Many Americans are upset that older people are going to face a ‘age penalty’ under President Trump’s healthcare plan, but not everyone sees the situation as problematic. In fact, some experts think that it won’t be the unfair cost that Americans fear it will be.
Rob Wilson, President of Employco USA and group employment insurance expert says, “For many years, insurers have been able to charge older people higher premiums, as it is understood that they will generally have higher health costs and require more doctor’s visits. This reality has been folded into insurance costs for older people for a significant period of time, so President Trump’s so-called age penalty won’t be changing things too much. The only difference is that Obamacare only allowed insurers to charge older folks three times as much as they what they would charge other people for the same coverage, whereas President Trump’s plan allows for them to charge up to five times as much.”
Still, Wilson doesn’t believe that this means that millennials will be getting a free ride, as he explains that President Trump’s “continuous health insurance coverage incentive” will hit younger people the hardest.
“Younger people are disproportionately likely to suffer a lapse in insurance coverage,” says Wilson. “And President Trump is asking that people who drop in and out of the insurance market be faced with penalties for doing so. This continuous coverage incentive applies to anyone who opts to go without insurance for longer than 63 days and then desires to resume coverage. The idea is that young people can’t cherry-pick when they want insurance, leaving older folks stuck with a hefty bill.”
New Survey Reveals that Middle-Class Families Must Choose Healthcare Over Food, Clothes
Healthcare trends expert discusses these disturbing findings
Recent numbers show that middle-class families have increased their spending on healthcare by 25 percent since 2007. As these expenditures have increased, families have tightened their belt in other areas—with spending dropping on essentials such as food and clothing.
“These numbers are very disturbing,” says Rob Wilson, President of Employco USA and healthcare trends expert. “The Affordable Care Act was supposed to offer healthcare savings for Americans across the board, but instead it seems that middle-class families have been the hardest hit by our unstable economy.”
Wilson says that many Americans are reporting that their premiums are now so high that they cannot afford to go to the doctor. “With Obamacare, Americans are now facing deductibles of $3,000 a year or more,” he says. “Meanwhile, other Americans are losing their insurance as companies are forced to shut down as a result of the Affordable Care Act—not to mention, the amount of jobs that are going to be lost due to these company shutdowns.”
Wilson continues, “The whole point of President Obama’s plan was so that people would not have to choose between a doctor’s visit and paying for groceries. But now, thanks to these high premiums, we are right back in that same situation.”
7.5 million Americans were required to pay a penalty last year due to not having health insurance. This is a higher number than the government predicted, and many worry it is a sign that the country is not prepared for Obamacare.
Rob Wilson, CEO of Employco USA, says “The Affordable Care Act is causing issues across the board. Not only did the IRS collect $1.5 billion dollars in penalty fees from hardworking Americans, but many people also were confused about filling about their tax forms. Taxpayers who paid a penalty to the IRS should have claimed an exemption on their tax forms, but thousands and thousands did not, simply because they were not informed. As a result, they overpaid the government on their taxes.”
Additionally, about five million Americans claimed no health insurance status on their forms, leaving the government struggling to find out how to categorize these folks. “We don’t know how millions of Americans in this country are able to pay for healthcare, or if they are receiving healthcare. It’s scary business.”
How to approach health benefits plans on a tight budget
The time to renew health benefits plans is upon many businesses. With all the cutbacks and troubling economic news employers have had to contend with lately, the option of varied benefits choices is a welcome one. The variety of plan structures and additional programs that exist allow employers and their employees to take greater control of a system where costs have historically been experiencing double-digit increases for some time now.
“When business owners face a health benefits renewal with an increase of 10 percent, even 20 percent, what can they do?” says Rob Wilson, president of Employco Group. “Neither the business owner nor the employees have discretionary dollars for that now.”
Smart Business asked Wilson about ways to lessen the impact of rising benefits costs by offering employees more choices.
How can business owners approach open enrollment season?
Employers can decide to absorb premium increases if they’re in the financial position to do so. If there’s absolutely no room in the budget for an increase in premium, they may consider passing it along to the employee. Another consideration may be to split the increase between the employer and employee so both parties can shoulder the burden.
Employers can also quote other insurance carriers. It is typical in the industry for carriers to have different sales strategies, depending on where they are in the business cycle. Premiums may be higher at certain times to increase revenue and lower at other times to obtain more market share. Since each carrier has its own approach, it may be possible to find the same coverage at lower premiums if you take the time to look. It is a good idea to compare rates with different carriers at least once a year.
What are different plan structures to consider?
It’s always beneficial to consider different plan structures whether you’re staying with the same carrier or switching. Do a comparison between a preferred provider organization (PPO) plan and a health maintenance organization (HMO) plan or consider offering both.
Conduct a thorough evaluation between plans in terms of co-pay, deductible, coinsurance, prescription drug card and pick the plan that’s best suited for your group and budget. You may be able to significantly reduce your premiums by increasing your deductible, co-pay, co-insurance and/or prescription drug card.
Keep in mind employers have the option to review their policies every year before renewal so changes are not permanent and may just be for the upcoming year.
Aside from the traditional PPO and HMO plans, are there other non-conventional options that can be considered?
The health savings account (HSA) is becoming more popular. It’s a high-deductible plan, so typically the premium would be lower. Other benefits of HSAs are:
Tax deductions when individuals contribute;
Tax-free withdraws for qualified medical expenses;
Portability — the account belongs to the individual.
Another option to help employees with health-related expenses is a flexible spending account (FSA). An FSA account allows employees to put away pretax dollars that can be applied toward employee-chosen medical expenses such as premiums, copays, deductibles, prescriptions, over-the-counter medicines or even day care.
For example, if your employees pay $500 toward health care premiums, deductibles, etc., using an FSA, they can use pretax dollars instead of after tax dollars. That equates to a tax savings of $178 for every $500 of premiums paid.
Are there options specifically for small businesses?
Small to midsize businesses may choose to look into industry associations or partnerships with human resource organizations (HRO). By joining an HRO, businesses that might otherwise be too small to obtain competitive pricing can now get the same buying power as bigger companies. When an employer joins an HRO and bands together with all the other companies comparable in size, the number of the group increases exponentially to hundreds or thousands of employees. The buying power now lies in the hands of a much bigger pool, which, to insurance carriers, is more attractive. The pricing may be more competitive through an HRO than on a stand-alone basis since the insurance is bought in volume at a reduced rate.
How should employers communicate with employees about plan changes?
Employers need to communicate honestly with their employees during open enrollment time, especially if there will be changes in the benefits plans. If, due to the decrease in revenue, the existing PPO plan has to be changed to a HMO plan or the deductible increased, reassure the staff that these changes may not be permanent.