Sunday, June 30, 2013

Men Over 40 Should Think Twice Before Running Triathlons

Men Over 40 Should Think Twice Before Racing Triathlons

...The 40-to-60-year age bracket ... now holds 32 percent of the membership in USA Triathlon, the sport’s official governing body in the U.S. More fitness conscious than previous generations, their numbers in competitive races are swelling, along with their risk of cardiac arrest. Triathlons, the most robust of endurance races requiring swimming, biking and running, are also believed to be the most risky.
“People need to understand that they’re not necessarily gaining more health by doing more exercise,” said David Prior, a cardiologist and associate professor of medicine at the University of Melbourne. “The attributes to push through the barriers and push through the pain are common in competitive sport, but that’s also dangerous when it comes to ignoring warning signs.”
While benefits of exercise are well-known, researchers now suspect that there may be a point at which exertion becomes dangerous, especially for middle aged men who, because of gender and changes that accompany aging, are more susceptible to cardiac arrest caused by vigorous exercise....

Triathlon Risk

The death rate for triathlons is about twice that of marathons because of increased intensity of the competition and the initial swimming leg of the events, according to a 2012 study published last year in the journal Mayo Clinic Proceedings.
“The swim seems to be a particularly dangerous time,” said Andre La Gerche, a cardiologist at Melbourne’s St Vincent’s Hospital and marathoner. “Paradoxically, in the marathon, it’s the opposite: it’s the last mile of the event where the vast majority of fatalities occur.” Researchers speculate that sprinting to the finish produces a rush of adrenalin that may trigger an abnormal rhythm in runners with susceptible hearts....
Causes of cardiac events in athletes vary depending on age. For those under 35, cardiovascular conditions are usually inherited. Heart incidents in older athletes can be due to coronary artery disease that they don’t know they have, Melbourne cardiologist Prior said.

Vessel Disease

By middle age, most people have developed some underlying early stage vessel disease, such as hardening or plaque buildup in their coronary arteries, said Kade Davison, who teaches clinical exercise science at the University of South Australia in Adelaide.
“If anyone is going to have a cardiac event they’re far more likely to have one during exercise,” said Davison. A person is seven times more likely to have a heart incident while exercising than at rest, he said, citing a 1984 New England Journal of Medicine study.
A person’s electrolyte balance changes while doing long distance endurance events like marathons or long cycle rides, Davison said. People might also suffer potassium or sodium depletion, or become dehydrated, which also contributes to extra stress on the heart.

Heart Tears

Intense exercise for periods longer than one to two hours can cause over-stretching and tiny tears of the heart’s tissue, said James O’Keefe, a sports cardiologist and head of preventative cardiology at the Mid America Heart Institute in Kansas CityMissouri. This type of repeated injury over years can cause irregular heart rhythms, increased inflammation, scarring and stiffening of the arteries, he said.
Athletic over-achievers tend to think that “more is better,” though when it comes to health, “moderation is almost always best,” said Mid America Heart Institute’s O’Keefe....
O’Keefe advises his patients, especially those over 45, to run no more than 20 miles a week, spread out over three to four days.
“That’s not to say you can’t get problems when you’re under 45,” said O’Keefe. “But you’re much more susceptible when you’re over 45 because it just takes longer for your body to recover and when you hammer it day in and day out, it just takes a toll on your body.”...

Saturday, June 29, 2013

Here is what happens when you call the government's Obamacare hotline

This is from Koch's Tour and it would be hysterical if it had not reduced my will to live so dramatically on a sunny Saturday morning.  She called in, did not give any personal information at all and was disconnected when she started asking tougher questions that the beurocrats could not answer.  This is how she describes her second call in. 

When pressed, it turned out that Obamabette #2 knew not only my name (and phone number), she knew my husband’s name as well – she even tried to tell me that perhaps my husband had also called earlier, and maybe he was the one who gave them that information.  Which he most definitely did not do, seeing as he WORKS FOR A LIVING, and therefore doesn’t deal with stuff like this (that’s my job).

When I asked her how they had gotten access to my personal information, she couldn’t give me a good explanation.

When I asked her why my information wasn’t kept private – per my explicit request – she couldn’t give me a good explanation either.

When I mentioned that a citizen might have grounds for a privacy lawsuit in light of this information, she sounded taken aback.

When I said that maybe all of the stuff that’s been reported in the media about Big Brother snooping on all of us has some merit, she got really quiet…….

Mind you, I don’t fault her for this – she’s just an entry-level employee; what bothers me is that if our government wants to make life difficult for people who are asking “inconvenient” questions, all some employee would have to do is to flag a call like mine for “further review”.

We can’t have any troublemakers in Obama’s land of Skittles and unicorns, now can we? 

Read her entire post.

What's Still Unclear about FMLA After the Court's Ruling?

But what about employees who live in a state that does not recognize same-sex marriage?  Are they entitled to FMLA leave to care for their spouse?  

As an initial matter, the regulations look to the employee's "place of domicile" (state of primary residence) to determine whether a person is a spouse for purposes of FMLA.  Therefore, even if the employee formerly lived or was married in a state that recognized the same-sex marriage, he/she is unlikely to be considered a spouse in the "new" state for purposes of FMLA if the state does not recognize the marriage.  This is no small issue, since 30+ states currently do not recognize same-sex marriage and some don't go all the way (e.g., Illinois, which recognizes same-sex unions, not marriages).  

Surely, some might argue that the United States Constitution requires other states to recognize the marriage; however, this issue is far from settled.  My friend and Indiana University Maurer School of Law professor Steve Sanders writes a compelling article for SCOTUSblog contending that an individual married in one state maintains a "significant liberty interest" under the 14th Amendment’s Due Process Clause as to the ongoing existence of the marriage.

Here, employers clearly need some help from the DOL.  Might the DOL draft regulations on how employers administer the FMLA in situations where the employee's spouse is not recognized under state law?  If so, we could see the DOL give life to concepts such as a "State of Celebration" rule, in which a spousal status is determined based on the law of the State where the employee got married.  

Without more guidance, it still is too early to tell where this question is heading.  Nevertheless, the employer community looks forward to helping shape these rules. 

Full text: FMLA Insights

Hawkin' Obamacare Update: NFL Won't Take Your Tax Dollars to Bestow the Virtues of Obamacare to You

One small victory in the incremental battle against the federal behemoth.  

I'm as free market as they come.  I have no problem with any celebrity or professional athlete making as much as they can in endorsements.  What I strongly object to is your and my dollars be squandered as bribe money to political constituencies and celebs/pro athletes to promote a law most of us don't want.  

If you are going to take my tax dollars to "care for the most needy" and you tell me that once you pass the law we will love it as we "see what is in it"; then fine, take my money to care for the sick.  But don't use that money to buy more votes and spread propaganda because the law you passed over three years ago is as unpopular today as it has ever been.  

This is from The Blaze

NFL Says No to Obama Administration

NFL Has No Plans to Help Promote Obamacare

Photo Credit: Rick Osentoski

Despite being encouraged by the federal government to help promote President Barack Obama’s health care law, an NFL spokesman on Friday said the league has “no plans” to work with the White House regarding the implementation of “Obamacare.”

The Department of Health and Human Services has reportedly reached out to the NFL — as well as the NBA and MLB — to help pitch the health care overhaul to its audience, particularly younger Americans. Earlier this week, HHS Secretary Kathleen Sebelius said the NFL and a “variety of sports affiliates” had been “enthusiastically engaged” with the administration regarding the idea.

On Friday, Brian McCarthy, vice president of communications at the NFL, said in an email that the league has responded to letters from members of Congress.

“We currently have no plans to engage in this area and have had no substantive contact with the administration about (Patient Protection and Affordable Care Act’s) implementation,” McCarthy wrote....

“More than half of Americans oppose the law. According to a CNN/ORC International Poll last month, 43% favor the Affordable Care Act, while 54% oppose it....

Is The Pervasive Theory of Cost Shifting Largely a Myth? Cost Shifting and Price Discrimination Explained

One of the most widely held beliefs in healthcare is that when the government cuts Medicare or Medicaid reimbursements those costs are simply shifted over to private insurers (born primarily by employers and employees) in the form of higher costs.  

The fascinating reality is that the theory of cost shifting is largely myth.  The best studies from well known economists are showing that for every dollar that Medicare drops reimbursement, only about 20 cents are shifted to the private insurance market.  

I've linked one summar of such a study here.  And you navigate up to the "cost shifting" tag cloud in the upper right section of this link you can see a myriad of data debunking the myths that cost shifting moves as much as 50 to 80 cents on the dollar.   

A 20% shift is not chump-change as one of the commenters points out, but it also means 80% of real savings.  This will then lead into a discussion about whether providers are paid too much - which can be hotly debated all on its own.   

What many folks may think of as "cost shifting" is really the economic principal of price discrimination, which does occur regularly in healthcare and other markets.  Austin Frankt describes this nicely here:

It is well-known that hospitals charge different payers (health plans and government programs) different amounts for the same service even at the same point in time, a phenomenon known to economists as “price discrimination” (Reinhardt 2006). Price discrimination is not unusual. Airlines engage in it (charging passengers on the same flight different ticket prices depending on purchase date), as do hotels (different room rates by date of purchase), colleges (via financial aid), movie theaters (senior and child discounts), and many other industries. ... 

However, price discrimination does not mean that someone pays more because someoneelse paid less. In fact, a business that was trying to earn as much profit as it could should charge each customer as much as it can without driving too many of them to a competitor. In other words, the price you pay at the movies is the profit maximizing price. Even if another class of customer (senior citizens or kids) pays less, the profit maximizing price for you is not higher because they do so. In fact, if the theater lowered its price for senior citizens further and raised those for younger adults, it would drive away the younger ticket purchasers and attract more senior citizens, lowering profit, not raising it.

However, for some reason when it comes to health care–and in particular, hospital service–it is widely believed that private insurers have to pay more because public programs pay less. This phenomenon is called “cost shifting” (Morrisey 1993, 1994, 1996, Ginsburg 2003).

Friday, June 28, 2013

June 28th Appearance on the Armstrong and Getty Radio Show re: ObmaCare and Public Dollars to School Kids to Sell PPACA

I was on with Jack and Joe again this morning to discuss a few basics of the law as well as the State of California's new initiative to use school kids to "sell" Obamacare to their friends and family. (More on that story here.)

Here is the segment:

You can hear all of my May and June appearances on the show in this playlist.

All Armstrong and Getty Shows can be heard via podcast.
  • Listen in the Bay Area? Click here to get the podcasts.
  • Listen in the Sacramento area? Click here to get the podcasts.

UPDATE: About 6 hours after we discussed this topic regarding LA's public schools, Fox Business and Reason Magazine discussed the same here.

IRS and Treasury anticipate employers may try to 'exploit', using temporary employment agencies in PPACA and they are watching

If your business relies upon temporary staffing agencies or any other shared-employment arrangement, you must make sure that benefits are provided to those folks or risk being fined.  This is a great summary on the topic from E is for ERISA: (Hat tip to Dr. Ryan Kennedy.)
General Anti-Abuse Rule. The proposed regulations also provide that any hour of service will be disregarded if the hour of service is credited, or the underlying services are requested or required of the employee, for the purpose of circumventing employer shared responsibility rules. 
Use of Temporary Employment Agencies. Thepreamble to the regulations identify practices that the IRS and Treasury anticipate employers may try to exploit, using temporary employment agencies as purported common law employers, and state that final regulations on employer shared responsibility duties will expressly prohibit such practices. In one scenario the employer would purport to employ individuals only part of a week, such as 20 hours per week, but would then hire the same individuals through a temporary employment agency who acts as their common law employer for the remaining hours in the week, with the result that the individuals do not qualify as full-time employees, for shared responsibility purposes, of either the employer “client” nor the temporary employment agency. An alternative scenario would split the hours between two separate temporary employment agencies. The preamble minces no words in commenting on these strategies: 
“The Treasury Department and the IRS anticipate that only in rare circumstances, if ever, would the “client” under these fact patterns not employ the individual under the common law standard as a full-time employee. Rather, the Treasury Department and the IRS believe that the primary purpose of using such an arrangement would be to avoid the application of section 4980H.” 
As this excerpt makes clear, the government intends that the employer shared responsibility duties will attach to businesses based on “common law” employment relationships, irrespective of third party involvement. Very generally, a common law employment relationship exists if the employee is subject to the will and control of the employer not only as to what work must be done but as to how the work will be performed. (This is a gross oversimplification...)
Here are some more resources on this topic:

Here is what the IRS has to say about "Common Law Employees:"  
Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. 
Example: Donna Lee is a salesperson employed on a full-time basis by Bob Blue, an auto dealer. She works 6 days a week, and is on duty in Bob's showroom on certain assigned days and times. She appraises trade-ins, but her appraisals are subject to the sales manager's approval. Lists of prospective customers belong to the dealer. She has to develop leads and report results to the sales manager. Because of her experience, she requires only minimal assistance in closing and financing sales and in other phases of her work. She is paid a commission and is eligible for prizes and bonuses offered by Bob. Bob also pays the cost of health insurance and group-term life insurance for Donna. Donna is an employee of Bob Blue.
The IRS formerly used what has become known as the "Twenty Factor" test. Under pressure from Congress and from representatives of labor and business, it has recently attempted to simplify and refine the test, consolidating the twenty factors into eleven main tests, and organizing them into three main groups: behavioral control, financial control, and the type of relationship of the parties. Those factors appear below, along with comments regarding each one (source: IRS Publication 15-A, 2010 Edition, page 6; available for downloading from (PDF). Another good IRS resource for understanding the independent contractor tests is at,,id=99921,00.html. In the first of the two pdf's in this paragraph the IRS provides on pages 7-8:

Common-Law Rules

To determine whether an individual is an employee or an independent contractor under the common law, the relationship of the worker and the business must be examined. In any employee-independent contractor determination, all information that provides evidence of the degree of control and the degree of independence must be considered.

Facts that provide evidence of the degree of control and independence fall into three categories: behavioral control, financial control, and the type of relationship of the parties. These facts are discussed next.

Behavioral control. 
Facts that show whether the business has a right to direct and control how the worker does  the task for which the worker is hired include the type and degree of:

Instructions that the business gives to the worker.  An employee is generally subject to the business' instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.
  • When and where to do the work.
  • What tools or equipment to use.
  • What workers to hire or to assist with the work.
  • Where to purchase supplies and services.
  • What work must be performed by a specified individual.
  • What order or sequence to follow.
The amount of instruction needed varies among different jobs. Even if no instructions are given, sufficient behavioral control may exist if the employer has the right to  control how the work results are achieved. A business  may lack the knowledge to instruct some highly specialized professionals; in other cases, the task may require little or no instruction. The key consideration is whether the  business has retained the right to control the details of a  worker's performance or instead has given up that right.

Training that the business gives to the worker. An employee may be trained to perform services in a particular manner. Independent contractors ordinarily use their own methods.

Financial control
Facts that show whether the business has a right to control the business aspects of the worker's  job include:
  • The extent to which the worker has unreimbursed business expenses. Independent contractors are more likely to have unreimbursed expenses than are employees. Fixed ongoing costs that are incurred regardless of whether work is currently being performed are especially important. However, employees may also incur unreimbursed expenses in connection with the services that they perform for their employer.
  • The extent of the worker's investment. An independent contractor often has a significant investment in the facilities or tools he or she uses in performing services for someone else. However, a significant investment is not necessary for independent contractor status.
  • The extent to which the worker makes his or her services available to the relevant market. An independent contractor is generally free to seek out business opportunities. Independent contractors often advertise, maintain a visible business location, and are available to work in the relevant market.
  • How the business pays the worker. An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time. This usually indicates that a worker is an employee, even when the wage or salary is supplemented by a commission. An independent contractor is often paid a flat fee or on a time and materials basis for the job. However, it is common in some professions, such as law, to pay independent contractors hourly.
  • The extent to which the worker can realize a profit or loss. An independent contractor can make a profit or loss.
Type of relationship.

Facts that show the parties' type of relationship include:
  • Written contracts describing the relationship the parties intended to create.
  • Whether or not the business provides the worker with employee-type benefits, such as insurance,  a pension plan, vacation pay, or sick pay.
  • The permanency of the relationship.If you engage a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that your intent was to create an employer-employee relationship.
  • The extent to which services performed by the worker are a key aspect of the regular business of the company.If a worker provides services that are a key aspect of your regular business activity, it is more likely that you will have the right to direct and control his or her activities. For example, if a law firm hires an attorney, it is likely that it will present the attorney's work as its own and would have the right to control or direct that work. This would indicate an employer-employee relationship.
IRS help. If you want the IRS to determine whether or not a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.

Thursday, June 27, 2013

Despite the The End Of DOMA, Obamacare Will Keep Some from Marrying

But people who will be eligible for coverage under Obamacare starting next year may want to consider all the financial consequences of marriage.

"Same-sex partners with similar incomes may lose out," says Brian Haile of Jackson Hewitt Tax Service, who sent this memo around today.

For example, Haile says, same-sex partners who each have an income of $40,000 may be eligible for the premium assistance tax credits under the Affordable Care Act, but only if they remain single.

If they marry (in those states that allow same-sex marriage), then they would lose eligibility because their income would be over the threshold for a household of two.

Native Americans Exempted from Obamacare

On June 26th, the Obama administration broadened an exemption for American Indians from PPACA's requirement that virtually every U.S. resident has health insurance starting next year or pay a penalty (I mean tax). New rules clarify that people who are eligible to receive medical care through the federal Indian Health Service will be exempt from the requirement to have health insurance or face fines from the Internal Revenue Service. The Indian Health Service, a division of U.S. Health and Human Services, oversees a network of clinics that are required through treaty obligations to serve all patients of Indian ancestry, even if they cannot document their federal tribal status.  

Employee Benefit Obligations Post-DOMA: Retroactive Tax Relief? Self Funded Plans? And 1,000 Federal Laws to Now Conform

Here are the most interesting legal nuances and open questions from a longer SHRM article on the Supreme Court's DOMA Rulings. The possibility of getting retroactive tax refunds for open years really has the ability to create a plethora of paperwork and administration: 

For a legally married couple who live in a state where same-sex marriage is recognized:

    • Employers with self-insured welfare plans (meaning benefits are paid out of the company’s general assets) may not have to extend spousal-benefit coverage to same-sex spouses, because federal law does not require spousal welfare-benefit coverage and because state insurance law mandates do not apply to self-insured plans. However, employers that continue to provide benefit coverage only to opposite-sex spouses “are almost certain to face legal challenges under federal discrimination law," Solomon advised.
    • Employees will no longer have to pay federal income taxes on the income imputed for an employer’s contribution to a same-sex spouse’s medical, dental or vision coverage. And workers can pay for same-sex spouses’ coverage on a pretax basis under a Section 125 plan.

“The above rules only apply to same-sex spouses who were married in and live in a state where same-sex marriage is legal,” Solomon clarified. “The big open question is what happens to same-sex spouses who live in states such as Florida or Texas," which don't recognize same-sex marriages. “No one can answer the question until additional guidance is issued. It is possible that the answer can vary for different purposes—for example, state of residence will likely carry the day for tax filing and imputed income purposes, but it is possible the IRS could say that 'state of celebration' governs for pension plan purposes. In the meantime, it appears that employers can choose either approach, but it will be imperative to amend plans to add clear plan language to document the employer's approach.”...

Retroactive Benefits

Another question is whether employees can claim benefits retroactively—for instance, seeking past tax relief for spousal health care benefits—if they've been married to their same-sex spouse in a state that recognizes same-sex marriage. Solomon observed: “It is certainly not clear yet, but I would think employees should be able to amend tax returns for open years to claim refunds. And employers should be able to get refunds of FICA taxes for prior open years.” 

Retroactivity “is one of the most important practical questions facing employers and plan sponsors” following the DOMA ruling, added Joanne Youn, an ERISA and benefits law attorney at Caplin & Drysdale in Washington, D.C. “While the court did not specifically address retroactivity broadly, the decision arose out of a claim for refund of estate taxes paid by a same sex-spouse in a prior tax year. The IRS has authority under existing law to grant relief from retroactivity; however, even if it were to do so, its authority would not extend to other statutes affecting employee benefits, such as ERISA.”

The decision references the fact that “over 1,000 federal laws contain provisions specifically applicable to spouses that may be affected and should be coordinated,” Youn noted. “Therefore, I would expect that additional guidance will be issued in the coming months.”

Deferring to State Law

Rita F. Lin, a partner at Morrison Foerster in San Francisco, said that many federal laws governing spousal benefits do not contain a statutory definition indicating which law governs whether an individual is “married.”...

Benefit for All: Free Lunches for Everyone Under 18 Promoted in Sacramento, 'No Income Requirements or Restrictions!'

When did we vote for this one?

Wednesday, June 26, 2013

ObamaCare 'Doesn't Go Far Enough' Proposed CA Law Wants Employer Funded Health and Dental for Part Time, Seasonal and Illegal Workers

This is is from

Millions of Californians will remain uninsured after the signature reforms of the Affordable Care Act roll out in 2014. Legislators are proposing an employer-funded trust to insure many of those who will likely fall through the cracks of the Affordable Care Act.

Assemblyman Manuel Perez introduced Assembly Bill 175, which would establish a trust fund, paid for by employers, private donors and philanthropic organizations, to provide comprehensive health insurance coverage, including primary care, dental and mental health benefits, to workers who are not covered by the ACA or the proposed expansion of Medi-Cal.

The bill proposes that the California Department of Health Care Services administer the fund and nonprofit community health centers would apply to the trust for money to serve the number of uncovered workers coming to their clinic for the time those workers are employed by the employers contributing to the fund.

Even after the first five years of implementation of the Affordable Care Act (ACA), three to four million people in California will probably remain uninsured....

The report predicts that nearly 40 percent of the uninsured won’t have an affordable coverage option, which is defined by the ACA as 8 percent or less of family income. And about a third, approximately one million people, will be undocumented individuals. They are barred from buying insurance on Covered California, the state’s new health benefit exchange for individuals, families and small businesses, and from participating in the proposed expansion of Medi-Cal.

These rules may affect immigrants on the path to citizenship pending the outcome of national immigration reform. Based on the current House and Senate immigration bills, it could take them 10 to 20 years to become eligible for health care under the ACA.

In the Senate bill, agricultural workers would be eligible for ACA services after five years if they meet certain criteria to become permanent resident aliens, said Arnoldo Torres, policy consultant for the sponsors of AB 175....

“For employers who want to cover their workers, this is another option,” Perez said. “The ACA is historical for us, …but it doesn’t go far enough.” AB 175 is expected to serve employees of small businesses, agriculture, restaurants, sales and service industries, primarily people who don’t receive health insurance through their jobs and who can’t afford to buy it on their own.

The bill is sponsored by three safety net health-care providers: Clinica de Salud del Valle de Salinas in Salinas, Clinicas Del Camino Real Inc. of Ventura and the Borrego Community Health Foundation serving San Diego and Riverside counties.

“Our objective is to create a foundation and a premise that funding for the healthcare of workers should be coming from the employers,” Torres said.

Now that Obesity is a Disease, Is it Criminal to Blog About Anti-Obesity Measures Without a Medical License?

I really wish I had not read this.  From Mark at the Daily Apple: (Link)

Now, the obese man won’t even think about looking into lifestyle modifications. He’ll just add the next big anti-obesity drug to his daily cocktail, right between the statins and the beta blockers.

I also worry about the legal fallout from this decision. Are people writing those free Primal (or any diet) blogs full of advice on losing weight now subject to governmental regulation because they’re dispensing medical advice regarding an officially recognized disease? A similar thing already happened to Steve Cooksey, who committed the egregious sin of dispensing nutritional advice to people with another recognized disease: type 2 diabetes.

Rate shock Follow up in California: Twice the Cost for Equal Benefits - Comparison

This is the best, simple, analysis I've seen yet on the real prices of California's proposed Exchange Plans. 

The following is a guest post at the Incidental Economist by Sam Richardson, an instructor at the LBJ School of Public Affairs, UT-Austin. Sam is also a PhD candidate in Health Policy (economics concentration) at Harvard, where next month he will be defending his dissertation on quality-based provider payment. You can follow him on Twitter: @Prof_Richardson.

Avik Roy and others have been beating the drum on “rate shock”, the idea that younger, healthy people (particularly young, healthy males or “bros”, for short) will face much higher premiums under Obamacare than they pay for non-group insurance now. One counter to their argument has been that Obamacare’s mandated minimum coverage requirements would mean that while bros will pay higher premiums, they will get more generous coverageRoy’s response has been that bros currently buying cheap plans clearly don’t value more generous coverage, or else they would purchase it. But everyone (except perhaps the Capital One baby) places some value on more generous insurance; the question is simply how much.

I decided to do some digging into the minimum coverage question, and it turns out that Roy has a much better response available: at least in California, bronze plans on the exchanges aren’t any more generous than the cheapest non-group plans currently available. (Ohio is potentially another story, where one of the comparison plans used by the Department of Insurance had a $25,000 deductible.)

I don’t have an army of interns, so I focus on plans available in Sacramento county (population 1.4 million, with health insurance premiums close to the state median: not as cheap as Los Angeles, and not as expensive as the San Francisco Bay Area). Going to, and entering a Sacramento zip code (95811), I find that the cheapest plan available to a 25-year-old is $94/month, offered by Health Net. (Note that in California men and women are currently charged the same premiums, so what applies to a bro also applies to a sis.) The second-cheapest is the $100/month 50/5000 plan from Kaiser Permanente. Because Health Net is not participating in the exchange in Sacramento, I picked the Kaiser plan, and compared it to the Kaiser bronze-level exchange plan, which is at $205/month is the second cheapest bronze-level plan, after a $197/month plan from Anthem Blue Cross. A nice benefit of comparing Kaiser’s plans is that Kaiser’s provider network is the same across all of its plans, and there has been concern that California insurers may be bringing down exchange premiums by excessively restricting their networks. Data on California exchange premiums are from’s 2014 Health Plans and Rates booklet, and data on the standardized benefits packages at each level are available here.

The table provides a summary of benefits for each plan, and it is striking how similar the plans are. The bronze plan has a $400 higher out-of-pocket maximum and somewhat higher copays, but the 50/5000 plan does not cover prescription drugs. ... The actuarial value of a plan is an overall summary of the generosity of its benefits (actuarial value is the expected percent health care spending that will be paid by the plan, with the remainder paid by the enrollee). Luckily for us CMS has posted an actuarial value calculator: using the calculator I find that the overall generosity of the plans is nearly identical. ...

AV compare

Please let me know if you replicate this, looking at different plans in different parts of California, or in different states. But I would be surprised if rate shock in California will be driven to any meaningful extent by increased insurance generosity.

What will be the Legal Impact to your Company of Today's Supreme Ct. Rulings on Same Sex Marriage?

The below is from our friends at the law firm of Kutak and Rock:

Impact on Employee Benefit Plans. If an employee benefit plan uses terms such as “marriage” and “spouse,” the plan must interpret these terms according to state law and on a state-by-state basis. In states where same-sex marriage is legal, this means that an employee’s same-sex spouse should be considered a spouse for purposes of the employer’s plan. ...

On a going-forward basis, if a California employee has a same-sex marriage that is recognized in California, then for employee benefit purposes, the employer must treat the same-sex spouse in the same way it would treat an employee’s opposite-sex spouse.

Selected Employee Benefits Laws Implicating “Spouses”

At the present time, same-sex marriages are legal in the following states: California, Connecticut, Delaware, District of Columbia, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington. With respect to employees working and residing in those states, employers will generally be required to give same-sex spouses all of the same benefit-related rights that are given to opposite-sex spouses. (How an employer should treat an employee who works in one state and resides in another will depend on details that are beyond the scope of this Client Alert.) We have highlighted some of the more significant of these rights and opportunities below. 

Qualified Retirement Plans

  • In certain plans, the participant’s spouse must be eligible for a Qualified Joint and Survivor Annuity and/or a Qualified Preretirement Survivor Annuity.
  • In certain plans, the spouse is the default beneficiary for the participant’s account. 
  • In a 401(k) plan that allows hardship withdrawals, such a withdrawal generally may be based on the medical or educational needs of a participant’s spouse. 
  • In some cases, a surviving spouse is entitled to defer minimum required distributions following the participant’s death.
  • A qualified domestic relations order may award a portion of a participant’s retirement benefit to a former spouse.

Health and Welfare Plans

  • Spouses (and their children) may be eligible to enroll (for example, in a health plan) or receive a benefit (for example, a death benefit from a life insurance plan).
  • If a plan is subject to COBRA, continuation must be offered to employees, spouses, and the spouse’s children who are qualified beneficiaries.
  • HIPAA special enrollment rights must be available to an employee’s spouse and the spouse’s children. 
  • Medical expenses incurred by a spouse or a spouse’s child may be reimbursed by health reimbursement accounts or health flexible spending accounts.
  • An employee may change elections under a cafeteria plan depending on various events experienced by the employee’s spouse and children.
  • An employee may be entitled to FMLA leave if the spouse has a serious medical condition.

Action Items

In states where same-sex marriage is legal, employers will generally be required to treat same-sex spouses no differently than opposite-sex spouses on a going-forward basis. 

Qualified Retirement Plans

  • Inventory. Identify all plan provisions involving “marriage,” “spouse,” and similar terms.
  • Employer Determinations. Identify any determinations relating to marital status that are made by the employer under these provisions, and determine whether adjustments are required to recognize same-sex marriages and spouses.
  • Vendors. Contact defined contribution plan vendors and request information about how and when they intend to update their processes and procedures related to participant distributions and reporting (e.g., hardship distributions, death distributions, and qualified domestic relations orders). Contact pension plan vendors to discuss benefit calculations which take into account marital status (e.g., survivor annuities) and the process for sending updated statements.
  • Documentation. Determine whether the language in the plan documents and summary plan descriptions should be amended to address same-sex marriage and same-sex spouses. Amend the documents as needed.

Health and Welfare Plans

  • Inventory. Review all benefit arrangements to determine the instances in which spouses and their children are eligible to enroll or are eligible to receive a benefit. Prioritize those benefit arrangements that require spousal enrollment, such as health coverage or optional life insurance.
  • Employer Determinations. Identify any determinations relating to marital status that are made by the employer under these provisions, and determine whether adjustments are required to recognize same-sex marriages and spouses.
  • Enrollment. If same-sex spouses were not previously offered benefits on the same basis as opposite-sex spouses, formulate a plan for offering enrollment to these same-sex spouses. Some employers may want to hold a mini-open enrollment, while others may offer enrollment upon request. At a minimum, an employee who currently has a same-sex spouse should be treated as having acquired a new dependent—the employee should be permitted special enrollment rights in any applicable group health plan with regard to the spouse and, where applicable, the spouse’s children. 
  • Imputed Income. Coverage for same-sex spouses and their dependents will no longer result in imputed income and will require changes for payroll and accounting....

What will be the Financial Impact to your Company of Today's Supreme Ct. Rulings on Same Sex Marriage?

Many companies will see modest new benefits-related costs as a result of today's ruling that struck down the Defense of Marriage Act.  This is from David Mcann at

Today’s ruling removes that prohibition with regard to same-sex married couples in the states where such marriages are lawful: Connecticut, Delaware (as of July 1), Iowa, Maine, Maryland, Massachusetts, Minnesota (as of Aug. 1), New Hampshire, New York, Rhode Island (as of Aug. 1), Vermont and Washington, as well as the District of Columbia [and California within a month]....

The ACA provision under which employers must offer health benefits to employees and their dependents or pay a federal penalty doesn’t define “dependents” as including spouses [so companies will not be compelled to offer healthcare to spouses of any sex in 2014]. But following the court decision, children of same-sex spouses in the applicable states must now be eligible for coverage, notes Fredric Singerman, an attorney with Seyfarth Shaw....

Another potential cost hit, applicable to all employers, involves death benefits under defined-benefit pension plans and 401(k) plans. Some such plans stipulate that a death benefit is payable only to a spouse. Now, of course, more such payouts will have to be made.

It’s unclear so far whether death benefits will be payable to a same-sex couple that moves from a state where their marriage is legal to one where it isn’t. “If a couple moves from New York to Texas and the plan participant’s spouse passes away there, what happens to the death benefits?”...

Almost all employers will have to absorb some administrative costs. For example, until now the value of health benefits for same-sex spouses of plan participants and their dependents was taxable. That will still be the case in states where same-sex marriages are unlawful. But employers will have to “go back and rejigger the tax treatment for those people” in the jurisdictions where such marriages are allowed, Singerman says.

On the plus side of that issue, Singerman suggests that employers may be able to file for tax refunds. “It seems to me they should be able to. They’ve been paying FICA tax on those benefits, but under the decision it was unconstitutional for the IRS to treat same-sex spouses differently from opposite-sex spouses in this regard.” Refunds potentially will be available for taxes paid in the past three years, Singerman says.

There could be a fair-sized range of other administrative costs with respect to employees in the jurisdictions where same-sex marriages are legal. “If marital status affects the delivery of benefits to an employee’s same-sex spouse or that spouse’s child,” says human-resources consultancy Mercer, employers may need to: amend the benefits plan’s definition of “spouse”; reprogram tax-reporting systems; and update enrollment forms, distribution-election forms, tax notices, beneficiary designation forms, summary plan descriptions, and the like.

Other steps may involve revisiting domestic partner policies and evaluating whether DOMA “workarounds” adopted in the past are still needed to achieve human-resources objectives....

Tuesday, June 25, 2013

ObamaCare Hub? Just Imagine the IRS and NSA on Steroids

I don't think any of us had any real appreciation for how far-reaching Obamacare would be.  I thought I grasped the enormity of three primary regulatory agencies (HHS, DOL and IRS) writing regulations that I project will ultimately reach about 140,000 pages when finally completed.  But creating a "hub" for seven different agencies jam packed with people's personal, medical and financial data ... what could go wrong?    

This is from John Merline at Investors Business Daily (Pointer from John Goodman):
...Sen. Max Baucus, D-Mont., asked HHS to provide "a complete list of agencies that will interact with the Federal Data Services Hub." The Hub is a central feature of ObamaCare, since it will be used by the new insurance exchanges to determine eligibility for benefits, exemptions from the federal mandate, and how much to grant in federal insurance subsidies. 
In response, the HHS said the ObamaCare data hub will "interact" with seven other federal agencies: Social Security Administration, the IRS, the Department of Homeland Security, the Veterans Administration, Office of Personnel Management, the Department of Defense and — believe it or not — the Peace Corps. Plus the Hub will plug into state Medicaid databases. 
And what sort of data will be "routed through" the Hub? Social Security numbers, income, family size, citizenship and immigration status, incarceration status, and enrollment status in other health plans, according to the HHS. 
"The federal government is planning to quietly enact what could be the largest consolidation of personal data in the history of the republic," noted Stephen Parente, a University of Minnesota finance professor. 
Not to worry, says the Obama administration. "The hub will not store consumer information, but will securely transmit data between state and federal systems to verify consumer application information," it claimed in an online fact sheet
But a regulatory notice filed by the administration in February tells a different story.
That filing describes a new "system of records" that will store names, birth dates, Social Security numbers, taxpayer status, gender, ethnicity, email addresses, telephone numbers on the millions of people expected to apply for coverage at the ObamaCare exchanges, as well as "tax return information from the IRS, income information from the Social Security Administration, and financial information from other third-party sources." 
They will also store data from businesses buying coverage through an exchange, including a "list of qualified employees and their tax ID numbers," and keep it all on file for 10 years. 
In addition, the filing says the federal government can disclose this information "without the consent of the individual" to a wide range of people, including "agency contractors, consultants, or grantees" who "need to have access to the records" to help run ObamaCare, as well as law enforcement officials to "investigate potential fraud." 
Rep. Diane Black, R-Tenn., complained that just months before ObamaCare officially starts, the Obama administration still hasn't answered "even the most basic questions about the Data Hub," such as who will have access to what information, or what training and clearances will be required. 
Beyond these concerns is the government's rather sorry record in protecting confidential information.   
Late last year, for example, a hacker was able to gain access to a South Carolina database that contained Social Security numbers and bank account data on 3.6 million people. 
A Government Accountability Office report found that weaknesses in IRS security systems "continue to jeopardize the confidentiality, integrity, and availability of the financial and sensitive taxpayer information." 
A separate inspector general audit found that the IRS inadvertently disclosed information on thousands of taxpayers between 2009 and 2010. In 2011, the Social Security Administration accidentally released names, birth dates and Social Security numbers of tens of thousands of Americans. 
If these government agencies can't protect data kept on their own servers, how much more vulnerable will these databases be when they're constantly getting tapped by the ObamaCare Data Hub? ...
A recent CNN poll found that 62% of Americans say "government is so large and powerful that it threatens the rights and freedoms of ordinary Americans." ...

Paying People Not to Work: Disability's Safety Net Broadening Into a Hammock

  • Amount of working-age Americans receiving federal disability payments has roughly doubled in 30 years. 
  • It rose from 23 of every 1,000 workers in 1980 to 47 of every 1,000 workers in 2011.
  • 5% of the potential work force is more or less permanently out of action.
Have we somehow devolved into a far less safe society with our endless helmet, seatbelt and cell phone laws? Hardly. This article summarizes nicely - The Rise of Disability -
...The government likes to describe the increase mostly as the result of two demographic trends. Americans, on average, are getting older, and old people are less healthy. Also, as more women have entered the labor force, the share of female workers with health problems has climbed closer to the male average.

Independent experts, however, see substantial evidence that disability insurance increasingly serves as a safety net for people who cannot find jobs – people, that is, who might still have the ability to perform at least some kinds of work.

A new research note from the Federal Reserve Bank of San Francisco estimates 40 percent to 60 percent of the growth in disability claims in recent decades is a result of the program’s attracting a broader constituency. They note that it has become easier to qualify, as claims increasingly are judged on subjective criteria. And the benefits have become more lucrative, particularly for low-wage workers. The formula is based on average wages, so rising income inequality has increased benefit payments even as the wages of most workers have stagnated.

The difference is important because disability insurance is a very sticky kind of safety net. Historically, few people who qualify for disability during downturns return to the work force during rebounds, creating a twofold drag: Fewer workers and more people depending on each of those workers to pay their taxes.

The difference also is important because the disability program is running out of money. The government projects that the disability fund will not be able to meet all claims in full by 2016....
Shared from The Rise of Disability - | Binyamin Appelbaum.

California Public Schools Training Kids to Sell ObamaCare with Taxpayer Dollars

I really hate to sound like a broken record, but if the law is so wonderful why are we spending millions to "sell" it?   

Oh, and just in case you were concerned that your tax dollars would not go to public school kids to indoctrinate them on the virtues of government healthcare, rest assured, they have that covered here in California.  

The Los Angeles Unified School District will use a state grant to train teens to promote ObamaCare to family members. Covered California, the state's health insurance exchange, announced grants of $37 million on May 14 to promote the nationally unpopular law.

LAUSD will receive $990,000. The district listed as a primary outcome for its project, “Teens trained to be messengers to family members.”

Covered California spokeswoman Sarah Soto-Taylor said staff have not questioned this goal.  

“We have confidence that the model LA Unified brought to the table will be successful in reaching our target population, which includes family members of students,” she said.

LAUSD will also use tax-paid staff to promote ObamaCare through phone calls to students’ homes, in-class presentations, and meetings with employees eligible for ObamaCare’s taxpayer-covered healthcare, the grant award says.

One in three Los Angeles students never graduates high school....

If the project is successful, Los Angeles families can expect more use of students to push government-preferred messaging.

“Teens are part of a ‘pilot’ program to test whether young people can be trained as messengers to deliver outreach and limited education to family and friends in and around their homes,” said Gayle Pollard-Terry, a LAUSD spokesman, in an email. “Teens will be educating adults that they already know (e.g., family or friends) and not other adults.”...

Learn more - Covered California, Outreach and Education Grant Program Notice of Intent to Award, May 14, 2013:

Supreme Court clarifies who counts as a “supervisor” for purposes of harassment liability

Yesterday the Supreme Court barely (5-4) ruled that a "supervisor" for purposes of harassment liability must be someone who has the ability to take tangible employment actions against someone as opposed to direct tasks, for example, in one project area.  It was a win for employers. The below summary nicely encapsulates the reality if the ruling from The Coyote Blog (a small business owner in Arizona) and Walter Olson.  

Walter Olson has an article on three recent 5-4 decisions where we narrowly avoided Supreme Court rulings that would have further separated liability as a business owner from actual bad actions.  This one in particular resonates with me:

Vance raised the question of who counts as a “supervisor” for purposes of harassment liability. Under existing Court precedent, employers are more or less automatically liable when a “supervisor” engages in harassment. When it’s a co-worker, they are still frequently liable – e.g., if they have received a complaint about it but not fixed things, or if they have negligently allowed the situation to develop – but liability isn’t as close to automatic. As all Justices recognized, however, the old model of a workplace with a military-like chain of command is fast giving way to newer models in which it is extremely hard to tell who is supervising whom, and in particular work orders (“Here, do this for me.”) can issue in multiple directions, not just from “up” to “down.” The four liberal justices were happy to blur the lines by saying that the more people are doing supervisor-like things, the more employees’ misconduct will be imputed automatically to the employer with no chance for it to raise counterarguments that it had acted properly. The majority led by Justice Alito more reasonably recognized that the ability to take tangible employment actions against a co-worker is a better test of “supervisor” than the ability to ask them to undertake some work responsibility.

Last year I got sucked into a lawsuit where an ex-employee, after her termination, sued our company for allegedly racist remarks another employee made about her husband.  The lawsuit was the first we ever heard about the alleged incident -- it was never reported to me or any other manager or employee, it was behavior that was banned by our policies and training, and we never (obviously) had a chance to make any corrections.  The litigant tried to argue that the person who made the alleged remarks was "supervisory" because she had sometimes been asked to draft a shift schedule for the manager.

We eventually had this dismissed, but it cost us $25,000 in legal fees to make it go away.   It was particularly frustrating given that if this had ever been raised as an issue to me, it would have been investigated and heads would have rolled if necessary.  This whole notion of having liability even when operating to the highest standards is just terrifying.  And four Supreme Court justices tried to make all this irrelevant, essentially linking my liability to the standards and intelligence of whoever is my weakest employee.