Health Insurance Seminar by John Klimchak - Part 5

What is fringe money?

It's if you do contract work for the city, if you're not paying the benefits, you know you have first of all the fringe wage which is a different wage it's a higher wage say it's like an $18 an hour now make like $30 an hour and then if you have if you don't offer benefits they might tack on another $8 an hour to the employee to the employee.

And he wanted to get rid of paying the fringe?

But the employees wouldn't take the plan, remember?

That's right I do remember but to that point so what it happened was we were going to and we go into them today and interestingly enough it amazes me today that we've got food restaurants. I'm gonna say not necessarily franchise is but restaurants that might have 3-400 employees and the owners are thinking to themselves well you know what we've got you know different names on the ownership of each entity but they all own each of these different restaurants.

So when you take a look at it it's a matter of common ownership if you have 80% common ownership they still have to they're deemed as one employer they still have to provide benefits deemed affordable.

And they're not doing it and I'll tell you what we're gonna get into in a little bit they could be subject to these penalties

But then you also have this other problem too where say they all you have 50 FTE and you have to offer these benefits of the fast food now maybe a majority of them all turned down. Some of them are covered some of them aren't covered when you pull up the ones that already have coverage then you can wave them in the group but if only two people take the plan and 30 people just decline it and they don't have coverage you're still not gonna qualify for the plan because you have too many people turning it down.

You are so right to that point, so true but with that point and a lot of the insurance companies really don't want anybody to know this but there is a special federal open enrollment period from November 15th to December 15th for small group coverage in New York that insurance carriers cannot impose participation requirements on the employers.

If they have their open enrollment period between November 15th and December 15th it could either be for a December 1st effective date or January 1st effective date the insurance carriers cannot impose participation requirements and that's huge.

That is huge because a lot of these employers you know with these lower wage employees to your point they are no way going to meet participation.

Now they do that to force, say the fast food owner to be compliant when they, for example the fast food owner of 11 months of the year can say hey I can't have the plan because nobody's joining and I'm not gonna you know so how can you tell me to be compliant, is that what they do, they put that little in front of there.

Well what the employers do is that you know those restaurants we make sure the open enrolments are during the we set them up during that time frame and the open enrolements have to be during that time frame also cause once you step out and have them in the bank they're gonna bank you out.

That's why they do that and they don't want to do it because what is what's gonna happen who's gonna sign on to the plan you know if you got 77 employees alright 76 of them aren't gonna take it who's that one guy that's gonna sign on to the plan, the sick guy. So that's the definition of adverse selection.

Now interestingly enough to that point well, what you want to take a look at is you know it's always important, at least to our job is to try to minimize the cost to the employers cause the employer's first employee's second I hate to phrase it like that but that's really the reality of life. So what do we talk about before in order to mitigate costs, Children's Health Plus.

If you're able to have kids, see if Children's Health Plus is a viable option that's number one. number two and you're not gonna hear this much but interestingly enough with respect to the Affordable Care Act the contribution was only the contribution requirement was only made on that 60% actuarial bronze plan. Now if I'm married, I can if I'm a large group a large group that's experience rated when my rates are gonna be based upon my claims a large group now over 100 employees 500 employees whatever.

And you see it with larger companies we'll see it as well. I can say the employer can say hey listen this is all part of the Affordable Care Act that if I'm married and my wife or my spouse is working and she's got access to care through her employer she can't come onto my plan so I could mandate that she has to go onto her plan so that'll help mitigate risk.

And then the other thing that we try to do to help mitigate risk and this gets a little bit you have to be careful with this is Medicare. We spoke about Medicare health insurance for poor people right

You know the misconception people think it's free and it is not. It's not cheap either and you need supplements, drug plan, dental plans.

So you're no longer on your private health insurance anymore you just.

No, you can have both

You can have it but you don't have to take Medicare, you can enroll but not pay premiums and just take it when you need it.

But then they always get in your regular health insurance question is always do you have any alternative coverage and then they always your primary wants to take a back seat to Medicare all the time so how do you not.

Well you just enroll.

Let's talk about that. So what will happen here is this, let's talk about employer group size for a moment employer group size, fair enough? So if an employer has between 2 to 19 employees less than 20 a group has less than 20 then by default Medicare is going to be primary over any group plan. If you have 20 or more then the private health plan the group health plan is going to be primary of Medicare.

So now let's talk about what Sherry brought up and she's absolutely right so now what happens when somebody's 65 Medicare has several parts there's Part A which is hospital part A hospital is free cause you've been paying into Social Security then and here's where the analysis comes in here's where it comes in then you have to take a look at Part B is doctors and there's the premium and the premium for that and I have it in your kit there it's means based.

So they're gonna look at your tax return from two years ago to determine what the premium is gonna be the base premium is about $185 per month per party and then as your income goes up it goes to roughly $630 a month.

That's so cheap.

Which is ridiculous because they look back and if you retire, you're not getting that income.

Well again good point because what you could always do is you could file to have that reduced.

Amended.

Exactly right.