W-2 Form Reporting

Employers no longer have to report the cost of coverage of an employer sponsored group health plan until January 1st, 2012. Originally employers were required to report their W-2s at the beginning of 2011. However, the IRS determined that additional time was necessary to allow small business owners to alter their payroll systems and procedures in preparation for compliance.

The Average Joe’s Guide to coinsurance, deductibles, and copays

The words used in insurance are a source of confusion for the everyday person. As plan designs continue to change in an effort to be premium friendly, many more people are faced with deductibles and coinsurance, in addition to their general office copays. What does that mean for you?

Traditionally, PPOs (Preferred Provider Organizations) had plans with copays, deductibles, and coinsurance. Nowadays, many HMOs have adopted that plan design structure, only with access to in network providers. Therefore, people who in the past only paid copayments for any medical services, are having to pay deductibles and coinsurance in addition.

What is a copayment? It is a cost sharing arrangement in a medical contract, partially paying the actual cost of the office visit, medicine, or other procedures for the patient. The insurance company pays the remainder of the costs for that visit or service. Plans with deductibles have a further cost sharing of the contract with the patient paying for more of the medical expenses upfront, helping to lower the premium costs. A higher deductible generally equates to a lower premium.

Once a deductible is met, the final cost sharing comes with the coinsurance: the percentage split between the carrier and the patient. A patient pays the smaller percentage for all subsequent expenses, until the out of pocket maximum for the insurance is reached, usually based on a calendar year. Here is an example of how all of these insurance components would work for a patient named Joe.



Joe goes to the doctor with an upset stomach and general headache. He pays his copay at the office. Upon the doctor’s examination, it is determined that he has the viral infection currently going through all the school children, and he just needs to go home to bed and eat chicken soup. That copay is the total cost for the visit! However, if the physician was concerned that the stomach ache represented a larger problem, any tests or outpatient procedures scheduled in other locations would be applied against his $1000 deductible. Let’s assume Joe’s stomach ache progressively gets worse, and he is rushed to the emergency room in excruciating pain, and is subsequently hospitalized! Once his deductible is met, probably during his stay in emergency, all further charges for the hospitalization and any surgeries would be paid by the patient’s percent of coinsurance. Most likely during the hospitalization he would meet his out of pocket maximum. At that point, going forward, the insurance company would pay all other medical expenses to the end of the year, excluding any ongoing copays.



Current healthcare reform has altered cost sharing for preventive services, allowing access to preventative care for children and adults with new insurance policies, and renewing, non-grandfathered existing insurance plans. Going forward, federally accepted, age appropriate preventative care will be provided without any cost on the patient’s part. This does not mean that everyone will receive this care without copays or cost, but a consumer should check with their carrier or HR department to see if the new regulations will apply to them.

For many companies, now is the time to evaluate benefit packages and to enroll employees and their dependents before year end. Unfortunately, many people consider open enrollment to be a 24/7 opportunity. Traditionally, the employer chooses an eligibility period that must be met by the new employee for benefits. When waiting periods are met, the employee completes all necessary documents, enrolling him and any family members on the company plan. This is the first enrollment, and should that enrollment period be ignored or overlooked, the employee will find themselves without coverage until open enrollment. Open enrollment is only the narrow band of thirty days prior to the renewal of a firm’s insurance programs. Let’s review the expected process, and the life events that allow enrollment all through the year.

In Colorado, open enrollment exists for employees in the thirty days prior to the renewal of the health insurance. This will be an opportunity for dual income families to change between their separate employer plans, selecting the one that suits their needs best. Also, review your family’s enrollments to see that all eligible children are enrolled. This includes any stepchildren or other children that you are designated as the legal guardian. If children or spouses remain on separate employer or individual coverage, be certain that a waiver of coverage for them is given to your HR department. Should life change and specific qualifying events occur, this will allow family members who waived coverage, to enroll at other times of the year. They will not need to wait for the next open enrollment period.

Other enrollment opportunities are tied to important life events. Qualifying events include birth, adoption, marriage, divorce, and death. Job related events include the loss of employment, or the end of COBRA or State Continuation. Again, the opportunity to enroll because of these changes is limited to 30 days from the event. Missing the deadline will result in waiting to the firm’s annual open enrollment period tied to the renewal.

Healthcare reform is triggering additional opportunities to enroll. If you have a dependent under age 26, many carriers are allowing that person to enroll, some in a special open enrollment this October, and others at the company’s annual renewal. This enrollment can even be extended in some cases if that dependent is married. Please check with your HR department and the carrier as to the specific course they will require to enroll these overage dependents in this new environment.

Healthcare Bill Timeline

There are questions and uncertainty surrounding the health care legislation recently enacted by Congress. A primary goal of this blog is to provide some answers and to let our followers know about the changes occurring in the insurance industry on a day to day basis.

The Healthcare legislation passed is known officially as the Patient Protection and Affordable Care Act (PPACA). The PPACA was not meant to be enacted all at once due to the wide impact it would have on the health insurance industry and on the American public as a whole. Instead, the PPACA has several dates by which health care reforms would take place to minimize swings in premiums and lessen impact on the consumer. Several reforms were enacted at the beginning of this year (2010). Several more reforms are going to be enacted on October 1^st of this year with a final wave of many reforms being enacted January 1^st of 2014. The majority of these reforms will go into effect on your policies at the anniversary following the date in question.

At the beginning of this year the following was enacted:

• State grants to establish or expand ombudsman programs
• Updated Federal Rate Review Process
• National Risk-Pool Created
• Temporary Retiree Reinsurance Program
• Small Business Tax Credit

The Following will be enacted October 1^st:

• Unlimited Lifetime Benefits
• Dependent Coverage increased to 26 years of age
• Preexisting condition exclusions for dependent children (18 and younger) are prohibited
• All Emergency Care Services are covered as if they were In Network
• Salary Discrimination Prohibited

The Following will be enacted January 1^st, 2014:

• Health Insurance Exchange
• Guarantee Issue is mandatory
• Pre-existing Condition Exclusions are Prohibited
• Individual Affordability Tax Credits

This timeline is not entirely set in stone, and there are more changes going on in the background. In the meantime, I hope this answers some of your questions concerning the Health Care Bill and the timeline during which major aspects of it will be enacted by the federal government.

About Stephen Bass & Associates Inc.

Stephen Bass & Associates Inc. is an independent brokerage company based out of Denver, Colorado. For the past 16 years we have been a leader in providing the best coverage to individuals, families, and small businesses throughout the Colorado area. We represent our clients on behalf of the insurance industry to assure our clients that they receive the ideal coverage for their specific circumstances.
Stephen Bass & Associates does not exact a fee from our clients - insurance rates are the same regardless of whether you go through a broker or direct to an insurance company. If you have any questions concerning your own insurance, carriers, rates and/or the health bill as it becomes effective in the coming months, please visit our website at www.SteveBassInsurance.com or give us a call at (303) 779-5474.