LOS ANGELES (AP) — Another health insurer has withdrawn a proposed rate hike after an independent review discovered errors in the complicated calculations the company used to justify boosting 65,000 policyholders’ rates by an average of 19 percent.

The review ordered by a California regulator discovered Aetna Inc.’s proposal incorrectly multiplied when converting the monthly premium into an annual one, and the rate increase was not compounded correctly.

The mathematical errors resulted in inflated rate hikes, but it’s unclear how far off the rates were because the insurer withdrew the rate hike before the review was completed, Department of Insurance spokesman Darrel Ng said.

The review was part of a broader regulatory move by Insurance Commissioner Steve Poizner, who earlier this month ordered independent reviews of all rate hikes for individual policies at the state’s four biggest insurers.

The top four companies control 90 percent of the market for the 1.1 million individual health policies regulated by Department of Insurance. The Department of Managed Health Care regulates another 1.4 million such policies.

In a statement, Aetna said it conducted a third round of internal reviews of the rate hike and “found a miscalculation not previously detected. This was simple human error.”

A proposed increase from Blue Shield is currently under review, and future increases from Anthem Blue Cross and Health Net Inc. will be reviewed.

In California, insurers are required to spend 70 cents of every dollar collected in health insurance premiums on medical benefits.

In April, Anthem Blue Cross withdrew a plan to hike rates 39 percent for some customers after facing similar scrutiny and broad public criticism.

Anthem’s rate hike was repeatedly held up by President Barack Obama as an example of a broken health care system in the run up to the vote on the federal health care reform bill.

Anthem withdrew its hike one day after its parent company, Wellpoint Inc. of Indianapolis, announced its first-quarter profit soared 51 percent.

Poizner has pledged more transparency in the process of health insurance rate hikes because two of the four major health insurers have submitted erroneous filings.

“I have decided to take the exceptional step to post future individual health insurance filings on the Department of Insurance’s website,” said Poizner. The move will “allow any member of the public to scrutinize these rate filings and will, in the end, minimize rate increases by keeping markets as competitive as possible.”

(This version CORRECTS number of policies regulated by the Department of Insurance.)

Fact Check: Health care benefits not taxable but are reportable

FACT: The IRS needs to know who doesn’t have insurance as of 2014.Posted: June 20, 2010 – 3:25am

Times-Union readers want to know:

Is it true that we will have to pay income tax on the health care benefits provided by our employers?

The new health care law seems to provoke a lot of questions – and false claims.

This is one of them.

The value of your employer-provided health care insurance will appear on your W-2 form, but it won’t be considered taxable income. The value is purely for informational purposes, according to the fact-finding sources, FactCheck.org and PolitiFact.com, and various other media outlets who quote tax experts.

A widely circulated e-mail quotes a summary of the bill that became law, FactCheck.org reports: “[Section 9002] requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage.”

That’s accurate.

But the e-mail incorrectly assumes that the cost will be “added to your gross pay” and that “you will be taxed on the total.”

“See what $15,000 or $20,000 additional gross does to your tax debt,” the e-mail claims. “That’s what you’ll pay next year. For many, it also puts you into a new higher bracket so it’s even worse. This is how the government is going to buy insurance for 15 percent that don’t have insurance and it’s only part of the tax increases.”

The actual health care law says nothing of the sort. The value of your employer-paid insurance is not taxed now, nor will it be when the provision of the new health care law goes into effect.

The requirement begins for the tax year 2011, so employees will see it on their W-2s in 2012.

The chain e-mail also cites an April 5 article by Joan Pryde, a senior editor of the Kiplinger letters, as proof that the tax is coming. The e-mail states, “Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what I just told you about.”

But FactCheck.org, a nonpartisan fact-finding project of the Annenberg Public Policy Center at the University of Pennsylvania, and PolitiFact.com point out that the Kiplinger article actually contradicts the claim. The article says:

“3. A requirement that businesses include the value of the health care benefits they provide to employees on W-2s, beginning with W-2s for 2011. The amount reported is not considered taxable income [emphasis added].”

So if we’re not being taxed for our employer-paid benefits, why include the value on our W-2 forms? PolitiFact.com, the Pulitzer Prize-winning nonpartisan project of the St. Petersburg Times, tells why:

Beginning in 2014, people who do not get health insurance will be fined. The W-2 reporting requirement will help the Internal Revenue Service verify that people have coverage for themselves and their dependents. The requirement will also help the IRS more easily collect a tax on the so-called “Cadillac” health insurance policies, those that cost significantly more than the national average. The Cadillac tax goes into effect in 2018.

FactCheck.org reminds us of a little history: During the 2008 presidential campaign, Republican candidate John McCain did propose to make the value of employer-sponsored health insurance taxable. A response ad for Barack Obama claimed, albeit falsely, that it would be the largest middle-class tax increase in history. But Obama was clearly against the idea and used harsh rhetoric against it in the campaign – until, as president, he said he might be willing to support it as a way to help pay for the plan and if it kept the health care process on track. The idea never made it into the final legislation.

carole.fader@jacksonville.com, (904) 359-4635