required) reports a Commonwealth Fund study shows baby boomers "have the highest rates of unemployment among working-age adults and are increasingly losing their health insurance," so "that generation stands to benefit from the new health care law." About "8.6 million adults between the ages of 50 and 64 lacked insurance in 2009, an increase of 1.1 million over the previous year, the study found. Another 9.7 million people in that age range have such high out-of-pocket costs that they are considered underinsured." Early provisions "of the health law that might help this group include the creation high-risk pools for people with pre-existing conditions; the ban on lifetime coverage limits and the phase-out of annual limits; coverage of preventive services; an early retiree reinsurance program; and a new long-term-care insurance program, the report said."

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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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HHS, Walgreens Working To Provide Free Flu Vaccines For Uninsured.
CQ HealthBeat
(12/18, Adams, subscription required) reported that HHS "is partnering with Walgreens pharmacy to provide about 350,000 free flu vaccines in 15 US cities in an effort to promote public health and reduce racial or ethnic health disparities. The project is aimed at encouraging people without insurance coverage for flu shots to get them." HHS Assistant Secretary for Health Howard Koh said, "Even if you don't have a regular doctor or nurse, you can get a flu vaccine." CQ explained that the "project is a demonstration project, not a universal program offered nationwide. Walgreens President of Pharmacy Services Kermit Crawford said the company is offering $10 million for vouchers," which "will be good for a free shot that people can use initially in eight cities and, starting next week, an additional seven areas."
        MedPage Today (12/17, Neale) reported, "People living in 15 underserved US communities will be able to get flu shots for free thanks to a partnership between the Department of Health and Human Services and Walgreens to provide around 350,000 doses of influenza vaccine." This "demonstration project, started with a $10 million donation from Walgreens, will launch next week by distributing vouchers in eight US markets -- Atlanta, Bronx, N.Y., Chicago, Houston, Kansas City, Mo., Newark, N.J., Oakland, Calif., and Philadelphia."

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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

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