Hobby Lobby – Bringing Religion into the Workplace is Now OK

If you had the chance to examine the Supreme Court’s decision in the Hobby Lobby case and President Obama’s response to it, you would realize that the religion of your company’s owner can now influence your working environment. 

The Supreme Court interpretation of the Religious Freedom Restoration Act in a more religious friendly way, significantly expanding the influence of religion in the workplace.  This decision allows owners of small businesses to imbue their wholly owned corporate entities with their religious beliefs.  Further, their right to hold these beliefs now trumps their obligation to comply with certain laws.  This imakes the Hobby Lobby case more than a case about birth control, or even about women.  The Hobby Lobby case has become a case about how religious beliefs could be enforced in every workplace scenario.

Over the last fifty years, our country has developed a system of laws for the sole purpose of protecting the little guy.   We enacted civil rights laws, sex discrimination laws, laws guaranteeing certain employee benefits as well as certain protections from being fired.  What happens now if the religious beliefs of the business owners you work for conflict with the laws that ensure theses protections?  If the owners of a business are Christian Scientists, does that mean that they do not have to pay for health insurance for their employees?  Is that same Christian Scientist owner of that small businesses able to not provide defibrillators (all businesses over 100 employees are required to have defibrillators)?  Can they prevent the use of a defibrillator or other lifesaving method when someone has a heart attack? If you are a Muslim or an Orthodox Jew, can you require your female employees to cover in order to comply with your religious beliefs?  Can Muslim business owners refuse to hire women because they do not believe men and women should be working together?  Could they go as far as refusing to hire African Americans, Hispanics or Jews if they refuse to adopt the Muslim religion?  You might have thought the answer to these questions was a resounding no; but is it?

The only limitation on this decision is that it limits ability to exercise their religious freedom to owners of small closely held private corporations.  But remember, Hobby Lobby does $3.1 billion in annual sales.

Foster Critiques of ACA Are Coming True

The critiques of Affordable Care Act issued by Rick Foster, are the Chief Actuary of Medicare, and his office, are coming to fruition. Here is what he said:  “You cannot take close to one trillion dollars away from one group of people and spend it on another group of people and somehow leave those footing the bill better off. You cannot give millions of people large increases in medical care without creating any new doctors, new nurses, or other paramedical personnel. You cannot arbitrarily reduce what you are paying providers by billions of dollars and still expect to get the same quantity and quality of care. You cannot give millions of patients and thousands of doctors’ new incentives to waste medical resources and then expect health care spending to go down.”

His predations:

  1. There will be a net drop in employee coverage. TRUE! Today, if you exclude those who are eligible for Medicaid, the number of people who lost their coverage is greater than the number of people who signed up for subsidized coverage under the ACA. Employees of small firms are especially at risk (despite small employer tax credit subsidies). 2 million employees who lose coverage will enroll in Medicaid. A Medicaid insurance card is not a guarantee of care. An estimated 18 million people will be added to Medicaid. However, because there is no corresponding increase in the supply of caregivers, “it is reasonable to expect that a significant portion of the increased demand for Medicaid would be difficult to meet, particularly over the first few years.”
  2. Healthcare costs have gone up, not down. TRUE! National health expenditures increased from 17 percent of GDP now to 21 percent under the new law and will be higher than without the legislation. Net federal spending on health care will also increase.
  3. One in ten insured workers will see their health benefits taxed. TRUE! The taxation of benefits that becomes effective in 2018 will effect anyone whose company offers a “rich plan,” which is being interpreted as a high deductible plan which reimburses more than between 60 to 70 percent of costs. Foster believed that by 2019, more than 10% of insured workers will “be in employer plans with benefit values in excess of the thresholds. This is a conservative estimate.  
  4. Higher taxes led to higher premiums. TRUE! The new taxes on medical devices, prescription drugs, and insurance plans have been “generally be passed on through to health consumers in the form of higher drug and device prices and higher insurance premiums.”
  5. Medicare cuts will impact everyone and significantly impact the type, level and quality of care people over 65 will receive in this country.
  6. The promise to those with pre-existing conditions is unfunded. TRUE! By 2011 and 2012 the initial $5 billion in Federal funding for [high risk pools] would be exhausted, resulting in substantial premium increases to sustain the program.”
  7. The law does almost nothing to limit actual fraud and abuse. TRUE! The fraud provisions are ineffective. Enforcement has been placed in the hands of the IRS. They are not equipped to perform the required tasks to ensure providers and insurers are complying with the law. Since the government is responsible for reimbursing the insurers for losses, and there is no ability to audit this, the insurers can provide numbers in any way they choose, costing the taxpayers potentially billions of dollars. 

It is critical that we begin to address these issues; every dollar lost in the abiss of ACA reimbursements is a dollar lost to fund Medicare. 

Doctor Flight

It turns out that when you push people too far, they reach a point when they fight back. The doctor revolution is beginning. My doctor is one of 90 physicians who is trying to remain independent. With the most recent cuts to reimbursements, 89 of the 90 decided they are no longer accepting most carriers and, again, 89 of the 90 are not accepting ANY of the policies offered through the exchange. At their next meeting they are holding a discussion about the pros and cons of opting out of Medicare. The AMA estimates that approximately 10 percent of doctors for each of

the next several years will either leave the practice of medicine or decline to accept insurance. At a time when the number of insured is increasing, this is disastrous. 

The 8 Million

The good news is that 8 million people have signed up for healthcare. California represents three million of those eight million. California says that 1.9 million of the people 3 million who signed up will be getting Medicaid, while 1.3 million people (I know the numbers don’t add up) will be receiving subsidies. If California is any indication of what is happening across the country, then of the 8 million, approximately 60% will be receiving Medicaid. The insurance companies have publically stated that a little less than 20% of the people who signed up have not paid. Since it is not clear if they mean 20% of all sign ups or 20% of those who are required to make payments, the number of people who will actually receive insurance could be between 5 and 7 million, of which approximately 4.8 million will receive Medicaid. 

The expansion of the Medicaid program has been a significant benefit; for the people who have healthcare and for the hospitals, who have seen declines in unpaid use of their emergency facilities. The rest…

A Reminder About the Minimum Wage

Last month we had the discussion about how raising the minimum wage without raising the eligibility standard for Medicaid would take away healthcare benefits from people currently making the minimum wage. In certain states, those who have received Medicaid benefits have significantly increased their standard of living and the cost of delivering healthcare to those people has gone down. It is important that if politicians raise the minimum wage, they raise the Medicaid eligibility standard.

Flexible Spending Accounts

Flexible Spending Accounts are a great tool to allow employees to set aside pre-tax dollars to cover eligible Section 213d healthcare and dependent care expenses.  The good news is that you don’t need a qualified plan to have an FSA.  Employers save in payroll taxes for every dollar an employee elects, which results in a mutually beneficial program. Employers will need to appoint an administrator for the plan.   In 2014, employees may elect up to $2500 (per household) of their annual salary for healthcare and $5000 (per household) for dependent care expenses to be placed into an FSA on a pre-tax basis.   The number will increase next year. 

There are three different types of accounts that can be offered by an employer through this program. 

  • The Healthcare FSA allows employees to submits eligible healthcare expenses to the plan administrator which are verified and then reimbursed.  FSA eligible expenses include doctor visit co-pays, prescription co-pays, vision care, dental expenses and more.
  • Dependent Care Spending Account or a Limited Scope FSA is most commonly used to reimburse daycare expenses for children under the age of 13. It can also apply for children of any age that are physically or mentally incapable of self-care. In addition, adult daycare for senior citizen dependents is also eligible as long as they are claimed as a dependent on the employee’s federal tax return.
  • Where an employee has a High-Deductible Health Plan (HDHP)  and Health Savings Account (HSA), a Limited Scope FSA Healthcare may be established. Like a Healthcare FSA, this account allows employees to pre-tax up to $2,500 (per household) of eligible expenses. However, Limited Scope FSA eligible expenses are “limited” to reimburse dental and vision expenses. At the employer’s discretion, eligible medical expenses incurred after the deductible may also be reimbursable.

Wellness vs the Unwell

One of the benefits granted under the Affordable Care Act was the coverage requirement for wellness services.  This means that certain screenings such as colonoscopies and mammograms were to be regularly performed at no cost to the consumer. 

An interesting loophole is being exploited.   Insurers have determined that if a screening indicates that the patient has an underlying health issue that was uncovered during the regular screening, that the purpose of the screening was diagnostic.  This means it would not be covered under the wellness provisions of your policy.

What this means is that if you go in for your mammogram and it is determined that you have breast cancer the news you get is: “You have breast cancer. Oh, and, that “free” mammogram; you are now going to have to pay for it.”

So, you can either pay your co-pay or fight the charge.  But, oh yes, you have cancer, so maybe fighting with the insurance company is not on the top of your priority list.


Update on Exchange Prescription Drug Coverage

 As time passes, it is becoming clear that policies purchased from an exchange will require more and more time from policyholders and their doctors to monitor payments and to meet new responsibilities which have become a prerequisite to being reimbursed. 

Prescription Drug Coverage

If you have an exchange policy, the days of having your doctor call in a prescription and then you going to the pharmacy of your choice and picking it up are becoming a thing of  the past.  Exchange policies are unlikely to offer open access to drugs used regularly. 

Insurance companies are implementing ”utilization management controls” which must be complied with in order for you to receive reimbursement for your prescription drugs.  This means that patients and their physicians must complete additional paperwork to demonstrate appropriate use of the drug being prescribed.  By doing this, drug companies can limit access to specific medications and, more importantly, reduce costs.  

Doctors are now being asked to fill out additional, complex paperwork to get their patients covered by their insurance companies.   If physicians do not comply with new and confusing utilization requirements, patients may not be able to get the drugs their doctor says they need. 

Worse, consumers will have to pay for the cost of controlling costs.  Copayments and co-insurance fees for drugs increased an average of 34 percent under ACA. Greatest impact was felt in the cost of brand-name drugs and specialty drugs.

 ‘Analysis from Avalere Health concluded that consumers purchasing insurance through the exchanges are twice as likely to face utilization management controls on prescription medications compared to people with employer-sponsored coverage.   Patients who use brand-name, cancer or mental health drugs are more likely to encounter this problem under PPACA.  For example, fifty one percent (51%) of brand-name mental health meds have special controls on the exchanges, compared with only eleven percent (11%) on the employer-based market.’  (Source: Rx hurdles high under some PPACA plans, By Kathryn Mayer, March 24, 2014 Benefits Pro Magazine)

Raising the Minimum Wage will Decrease Eligibility for Obamacare Benefits

People earning the current minimum wage have significantly benefited from the expansion of “Obamacare”.  A large number of those low income wage earners are single women with children.  Because of the Affordable Care Acts’ expansion of Medicaid eligibility, these women have been able to get healthcare for themselves and their families.

The President is now pressing to increase the minimum wage; and, he is moving to expand eligibility for overtime.  By expanding the minimum wage and increasing overtime payments, the President may actually be hurting those people who were formerly helped by the Affordable Care Act..

The unintended consequence of raising wages for people who have obtained health services through an exchange is that those very people may no longer be eligible for the subsidies or the benefits they received.  If their wages increase too much, they may be put over the threshold for Medicaid eligibility and lose their benefits.   If this wage increase goes into effect after the sign up deadline passes, those people will not be able to get health insurance coverage to replace their Medicaid coverage until 2015.

By expanding the minimum wage to $10.10 per hour, if a person works 40 hours per week, their annual income would be $21,008.  Previously, at $7.25 per hour, the federal minimum wage, the same person working 40 hours per week would earn $15,080.  Under the ACA’s expansion of Medicaid, any person earning $7.25 per hour and the family members they were financially responsible for would be eligible for Medicaid. By raising the wage to $10.10, a single person would no longer be eligible for Medicaid.  If a single mother of one makes more than $21,707, she and her family is no longer eligible for Medicaid.  (Note: In some states, like California, the Medicaid threshold was increased to 138% of the poverty level vs. the federal standard of 135%; but, in this care, the effect would be no different.) 

Increasing wages for people who have already sought subsidized coverage based on current wages has another unintended consequence.  If their actual income exceeds the estimated income their subsidies were based on, they will be responsible for repaying the difference between the lower subsidy they would get at their new higher wage and what they actually got.  The IRS is responsible for enforcement.  Failure to return the money can lead to garnishment of wages, attachment of bank accounts; the penalties are quite severe. 

The registration deadline could be extended to accommodate those whose increased wages make them ineligible for Medicaid.   However, moving people from Medicaid to an exchange policy significantly increases their cost of care. Not only do they have to pay for their coverage, but they are now responsible for co-pays, etc.  Increasing income also impacts one’s eligibility for subsidies and out of pocket costs they will be responsible for. 

Now that healthcare is directly tied to wages, we must be thoughtful about the interconnectedness. 

But What About Me?

While corporations have been taken off the hook as regards to meeting compliance deadlines for 2014, individuals have not.  Individuals have until the end of March to sign up for benefits.   Before you do, there are several things to consider, the most important of which is what I can afford.

The law states that you must either purchase benefits or pay a fine.  It is not illegal to go without insurance.  The law says you must either have insurance OR pay the fine.  To do neither is breaking the law.

The fine is 1% of your income or $95 for an individual or $285 for a family of 3 or more, whichever is greater (See Below for Specific Details).   The fine is pro-rated for each month and accrues for each month you do not have coverage.   The penalty for not having insurance is to be paid as part of your taxes.  If you do not pay, the only recourse the federal government has is to take the money from future tax refunds owed. 

The decision you have to make is whether or not “affordable” healthcare is affordable for you.    Here are some things to consider:

   Are you or would you be eligible for Medicare / Medi-Cal?

  • In California, if you earn less than 138% of the poverty line, you are eligible for Medi-Cal.  Outside California, if you earn less than 133% of the poverty level you are eligible for Medicaid.  You do not have to pay for these services.  Therefore, if you are close to these income levels, if you are single and make less than  $15,900.00, if you are a couple and make less than  $21,500.00, or if you belong to a family of four and make less than $32,499.00, you are eligible for Medi-Cal. 
  • Medi-Cal / Medicaid is free.  If you fall into the income categories above then you are eligible.  If you are close to these income levels and suffer a catastrophic event that would put you below the income levels required;  you could be better off by not getting insurance now and, in the event such a terrible thing occurs, you would be eligible for Medi-Cal.

   What is the penalty for not having insurance?

  • The penalty in 2014 is calculated one of 2 ways. You’ll pay whichever of these amounts is higher: Either 1% of your yearly household income with the maximum penalty equaling the national average yearly premium for a bronze plan OR $95 per person for the year ($47.50 per child under 18) with the maximum penalty per family using this method  equaling $285.  Penalty fees increase every year. In 2015 it’s 2% of income or $325 per person. In 2016 and later years it’s 2.5% of income or $695 per person. After that it is adjusted for inflation. 
  • If you’re uninsured for just part of the year, 1/12 of the yearly penalty applies to each month you’re uninsured. If you’re uninsured for less than 3 months, you don’t have a make a payment.
  • If you drop your contract you may be subject to significant penalties.

Can you afford the total cost of the policy?

  • The total cost of the policy is the premiums you pay plus the deductibles plus the co-pays.
  • You have to consider the whole cost. For example, if you earn $50,000 and have a family of 4, you subsidized payment for a bronze plan will be $3 per month.  But the individual deductible for that plan is $5,000 and the family deductible is $10,000.  Remember, the insurance doesn’t begin to pay until you’ve met your deductible.
  • If you are a heavy user of the healthcare system you are better off getting a silver, gold, or even a platinum plan because, thought the monthly costs are more, the deductibles are lover and the co-pays are significantly lower, 10% versus 40% for a bronze plan. 

 If you get the contract what is the cost of dropping it?

  • Even if you drop your contract, you are still eligible for service next year.  No US citizen can be refused a policy because they broke their contract in the prior year.
  • You will be assessed penalties if you drop the contract.
  • You may be required to repay any subsidies you received.  If you don’t repay you can be pursued to the full extent of the law.