Small business’ role in children’s health insurance

What role do small business owners have in providing health coverage for children of employees?

This question is increasingly significant as the federal government stalls and is apparently unwilling to issue funding for ‘CHIP’ programs that cover the children of nearly 9 million moderate income families that have historically been supported by the majority of lawmakers. Recent news reports indicate that the Senate is unlikely to approve the funding so states and employee benefits advisers like us are beginning to investigate alternatives. This article is meant to provide a preliminary checklist.

  1. Small businesses are not required to provide health insurance to employees.
  2. Businesses that do provide health insurance to employees are not required to provide it (or even make it available) to employees’ children.
  3. Businesses that do provide employee health coverage typically cover children on the same plan and under the same terms as the employees.
  4. CHIP often covers the children of parents who work in small businesses.
  5. Until 2010, the United States was making strong positive progress in providing health coverage to low income children. I covered this topic here in 2011. Most of these initiatives were replaced by the Affordable Care Act (ACA).
  6. The implementation of the ACA dominated coverage from 2012 until this year, 2017. This federal law treated all low income people equally (although coverage varied depending on state and local markets).
  7. The rollback of funding for ACA is the primary factor affecting children’s health insurance for lower income families in 2018.
  8. The cost of children’s health insurance is less than the cost of adult coverage
  9. In many cases small businesses are wise, considering all the options and current laws, to provide supplemental health coverage and avoid providing primary health coverage to employees and their dependents.
  10. Employee health plans can be modified to provide relief for employees’ children in the event of a cancellation of CHIP programs without disturbing other employer policies that are currently in force.

This blog post offers generalized comments for public presentation. Discussion is not customized for each state’s laws. Some of these points may not apply to your firm. Please seek individual guidance that applies to your firm and your state’s laws.

2018 health insurance: 4 simple priorities to consider now

Health care can be complicated. It helps to stay focused on the big decision issues and know that help is available if you need it. It may help to focus on these four simple priorities this month:

  1. PLAN AHEAD: The cost of health coverage can be up to almost 20% of total household income for middle class people in the $50,000 to $100,000 income range. This is a tremendous financial burden that needs to be part of your overall long term financial plan. No political solution will make this problem go away; it is up to you. Take control now by doing what is necessary to protect yourself.
  2. QUALIFY FOR A TAX CREDIT: Most people – about 4 out of 5 people – who need health insurance qualify for reduced-cost coverage made possible by income tax credits that are advanced through your insurance company. It is important to have your online application for 2018 at* complete by December 15 so get an early start.
  3. OTHER TAX PLANNING: For the 1 in 5 applicants who do not qualify for a premium subsidy (mostly self-employed people or early retirees with income over $100,000)  it takes serious financial planning to cover this expense. Some relief may be available through smart tax planning to cover the expense on a tax exempt basis that saves thousands.
  4. FIND AN ALTERNATIVE: If you can’t afford this type of Obamacare coverage, there are two important next steps are: 1) qualify for a waiver of the tax penalty, and 2) enroll in an alternate less expensive health plan that might cover less but is better than being unprotected.

Freedom Benefits can offer free help with any of these four priorities.

Effects of federal government halt to health insurance subsidies

The federal government has announced that it will not pay scheduled benefits called Cost Sharing Reductions for lower income working class people who buy their own health insurance. It turns out that relatively few people are actually affected. Here are six things for consumers to know:

  1. In most cases the action does not directly affect the amount your pay for insurance. A ‘subsidy’ is not the same as a ‘premium tax credit.’ The amount of  premium tax credit is unaffected. In fact, the number of people who qualify for the credit may increase.
  2. Insurers will increase the premium rates for all policyholders. But most of this increase is paid by the federal government. The 15% of policyholders who pay the full premium will pay more unless the increase now qualified them for a premium subsidy.
  3. The amount of ‘out-of-pocket’ payment for lower income policyholders could increase. If so, in some cases it might be possible to adjust your HSA, FSA and payroll tax withholding to nullify the change by an insurer.
  4. Some insurance companies say they already anticipated Trump’s move when they set their 2018 premiums. States granted insurance companies an extra rate increases to make up for the lost federal funding.
  5. No insurance companies have announced their attention to withdraw from any market because of the federal government action.
  6. Employers that want to help employees make up the difference have a range of tax-free options that allow them to do so. Talk to us about the range of options,

Despite the strong public objection to this action, it might turn out to have minimal impact. The larger danger is that low-income individuals will become frustrated or confused about their health benefits and choose to not enroll in subsidized insurance coverage next year.

Introduction of Healthcare Market Certainty and Mandate Relief Act of 2017

I don’t normally spend much time commenting on newly proposed legislation in its earliest stages. However, the two separate major pieces of legislation introduced yesterday deserve some attention. The first piece was the tax reform legislation, I covered impressions of that “Tax Cuts and Jobs Act” bill here. The second proposed bill called “Healthcare Market Certainty and Mandate Relief Act of 2017” addresses health insurance issues by funding insurance subsidies and removing the individual and employer health insurance mandates.

The American Hospital Association published a press release that says:

“Senate Finance Committee Chairman Orrin Hatch (R-UT) and House Ways and Means Chairman Kevin Brady (R-TX) yesterday introduced the Healthcare Market Certainty and Mandate Relief Act of 2017 that would fund cost-sharing reduction payments to health insurers for two years and eliminate temporarily certain Affordable Care Act mandates. The leaders said the proposal would fund the CSRs through 2019. For 2018, carriers would have to meet certain conditions that would be determined in consultation with the secretaries of the departments of Health and Human Services and Treasury. The proposal also would eliminate the ACA’s individual mandate from 2017-2021; eliminate the ACA’s employer mandate from 2015-2017; and expand the use of health savings accounts.”

The link in the description above is to the Senate bill. The House version of the bill is here. I haven’t read either because we understand that the wording is still in flux. (I don’t understand the process of changing a filed bill or whether these are still considered unfiled).

It is significant to note that this bill is separate from the tax reform proposal and will likely proceed on its own route. It seems to me that the proposal, while unorthodox from an actuarial perspective, just might work.

As of November 5, 2017, the bill has not moved forward from The House Ways and Means Committee.

2018 online insurance enrollment web sites

Different enrollment web sites serve different purposes

Health insurance enrollment for 2018 opened on November 1, 2017. In previous years it was possible to enroll for multiple types of insurance on one web site portal that connected different types of insurance. This year, however, insurance companies have taken steps to separate their products. Freedom Benefits recommends that shoppers deliberately separate their online shopping rather than use a combined product portal in order to get the best service and range of product options. Using two different enrollment web services maximizes the different capabilities of each type of insurance. This is a potentially confusing issue that may come up in this year’s health insurance enrollment.

Regular individual major medical insurance (also known as Obamacare) is offered through This is the government-run health insurance web site. Coverage is available in all locations across the United States. Enrollment is only available online and not by telephone.

Supplemental insurance, short term medical insurance, deductible supplement insurance and dental coverage are offered through commercial insurance exchanges like Smart Insurance Marketplace. Not all types of coverage are available in all areas. Enrollment and live support is available by phone but we recommend that you enroll online.

In the past Freedom Benefits pricing and enrollment support was offered together through one exchange portal service. While these older web sites do exist, we n longer endorse them. We do provide support to consumers with questions about any insurance enrollment decision, regardless of the point of enrollment.

Today’s the day!

All year people have asked me about open enrollment in health insurance. Today’s the day! Open enrollment goes until December 15. Coverage starts January 1, 2018. Most people are eligible for affordable coverage and the web site is quite impressive. But there are three things to watch out for:

1- Technical problems on I’ve already been snagged on one technical issue this morning.

2-Lack of navigator help. If you have questions it may be harder to find help due to reduced funding for navigators.

3-Tax complications. The integration between and the IRS is stepped up this year. The result, for some people, is difficultly getting advance premium credits. If this happens, most people will need additional help from the exchange staff and this may take some effort.

I offer limited independent free help with health insurance questions through OnlineNavigator web site. This service is not associated with any government agency, program or insurance company. It’s just something that I do as a community service.

Update on the defunding of insurance subsidy payments

The president’s action appears to have backfired from a political perspective. Now up to 3.5 million middle-income Americans must deal with the severe financial consequences. On the other hand, the resulting premium increases from this government action make more low-income people eligible for free or reduced cost coverage in 2018.

Two weeks ago on October 13 President Trump followed through on his threat to remove cost subsidies to health insurance companies that offered coverage to low-income policyholders. The payments were intended to lower policy deductibles and out-of -pocket expenses for individual who cannot afford to pay these out-of-pocket costs.

Some members of Congress and public health policy experts denounced the move that was intended to hurt lower income policyholders.  Liberal-leaning news sharply criticized the move in this broadcast while some people, including Speaker of the House Paul Ryan publicly supported the cancellation of payments. I was outspoken in earlier interviews and blog posts against the change both from a public policy perspective and as a Republican political strategy. Announcements by the White House said that the move was designed to hasten the collapse the health insurance markets. Apparently President Trump or some federal strategists mistakenly thought that without the subsidies, insurance markets could quickly unravel. President Trump was taped said “this will cost the federal government nothing”. He was wrong. Those supporters failed to consider the ability of insurers and states to nullify the effect of this subsidy cancellation action by raising their premium rates for all policyholders. Most of those increases are mostly paid by the federal government through premium tax credits that Congress has already refused to cancel.

Health insurance companies said they will need much higher premiums to make up for the loss of subsidies. Most companies are now raising their rates for 2018 by an average rate of 20%. State insurance departments that regulate insurance premiums are likely to permit the rate increases. In my state of New Jersey the two largest individual health insurance providers (Amerihealth and Horizon Blue Cross Blue Shield of New Jersey)  will raise rates by  16 percent to 28 percent.  In Pennsylvania some premium rates will  rise by more that 30 percent. For discussion purposes, this might mean a $200 to $500 increase in monthly family premium.

Responses to the defunding

We have seen three primary effects of the president’s decision to defund the subsidy payments for low income policyholders:

1)  The states of California, Connecticut, Delaware, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington state and the District of Columbia sued the federal government to restore the health benefit payments. Yesterday a federal court judge blocked the lawsuit from moving forward so this action appears to be dead. See this link to the court ruling. Even though the lawsuit was unsuccessful, it’s filing by so many states shows the opposition of state governments to the federal government’s ‘slash and burn’ approach to health care reform.

2)  Insurance companies throughout the nation have raised premium rates on all individual health insurance in response to the executive order. Most states will grant the last minute rate increases for 2018 as requested to avoid risking companies from withdrawing and collapsing the insurance market.

3) More people are dropping coverage. The number of people without health insurance is rising again. In this recent coverage Fox News speculates that the increase is due to confusion created by the president. Last year the federal government spent $110 Billion covering people and reducing the number of uninsured Americans to a record low, Now the number of Americans without insurance may soon return to the previous high levels.

Effect of the defunding

We see three results so far in response to the defunding of subsidies:

1)  No insurers have pulled out of the market and no individual insurance exchanges have closed as the president intended.

2) The 20% of policyholders who pay the full cost of their policy, about  3,500,000 people in total, will be adversely affects. Many of those hurt are self-employed or early retirees living in suburban areas. News coverage this past week made a big deal of the observation that the strong majority of those financially punished by the President’s executive order are among the relatively small group of Americans who support the president.

3) More Americans will qualify for reduced cost and free coverage. The Wall Street Journal covered this topic today. Apparently insurers are now gearing up to market the “free insurance” and that might further deter the President’s efforts to undermine Obamacare. Even people with incomes up to $98,400 (assuming 4 people in the household located in the lower 48 states) receive some insurance premium tax credit.

Individual response to the executive order

Some middle-income people are concerned about the 15% to 20% increase in their health insurance rates as a result of this presidential action.

Lower income people will not likely be able to pay the deductibles on their policy. This does not affect the ability to access medical care but may affect the individual’s credit score. It seems unlikely that medical providers will take legal action against these low-income individuals.

What to do?

For those 3,500,000 Americans hurt by this presidential action, I advise addressing those options on a one-on-one basis with a health care expert as soon as possible. Health care planning should be the core of financial planning. In this circumstance where life and health are at stake, all options should be considered.

Concerns of small businesses in response to the president’s executive order on health care

On October 12, 2017 the president issued an executive order that directed federal government agencies to explore ways to loosen niche types of health insurance. My annotated copy of the execuive order is posted on my web site at

The executive order does not address these immediate concern to small businesses and individuals:

1) Indicate any change in state insurance regulations that prohibit the use of short term medical or limited benefit insurance plans within its borders. This is of special importance in states with the most restrictive and most expensive insurance.

2) Predict how state insurance regulators will react to the sale of already approved limited benefit or short term medical insurance across state borders to residents within its jurisdiction.

3) Indicate how state insurance prohibiting the use of association insurance plans will be affected or persuaded to ease in conjunction with this executive order.

Freedom Benefits is working with insurance companies, business associations and individual business clients to address these issues and close the gap in knowledge where specific health plan solutions are needed. We are especially focused on solutions for New Jersey small businesses since this state has the most restrictive insurance laws in the nation in this market niche.

Freedom Benefits acts as an adviser but not an insurance company, agent, broker, insurance exchange, association health plan or other entity affected by the executive order. We may be paid paid to perform support functions for any of these entities.

States most hurt by Trumpcare

Associated Press reports that 70 percent of those who will be hurt by the cut in Cost Sharing Reductions health care subsidies announced this week live in states Trump won in his election. This underscores the political risk for Trump and the Republican  party for the move that is largely condemned y voters in both parties and called “ill-advised” by his own party leaders. It seems clear that Americans will blame the president for increased costs and chaos in the insurance marketplace in the future. The cut affects only low income workers who struggle to afford health coverage, not poor people who are covered by Medicaid.

Lower income residents of the following states are listed as being among the most hurt by the cuts according to the Centers for Medicare and Medicaid:

  • Alabama
  • Idaho
  • Florida
  • Georgia
  • Louisiana
  • Massachusetts
  • Nevada
  • Mississippi
  • North Carolina
  • Oklahoma
  • South Carolina
  • South Dakota
  • Utah

Residents of my local area in New Jersey and Delaware and southeastern Pennsylvania are not as likely to be affected. Residents of rural Pennsylvania will be affected and I anticipate blogging about that soon.