Thursday, May 6, 2010

Health insurance help for early retirees to start June 1

The federal government announced plans to start its new reinsurance program for early retirees June 1 - several weeks ahead of the June 21 start date required by the Patient Protection and Affordable Care Act.

The new program will provide $5 billion, over the next three and half years, to both self-funded and insured employer health plans. The funds must be used to help lower the employer's own health costs, provide premium relief to their workers and families or a combination of both.

According to Health and Human Services Secretary Kathleen Sebelius, the number of large firms offering retiree coverage to its workers has dropped more than 30 percent over the last 20 years.

Beginning in late June, employers can apply for reimbursements of up to 80 percent of claims costs between $15,000-$90,000. Claims incurred between the start of the plan year (usually Jan. 1) and June 1 count towards the $15,000 threshold. But only claims that occur after June 1 are eligible for reimbursement.

We've posted some basic information on our health reform pages, but for more details go to

Seattle couple charged in insurance scheme

The owners of a Seattle construction company have been charged with multiple counts of theft for a scheme that investigators believe bilked insurance companies out of more than $470,000.

James Philo, 59, and Cheryl-Lin Philo, 45, owners of Philo Construction Company of Seattle, each face four counts of first-degree theft and 15 counts of second-degree theft. Arraignment is scheduled for May 11, 2010 in King County Superior Court.

“Fraud and inflated claims mean higher premiums for the rest of us,” said Washington state Insurance Commissioner Mike Kreidler. “In this case, employees and former employees were concerned about what they saw going on and stepped forward to report it.”

In December 2006, a major windstorm swept across Washington, knocking down trees and causing substantial damage to a numerous homes. The Philos hired subcontractors to remove many of those trees from customers’ homes.

In March 2007, a former employee contacted Kreidler’s office, saying that Philo was submitting inflated invoices to insurers. Other workers provided information as well.

An investigation by the agency’s Special Investigations Unit, working with more than 15 insurance companies, found that the Philos had been asking their subcontractors for two invoices for each job. The Philos paid the subcontractors the smaller amount, and then submitted the larger invoice to their customers’ insurance companies for reimbursement.

The markup averaged close to 30 percent, plus another 20 percent that insurers allow for profit and overhead. For example, a $2,150 bill from a tree service company was reported to the insurer as a $2,795 job. Once profit, overhead and sales tax were added, the Philos were paid a total of $3,649.

The Philos also created a fictitious company, Pro Line Construction Resources, to act as a subcontractor when they needed to support a particularly high estimate.

The criminal charges are based on 20 cases of double-invoicing, totaling $31,000 in overcharges to insurers. All told, state investigators documented more than 60 cases of apparent fraud, totaling which they believe represents $470,000 in overcharges.