Archive for February 12th, 2010

Humana Announces New Form 500 Reporting Requirements

Friday, February 12th, 2010

Revisions to Department of Labor regulations require carriers to disclose more information to ERISA employers about broker compensation. The goal is to provide more transparency about what carriers pay for services. As a result, Humana now must include the value of indirect expenses such as trips and entertainment along with reporting on direct expenses such as commissions and bonuses. Employers must report this information when they file their ERISA Form 5500.

Humana’s reporting on Form 5500

We modified our systems to start reporting Jan. 1, 2010.

We will implement the new regulations using these guidelines:
  • For each expense related to a broker or a consultant, Humana will determine what portion of the expense is related to existing accounts and assign the percentage of the total expense that is reportable.
  • If the reportable portion of the expense is related to a general discussion of many existing clients, then the expense will be allocated across the entire book of business, then only the portion allocated to ERISA employers will be reported.
  • Humana will report on indirect expenses related to existing customers. If the expense is related to general education, new business development, or a specific new business prospect, the expense will not be allocated to other customers.
  • The last step is to aggregate all of the reportable expenses to each ERISA eligible employer to see if the total meets the minimum expense test provided by the Department of Labor for reporting. With the new regulations, we now must also report the value of:
    • Gifts, meals, and entertainment valued $10 or more if the total equals at least $100 per person, per calendar year
    • Individual items valued at $50 or more regardless of the total annual value

Examples of how expenses will be reported

Dinner to discuss specific ERISA accounts

A Humana associate has dinner with “Broker Jones” to discuss the renewals for three accounts. All of the accounts are ERISA accounts. The total expense is $300. The Humana associate will report the $300 expense, and at the end of the plan year Humana will report the $100 expense to each of the three ERISA account on their 5500 information.

Dinner to reward business

A Humana associate spends $300 taking “Broker Smith” and his wife out to dinner and entertainment to thank him for his business. The $300 will be divided by the total number of accounts in the broker’s book of business. Broker Smith has 10 accounts with Humana, so the reporting basis is $30 per account. Only four of Broker Smith’s accounts are ERISA eligible; those four will receive $30 reporting of indirect expenses at the end of the plan year.

Educational seminar about Humana’s new products and services

Humana hosts 15 brokers at a daylong seminar to learn about healthcare reform as well as Humana’s products. Some of the brokers are new to Humana and some have long-standing relationships. The event costs $15,000. Since the event is educational and not related to specific customers, the expense is not reportable on any customer’s 5500 information.

Top Health Insurers Profits Climbed 56% in 2009

Friday, February 12th, 2010
08:27 AM CST on Friday, February 12, 2010

Los Angeles Times

WASHINGTON – As the nation struggled last year with rising health care costs and a recession, the five largest health insurance companies racked up combined profits of $12.2 billion – up 56 percent over 2008, according to a new report by a liberal health care coalition.

Based on company financial reports for 2009 filed with the Securities and Exchange Commission, the report said insurers WellPoint Inc., UnitedHealth Group, Cigna Corp., Aetna and Humana Inc. covered 2.7 million fewer people than they did the year before.

The report Thursday also said three of the five insurers cut the proportion of premiums they spent on their customers’ medical care, committing relatively more to salaries, administrative expenses and profits.

Prepared by Heath Care for America Now, a coalition of liberal advocacy groups and labor unions, the report was aimed at bolstering the drive by Democrats to complete work on a health care overhaul, which insurers have vigorously opposed.

Industry representatives Thursday criticized the report’s approach, pointing out that 2008 was a bad year financially across many industries, skewing the 2009 comparison.

“It is disingenuous to look at the profits at one company today compared to where it was in the depth of a recession,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s Washington-based lobbying arm. The companies’ 2009 profits are nonetheless intensifying pressure on an industry already under attack for raising premiums and denying coverage to millions of Americans.

“That’s why we need health insurance reform today in this country and why we are going to continue in the Congress to work on this until we see it through,” said Rep. Rosa DeLauro, D-Conn.

Editor’s Note: This article was sent to us by our undercover operative in Dallas, a San Benito native who has made good in the Big City. Rumor has it that he is directly related to Baldimar Huerta, better known as Freddy Fender of country western fame. Forgoing a lucrative career as a professional bull fighter based out of Tamulipas, Mexico, Big Al heads up the Dallas office of a major stop loss carrier. Keep them coming Al!