Monthly Archives: September 2013

Defined Benefit or Defined Contribution-what does it all mean?

Most employers choose the health insurance and/or other insurance plan or plans they offer their employees together with the level of contribution to the employee benefit program- generally a % of the Employee only premium(“Defined Benefit”).

As health insurance costs have greatly increased over the past few years employers have increasingly been looking at a “Defined Contribution” method which not only saves them money BUT generally provides a higher level of insurance plan coverage and gives the employee greater freedom regarding that insurance coverage- its their plan and their coverage and they can take it with them if they move from their current job or company!

Defined contribution plan allows the employer to contribute any specific amount to employees’ health care costs (including individual insurance), and gives employees access to individual health insurance subsidies through the new health insurance marketplaces/exchanges as well as the other PPACA qualified plans direct from insurers or through a qualified insurance agent/broker

In”Defined Contribution” the employer chooses what monthly cash level of contribution they will make to all FT ( part time employees can also be included if desired) employees for health ( and any other type of insurance-dental, vision, life,etc). The employees can, as of 10/1/2013 go to the individual marketplace/exchange ( to make sure that they get their tax credit or cost allowance payments- if qualified) or any qualified insurance broker/agent or any insurance company to get quotes for qualified PPACA health insurance plans and they will choose whichever plan suits them and and their family best.

The employer puts in place an HRA (Health Reimbursement Arrangement) or similar type plan so that they can reimburse the employees for their required portion of the employee’s health insurance plan or other insurance premium so that it is tax free to the employees and deductible by the employer.

It may also be possible to provide different levels of contribution to different type of employees!!

Much has been written about this program which has been either mistaken or wrong and it requires a professional benefits manager to organise the appropriate paperwork,etc. We use an organization from Tucson who are highly recommended, top class and work countrywide with moderate fee levels!

Eric’s insurance WEB site

Delay for large groups- 50 or more employees!

The announcement by HHS deferring the start of the “large group” employer mandate also known as “pay or play” – (more than 50 employees,etc) PPACA provisions does not affect:-

the individual mandate,
the individual health insurance tax subsidies, or
the federal or state health insurance Marketplaces AND also for small groups the SHOP marketplaces which are all scheduled to take effect 1st January 2014 while the marketplaces will be open 10/1/2013!!.

Marketplaces including SHOP will be available online, by phone, the telephone or through the mail.

We have the new plans and the individual tax credit and copayment calculators for all individuals ready now so that everyone can see what type of assistance they might be able to get on 1/1/14 when PPACA will start!

REMEMBER– the Health Insurance Marketplaces ( Exchanges) including SHOP will be open October 1, 2013!!.

Anyone can use a qualified insurance agent/broker at NO COST for the individual and group (SHOP) marketplaces.

Eric’s insurance web site

COBRA APPLIES

Recently, the delay of the large employer mandate or “pay or play” and seeming disarray over implementation of the state insurance exchanges have underscored the confusion surrounding the Patient Protection & Affordable Care Act.

A lengthy list of new rules joins existing regulations that have governed the administration of health plans for years. Regulatory guidance has been uneven, and just how the PPACA affects longstanding law – including COBRA – has appeared unclear.

There is the misperception that COBRA no longer applies. On its website, The Department of Labor, the federal agency that regulates COBRA, states: “PPACA did not eliminate COBRA or change the COBRA rules.” Employers need to continue complying with COBRA.

Misperceptions stem from the misunderstanding that exchanges will eliminate the need for COBRA. Yes, the PPACA requires that exchanges be operational in states by Oct. 1, 2013. But this will be another option, not a replacement, for qualifying individuals who otherwise lack health insurance and also qualify for COBRA.

It will depend on the need.If you have a rich plan, then those who exit, but need and use health care, are probably going to stay onboard. They need that kind of coverage. Driving that is whether or not platinum plans under the exchanges, for instance, turn out to be as good as COBRA.

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Eric’s insurance web site