Tag Archives: PPACA


ƒƒ New Jersey is the second state after Vermont to enact an individual mandate, which becomes effective
January 1, 2019.  The purpose of P.L. 2018, Chapter 31 is to stabilize the market and help keep health insurance premiums
as low as possible.  The tax applies to all New Jersey residential taxpayers. Hardship exemptions shall be determined by the State Treasurer.  The mandate requires individuals to maintain minimum essential coverage (MEC) or pay a penalty.
ƒƒ The amount of the tax penalty is the New Jersey average premium for bronze level plans, $695 or 2.5% of income, whichever is greater. “Income” is defined as household income minus any deductions.

The tax will be collected via the New Jersey income tax return.

United Healthcare exits Individual Market

While this has garnered alot of attention around the country and in the press and media, it is no surprise to anyone in the industry.  “The smaller overall market size and shorter-term higher risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis,” said CEO Stephen Hemsley in the company’s quarterly earnings conference call.

While United covers more Americans for health insurance than any other private insurer, it has only been a bit player in the individual/exchange marketplace;  most of its members are corporate plans.

A big part of the problem that was completely expected by industry experts is that the exchanges are “adversely selected” meaning that they have sicker enrollees.  “So as we look at it, the early indications on the health status of the members appears to be a little bit worse,” said UnitedHealthcare CFO Daniel Schumacher.  The original expectations of the administration was that younger members that were healthier would offset this problem, but they have not enrolled as expected.

Blue Cross loses more money on exchange than other carriers

The nation’s Blue Cross and Blue Shield plans have fared worse than publicly traded health insurance companies on the new health insurance exchanges, with many of these plans losing hundreds of millions of dollars last year on individual policies sold under the Affordable Care Act.

A new report from Fitch Ratings, which looked at earnings ofnearly three dozen Blue Cross and Blue Shield companies, showed 23 had a decline in earnings and 16 had a net loss , largely related to losses from policies sold to newly insured Americans who bought subsidized individual policies on public exchanges. There were 23 Blue Cross companies that reported a “collective $1.9 billion decline in earnings” for the first nine months of 2015, and 16 of those companies had net losses.

It’s a significant development because these insurers are raising prices for this year to recover the losses and taking additional steps like slashing broker commissions and narrowing doctor and hospital choices to rebound in 2016.

Blue Cross plans also tend to be the dominant providers of individual policies in their states. In Illinois, for example, the Blue Cross plan owned by Health Care Service Corp. has about 80% of the customers who purchase coverage on the public exchanges.

How does the ACA apply to LTD and STD recipients?

From Employee Benefits Advisor Magazine:

In order to avoid potential pay or play penalties, do employers need to make an offer of health plan coverage to individuals receiving payments from a short-term disability or long-term disability arrangement?

All large employers must offer health plan coverage to their full-time employees or potentially be subject to pay or play penalties. Under the ACA, a full-time employee is an individual that averages at least 30 hours of service per week, or 130 hours per month. When determining full-time status for purposes of making an offer of health plan coverage, you may use one of two measurement methods. Under the monthly measurement method, full-time status is determined on a monthly basis. Under the look-back measurement method, you determine full-time status by calculating the average hours of service during a look-back measurement period.

If you are using the monthly method, in order to avoid potential penalties you must offer health plan coverage to an employee for a month in which he or she received 130 hours of service. An employee is entitled to an hour of service for any hour in which they are paid or entitled to be paid. Payment includes STD and LTD pay, unless it is a STD or LTD arrangement paid for by the employee on an after tax basis. In other words, an employee who is credited with hours of service resulting from STD or LTD benefits will not be considered to be on an unpaid leave of absence. For example, if Bob is an ongoing employee and works 35 hours during each of the first two weeks of March and he receives STD payments resulting in 35 hours of credited service for each of the second two weeks of March, you must offer Bob coverage for the month of March because he was paid for more than 130

Under the look-back method the employee’s current hours of service are irrelevant to whether you must offer coverage or pay a penalty. After you determine that an individual is a full-time employee during a measurement period that determination will apply throughout the following stability period, regardless of the number of hours of service the employee receives during that period. If the employee receiving STD or LTD is considered full-time for the stability period in which his or her leave occurs, you must continue to offer coverage during the leave of absence. For example, if you determine during a twelve month measurement period that Bob is a full-time employee for 2016 and in 2016 Bob misses six months of work and is receiving STD payments during those six months, you must continue his offer of coverage during his leave in order to avoid potential penalties. You must also count his credited hours of service in the average for the measurement period in which he received the STD or LTD disability payments, which ultimately impacts whether he will be full-time in next year’s stability period

Dave and Busters class action Health Care Reform Suit

From business Insurance:


A U.S. District Court judge has refused to dismiss a putative class action lawsuit filed by a former restaurant worker who claims her employer cut her hours to part time from full time in order to avoid Affordable Care Act costs, in violation of the Employee Retirement Income Security Act.

Maria De Lourdes Parra Marin said in a lawsuit filed in May 2015 that in response to enactment of the ACA, managers at a New York restaurant operated by Dallas-based Dave & Buster’s Inc. told workers that to avoid costs totaling as much as $2 million, it would reduce its full-time employees to about 40 from more than 100, according to Tuesday’s ruling by the United States District Court for the Southern District of New York in Maria De Lourdes Parra Marin v. Dave & Busters Inc. et al.

She was then reduced from full-time to part-time status, causing a reduction in pay to a range of $150 to $375 per week from a range of $450 to $600 per week, along with the loss of eligibility for medical and vision benefits, according to the ruling.

Ms. Marin then filed suit, charging discrimination under ERISA.

U.S. District Judge Alvin K. Hellerstein denied Dave & Buster’s motion to dismiss the case in the ruling.

“Plaintiff has put forward factual allegations supporting her claim that the employer had the specific intent to interfere with her right to health insurance,” said the ruling. “The reduction in plaintiff’s hours affected her employment status, her pay, and the benefits she had and to which she would be entitled.”

Commenting on the ruling, Kevin LaCroix, attorney and executive vice president of RT ProExec, a division of R-T Specialty L.L.C. in Beachwood, Ohio, said the ruling illustrates “how employers that try to restructure to find a way to evade the mandates of the ACA could wind up, potentially at least, facing litigation” under ERISA.

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