Volume 9

HealthSure Headlines - A quarterly information digest for healthcare providers
In This Issue
Exchange Notice Requirements Change Under ACA
What Now? Making the decision to pay-vs-play
HealthSure wins TORCH/TMSI Partner of the Year Award

Client Question #1


I recently heard from a colleague about business overhead expense insurance but do not understand the difference between it and regular disability insurance.  

Please explain.


HealthSure’s Answer

Client Question #2

I heard recently that directors and officers policies might start excluding things like HIPAA.  

Is that true?

HealthSure’s Answer


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Exchange Notice Requirements Change Under ACA

The Federal government has responded to employer’s requests for help in providing notice to their employees of coverage options available through the state exchanges (now referred to as the Health Insurance Marketplace).

More ACA news

What Now? Making the decision to pay-vs-play   


Speculation about the financial impact of healthcare reform has been rampant, contradictory, and vociferous (to say the least). In such a volatile environment, healthcare providers can be forgiven for feeling overwhelmed by complexity.


Read the Article

HealthSure News

HealthSure wins TORCH/TMSI Partner of the Year Award

Read the Article


Seasoned Pro Joins HealthSure

Read the Article

Exchange Notice Requirements Change Under ACA

The Federal government has responded to employer’s requests for help in providing notice to employees about coverage options available through state exchanges (now referred to as the Health Insurance Marketplace).

To assist employers, Technical Release 2013-2 announced the availability of two model notices. As discussed below, one notice is for employers who offer a health plan to some or all employees, and the other notice is for employers who do not offer a health plan.


ACA initially required employers to provide a written notice to each employee at the time of hiring (or with respect to current employees, not later than March 1, 2013).

On January 24, 2013, the Federal Government announced it was delaying the effective date of notice requirement until late summer or early fall 2013, which would coordinate with the open enrollment period for the Marketplace.

However, Technical Release 2013-2 now states the government is issuing the model notices in advance of the expected timeframe because of several requests from employers wishing to inform their employees now about the upcoming coverage options through the Marketplace.

Which Employers are Subject to the Notice Requirement?

The notice requirement applies to employers subject to the Fair Labor Standards Act (FLSA), including those employing one or more employees engaged in, or who produce goods for, interstate commerce. For most companies, a test of not less than $500,000 in annual dollar volume of business applies. Accordingly, nearly all employers are subject to the notice requirement. The following entities must also comply: federal, state and local government agencies; preschools, elementary and secondary schools, and institutions of higher education; hospitals; institutions primarily engaged in the care of the sick, the aged, mentally ill, or disabled who reside on the premises; and schools for children who are mentally or physically disabled or gifted.

Who Must be Provided Notice?

Employers must provide a notice of coverage options to each employee, regardless of 1) plan enrollment status (if applicable) or 2) part-time or full-time status. However, employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan, but who are not employees.

Form and Content of the Notice

The notice must include information regarding the existence of the Marketplace, as well as contact information and a description of the services provided by the Marketplace. The notice must also inform employees they may be eligible for a premium tax credit if they purchase a qualified health plan through the Marketplace. And, it must provide a statement informing employees that if they purchase a qualified health plan through the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer, and that all or a portion of such contribution may be excludable, from income for Federal income tax purposes.

Timing and Delivery of Notice

Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the Department will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date.

With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice no later than October 1, 2013.

The notice is required to be provided automatically, free of charge. The notice must also be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor are met.

Model Notices

The government has provided two model notices to assist employers in providing the required information.

Notice for Employers without Health Plans This shorter notice is two pages, and describes the Marketplace, eligibility for a premium tax credit, a note that purchasing insurance through the Marketplace may eliminate any employer contribution or tax benefit that comes with employer-sponsored coverage, and that the employee contributions to the Marketplace are made on an after-tax basis.

The second page of the notice contains employer contact information that must be completed by the employer, as well as a statement that the notice recipient is not eligible for health coverage through the employer.

Notice for Employers With Health Plans In addition to the information above, the longer notice (three pages) includes specific information about the employer’s health plan, such as whether the plan meets the minimum value standard, and whether the plan’s coverage is affordable.

While the third page is to be completed by the employer, it is optional however, and is intended to provide the employee with the appropriate information about the cost of the employer plan to assist with applying for a premium subsidy if applicable.

Employers may use one of these models, as applicable, or a modified version, provided the notice meets the content requirements described above.

These two model notices are available on the Department of Labor’s website at www.dol.gov/ebsa/healthreform. For ease of reference, the two model notices are linked below:

Model notice for employers who offer a health plan to some or all employees, available at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

Model notice for employers who do not offer a health plan, available at http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf

If you have any questions, please do not hesitate to contact any member of the HealthSure team.


More ACA news


What Now? Making the decision to pay-vs-play

At the 2013 TORCH Annual Conference in April, HealthSure’s Brant Couch, the TORCH Insurance Program manager, invited Misty Baker to co-present an update on healthcare reform. Misty is the director of health insurance information for The Independent Insurance Agents of Texas. She spends most of her time studying and presenting on the impact of healthcare reform to employers and legislators.

David Pearson, TORCH’s CEO, caught up with Misty and Brant, after their presentation, and asked them to share their insights into how hospital CEOs can discover and take advantage of the opportunities created by PPACA.

Q: Your presentation covered a fair bit of ground and detail. If there were only one thing you would like the CEOs in the audience to remember, what would it be?

A: Misty: The last thing I want any CEO to do is put their head in the sand. The renew-and-forget era for employee health insurance plans is over. I believe that if a CEO gets into the conversation in a purposeful, energetic fashion and takes a leadership position, the effort they put into their hospital’s health plan will pay them significant dividends. 

Q: How are other CEOs doing this?

A: Misty: They are getting into the conversation by actually talking with employees about what healthcare reform means to the hospital as an employer, and to employees as individuals. Generally speaking, CEOs are educating themselves about the details of PPACA and how it impacts their business.

Brant: One really great example I heard recently was from Chuck Norris, CEO at Gonzales Healthcare. They have set up a healthcare reform task force in their hospital to keep up with all the changes and engage others in the process.

Q: Speaking of details, your presentation covered a lot of ground, what aspects of PPACA do CEOs need to understand?

A: Misty: I boiled 15,000 pages of regulations down to focus on the most significant issues, the ones that involve the greatest expense. CEOs have to understand the repercussions of choosing to “pay or play”. They need to know how the act defines affordable coverage; what is actually affordable to the lowest wage earners. And, they have to be aware of the nuances of calculating ongoing variable hours.

Q: Deciding to “pay or play” is a big issue. How can a CEO know which is the best choice for his or her hospital?

A: Misty: First off, I recommend they gain a clear understanding of the regulations and in particular, the financial penalties. With this information in hand, they must then mine their hospital’s data to figure out the cost difference between paying and playing. But this is only part of the issue; they also must deal with a dilemma that is unique to healthcare providers.

Q: What dilemma are you referring to?

A: Brant: It’s a moral issue. If an analysis of the numbers indicates it is cheaper to pay and not offer benefits (and chances are this could be a common occurrence), how then will the hospital reconcile its role as the center for health and welfare in the community with the fact it does not offer health benefits to its own employees?

Q: What can CEOs and administrators do about this dilemma?

A: Misty: That is, quite literally, a million dollar question. It will make sense for some hospitals to protect their revenue by participating in exchanges. But, doing so without providing health insurance is… well, if nothing else, it might not look very good.

The way to address this is to commit to providing health insurance but to do so with an entirely new attitude. What I have been seeing has made me start to believe the choices for large employers are not that bad.  We may have done it the same way for 25 years, but now we must find creative ways to provide healthcare to employees.

Q: What are some of those “creative” ways?

A:  Brant: There are three major pillars of creativity: self-funded plans, private exchanges, and tackling claims costs.

Many hospitals and physician groups are already self-funding to some degree. The flexibility and control self-funding provides can be an essential component in your overall health insurance strategy. 

And, private exchanges are already becoming popular: Southwest Airlines, Red Lobster, Sears didn’t bail on health insurance. Instead they said, “We need to find a creative solution to take care of our best employees.”

Q: You also mentioned tackling claims costs… what do you mean?

A: Brant: Hospitals have a distinct advantage when it comes to driving care into their own facilities while at the same time negotiating claims that go elsewhere.  More now than ever before, rural hospitals are in a position to leverage their strengths to reduce claims cost (in some cases at Medicare pricing) outside their own facilities if they avail themselves of the right tools and resources.

Q: Based on the many conversations I’ve had with hospital CEOs, I think it’s safe to say they feel healthcare reform is backing them into a corner.

A: Misty: It may seem that way now… especially for CEOs who do not have a good understanding of the new law and its repercussions. The best advice I can give, beyond self-education, is to work with a great independent broker who knows the healthcare business and has access to all of the solutions.


HealthSure News

HealthSure wins TORCH/TMSI Partner of the Year Award

In recognition of the success of the TORCH Insurance Program, HealthSure (the program manager) was this year’s recipient of the TORCH/TMSI Partner of the Year Award.

As she presented the award, TORCH’s Vicki Pascasio acknowledged these program milestones:

  • Almost 60 hospitals currently participate in the program
  • Participation has grown almost 40% since ’07 and buying power has tripled
  • The number of lines of coverage the program offers has grown 197%
  • Special programs such as the TORCH Health Insurance Alliance (THIA) and the TORCH Physician Protection Program (TPPP) have been added to support member needs.
  • THIA has become vital in the long term strategy of helping members respond to the complexity healthcare reform

She also recognized the HealthSure team that manages the TORCH Insurance Program including Patti Johnston, Sarah Cheek and Brenda Stubbs.  


Seasoned Pro Joins HealthSure

In keeping with the significant changes and improvements we’ve been making in 2013, HealthSure is please to welcome Jennifer E. Fudge, RPLU to our team.

Jennifer takes on the role of Director of Operations and brings more than a decade of management experience with one of the nation’s largest insurance association.

“Jennifer’s experience, leadership, and commitment to getting things done right is going to help us execute our strategic plan,” says HealthSure CEO Barry Couch. “We’re counting on her to make sure it never gathers any dust.”

“With 13 years of senior management experience and excellent performance with the Independent Insurance Agents of Texas, Jennifer will make a significant contribution to the improvement of all our processes,” says HealthSure President, Brant Couch.

“With Jennifer’s help streamlining operations and improving our effectiveness, Barry and I are looking forward to gaining more freedom to work on new ways to deliver greater value to our clients.”


It isn’t always easy to get the answer to the questions you have.  Sometimes it isn’t even easy to come up with the right question!

That is why each issue of HealthSure Headlines will feature one or two questions from our clients and answers from our team or, if need be, outside experts.

If you have a question you can’t find a satisfactory answer to, send it to brantc@HealthSure.com

Client Question #1


I recently heard from a colleague about business overhead expense insurance, but do not understand the difference between it and regular disability insurance. Please explain.

Business Overhead Expense or BOE insurance protects a physician’s practice, from the loss of revenue and ongoing expenses that result when a key partner physician becomes disabled and is unable to see patients. BOE creates distinct tax advantages for the business, in contrast to traditional disability benefits payable to individual physicians. 

Client Question #2


I heard recently that directors and officers policies might start excluding things like HIPAA.  Is that true? 

Yes it is true, but the good news is HIPAA-type medical privacy violations and losses may be covered elsewhere (e.g.: medical mal practice insurance) D&O insurance carriers are increasingly looking for ways to limit their exposure and therefore healthcare organizations need to thoroughly examine all forms of insurance to make sure there are no gaps or overlaps in coverage.


Pay-or-Play Facts


To bring some simplicity to the choice between paying the tax levies versus playing along and providing a health benefit program that fits within ACA parameters, here are some facts to help you get oriented and to give you a firm foundation from which to make your decisions.

Please note

Every individual employer is different.  The information below gives guidance around the rules (as they stand) that will impact all employers in some way in 2014.

To understand how they impact you directly, seek help from a qualified broker advisor. 

Defining Full Time Employees

The ACA legislation recognizes Four Types of Employees

Managing Ongoing Variable Hour Employees

Do I Pay-or-Play?

The Pros and Cons

  • Pros: Get rid of headache and pay less money
  • Cons: Recruitment and Retention tool is gone. Employee burden goes up. Employee costs go up, excise tax (i.e. penalty)

If I Choose to Pay (penalty)

If you make this choice, your potential penalties are:

  • Affordable coverage is no more than 9.5% of the employee w-2 income (Box 1)
  • Coverage is Bronze level plan (60% minimum value)
  • Penalty of you offer NO COVERGAE to your FTEs is $2,000 X the total number of FTEs… if at least one FTE is receiving a subsidy
  • Penalty for offering UNAFORDABLE COVERAGE or if it does not meet MINIMUM VALUE, your fine is the lesser of $3,000 X the number of FTEs receiving a subsidy or $2,000 X the total number of FTEs

Hospitals that do not offer coverage may subtract the first 30 workers when calculating their liability for tax penalties

What is Unaffordable Coverage?

In this example the employee earns $9.50/hour and the monthly cost of employee only coverage is $148.75

  • W-2 Safe Harbor:
  • Box 1 income is gross income after pre-tax deductions
  • EE earns $19,750, but $1,785 on a pre-tax basis = Box 1: $17,975
  • FAILS 9.5% of Box 1 income: $142.30 less than $148.30
  • Pay Safe Harbor
    • Hourly rate of pay ($9.50) x 130 hours/mo = $1,235.00
    • FAILS 9.5% of $1,235: $117.32 is less than $148.30
  • FPL Safe Harbor
    • Federal Poverty Level: $11,170
    • FAILS 9.5% of FPL: $88.43 is less than $148.30

Do You Meet the Affordability Test?

If you decide to pay (offer employee health benefits) will your program pass the affordability test?


Federal Poverty Limit – FPL


Hourly Rate

(40 hr week)

W2 Wage

Employee Share of Single Premiums per Mo @ 9.5% income standard

100% (Possibly Medicaid Eligible)





133% (Possibly Medicaid Eligible)





150% (Minimum Wage)






























 400% family of 4




$345/mo since employer only has to use the single rate for lowest tier plan to calculate affordability


Could You Be Caught?

All it takes is one employee receiving coverage from Exchange to cause an employer to be reviewed for penalties.

How will they know?

  • Exchanges are responsible to review each individual’s income to determine level of premium subsidy they are eligible for in the Exchange
  • The Exchange will obviously review tax information for each applicant which will eventually lead them to the employer

For More Clarity – Talk to Us

HealthSure is here to ensure Texas healthcare organizations succeed in the increasingly complex world of risk and insurance. When it comes to the potentially crushing complexity of Healthcare Reform, consider turning to us for clarity, guidance, and leadership.


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