Draft Law on Reforming Health Care = windfall for insurers retired

health care reform as finally adopted! However, amid the hubbub surrounding lost, "partisan politics," the funding of abortion "or" Cadillac "tax is receives a subsidy can bring significant relief to plan sponsors find it difficult to reign in the costs of health care for retirees. This provision referred to as the "Program of Reinsurance, reinsurance creates a subsidy for plan sponsors coverage of retiree health plans providing pre- Medicare retirees over 55.

The Medicare Modernization Act of 2003 created a grant program of the employer (retiree drug subsidy " or "RDS") for plan sponsors an incentive to maintain their retiree drug plans rather than leave the coverage and forcing retirees with Medicare Part D plan for the reinsurance program is to provide employers with a similar incentive. The incentive of this program would be the groups of employers to maintain plans for their medical condition Return pre-retirees eligible for subsidy.

The reinsurance program clearly benefits employers and industries that are dominated by Union and fighting with rich and costly retiree medical plans. Paradoxically, while the Bills care reform have been affected by special interests and based many in the political commitment of the other provisions, the tax "Cadillac", it can be neutralized by the grant (despite the impression the work will probably have worked a deal with the White House to exempt groups of collective agreements 2018). The tax "Cadillac", which imposes a tax of 40% of the plans of the premium costs exceeding pre-set "Threshold amounts," the plan would increase costs for many of the same rate plans for reinsurance subsidies. For plan sponsors with a huge population of retirees, the effect is that every dollar of premiums for retirees plan subject to tax duty may be largely offset by a subsidy.

What are the potential savings?

The proposed program would establish a program of "temporary reinsurance for employers who offer health insurance coverage for retirees over age 55 years and that are not yet eligible for Medicare. The program reimburses employers or insurers 80% of claims 15,000 retirees and $ 90,000 dollars.

For a group of employers with 700 employees and 500 retirees who spends $ 10 million per year in health insurance plans, the grant can be up to $ 720,000, which reduces the costs of their retirement plan of 14.4%.

How the insurance program work?

If we can learn the Retiree Drug Subsidy (RDS) Program, initially the drug benefit is calculated as a percentage of all prescription claims incurred by the sponsors the plan is likely to be a segment within the government push to dilute and reduce the category of "eligible" states in the final calculation. The formula RDS was relatively simple initially until there was a bureaucratic decision to create "Drug classes excluded" the right to receive grants. Logic CMS "behind this change was not to pay the subsidy drugs that have been excluded under the government-sponsored insurance part D of Medicare. Could have a similar logic used to create the "excluded" medical expenses to align with only grants approved medical procedures and fundamental part of government plans, as defined in the final bill.

Moreover, language in both bills is not clear as to "who" receiving the grant. The Senate bill provides that «…. The program will reimburse employers or insurers, while the bill the House of references that "employers." In addition, language in both bills explicitly states that "Payments reinsurance program is used to reduce costs for people enrolled in the employer's plan. "What can we interpret from that language? Does the company are not eligible for subsidy? Will insurers be able to create insurance plans for workers and to maintain the subsidy and lower cost of premiums as they do now under Medicare Advantage?

But is this program?

The award is "temporary" as the bill appropriates only $ 5 to finance the program through January 1, 2014.

quick math shows that the funds allocated to this program could run out quickly. In 2006, the Pew study reported Center1 funded by the United Nations obligations for retired state health and local governments alone. Status of payment systems it is expected that 9.7 billion U.S. dollars for "other post employment benefits." Responsibility 30 years of health care for retirees is projected 381 billion, a conservative estimate, since these figures do not include the obligations of teachers and workers in local communities. The State of California, together with all local governments in California, has projected a $ 6 billion health retired in 2009. Add to that all the great Taft Hartley plans, VEBA plans are independent (ie, the UAW VEBA) and other large private sector pension plans, one can see what affects the evaporation in a short period of time.

This raises the question. How priority is determined whether the government body responsible for the management of this program is inundated with requests? Will it be first come, first served? Will there be a certain level of "necessity" established to prioritize or create qualification? Or this program, once the health reform became another program that is right Act permanently?

To learn more on the potential impact of health care reform plans of the municipal government health insurance, allow yourself to our free webinar Wednesday, April 28. to 9am.

Visit www.cornerstonemunicipal.com , E-mail jbrown@cornerstonebenefis.com Or call 248-641-2892 for more information.

For over two decades Marcos Manque, CPA, MST has served clients in the health care cost control, innovative solutions and strategies of retirement plan design a transition plan unionized environment. As founder RDS Services, LLC, has added services specifically for the municipal market in areas such as GASB consulting, service Retiree Drug Administration grants and Medicare Services Act. In 2008, Mark was named one of Corp! Magazine employers of Distinction winners.

1 The Pew Research Center is a nonprofit corporation, tax exempt operating under 501 (c) (3) of the Code of the Internal Revenue Service. It was established in 2004 as a subsidiary of The Pew Charitable Trusts, a public charity Philadelphia. The Pew Research Center is a nonpartisan fact tank "that provides information on issues, attitudes and trends shaping America and the world. The done by conducting public opinion polls and social science research for the dissemination of news and analysis of news coverage and organizing forums and briefings. It takes no position on political art

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