Day: May 30, 2013

                

A Scheme To Avoid or Reduce Accountable Care Act Taxes

By William Rusteberg

“Skinny” group medical plans have been making the news lately. Gleeful insurance agents, consultants, TPA’s and insurance companies are ecstatic , believing that they have found a new marketing bonanza with rich rewards. Whereas ObamaCare ensured eventual extinction, profitable economic survival as a health care intermediary now seems viable once again.

Certain provisions of the PPACA appear to create a big loophole for employers in search of ways to avoid, or minimize ObamaCare taxes.

Mark Holloway, a compliance specialist at Lockton Companies, wrote about the loophole in February 2013, after studying recently released U.S. Department of Health and Human Services implementation guidelines.

Here is a summary of how the scheme is employed – A Scheme To Avoid or Reduce Accountable Care Act Taxes

Numerous insurance intermediaries are jumping on the loophole bandwagon. Fees and commissions to be earned can be enormous. Marketing strategies are geared to entice Plan Sponsors with promises of legal tax avoidance benefits while blinding eager prospects to high fees. Administration fees, commissions and other fees can account for as much as 50% or more of claim costs. There is no MLR provision to worry about.

Some employers are willing to pay anything to avoid punishing PPACA taxes. It’s the bottom line that counts.

Will the loophole survive political scrutiny? Seems unlikely.

http://www.probenefitsolutions.com/blog/general/quot-skinny-quot-plans-too-good-to-be-true

Note: SIIA believes that the Federal agencies may conclude that this type of practice violates the new nondiscrimination rules that apply to fully-insured group health plans.  To date, the Federal government has not issued regulations detailing these rules.  In the case of self-insured plans, this practice may already violate the nondiscrimination rules applicable to self-insured arrangements under section 105(h) of the Internal Revenue Code (“Code”).  If not, contemporaneous with the issuance of the new nondiscrimination rules for fully-insured plans, Treasury may add to the current regulations under Code section 105(h), providing that offering low-cost, skinny plans could be discriminatory in certain instances.

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Even though the health reform law was upheld by the U.S. Supreme Court and is moving steadily along in terms of implementation, some staunch opponents are still working on repealing the health overhaul legislation.

But instead of lobbying Congress or suing through the court system to reach a full repeal of the law, opponents are taking steps to block the health insurance exchanges, which are key provisions to the whole law, from success, reported Bloomberg.

“If you’re committed to making sure Obamacare doesn’t go into effect, you have to focus on the expansion and on the exchanges,” said Dan Holler, a spokesman for the Heritage Action for America, a conservative lobbying group. “Once you have people under a program, it’s really hard to change that system no matter how badly it needs change.”

In particular, Heritage Action and similar groups like FreedomWorks are working to persuade Congress to end exchange funding when the lawmakers debate whether to raise the debt ceiling later this year. Exchanges lacking adequate financial support will result in limited enrollments and higher costs, which could drive lawmakers to roll back all or part of the law in the future.

“If enough people don’t get in to these exchanges, it’s essentially going to be to be unfundable,” Josh Withrow, legislative affairs manager for FreedomWorks, told Bloomberg.

Some of their efforts appear to be working. Congress rejected a request from the U.S. Department of Health & Human Services for $1.5 billion to implement the exchanges, FierceHealthPayer previously reported.

To learn more: – read the Bloomberg article

 

With roughly 1.3 billion people and a growing middle class, China is on the brink of a burgeoning healthcare market. And Cigna is making inroads to secure a large share of the business.

The insurer teamed up with China Merchants Bank, a prominent retail lender known for its ability to adeptly handle consumers, when it entered the Chinese market in 2003. And last year, Cigna reported $331 million in revenues, an increase of 32 percent from 2011. What’s more, its Chinese business broke even after operating in the country for only three years, according to Fortune.

Such strong financial performance comes amid healthcare spending in China that’s expected to more than triple by 2015 to $648 billion, with the health insurance market in particular reaching about $15 billion, of which Cigna’s portion could total almost $1 billion, says Ana Gupte, an analyst at Bernstein Research.

Among its ventures in India, Turkey and the Middle East, as previously reported by FierceHealthPayer, “China is the fastest growing asset in our international portfolio,” Cigna CEO David Cordani said.

Key to Cigna’s rise in the foreign Chinese healthcare market is its joint venture with CMB, which uses innovative marketing tactics, including the latest data-mining techniques.  And because China’s registration process is lengthy and cumbersome, Cigna isn’t likely to face a lot of competition.

“It’s a great opportunity for them,” Wedbush Securities analyst Sarah James told Fortune. “I don’t see anyone else entering the market there.”

Up next for Cigna is offering employer-based insurance plans to Chinese companies. It has signed deals with 12 more banks, credit companies, airlines and retailers to acquire their customer lists while also establishing a concierge service to help middle-class Chinese consumers deal with the evolving healthcare market.

To learn more: – read the Fortune article