HealthCare Reform’s Affect on Voluntary Benefits and Limited Medical Plans White Paper


1128 Royal Palm Beach Blvd., Suite 138, Royal Palm Beach, FL 33411

T: 561-204-3676 F: 561-792-4428


HealthCare Reform’s Affect on Voluntary Benefits and Limited Medical Plans White Paper

Released May 18, 2010

By: The Healthcare Reform Magazine,,

and the National Healthcare Reform Conference™,

At the end of March, the Patient Protection and Affordable Care Act and the reconciliation bill were passed into law.   The passage of Healthcare Reform has made sweeping changes and has changed healthcare as we know it in America.  While some believe health insurance costs will decrease under Healthcare Reform, many believe healthcare and health insurance costs will increase under Healthcare Reform.  Unfortunately, most Employers, Insurance Companies, Health Insurance Agents and Consultants are not staying informed on the true affects of Healthcare Reform, the timeline and compliance issues.  Many are operating under the false pretense that some magical entity, such as the U.S. Government, Insurance Companies or Trade Associations will provide them with all the guidance they need, or will implement any compliance issues.  We recommend against this course of action and believe that professionals in the health insurance industry educate themselves and should not expect complete guidance and direction from third parties.

Healthcare Reform did not create a public option or a government plan so the insurance marketplace will still be run by private industry, specifically by Fully Insured and Self Funded health plans.  Some of the major changes in Healthcare Reform will be the waiving of pre-existing conditions, the elimination of annual and lifetime limits, the expansion of dependent coverage to age twenty-six, providing level or equal premiums for those who are sick or healthy, the creation of “essential benefits,” the creation of health insurance exchanges where Americans can purchase health insurance and mandating the purchase of health insurance by Americans or a penalty must be paid.  Healthcare Reform also lowers the insurance premiums for the elderly Americans and raises it for younger Americans, specifically at a three to one ratio.  Phyllis Borzi, Assistant Secretary at the U.S. Department of Labor, is conducting research on the annual limits and providing the recommendations to HHS. 

Preventative Services

Healthcare Reform requires that preventative services must be included for newly enrolled insured plans in the fall of 2010 or within six months of enactment of the bill for existing health insurance plans.  Specifically, the following benefits must be included:

  •  Evidence-based items or services with a rating of ‘A’ or ‘B’ in the current recommendations of the United States Preventive Services Task Force;
  •  Immunizations recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved; 
  •  For infants, children and adolescents, evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration;
  •  For women, additional preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration;
  •  For women, the recommendations issued by the United States Preventive Service Task Force regarding breast cancer screening, mammography and prevention shall be considered the most current other than those issued in or around November 2009.

For those qualified health plans that will be required to provide this preventative coverage without cost-sharing for preventive services that are rated ‘A’ or ‘B’ by the U.S. Preventive Services Task Force, these services could be recommended immunizations, preventive care for infants, children and adolescents and additional preventive care and screenings for women.   

Pre-Existing Conditions

The waiving of pre-existing conditions will have both positive and negative effects on the health insurance industry.  The waiving of pre-existing conditions which starts in 2010 for children and 2014 for adults will drive up the costs of health insurance in the U.S.   For those who are sick and have health conditions this can be a positive step forward, because there are many Americans who were denied health insurance because of a pre-existing condition or who could not afford to purchase health insurance because of the high premiums.  For many of these Americans that health insurance and health care were inaccessible for, they could not afford to receive the proper medical care, which results in the worsening of their health conditions and eventually later in life much higher medical expenses.  Also, many of these Americans did not have access to preventative services to catch serious. health conditions at an early stage, due to lack of access to proper health care.  For these Americans, the waiving of the pre-existing conditions and the lowering of health insurance premiums, which will be subsidized by healthy Americans that will have their insurance rates increased, will provide them access to more affordable healthcare for the first time.  

This will have a tremendous. positive impact on many Americans lives and some people will finally have access to medication and prescription drugs which will put them on the path to better health.

However, the waiving of pre-existing conditions which starts in 2010 for children and 2014 for adults will drive up the costs of health insurance in the U.S.  Insurance premiums for individuals who are healthy will increase in order to subsidize Americans who have pre-existing conditions.  Also, Healthcare Reform does not properly incentivize Americans to purchase health insurance because the fines for not purchasing health insurance in 2014 start at $95 and increase each year, but are not that punitive.   Larger fines would create a more diverse group of insured and reduce adverse selection.  Having fines too low creates adverse selection because healthy Americans may opt out of paying for insurance while sicker Americans will opt in.  Compared to rising health insurance costs in the next ten years, the fines, which were originally meant to force the majority of Americans to buy health insurance, are small and will fall short of their intended goal.   This means many Americans can make the decision not to purchase health insurance, not engage in healthy lifestyles or behaviors and may choose not to focus on preventative medicine and instead wait until they are sick and then purchase guaranteed-issue health insurance with no pre-existing conditions clause at a “fair subsidized price by the healthy.”  This penalizes Americans who have engaged in healthy behavior and lifestyles and who have planned and paid for health insurance every month in anticipation of one day possibly becoming ill or sick. An example of this is as follows:

In 2014, Joe, who is 45 and whose health insurance costs $1,200 a month, makes a decision not to pay for health insurance and instead to pay the $95 fine for the year.  He chooses not to buy health insurance because he knows when he does get sick with a major health condition he can purchase health insurance at any time and immediately be covered.  Joe smokes a pack of cigarettes per day, drinks alcohol each day, eats fast food for meals and does not exercise.  Jane is 45, healthy and her health insurance costs in 2014 would be $1,200 a month.  She pays her premiums each month.  She exercises five times per week, eats healthy food and does not drink or smoke.  Under Healthcare Reform, Jane and Joe’s health insurance premiums must cost the same.  Joe will eventually develop serious health conditions because of his lifestyle and when he buys health insurance later in life it will automatically cover everything at the same price as Jane.  Jane’s insurance premiums starting in 2014 will have to increase for the eventuality and potential of people like Joe waiting until they are very sick and need health insurance to purchase it.

  The rise of health insurance premiums will have a very positive effect on the Voluntary Benefits industry.   As health insurance costs increase, more Americans will drop health insurance, turn to limited medical plans or purchase higher deductible and higher out-of-pocket expense plans.  This will fuel the growth of gap plans, hospital indemnity plans, accident medical plans, limited medical plans, cancer and critical illness plans, and new and innovative Voluntary Benefits programs that will be created in the future.

More Insured Americans or More Uninsured

The White House believes up to thirty-two more million Americans may become insured under Healthcare Reform because of a belief that health insurance premiums will be affordable and the individual mandate and fines for not purchasing health insurance will force Americans to purchase health insurance rather than pay the fine.   There are some in the industry that believe the opposite may actually happen and there may be more uninsured Americans under Healthcare Reform.    In 2014, the fine for an individual is $95 or $7.92 per month for not purchasing health insurance.  In 2015, it becomes $325, in 2016, $695.  The maximum fine for a family is $2,085 in 2016.  After 2016, it increases by a cost of living adjustment.  A child’s penalty is half that of the adult. 

In 2020, a mere ten years away, if the cost for health insurance is estimated to be between $30,000 to $40,000 per year for a family, with the average family annual income being approximately $56,000 per year, the average American will not be able to afford health insurance.   Also, in 2018, the “Cadillac” tax starts, which places a tax on high premium health insurance plans.  It places an extra 40% tax on health insurance plans where the individual premium is higher than $10,200 or $27,500 for a family.   Unfortunately, by 2017, it is possible that that most Americans, due to rising health insurance premiums, will fall under this “Cadillac” tax, thereby increasing their plan costs by another 40%.  Many Americans may go without health insurance and when they have a major sickness or illness purchase guarantee issue health insurance from an insurance exchange, which will not discriminate for pre-existing conditions.   This may produce adverse selection for those who are healthy and have purchased major medical insurance by driving up their health insurance, which will make them leave the “insurance exchange pool” and cause an exodus of healthy people from the insurance marketplace. 

More Uninsured in 2010 Due to Healthcare Reform; Unintended Consequences

Annual and Lifetime Limits are prohibited starting September 23rd, 2010.  This affects millions of Americans who in a few short months are going to lose their health insurance for various reasons.  Certain types of limited medical plans will not be able to remain in existence, many short-term medical plans will no longer be able to offer coverage, and widespread affordable major medical plans which had caps on annual and lifetime limits will no longer be allowed to exist.   In fact, several health insurance carriers have already ceased offering certain types of health insurance plans or announced the end of certain types of health insurance plans.  Millions of Americans received their health insurance through these types of plans and were able to pay for health insurance coverage because it was low cost and affordable.  Now, these same Americans who cannot afford comprehensive major medical insurance will be “disenfranchised” and unable to purchase health insurance in the future because of the cost.  These millions of Americans who no longer have health insurance and cannot afford it will turn to innovative voluntary benefits such as limited medical plans, hospital indemnity, accident medical, cancer plans and critical illness plans.

Younger Americans

Younger Americans health insurance costs will also increase under healthcare reform.  Older Americans should be charged between five to six times the amount of a younger person, (5:1 or 6:1).  Healthcare Reform artificially changed this underwriting to 3 to 1 (3:1), which means that older Americans’ health insurance costs will drop almost in half, and younger Americans’ insurance rates may almost double to subsidize older Americans.  This could cause many young Americans to go without purchasing health insurance.  Healthcare Reform also included a “young invincible” plan for younger Americans who are under thirty years old which allows them to purchase a catastrophic-only high deductible health plan.    Purchasers of the “young invincible plan” will be a perfect target for Gap Plans, Limited Medical Plans, Hospital Indemnity, Accident Medical and more which will provide coverage between first dollar expenses and when the catastrophic health plan kicks in.

Community Living Assistance Services and Supports Act (CLASS Act)

Many people are not aware that healthcare reform included a long-term care benefit called the Community Living Assistance Services and Supports Act. (CLASS Act)  The CLASS Act created a long-term insurance program that will pay no less than $50 a day for non-medical expenses such as home care.   Automatic payroll deductions will be taken from employees paychecks to pay for the program.  Employees are automatically enrolled by employers unless they opt out.  Employees must have been enrolled in the plan for at least five years before being able to access benefits from it.  While this provides a minimal benefit and does not replace long-term care insurance, it may make long-term care sales harder as some employees may not understand the difference and think that they are now covered under the CLASS Act.  A thorough education process will have to be developed to educate the employee on the importance of buying comprehensive long-term care insurance, which the CLASS Act does not provide.

Doctor Shortage

There is a severe doctor shortage and it is estimated by the Association of American Medical Colleges that in the next fifteen years there may be a shortage of as many as 150,000 doctors in the U.S.  This doctor shortage can become even worse if an estimated thirty million more Americans choose to buy health insurance under Healthcare Reform.  Healthcare Reform is attempting to address this by trying to increase the number of doctors and healthcare professionals in the industry and including provisions to improve the healthcare workforce education and training and to offer support to the existing healthcare workforce to improve access and delivery of health services to the people.  The Healthcare Reform Bill also helps to create a loan repayment program for the public health workforce, to help expand the existing public health fellowship programs and to establish a youth public health program, but this may not go far enough to reduce the doctor shortage and Healthcare Reform may only worsen it.  Doctor shortages could result in longer queues and waiting times for patients to see doctors and have surgeries performed, which may result in patients traveling overseas for faster access to medical care.

Baby Boomers Crisis

The U.S. is also facing a crisis in healthcare with Baby Boomers, Americans born during the post World War II baby boom.   These Americans are aging fast and will overburden and strain the American healthcare system, and exacerbate the doctor shortage issue.    The number of Americans aged 65 or over will double by 2050, the number of people age 85 or over will quadruple by 2050, and by 2030 over half of U.S. adults will be over age 50.  The over 65 population will nearly triple as a result of the aging Boomers, and more than six of every 10 Boomers will be managing more than one chronic condition.  More than one out of every three Boomers – over 21 million – will be considered obese, and one out of every four Boomers – 14 million – will be living with diabetes.  Nearly one out of every two Boomers – more than 26 million – will be living with arthritis, and eight times more knee replacements will be performed in 2030 than today.  62% of 50 to 64 year-olds reported they had at least six chronic conditions (hypertension, high cholesterol, arthritis, diabetes, heart disease and cancer).  As Boomers age, this number will grow from almost 8.6 million today (about one out of every 10 Boomers) to almost 37 million in 2030.  By 2030, there will be nearly twice as many adult physician visits as there were in 2004, and Boomers will account for more than four of every 10 of these visits.   By 2030, if all Boomers with diabetes receive recommended care, they will need 55 million lab tests per year – 44 million more than today.  Physician office visits will number more than one billion by 2020. Four out of 10 office visits will be Boomers.  The increase in longevity of Boomers – on top of advances in medications, less invasive treatments and diagnostic testing – will greatly increase the demand for cardiology.  This will create a huge strain on the U.S. healthcare system and on the doctor shortages.

Reference-Source:  A joint report from First Consulting Group and the American Hospital Association, titled “When I’m 64: How Boomers Will Change Health Care.”

Medical Malpractice and Defensive Medicine

Healthcare Reform did not provide reform of medical malpractice (tort reform) which is a large contributor to the costs of healthcare.  A 2009 Jackson Healthcare and Gallup Poll of physicians found that one in four dollars spent on healthcare in the United States is for unnecessary tests and treatments to protect physicians from being sued, a practice known as “defensive medicine.”   Ninety two percent of physicians admitted to practicing defensive medicine.  Seventy three percent of physicians admitted to practicing defensive medicine in the past twelve months to prevent lawsuits.  The survey also found that eighty three percent of younger physicians are taught how to practice defensive medicine in medical school or their residency.  The survey found the practice of defensive medicine is growing each year.

        Physicians who reported practicing defensive medicine estimated the following:

  • 35 percent of diagnostic tests were ordered to avoid lawsuits
  • 29 percent of lab tests were ordered to avoid lawsuits
  • 19 percent of hospitalizations were ordered to avoid lawsuits
  • 14 percent of prescriptions were ordered to avoid lawsuits
  • 8 percent of surgeries were performed to avoid lawsuits

The findings of the survey were that potentially $650 to $850 billion dollars in healthcare costs in the U.S. each year are due to defensive medicine.  There is clearly a large amount of healthcare costs in the U.S. due to defensive medicine and medical malpractice, and without meaningful tort reform within Healthcare Reform to limit these costs in the U.S.; they will only continue to increase.

Cost for Employers

Healthcare Reform increases the cost for employers offering health insurance to their employees because of many factors including increased benefits, elimination of the pre-existing condition clause, annual and lifetime benefits and more.  Several large employers announced the change in tax consequences will cost them significantly.  Caterpillar estimated in the first year alone, Healthcare Reform will cost the company $100 million dollars.  In May 2010, Fortune Magazine reported that several large employers are considering dropping their employer-sponsored health insurance because of the increased costs under Healthcare Reform and paying the fine for not providing health insurance.

Deere Inc. was quoted to have said, “We do expect double-digit healthcare increases as most Americans will now have insurance and providers try to absorb the 15% uninsured into a practice.”  AT&T revealed it spends $2.4 billion dollars per year on health insurance for its 300,000 employees and that if it canceled health care coverage for its employees and paid the penalty under Healthcare Reform, the penalty would only be $600 million dollars.  CNN reported that if fifty percent of employers cancelled their health insurance plans, federal healthcare costs would rise by $160 billion dollars per year starting in 2016.  No one knows the true effect Healthcare Reform will have on employers and how this will affect their employees, but in the next few years it will become much more apparent as the rules, regulations and effect of Healthcare Reform become clearer.

Dental Care and Insurance

More than 120 million Americans do not have dental insurance.  For the hundreds of millions that do have dental insurance or coverage, these plans have very low annual maximum benefits ranging between $1,000 to $1,500 on average, which do not provide comprehensive coverage and won’t even cover the cost of one tooth implant.  The American Dental Association (ADA) opposed Healthcare Reform because they felt it did not go far enough in providing dental insurance/benefits coverage to the average American.

On its website the ADA says, “For more than a year, the ADA has been advocating for changes in the various versions of Healthcare Reform that have been introduced. Even though each version was flawed, we worked to improve it in any way we could. Had we declared our opposition early on, we would not have been in a position to influence anything and the law might have been even more objectionable. On a number of issues, we were able to improve the law and make it less onerous to both dentists and patients…We also object to restrictions on Flexible Spending Accounts (FSAs), although we do appreciate that the new law will delay those cuts for two years. Many Americans use these accounts to pay for needed dental care. In addition, the health care law does not adequately address patient protections that should apply to employer-provided health plans offering dental benefits (including free-standing dental plans), such as prohibiting plans from limiting payments on services not covered by the plan. Finally, there is no meaningful medical liability reform. “

Source – 

Annual and Lifetime Limits

Healthcare reform prohibits Self Funded and Fully insured Medical Plans having annual and lifetime limits.  Healthcare Reform requires essential benefits for Fully Insured plans but eliminates the requirement of “essential benefits” from Self Funded medical plans, giving self funded plans an advantage.

Government to Redefine Benefits

Within twelve months of the law being enacted the HHS is to provide specific standards and languages that Self Funded medical plans will need to use in plan documents, SPDs, summary of benefits and explanations of coverage.  Self Funded medical plans will need to stay on top of these updates and changes and be prepared to comply with them.

Leaving Group Plans – Free Choice Voucher

In 2014, employers with more than 50 employees that offer health insurance coverage must provide a “free choice voucher” to those employees who meet the following requirements: (1) an income less than 400 percent of the federal poverty level; (2) share of the premium exceeds 8 percent, but is less than 9.8 percent of income; and (3) choose to enroll in the exchange.  The voucher amount must be equal to what the employer would have paid if the employee had chosen the employer’s plan.  Employers will not be subject to fines for such an employee’s participation in the exchange.  This may erode the employer healthcare plan and cause adverse selection to employer-sponsored health plans.
Employers Opting out of offering Healthcare

In 2014, the Employer Mandate Goes into effect and employers with over 50 employees are required to provide health insurance to their employees.  For those employers who choose not to offer health insurance and who have over 50 employees, the employer is fined $2,000 per employee annually after the first 30 full-time employees are subtracted. 

Part-time Employees are included in calculation for the purposes of mandate and fines. 

Waiting Periods

Healthcare Reform will require that waiting periods be no longer than ninety days or the Self Funded employer will be subject to fines by the Federal Government.

New Programs for Wellness

The Director of the National Institute for Occupational Safety and Health has explained that the Healthcare Reform Bill will authorize many new programs for prevention and wellness.  Although we do not know who or what will specifically fund these new Corporate Wellness programs, the idea is that they will allow the Centers for Disease Control and Prevention (CDC) to provide employers with certain resources and tools to help them assess Corporate Wellness and preventive programs, help to educate employers on how to assess their own programs and over the next two years carry out a national worksite programs survey to help evaluate these employer wellness programs.  The purpose of this is to help employers understand how their wellness programs are benefiting them by the impact they have on their savings.

In the Healthcare Reform Bill, there is a mandatory Prevention and Public Health Fund that will invest $2 billion per year for public health programs, which will include existing and new programs geared towards prevention, wellness and public health activities as sited by the Public Health Service Act.  In fiscal year 2010, only $500 million will be allocated to it, with it reaching the full amount in fiscal year 2015.  With this fund it will give the overall public a way to get involved with wellness programs and let them have the same opportunities to get healthy as some employees do already by being involved in their own company’s wellness plan or program.

Funding for Community Health Centers

The Healthcare Reform Bill will increase funding by $11 billion for community health centers and the National Health Service Corps over a five-year period (starting in fiscal year 2011).  This will help to institute new programs that will support school-based health centers and nurse-managed health clinics.  These centers and clinics will be additional areas for people to go to get health care, thus expanding opportunities for Americans to become and be healthy.

In order to reach some of the unhealthy members of our population in the less populated areas of our country, a grant program was established for the direct support of the delivery of evidence-based and community-based prevention and wellness services geared towards improving prevention activities and decreasing chronic disease rates.  These funds will be appropriated for 5 years starting in 2010 and will help those in our less populated areas to get the same opportunities for wellness that major urban areas have.

Small Employer Corporate Wellness Grants

The Healthcare Reform Bill supplies grants for 5 years (starting in 2011) to small employers who implement a wellness program(s).  It does not state how much will be granted to those employers or what is considered a ‘small’ employer, but it will be helpful for those who fall under the guidelines of this provision.  Many small employers do not have the start-up funds to start a Corporate Wellness program let alone sustain it, so this may be just what is needed to see an even greater change in health status amongst employees.

Rewards and Premium Discounts for Participation in Corporate Wellness Programs

For large, medium or small companies, the bill does also state that employers will be able to offer rewards to those who participate in a wellness program or who meet certain health-related standards.  These rewards may be up to 30% of the cost of coverage by offering premium discounts or waiving cost-sharing requirements or other benefits that wouldn’t normally be provided.  The reward limit may also be increased to 50% off of the cost of coverage if found to be fitting and the HHS increases it from 30% to 50%.  This part of the bill requires that employers must offer another standard for those people that find the standards to be ‘unreasonably difficult or inadvisable’ for them to adhere to.  Pilot programs in 10 states will also go into effect in 2014 to gather information on the effectiveness of wellness programs and it would also give similar rewards to the actual states that participate in the program.  Providing premium discounts to those who participate in wellness programs is a very effective way to get employees to engage in healthy behavior and to focus on prevention.

There is no doubt that Healthcare Reform has many possible positive outcomes.  What we are waiting on now is to see where this money will come from, where it will be allocated to and who will be in charge of directing provisions and their effectiveness.  As we begin the waiting game, it is best to look forward to the positive outcomes for wellness and prepare ourselves for change.  

Limited Medical and Mini Medical Plans

Certain Limited Medical Plans will be negatively affected by Healthcare Reform while others will not and will continue to grow and thrive.   It is possible that certain expense-incurred limited medical plans with co-pays and deductibles may fall under the Healthcare Reform provision that restricts annual and lifetime limits.  These plans are able to offer affordable health insurance premiums because of the restrictions on annual and lifetime limits and therefore these limited medical insurance carriers may not be able to offer the same plans and benefits starting September 23rd, 2010.  Also, certain indemnity limited medical plans that filed their limited medical plan as HIPAA creditable coverage may also fall under this same problem because of its filings.  These carriers may exit the market, or petition for an exception, or simply re-file new limited medical plans that would comply with Healthcare Reform or not be affected by it.   Many of the indemnity, fixed dollar types of limited medical plans are not affected by Healthcare Reform and will survive it. 

These plans have significant potential for massive growth as insurance rates continue to increase each year.   As health insurance costs increase, more Americans will drop health insurance, turn to limited medical plans or purchase higher deductible and higher out-of-pocket expense plans.    Many may purchase a limited medical plan and pay the fine for not purchasing major medical insurance, wait until they are sick and then buy a major medical insurance plan.  This would fuel significant growth and enrollment in limited medical plans.

Employers Shifting to Voluntary Benefits

As Healthcare Reform takes effect and health insurance costs rise, more employers will cancel contributions and begin offering ancillary “core” products with group health like, dental, vision, life, disability and other Voluntary Benefits.  These employers will shift to offering these benefits as “Voluntary Benefits’ and having employees pay one hundred percent of the cost of coverage.

Gap Plans

Gap Plans will grow with the adoption of high deductible health plans and as more Americans choose higher deductibles as health insurance costs increase.   Also, as the “young invincible plan” is implemented, those under thirty years old will have catastrophic coverage only and therefore many of these young Americans will purchase a Gap Plan to cover the gap in benefits.  While Gap Plans will continue to grow in the next few years, they should see significant adoption starting in 2014.

Other Voluntary Benefits

Life Insurance, Disability Insurance, Critical Illness, Cancer Plans, Accident Medical, Hospital Indemnity, Long-Term Care

Vision, Dental, Identity Theft, Legal Plans and other Voluntary Benefits will not be negatively affected by Healthcare Reform and will continue to gain momentum as more employers shift to Voluntary Benefits and away from “core” benefits. 

Effect of Healthcare Reform on Commissions

Healthcare Reform will have a negative effect on agents, brokers and consultants’ commissions.   Healthcare Reform also requires that large Employer Groups are required to spend 85% of insurance premiums on medical claims/costs and 80% for individual and small group health insurance plans.  This new mandated loss ratio requires a larger portion of insurance premium to be allocated to medical claims.  This specific part of healthcare reform was meant to reduce insurance companies’ profitability and shrink the pie.   What this also inadvertently does is reduce health insurance agents’ commissions.  As the pie gets smaller so does everyone’s piece.    However, insurance agents will have avenues of recourse to make up for the lost commissions from health insurance premiums.  The first will be to shift to a consulting fee or flat fee approach and charge this directly to the employer. The other approach is to find alternative revenue sources, of which the only solution would be to offer Voluntary Benefits, such as life insurance, dental, disability, critical illness, cancer, accident medical, vision, long term care and others to supplement their income.

  For the individual marketplace, it is possible that some agents, brokers and consultants will simply be put out of business as individuals go through state exchanges through the internet and totally bypass working with insurance agents.  The individual insurance exchange will make it very difficult for individual health insurance agents to provide the value in services they did before, and will make it hard to be identified as the agent of record and to receive commission.  Many Americans may simply avoid the individual insurance and shop online through the insurance exchanges. 

In the future, some employers may also shop for health insurance through the exchange.   This will reduce the “value” the health insurance agent, consultant and broker have to the employer, because it eliminates the core “value” that these insurance agents serve now, which is “shopping for health insurance” and “negotiating” health insurance for the employer.  Some employers may even opt to purchase group health insurance through the exchange and choose not to utilize an insurance agent, broker or consultant. 


Healthcare Reform has a focus on health, wellness and prevention and because of this Corporate Wellness programs will start to grow in the latter part of 2010 with strong growth starting in 2014.  Insurance Agents and Consultants will also turn to Corporate Wellness not just to lower healthcare costs, but to supplement their income due to reduced commissions from health insurance carriers and new minimum loss ratio rules.  More employers will shift from a consumer driven approach to healthcare, which has not reduced healthcare costs, to one of Corporate Wellness in which they help employees and insured engage in healthy lifestyles and behavior.

Voluntary Benefits will start to grow in the latter part of 2010 with explosive growth starting in 2014.   Insurance Agents and Consultants will turn to Voluntary Benefits to supplement their income due to reduced commissions from health insurance carriers because of new minimum loss ratio rules.   Some of these insurance agents and consultants will realize the need to diversify in 2010 as they see some of the first changed of Healthcare Reform implemented.  The strong growth will really start in 2014 as many insurance agents and consultants feel the significant pinch from reduced commissions and in some areas the possible elimination of commissions.

Employers will slowly start to shift to Voluntary Benefits as health insurance costs increase and they cancel “core” benefit programs like dental, life, disability and vision that they contributed to and will in the future convert to a one hundred percent voluntary benefit the employee pays for.  As some employers cancel health insurance plans, or as employees drop health insurance coverage because of the rising costs, many will shift to Voluntary Benefits and alternative healthcare plans.  Those limited medical plans that survive healthcare reform and are able to comply with it will see explosive growth after 2014 as health insurance costs skyrocket and people opt to pay the minimal fine, purchase a limited medical plan, and in the event of getting sick with a major health condition, purchase comprehensive guaranteed-issue health insurance at very affordable rates.    Healthcare Reform will accelerate the growth of Voluntary Benefits and the next few years should be very exciting times for those involved in the industry.

The Self Funded industry will grow as it has less restrictions in some areas which will make Self Funded plans more attractive than Fully Insured plans including, but not limited to, essential benefits not being applicable, and not being subject to  marketing and Internet portal rules, uniform enrollment, quality accreditation and provider network requirements.


A Timeline of Healthcare Reform from 2010 to 2018

October 2010 

  •  Subsidies begin for small employers to provide health insurance coverage to employees.
  • Insurance Companies will be barred from barring coverage to children who have pre-existing conditions (adults have to wait until 2014).
  • National High Risk Pool to be created within 90 days of enactment.
  •  Dependent Age Coverage extended to the age of 26.
  • Prohibition on Lifetime Benefit Limits.
  • Allows for Restricted Annual Limits for essential benefits as determined by HHS.
  • Preventative Services must be provided at no charge to the employee or insured.
  •  ER benefit must always be provided at in-network.  No Prior Authorization allowed for emergencies.
  • New Health Plan Disclosure and Transparency Requirements to be utilized.
  • Grandfather plans allowed but very limited, most of the new mandates apply to Grandfather Plans such as prohibition on lifetime limits, dependent coverage to age 26, no pre-ex for children and Allows for Restricted Annual Limits for essential benefits as determined by HHS.
  • Starting in 2010 until 2014, businesses with 10 or fewer full-time-equivalent employees earning less than $25,000 a year on average will be eligible for a tax credit of 35% of health insurance costs.  (Companies with between 11 and 25 workers and an average wage of up to $50,000 are eligible for partial credits).
  • The tax credit will remain in place, increasing to 50% of costs, for the first two years a company buys insurance through its state exchange.  The Congressional Budget Office predicts that the tax credit will affect about 12% of individuals covered via the small-group insurance market, lowering their cost of insurance by between 8% and 11%.


  •  “Class Act” – the new government long term care program starts.  Individuals pay premiums for a minimum of five years to become eligible for daily living coverage.
  •  $2.5 billion in taxes and fees to drug makers starts (increases each year).
  • HHS creates uniform documents and standard definitions are developed.
  • 85% Minimum Loss Ratio for medical expenses established for large groups.
  • 80% Minimum Loss Ratio for medical expense established for individual and small groups.


  •  $2,500 limit on what can be contributed to employer-sponsored Flexible Spending Accounts.
  • Health Insurance Fee to fund Comparative Effectiveness is imposed – $2 annually for each individual covered, whether fully insured, self funded, group or individual for comparative effectiveness research under a specified individual or group health insurance for plan years after September 2012.
  • The threshold for the itemized deduction for unreimbursed medical expenses would be increased from 7.5% of AGI to 10% of AGI for regular tax purposes.  The increase would be waived for individuals’ age.


  •   $8 billion dollar insurance provider fee (tax on insurance companies).
  •  Insurance Exchanges go into effect.
  • All insurance must be Guarantee Issue with no pre-existing condition
  • Rating Restrictions go into effect, limits the use of age as a rating factor (3:1 Ratio, only can vary rates based on age, geographic location and tobacco use.  Tobacco limited to 1.5:1 ratio).
  • Prohibits insurers from rescinding coverage because of illness.
  • Individual Mandate Goes into Effect, if you do not purchase health insurance the fine is  >  $95, or 1 percent of income in 2014,  $325 or 2% of income in 2015, 2016 it will be  >$ 695, or 2.5% of income.  Children’s penalty is half that of the adult.  The maximum fine for a family is $2,085 in 2016.  After 2016, it increases by a cost of living adjustment.
  • For children, the per-person sum is half the adult one.  The maximum family penalty is the greater of 2.5 percent of income or three times the per-adult penalty ($2,085 in 2016).  All penalties are capped at the cost of the lowest-priced conventional plan on the exchanges.
  • Employer Mandate Goes into effect, for over 50 employees the first 30 FTEs are subtracted (Fine $2,000 per employee annually).
  • Part Time Employees included in Calculation for purposes of mandate and fines.
  • Redefines small group coverage as 1-100 employees.  States may also elect to reduce this number to 50 for plan years prior to January 1, 2016.
  •  A catastrophic-only policy would be available for those 30 and younger.
  • Employer-sponsored plans offered outside of the exchange do not have to provide essential benefits coverage.
  • Employers with 200+ employee’s auto enroll new employees.
  • Essential Benefit Plan is created – Mandated Benefits.
  • Lifetime and Annual Limits are prohibited for Essential Benefits.
  • Coverage for approved clinical trials is mandated.
  • Grandfathered plans – Prohibit Annual/Lifetime Max and Pre-existing Conditions.
  •  No waiting periods beyond 90 days or fines for employer/insurer.
  • Employers with more than 50 employees that offer health insurance coverage must provide a “free choice voucher” to those employees who meet the following requirements: (1) an income less than 400 percent of the federal poverty level; (2) share of the premium exceeds 8 percent, but is less than 9.8 percent of income; and (3) choose to enroll in the exchange.  The voucher amount must be equal to what the employer would have paid if the employee had chosen the employer’s plan.  Employers will not be subject to fines for such an employee’s participation in the exchange.



  • Health Insurance Provider Fee (Tax) is increased to $11.3 billion dollars.


  • Health Insurance Provider Fee (Tax) remains at $11.3 billion dollars.


  • Health Insurance Provider Fee (Tax) is increased to $13.9 billion dollars.


  • Cadillac tax on high premium health insurance plans kicks in at $10,200 for individual, $27,500 for family, 40% tax and people 55 and older will be allowed to have higher insurance premium before excise tax kicks in).  Retirees and workers in high-risk professions like firefighting would have higher thresholds ($11,850 for singles or $30,950 for families), pegged to inflation.  By 2018, a majority of health insurance plans may qualify as a “Cadillac plan.”
  • Health Insurance Provider Fee (Tax) is increased to $14.3 billion dollars.


The Patient Protection and Affordable Care Act

Healthcare Reform Magazine –


Healthcare Reform Certification™

Attendees of the National Healthcare Reform Conference™, sponsored by the Healthcare Reform Magazine can attend the post-conference certification workshops and upon completion will receive a certification in Healthcare Reform.  This certification is specifically for CFO’s, Benefit Managers/HR, health insurance agents and consultants, TPA’s and insurers.  The purpose of the certification is to show the recipient has received advanced education in Healthcare Reform and has an understanding of the rules, regulations and compliance issues under Healthcare Reform and how it affects health insurance plans.  The certification shows that the recipient also has been educated by some of the nation’s experts on Healthcare Reform and has the ability to better advise those involved in the healthcare industry on the true effects and compliance issues of Healthcare Reform.  The conference will be taking place September 20-22nd, 2010 and more information can be found at  


Resources for More Information:

Healthcare Reform

National Healthcare Reform Conference, September 20-22nd, 2010 in Los Angeles, California

Employer Healthcare Congress, September 20-22nd, 2010 in Los Angeles, California

About HealthCare Reform Magazine

Whether you are for Healthcare Reform or against it, the reality is, it’s now enacted, and you need to know how it affects your business, and how to comply with it. The National Healthcare Reform Conference™ is focused on providing you with the answers and solutions.

The Healthcare Reform Magazine was created as the main source of information employers, consultants and health insurance agents, insurance companies, healthcare providers, governmental entities and other health insurance and healthcare industry stakeholders where they can learn about healthcare reform and to provide a central point of education and information for the recently passed healthcare reform and to provide updates as new rules, regulations and entities are created.

Cutting Edge ROI Expertise

This Healthcare Reform Magazine promises to provide you the most cutting edge advice and expertise, not by writers who know nothing about the industry, but written by the experts actively involved in the healthcare reform and the health reform industry who will give you practical advice that you can immediately use, and it will be advice and expertise that will provide you with ROI (a Return on Investment.). We guarantee our readers that by reading our health care reform magazine each month they will receive an ROI of their time!

  For more information visit  


About National Healthcare Reform Conference™,

Whether you are for Healthcare Reform or against it, the reality is, it’s now enacted, and you need to know how it affects your business, and how to comply with it.  The National Healthcare Reform Conference™ will be a fast paced advanced educational and networking event focused on providing you with the answers and solutions.

The National Healthcare Reform Conference™ is the 1st National Conference in the U.S. to address in detail the recently passed healthcare reform bill, the Patient Protection and Affordable Care Act.  With the sweep of a pen stroke President Obama signed into law the most comprehensive Healthcare Reform in the history of the United States.  The health insurance and healthcare world as we know it has changed forever.  The Healthcare Reform Bill is an issue being passionately debated across the country.  Some Americans think it is very positive, some very negative and others who see it in the grey area, between black and white, believing some parts of the Healthcare Reform Bill are positive and some negative. 

The National Healthcare Reform Conference™ will focus on providing detailed analysis of how Healthcare Reform really affects the U.S. and all the major players, such as insurance companies, employers, health insurance agents and healthcare providers.  The Healthcare Reform’s main focus will be to provide the detailed answers and solutions you are looking for. 

The National Healthcare Reform Conference™ is committed to bringing in the leading expert speakers from the U.S. Government, Insurance Companies, Employers, and Leading Legal Experts to explain what Healthcare Reform really means.

The National Healthcare Reform Conference™ is focused on bringing together up to 500 healthcare leaders to the conference, but because of high demand upon announcing the conference we expect the conference’s registration to possibly increase and be sold out at up to 2,000 attendees.

The National Healthcare Reform Conference™ is part of the Employer Healthcare Congress, , which is one of the leading healthcare conferences in the country with a focus on employers.

Those involved in healthcare and health insurance need to come to the National Healthcare Reform Conference™ to learn the details behind healthcare reform and to learn from their colleagues in the industry how they plan to address the sweeping change of Healthcare Reform.