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  Writing a policy for a business for group medical with 130 employees.
 

Writing a policy for a business for group medical with 130 employees. They have 53 full time and 50 part time employees.
Prior to our meeting they thought they were ok because they had multiple companies and four management people insured under a group plan under a different corporation.
The owner cam to IHU to try to reduce the costs of a potential penalty under Obama care. The law pertaining to this size company in regard to number of employees has been delayed to 1/1/15.

The law pertains to businesses with 50 full time employees therefore no matter what he did he was over 50 employees because two 15 hour part time employees equals one 30 hour full time employee (30 hours)

Therefore no matter what he did he would be over 50 full time employees
Because he doesn’t have affordable and minimum essential benefits affordable means employees can pay no more than 9.5% of employee income) medical insurance
Minimum essential benefits as defined by the affordable care act or obamacare
Choices:

  • $2000 penalty (not tax deductible) for each full time employee IN EXCESS OF 30 EMPLOYEES, that doesn’t have affordable group medical plan under the new obamacare plan therefore he would have a nondeductible $46,000(23 employees * $2000) penalty for the year.
  • Offer a self-funded group medical plan (a plan with a high deductible where a portion of the premium sits in an account to pay claim up to reasonable number and a portion of the premium goes into an account to pay catastrophic claims above the deductible; if the money is used in excess of that money set aside, there is to the 53 full time employees that is affordable that is less than the $2000 per year penalty and they need a 50% participation rate of the 53 full time employees. The employees can pay up to 9.5% of their income for this plan

The employer felt, by offering a plan as described above he would have less turnover as his employees would think twice before leaving as none of his competitors offer health insurance.
Benefits:

  • Offer health insurance while competitors don’t
  • Higher quality employees
  • Employer saves about $20k per year

MHIP – Maryland Health Insurance plan
In the state of Maryland, individual medically underwritten health insurance policies cost roughly half the price of group medical plans. Group can be a business with two or more employees the group plans cost more because they cover all preexisting conditions right away.

Individuals cost so much because you have to be health to get one, a person could be turned down for diabetes, heart condition (diabetes that has kept the rates lower then group policies.
Benefits are essentially the same. On 1/1/14 the difference between the two goes away, which means anyone regardless of health will be able to buy an individual policy healthy or not.
Therefore if you think this fact through the first group of people that sign up will be all the people with medical problems and the last to sign up will be the healthiest people that can pay a $95 on year penalty or 1% of their income and not have insurance.

There is a six month open enrollment starting 10/1/13 – 3/31/2014, therefore people that didn’t buy individual insurance during that open enrollment and are not on a group plan will not be able to buy insurance until 10/1/14 with the exception of life changes (death of spouse, end of cobra)

MHIP ends for low-income people 12/31/13 and regular MHIP ends 6/30/14. These people will be eligible for a plan under obmacare under 1 of four plans under the new affordable care act that covers all preexisting conditions; many people with low to moderate incomes will be eligible for a subsidy through the Maryland health insurance exchange for this purchase.

IHU will be in a position to guide people through this change.

What they say – our health insurance is broken and inefficient broken and costly, people cant get medical insurance, pple cancelled when they get a claim, insuring millions more people brings down the cost

What do you say – Insuring more sick pple raises the cost, insurance doesn’t get cancelled when you bring a claim unless you lied, Maryland residents have not had a claim covering pre-existing conditions because eof MHIP and small group medical plans available.

All individual medical policies end on 12/31/13

LIFE INSURANCE
Case 2
Universal life policy that was written in the 80’s with no gaurentee to stay in force, the policy needed ^5 to work; the equity in the policy will be zero in 17 years and the policy will be lost.

His choices are :

  • Do nothing
  • Cancel the policy and take current equity
  • Transfer equity into a new policy gaurenteed to age 120
    • Cost is slightly high approx5% because of good health

A neighbor carries a universal life policy $750k; that is impacted by interest in a dramatic way. If he pays his premium his policy will be lost in 12 years.
Case 3
Mother buys universal llifepolicy in the 80’s for two children paying $100 year for each, policy will run out when these two children, now adults will be in  there early 80’s. to keep the policy to 95, not gaurenteed will cost $400 a year for each. For the daughter, by transferring the equity in the policy to a new policy which is 50% more insurance the cost is $60 a year gaurenteed and paid up in full to age 65. For the son, the cost is a little more as females live longer.

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