Tag Archives: National

NY State should have done more about Healthrepublic collapse

Found in the Times Union:

The Empire Center is out with a report contending that the state, specifically the Department of Financial Services, should have seen the impending collapse of the Health Republic insurance co-op long before they ordered it to close in September.

The closure has forced about 215,000 New Yorkers to scramble to find an alternate, and almost certainly more expensive, health insurance carrier.

To be sure, these co-ops, which were created as part of the Affordable Care Act, have been falling apart in a number of states and there is a debate as to whether they were simply unrealistic in their pricing or under-funded by Congress.

In their report authored by veteran journalist Bill Hammond, Empire Center argues the former — that their rates were too low to cover their claims and the state, intent on seeing the co-ops make it, saddled them with rates that were so low they couldn’t cover their cost.

There were other issues as well including the amount of reserves they had to keep on hand and a state policy of controlling premiums. The report contends that market forces and competition would have provided a better mechanism for setting sustainable rates.

Here are the details:

The collapse of Health Republic Insurance of New York, a non-profit insurance co-op established under Obamacare, can be blamed largely on “an apparent breakdown in state oversight,” concludes a report released today by the Empire Center. The report says the state Department of Financial Services (DFS) should loosen its regulatory control of insurance premiums and refocus on the financial soundness of insurance companies.
Written by longtime Capitol journalist Bill Hammond, the report marks the first independent post-mortem on Health Republic’s failure—which disrupted coverage for 215,000 customers, stuck hospitals and other health providers with hundreds of millions in unpaid claims, and left federal taxpayers with a quarter-billion dollars of uncollectible debt.

The necessity for Health Republic’s state-ordered shutdown “should have been no surprise” to the state Department of Financial Services, the report says, citing the company’s “steep operating losses, mounting debt, unanticipated costs and heavy reliance on a federal risk-management subsidy that failed to materialize.”

“Yet the department did not intervene to order an increase in Health Republic’s premiums, as other states did in similar situations,” the report adds. “To the contrary, DFS repeatedly cut the company’s premiums below what the insurer had requested, aggravating the co-op’s losses.”

The report questions whether the department’s regulatory judgment was “clouded by the political desirability of keeping health insurance prices artificially low in the short term.” There was, it says, “an inherent conflict between the department’s longstanding regulatory role—which is to assure that health plans are financially sound—and rate-setting authority granted by the Legislature in 2010.”

The law reinstituting the agency’s power of “prior approval” over premiums for individual and small-group health insurance policies “is having no clear impact on New York’s health insurance costs versus national averages,” the report says. “This suggests that consumers might be better off if DFS kept its entire regulatory focus on the financial health of insurance companies while leaving price-setting to market forces.”

The Empire Center is a non-partisan, non-profit independent think tank based in Albany

Should you self-fund your benefits plan?

Level funding, and self-funding, are becoming commonplace in the small business community.  It provides a way to soften the blow of Obamacare’s regulations, provides more flexibility, and can lower costs significantly – we have seen groups premiums lowered 30% or more.  Here are a two things to consider that would make you a good candidate:

Stability-  If you company is fairly stable in its size, and finances, then the product can work well for you.  If you are either growing or shrinking more than 10% in the next year, it may not be as good a fit.  If your cash flow is inconsistent or elusive, this is not the product to get involved with.

Claims History-  Do you have access to your claims history, or are pretty sure your group is mostly healthy?  Do you feel your firm is not getting its monies-worth from the insurance company?  If so, consider the product.  On the other hand,  if you group are high utilizers of the plan, then this may not be for your company.

If you want to know more just give us a call at 843-800-8190 or email Reeve Conover at reeve@reevewillknow.com.

Changes to Retirement Plan Audits

Recent rules changes have refocused the IRS on what they are calling a “focused examination.”  In a “focused examination” the IRS will look at the employers “internal processed and controls regarding pre-determined areas of compliance” such as investment policy statement, investment committee, eligibility, vesting and distributions.”  If they find no problems in those areas they will move on to another employer.

While this is good news for employers that maintain tight controls, it should not cause you to relax about the potential for an audit (either random, or based on employee complaint).  It is reported that a full audit and examination can involve between 75 and 150 requests for information, consumer 200-300 staff days, and yields significant dollars in corrections, fines and penalties.

OSCAR HEALTH loses 105 million

(Bloomberg) — Startup Oscar Health Insurance Corp. lost $105.2 million in its New York and New Jersey businesses last year, a sign that insurers of all sizes are struggling in the new markets created by the Patient Protection and Affordable Care Act (PPACA).

The losses, $92.4 million in New York and $12.8 million in New Jersey, were disclosed by Oscar in filings with state regulators. Chief Executive Officer Mario Schlosser said some of Oscar’s losses stem from the cost of starting a new health insurer. Others are tied to the same problems befalling bigger health plans: costlier customers and a shortfall in a key government program.

Schlosser said last month that Oscar is adjusting its strategy to limit costs as it enters new markets in California and Texas. The insurer — valued at $2.7 billion in its latest round of funding, according to a person familiar with the matter — has struck deals with limited groups of hospitals and doctors, rather than offering broad networks like traditional insurers. Oscar has also been narrowing its network in New York, and Schlosser said the company is getting better prices for some services as its membership increases.

For the full article click here


1095 form instructions for waivers

We came across this helpful piece from NAHU to pass along in regard to filling ACA reporting forms for Employers.  This goes into how to list employees who waive coverage on the 1095 form.  Also they make important mention on the need to collect waivers each open enrollment period!!


Compliance Cornered: Employer Reporting When Employee Waives Coverage
: Employer Reporting When Employee Waives Coverage. Many employers are struggling with the ACA’s employer reporting requirements. It’s hard enough to know what to report when an employee enrolls in coverage. But, what is the proper way to report that an employee has waived coverage?

Line 16 becomes very important in this scenario. If the employer has adopted an affordability safe harbor, the code for the chosen safe harbor will appear in line 16.

There are three (3) safe harbor affordability codes. These are:

  • 2F The W-2 safe harbor (Box 1 of the W-2)
  • 2G The federal poverty line safe harbor
  • 2H The rate of pay safe harbor.

The example below shows code 2F. However, depending on the employer and the employee class, the safe harbor method used may vary. Of particular importance, the W-2 safe harbor must be used for all months of the calendar year for which the employee was offered health coverage.


If an employer has not opted to use a safe harbor, line 16 would be left blank (assuming no other codes are applicable such as transition relief). By doing so, the employer is indicating to the IRS that the employer and/or the employee may be subject to a penalty.

If an employer offers a self-funded plan, Part III of form 1095-C would also be left blank when an employee has waived coverage.

Given the penalties that employers may face if an employee does not have coverage or is not offered coverage , the importance of documenting that an employee has been offered coverage and declined it becomes even more important. Employers should obtain a signed waiver from any employees that waive coverage. In the event that an employee does not return a signed waiver, employers should note in enrollment materials that failure to respond by a certain date will be assumed to be a waiver of coverage.

Example when Employee Waived an Offer of Coverage

Facts of Assumptions:

  • Employer offers insured plan
  • Coverage for lowest cost employee premium per month is $150
  • The employee, spouse and dependents were offered coverage for all 12 months
  • The employer has offered affordable coverage using the W-2 safe harbor
  • The employee has waived coverage for everyone in the family.

Blog Archives

Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
FINRA.org - SIPC - Brokercheck