Take a look at the great article from Employee Benefits Advisor on what employers need to know about healthcare with the collapse of the AHCA by Alden J. Bianchi and Edward A. Lenz.
The stunning failure of the U.S. House of Representatives to pass the American Health Care Act has political and policy implications that cannot be forecasted. Nor is it clear whether or when the Trump administration and Congress will make another effort to repeal and replace, or whether Republicans will seek Democratic support in an effort to “repair,” the Affordable Care Act. Similarly, we were unable to predict whether and to what extent the AHCA’s provisions can be achieved through executive rulemaking or policy guidance.
Here are some ways the AHCA’s failure could impact employers in the near term.
Immediate impact on employers
Employers were not a major focus of the architects of the ACA, nor were they a major focus of those who crafted the AHCA. This is not surprising. These laws address healthcare systems and structures, especially healthcare financing. Rightly or wrongly, employers have not been viewed by policymakers as major stakeholders on those issues.
In a blog post published at the end of 2014, we made the following observations:
The ACA sits atop a major tectonic plate of the U.S. economy, nearly 18% of which is healthcare-related. Healthcare providers, commercial insurance carriers, and the vast Medicare/Medicaid complex are the law’s primary stakeholders. They, and their local communities, have much to lose or gain depending on how healthcare financing is regulated. The ACA is the way it is largely because of them. Far more than any other circumstance, including which political party controls which branch of government, it is the interests of the ACA’s major stakeholders that determine the law’s future. And there is no indication whatsoever that, from the perspective of these entities, the calculus that drove the ACA’s enactment has changed. U.S. employers, even the largest employers among them, are bit players in this drama. They have little leverage, so they are relegated to complying and grumbling (not necessarily in that order).
With the AHCA’s collapse, the ACA remains the law of the land for the foreseeable future. The AHCA would have zeroed out the penalties on “applicable large” employers that fail to make qualified offers of health coverage, but the bill’s failure leaves the ACA’s “play or pay” rules in full force and effect. The ACA’s reporting rules, which the AHCA would not have changed, also remain in effect. This means, among other things, that many employers, especially those with large numbers of part-time, seasonal, and temporary workers that face unique compliance challenges, will continue to be in the position of “complying and grumbling.”
This does not mean that nothing has changed. The leadership of the Departments of Health and Human Services, Labor and Treasury has changed, and these agencies are now likely to be more employer-friendly. Thus, even though the ACA is still the law, the regulatory tone and tenor may well be different. For example, although the current complex employer reporting rules will remain in effect, the Treasury and IRS might find administrative ways to simplify them. Similarly, any regulations issued under the ACA’s non-discrimination provisions applicable to insured health plans (assuming they are issued at all) likely will be more favorable to employers than those issued under the previous administration.
There are also unanticipated consequences of the AHCA’s failure that employers might applaud. We can think of at least two.
1. Stemming the anticipated tide of new state “play or pay” laws
The continuation of the ACA’s employer mandate likely will put on hold consideration by state and local governments of their own “play or pay” laws.
In anticipation of the repeal of the ACA’s employer mandate, the Governor of Massachusetts recently introduced a budget proposal that would reinstate mandated employer contributions to help cover the costs of increased enrollment in the Medicaid and Children’s Health Insurance Program, known as MassHealth. Under the proposal, employers with 11 or more full-time equivalent employees would have to offer full-time employees a minimum of $4,950 toward the cost of an employer group health plan, or make an annual contribution in lieu of coverage of $2,000 per full-time equivalent employee. While the Governor’s proposal is not explicitly conditioned on repeal of the ACA’s employer mandate, the ACA’s survival may prompt a reconsideration of that approach.
California lawmakers were also considering ACA replacement proposals, including a single-payer bill introduced last month by Democratic state senators Ricardo Lara and Toni Atkins. Had the ACA’s employer mandate been repealed, those proposals were likely just the tip of an iceberg. When the ACA was enacted in 2010, Hawaii, Massachusetts, and San Francisco were the only jurisdictions with their own healthcare mandates on the books. But in the prior two-year period, before President Obama was elected and made healthcare reform his top domestic priority, more than two dozen states had introduced various “fair share” health care reform bills aimed at employers.
Most of the state and local “play or pay” proposals would have required employers to pay a specified percentage of their payroll, or a specified dollar amount, for health care coverage. Some required employers to pay employees a supplemental hourly “health care” wage in addition to their regular wages or provide health benefits of at least equal value. California, Illinois, Pennsylvania, and Wisconsin considered single-payer proposals.
To be sure, any state or local “play or pay” mandates would be subject to challenge based on Federal preemption under the Employee Retirement Income Security Act (ERISA). While some previous “play or pay” laws were invalidated under ERISA (e.g., Maryland), others (i.e., San Francisco) were not. In sum, given the failure of the AHCA, there would appear to be no rationale, at least for now, for any new state or local “play or pay” laws to go forward.
2. Avoiding upward pressure on employer premiums as a result of Medicaid reforms
The AHCA proposed to reform Medicaid by giving greater power to the states to administer the Medicaid program. Under an approach that caps Medicaid spending, the law would have provided for “per capita allotments” and “block grants.” Under either approach, the Congressional Budget Office, in its scoring of the AHCA, predicted that far fewer individuals would be eligible for Medicaid.
According to the CBO: CBO and JCT estimate that enacting the legislation would reduce federal deficits by $337 billion over the 2017 to 2026 periods. That total consists of $323 billion in on-budget savings and $13 billion in off-budget savings. Outlays would be reduced by $1.2 trillion over the period, and revenues would be reduced by $0.9 trillion. The largest savings would come from reductions in outlays for Medicaid and from the elimination of the ACA’s subsidies for non-group health insurance.
While employers rarely pay attention to Medicaid, the AHCA gave them a reason to do so. Fewer Medicaid-eligible individuals would mean more uncompensated care — a significant portion of the costs of which would likely be passed on to employers in the form of higher premiums. As long as the ACA’s expanded Medicaid coverage provisions remain in place, premium pressure on employers will to that extent be avoided.
Long-term impact on employers
As we conceded at the beginning, it’s not clear how the Republican Congress and the Administration will react to the AHCA’s failure. If the elected representatives of both political parties are inclined to try to make the current system work, however, we can think of no better place that the prescriptions contained in a report by the American Academy of Actuaries, entitled “An Evaluation of the Individual Health Insurance Market and Implications of Potential Changes.”
The actuaries’ report does not address, much less resolve, the major policy differences between the ACA and the AHCA over the role of government — in particular, the extent to which taxpayers should be called on to fund the health care costs of low-and moderate-income individuals, and whether U.S. citizens should be required to maintain health coverage or pay a penalty. And even if lawmakers can reach consensus on those contentious issues, they still would have to agree on the proper implementing mechanisms.
But whatever the outcome, employers are unlikely to play a major role.
See the original article Here.
Bianchi A. & Lenz E. (2017 April 6). How employers should proceed after the AHCA’s collapse [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/how-employers-should-proceed-after-the-ahcas-collapse
Are you using HSAs to help save money on your healthcare cost? Find out from this article by Employee Benefit News on how the market for HSAs is set to grow exponentially over the next few years by Kathryn Mayer.
It’s about time for health savings accounts to take the spotlight. And that’s going to be a good thing for employees, industry experts say: Not only will HSAs help workers with their healthcare expenses, but the savings vehicles also will put them on a better track for retirement planning.
“The market is going to blow up,” American Retirement Association CEO Brian Graff said this week during the NAPA 401k Summit in Las Vegas, citing new healthcare reform proposals — including the GOP’s American Health Care Act — as well as a better understand of HSAs as reasons for the predicted growth.
The ACHA, which doubles HSA contributions, “dramatically increases the incentive for employers to offer high-deductible health plans,” he said. The GOP plan expands the allowable size of healthcare savings accounts that can be coupled with high-deductible insurance plans, up to $6,550 for an individual or $13,100 for a family. It also expands qualifying expenses to include health insurance premiums, over-the-counter medications and preventive health costs.
By 2018, there will be 27 million HSA accounts and more than $50 billion in HSA assets, according to estimates from the Kaiser Family Foundation cited by Graff. Currently, there are 18 million accounts and $34.7 billion in assets.
Those statistics — and proposed healthcare reforms — are catching the eye of the retirement industry: The accounts have the potential to become “more compelling than a 401(k),” due to tax-deductible and tax-deferred incentives, Graff said.
“We have to think about what this means for our industry,” he said.
In a live poll during a conference keynote, three-quarters of retirement advisers noted they do not offer HSA advisory services. That number, Graff predicts, will change radically over the next two years.
Current proposals are positioning HSAs a hybrid of medical and retirement savings, Graff said. “It’s not just a health account, it’s a savings account.” Healthcare expenses are a major concern for retirees and often cause employees to push back plans for retirement. If HSA funds are not needed for medical expenses, the money can be withdrawn after age 65 and taxed as ordinary income.
Graff says plan sponsors and retirement advisers should encourage employees to first max out their HSAs and then match their 401(k)s.
The HSA is “the nexus between healthcare and retirement,” Daniel Bryant, an advisor with Sheridan Road, said during a standing-room only panel on HSAs Monday.
Meanwhile, added panelist Ryan Tiernan, a national accounts manager with American Funds, “it’s the biggest jump ball no one has cared to jump to. HSAs are probably the most efficient way to save and invest for your biggest expense in retirement.”
Mayer K. (2017 March 22). HSAs to see explosive growth [Web blog post]. Retrieved from address https://www.benefitnews.com/news/hsa-market-going-to-blow-up?tag=00000151-16d0-def7-a1db-97f024b50000
Make sure you are staying up-to-date with the most recent rulings and changes regarding healthcare thanks to our partner United Benefit Advisors (UBA).
On April 18, 2017, the Department of Health and Human Services’ (HHS) Centers for Medicare & Medicaid Services (CMS) published its final rule regarding Patient Protection and Affordable Care Act (ACA) market stabilization.
The rule amends standards relating to special enrollment periods, guaranteed availability, and the timing of the annual open enrollment period in the individual market for the 2018 plan year, standards related to network adequacy and essential community providers for qualified health plans, and the rules around actuarial value requirements.
The proposed changes primarily affect the individual market. However, to the extent that employers have fully-insured plans, some of the proposed changes will affect those employers’ plans because the changes affect standards that apply to issuers.
The regulations are effective on June 17, 2017.
Guaranteed Availability of Coverage
The guaranteed availability provisions require health insurance issuers offering non-grandfathered coverage in the individual or group market to offer coverage to and accept every individual and employer that applies for such coverage unless an exception applies. Individuals and employers must usually pay the first month’s premium to activate coverage.
CMS previously interpreted the guaranteed availability provisions so that a consumer would be allowed to purchase coverage under a different product without having to pay past due premiums. Further, if an individual tried to renew coverage in the same product with the same issuer, then the issuer could apply the enrollee’s upcoming premium payments to prior non-payments.
Under the final rule and as permitted by state law, an issuer may apply the initial premium payment to any past-due premium amounts owed to that issuer. If the issuer is part of a controlled group, the issuer may apply the initial premium payment to any past-due premium amounts owed to any other issuer that is a member of that controlled group, for coverage in the 12-month period preceding the effective date of the new coverage.
Practically speaking, when an individual or employer makes payment in the amount required to trigger coverage and the issuer lawfully credits all or part of that amount to past-due premiums, the issuer will determine that the consumer made insufficient initial payment for new coverage.
This policy applies both inside and outside of the Exchanges in the individual, small group, and large group markets, and during applicable open enrollment or special enrollment periods.
This policy does not permit a different issuer (other than one in the same controlled group as the issuer to which past-due premiums are owed) to condition new coverage on payment of past-due premiums or permit any issuer to condition new coverage on payment of past-due premiums by any individual other than the person contractually responsible for the payment of premiums.
Issuers adopting this premium payment policy, as well as any issuers that do not adopt the policy but are within an adopting issuer’s controlled group, must clearly describe the consequences of non-payment on future enrollment in all paper and electronic forms of their enrollment application materials and any notice that is provided regarding premium non-payment.
Annual Open Enrollment Periods
Currently, annual Exchange open enrollment for plan year 2018 begins on November 1, 2017, and ends on January 31, 2018. Under the final rule, the open enrollment period will shorten; it will begin on November 1, 2017, and end on December 15, 2017. This open enrollment period will be consistent with the month-and-a-half open enrollment period beginning with and after the open enrollment for the 2019 benefit year.
Special Enrollment Periods
Starting in June 2017, all new consumers who seek to enroll in Exchange coverage through applicable special enrollment periods will be subject to pre-enrollment eligibility verification. This will include all states served by HealthCare.gov. This pre-enrollment verification will apply to the individual market only, not to special enrollment periods under the Small Business Health Options Program (SHOP).
New dependents can enroll in a new qualified health plan (QHP) at any metal level if they enroll in a separate QHP from other existing enrollees; however, if the new dependent is enrolling in the same QHP as those who are already QHP enrollees, then the dependent and existing QHP enrollees are restricted from changing plans or metal levels. This does not apply to the small group market or SHOP.
Consumers who were terminated from coverage due to premium nonpayment will not be allowed to enroll in coverage mid-year through a special enrollment period due to loss of minimum essential coverage.
For consumers who are newly enrolling in QHP coverage through the Exchange through the special enrollment period for marriage, at least one spouse must have had minimum essential coverage for one or more days during the 60 days preceding the marriage date, or must have lived in a foreign country or a U.S. territory for one or more days during the 60 days preceding the marriage date. This applies to the individual market only. This does not apply to the small group market or SHOP.
For consumers who are newly enrolling in QHP coverage through the Exchange through the special enrollment period for a permanent move, the consumer will need to provide documentation of the move and evidence of prior coverage for one or more days in the 60 days preceding the move, unless the consumer is moving to the U.S. from a foreign country or a U.S. territory. This applies to the individual market. The requirement to show prior coverage for the permanent move special enrollment period is applicable to the SHOP. Further, CMS intends to release guidance on documentation that will be acceptable for this special enrollment period.
For the remainder of 2017 and for future plan years, CMS will significantly limit the use of the exceptional circumstances special enrollment period by using a more rigorous test that will require consumers to provide supporting documentation. CMS intends to provide guidance on situations that will meet the more rigorous test and on documentation that consumers will be required to provide. This applies to the individual market only.
A consumer may request and the Exchange must provide for a coverage effective date that is no more than one month later than the consumer’s effective date would ordinarily have been, if the special enrollment period verification process delays the enrollment so that the consumer would be required to pay two or more months of retroactive premium to effectuate coverage or avoid cancellation. This applies to the individual market and SHOP.
The final rule indicates that the following special enrollment periods are no longer available:
CMS solicited and received comments on policies that would promote continuous coverage; however, CMS did not take any action in this final rule regarding such policies.
Health Insurance Issuer Standards under the ACA, Including Standards Related to Exchanges
Under the ACA, issuers of non-grandfathered individual and small group health insurance plans, including QHPs, must ensure that the plans adhere to certain levels of coverage.
A plan’s coverage level, or actuarial value (AV), is determined based on its coverage of the essential health benefits (EHBs) for a standard population. The ACA requires a bronze plan to have an AV of 60 percent, a silver plan to have an AV of 70 percent, a gold plan to have an AV of 80 percent, and a platinum plan to have an AV of 90 percent. The HHS Secretary issues regulations on the calculation of AV and its application to coverage levels; the ACA authorizes the Secretary to develop guidelines to provide for de minimis variation in the actuarial valuations used in determining the level of coverage of a plan to account for differences in actuarial estimates.
The final rule amends the definition of de minimis to a variation of -4/+2 percentage points, rather than +/-2 percentage points for all non-grandfathered individual and small group market plans (other than bronze plans meeting certain conditions) that are required to comply with AV. For example, a silver plan could have an AV between 66 and 72 percent. For bronze plans that either cover and pay for at least one major service, other than preventive services, before the deductible or meet the requirements to be a high deductible health plan, the allowable variation in AV will be -4/+5 percentage points. This applies to plans beginning on or after January 1, 2018. CMS’ revised 2018 AV Calculator (scroll to Plan Management, Guidance) reflects the amended AV de minimis range.
CMS will rely on state reviews for network adequacy in states where a federally facilitated exchange (FFE) is operating as long as the state has a sufficient network adequacy review process. In states that do not have the authority and means to conduct sufficient network adequacy reviews, CMS will rely on an issuer’s accreditation (commercial, Medicaid, or Exchange) from an HHS-recognized accrediting entity. CMS will use the following three accrediting entities for 2018 plan year network adequacy reviews: the National Committee for Quality Assurance, URAC, and the Accreditation Association for Ambulatory Health (these accrediting entities were previously recognized by HHS for QHP accreditation).
Unaccredited issuers are required to submit an access plan as part of the QHP application; the access plan must demonstrate that an issuer has standards and procedures in place to maintain an adequate network consistent with the National Association of Insurance Commissioners’ (NAIC’s) Health Benefit Plan Network Access and Adequacy Model Act.
Essential Community Providers
Essential community providers (ECPs) include providers that serve predominantly low-income and medically underserved individuals; issuers must meet requirements for ECPs’ inclusion in QHP provider networks.
CMS will lower the minimum percentage of network participating practitioners; an issuer will satisfy the regulatory standard if the issuer contracts with at least 20 percent of available ECPs in each plan’s service area to participate in the plan’s provider network. Also, CMS will continue to allow an issuer’s ECP write-ins to count toward the satisfaction of the ECP standard, if the written-in provider has submitted an ECP petition to HHS no later than the issuer submission deadline for QHP application changes.
The final rule adopts almost all the proposed rule’s provisions. The primary changes from the proposed rule to the final rule are: clarifications to the scope of the guaranteed availability policy regarding unpaid premiums, changes to special enrollment period provisions, updates to the definitions and general standards for eligibility determinations, and clarification regarding states’ roles.
CMS acknowledges that these provisions’ net effect on enrollment, premiums and total premium tax credit payments is uncertain. However, CMS determined that these regulations are urgently needed to stabilize markets, incentivize issuers to enter or remain in the market, and ensure premium stability and consumer choice.
To download the full compliance alert click Here.
Great article from our partner, United Benefit Advisors (UBA) by Danielle Capilla
A fixed indemnity health plan pays a specific amount of cash for certain health-related events (for example, $40 per office visit or $100 per hospital day). The amount paid is neither related to the medical expense incurred, nor coordinated with other health coverage. Further, a fixed indemnity health plan is considered an “excepted benefit.”
Under HIPAA, fixed dollar indemnity policies are excepted benefits if they are offered as “independent, non-coordinated benefits.” Under the Patient Protection and Affordable Care Act (ACA), excepted benefits are not subject to the ACA’s health insurance requirements or prohibitions (for example, annual and lifetime dollar limits, out-of-pocket limits, requiring individual and small-group policies to cover ten essential health benefits, etc.). This means that excepted benefit policies can exclude preexisting conditions, can have dollar limits, and do not legally have to guarantee renewal when the coverage is cancelled.
Further, under the ACA, excepted benefits are not minimum essential coverage so a large employer cannot comply with its employer shared responsibility obligations by offering only fixed indemnity coverage to its full-time employees.
Some examples of fixed indemnity health plans are AFLAC or similar coverage, or cancer insurance policies.
Recently, the IRS released a Memorandum on the tax treatment of benefits paid by fixed indemnity health plans that addresses two questions:
Capilla D. (2017 March 9).Tax treatment of fixed indemnity health plans [Web blog post]. Retrieved from address http://blog.ubabenefits.com/tax-treatment-of-fixed-indemnity-health-plans
On February 23, 2017, the Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS) released its Insurance Standards Bulletin Series, in which it re-extended its transitional policy for non-grandfathered coverage in the small group and individual health insurance markets.
States may permit issuers that have renewed policies under the transitional policy continually since 2014 to renew such coverage for a policy year starting on or before October 1, 2018; however, any policies renewed under this transitional policy must not extend past December 31, 2018.
If permitted by applicable state authorities, health insurance issuers may choose to continue certain coverage that would otherwise be cancelled, and affected individuals and small businesses may choose to re-enroll in such coverage.
As background, CMS’ transitional policy was first announced in November 14, 2013; CMS had most recently extended the transitional policy on February 29, 2016, for an additional year for policy years beginning on or before October 1, 2017, provided that all policies end by December 31, 2017.
Policies subject to the transitional relief are not considered to be out of compliance with the ACA’s single risk pool requirement or the following Public Health Service Act (PHS Act) provisions:
However, issuers can choose to adopt some of or all these provisions in their renewed policies.
Practically speaking, grandmothering provides some small employers the option to maintain a pre-ACA health plan. Although not every state allows grandmothering of policies and not all insurance carriers offer the option in those states endorsing it, there are still some employers in the 35 states that allow grandmothering who are able to be composite rated (rates based on the health status of the group), which protects young, healthy groups in particular. Grandmothered groups with older, unhealthy populations could still move to community-rated ACA- compliant plans, which were generally less costly for them, giving all groups the flexibility to save money. The UBA Health Plan Survey finds that though this grandmothered group is shrinking (8.1% of all plans compared to 17% in 2015), these employers have helped to keep overall average increases in check. In fact, premium renewal rates (the comparison of similar plan rates year over year) have increased an average of 5.9% for all plans—up only slightly from last year’s 5.6% increase. Small groups who found temporary protection this year through grandmothering and the PACE Act (depending on their state) were a significant factor in overall cost mitigation.
Capilla D. (2017 March 21). CMS allows states to extend life of “grandmothered” or transitional health insurance policies[Web blog post]. Retrieved from address http://blog.ubabenefits.com/cms-allows-states-to-extend-life-of-grandmothered-or-transitional-health-insurance-policies
With the fall of the AHCA find out what is next for employers in terms of healthcare from the great article at HR Morning by Christian Schappel.
The Republican’s best attempt to repeal the Affordable Care Act (ACA) to date has been axed. Where does that leave employers, and what can they expect next?
For starters, it leaves employers with the ACA and everything that comes with it … the employer mandate … the reporting requirements … the whole enchilada.
In other words, any organizations that relaxed their ACA compliance efforts — believing the Republican’s American Health Care Act would repeal and replace Obamacare — could be exposing themselves to non-compliance penalties.
The more complicated question is: What happens next?
With this appearing to be the GOP’s best shot at repealing and replacing Obamacare (or at least parts of it) in one stroke, and the party failing to push its legislation through Congress, President Trump and House Speaker Paul Ryan (R-WI) appear resigned to the fact that the ACA will remain in place indefinitely.
“We’re going to be living with Obamacare for the foreseeable future,” Ryan said after announcing the GOP bill would not be voted on in the House.
Trump has even indicated that after this loss for the GOP, he wants the party to focus on other issues, like tax reform.
But that doesn’t mean health reform will be on the back burner.
It now appears that Republicans’ best course of action to implement reform changes would be to attempt to “fix” parts of the ACA that are deemed to not be working. And it could do that by including small healthcare provisions in other pieces of legislation, like future tax reform bills.
Trump and his fellow Republicans could also seek to offer concessions to Democrats in future legislation as a means to get members of the left to agree to include certain provisions of the American Health Care Act in future bills.
Example, Republicans are still expected to push hard for a rollback of the ACA’s expansion of Medicaid, and members of the GOP could seek to include rollback provisions in future tax reform legislation in exchange for proposing a tax reform plan Democrats would find more palatable.
So why did the American Health Care Act fail, despite Republicans controlling the House, Senate and White House?
The answer starts with the fact that the GOP didn’t have the 60 seats in the Senate to avoid a filibuster by the Democrats. In other words, despite being the majority party, it didn’t have enough votes to pass a broad ACA repeal bill outright.
As a result, Senate Republicans had to use a process known as reconciliation to attempt to reshape the ACA. Reconciliation is a process that allows for the passage of budget bills with 51 votes instead of 60. So the GOP could vote on budgetary pieces of the health law, without giving the Democrats a chance to filibuster.
The problem for Republicans was reconciliation severely limited the extent to which they could reshape the law — and it’s a big reason the why American Health Care Act looked, at least to some, like “Obamacare Lite.”
Ultimately, what caused Trump and Ryan to decide to pull the bill before the House had a chance to vote on it was that so many House Republicans voiced displeasure with the bill and said they wouldn’t vote for it.
Specifically, here are some of what conservatives didn’t like about the American Health Care Act:
Schappel C. (2017 March 29). ACA repeal bill nixed: what’s next for healthcare reform, employers? [Web blog post]. Retrieved from address http://www.hrmorning.com/aca-repeal-bill-nixed-whats-next-for-healthcare-reform/
Great article from our partner, United Benefit Advisors (UBA) by Tara Marshall
I’ve looked at clouds from both sides now
From up and down and still somehow
It’s cloud illusions I recall
I really don’t know clouds at all
— Joni Mitchell, “Both Sides, Now”
And like that song from 1969, it appears that most employees really don’t know cloud computing at all. In an article on the Society for Human Resource Management’s website titled, “Public Enemy No. 1 for Employers? Careless Cloud Users, Study Says,” a North American IT solutions and managed services provider called Softchoice found that 1 in 3 users of cloud-based apps (e.g., Google Docs and Dropbox) download the app without letting their IT department know. Cloud computing became popular a few years ago because people could store all their documents, photos, and other information and then access that data from anywhere at any time and on any device.
What makes this such a bad situation is not the cloud computing itself, but that the vast majority of employees lack any sense of cybersecurity. That same study found that 1 in 5 employees:
Complicating this further is that the employees who actually do use passwords usually have weak passwords. That is, they are easy to guess (e.g., “1234,” “password,” or their username). Rather than leave a company and its network vulnerable to attack, some IT people suggest a ban on cloud accounts for work.
Security breaches involving a company’s intellectual property can be very costly. Sometimes referred to as “ransomware,” the important data of an organization will either be stolen or encrypted and will not be released until a fee is paid.
A better solution to a ban on cloud accounts would be to educate employees on the necessity for cyber security, train them to improve their online security habits, and remind them that IT rules are in place to make a company more secure, not make it more difficult for employees to be productive. Cyber thieves are clever and when they can’t break into a system using technology, they often rely on the flaws of human nature.
As we become more and more connected to the Internet, we leave ourselves and the companies where we work more accessible to cyber threats. It’s imperative that employees keep everything locked down.
Marshall T. (2017 March 14). Workplace cybersecurity begins with employees [Web blog post]. Retrieved from address http://blog.ubabenefits.com/workplace-cybersecurity-begins-with-employees
Make sure to stay up-to-date with the most recent changes to the ACA, thanks to our partners at United Benefit Advisors (UBA).
In March, the employee benefits world watched as the House Speaker unveiled a proposal to replace parts of the Patient Protection and Affordable Care Act (ACA) with the American Health Care Act (AHCA). The AHCA bill was withdrawn from consideration by the full House on March 24 because it appeared that there would not be enough votes to pass the AHCA.
On March 13, 2017, the U.S. Senate approved Seema Verma as the new administrator of the Centers for Medicare & Medicaid Services (CMS), which spends more than a $1 trillion annually on health care programs.
The IRS updated its Q&As to address whether family members of an employee who declines employer-sponsored coverage would be eligible for a premium tax credit for Marketplace coverage. The IRS updated its Publication 969 regarding health savings accounts and other tax-favored health plans. The IRS released its Information Letter regarding the treatment of cafeteria plan forfeitures. The Department of Labor (DOL) released an advisory opinion on whether an association’s administrative services program was an ERISA employee welfare benefit plan or a multiple employer welfare arrangement (MEWA).
UBA released one new resource in March: Important News Regarding the Employer-Tax Exclusion for Health Insurance
UBA updated existing guidance:
IRS Updates Guidance on Premium Tax Credit Eligibility When Employer-Sponsored Health Plan Coverage is Offered to an Employee’s Spouse and Children
The IRS updated its Questions and Answers on the Premium Tax Credit. Specifically, Q&A 15 addresses a situation in which an employer offers minimum value, affordable coverage to an employee, the employee’s spouse, and the employee’s children. The plan only allows the spouse and dependent to enroll if the employee enrolls. The employee declines to enroll.
The IRS determined that all three family members are not eligible for a premium tax credit for Marketplace coverage because they could have enrolled in the employer-sponsored coverage through the employee’s coverage and the coverage would have been minimum value and affordable.
IRS Updates Its Publication 969
The Internal Revenue Service (IRS) updated its Publication 969 Health Savings Accounts and Other Tax-Favored Health Plans for use in preparing 2016 tax returns. The publication describes HSAs, MSAs, FSAs, and HRAs, including eligibility requirements, contribution limits, and distribution information.
IRS Releases Information Letter
IRS released Information Letter Number 2016-0077, in which it explains how an employer may dispose of a flexible benefit plan’s unused funds when an employer ceases business operations and terminates a plan and when a participant forfeits funds to an ongoing plan.
The plan documents will determine how an employer may dispose of unused funds when a cafeteria plan terminates. Unused funds will not revert to the U.S. Treasury.
The IRS explained that the Internal Revenue Code (IRC) Section 125 rules apply to funds forfeited by a participant in an ongoing plan. Per IRC Section 125, the participants’ forfeited funds may be:
Finally, the IRS explained that when an employee terminates employment, IRC Section 125 prohibits the plan from reimbursing health care expenses incurred after the employee terminates employment and no longer participates in the plan.
DOL Issues Advisory Opinion
On January 13, 2017, the Department of Labor (DOL) issued Advisory Opinion 2017-01A. The DOL determined that an association’s administrative services program for its members’ employee benefits plan is not an ERISA employee welfare benefit plan and not a multiple employer welfare arrangement (MEWA).
As background, the association is comprised of large employers that sponsor self-insured benefit plans through administrative services only (ASO) agreements with insurance companies. The association has a member-owned and member-funded cooperative that analyzes health care spending, utilization, and outcomes; however, the association does not and will not provide insurance services to its members; determine benefit levels, administer plans, benefits, or claims; facilitate payment of ASO fees to insurers; or file or process claims.
The DOL determined that the program is not an ERISA employee welfare benefit plan because it has no employee participants and it does not offer or provide benefits to employees or their dependents.
The DOL determined that the program is not a MEWA because it is not an arrangement established or maintained to provide welfare benefits to employees of two or more employers. Further, the DOL determined that the program does not operate as a MEWA because no component of the program underwrites or guarantees welfare benefits, provides welfare benefits through group insurance contracts covering more than one employer, pools welfare benefit risk among participating employers, or provides similar insurance or risk spreading functions.
Question of the Month
Q. What obligations does an employer have when it receives returned Form 1095-Bs marked as undeliverable by the U.S. postal service?
A. Under IRS guidance, the employer fulfills its responsibility to furnish the statement to an individual if it mails the statement to the recipient’s last known permanent address (unless the recipient affirmatively consented to receive the statement in electronic format).
Practically speaking, the employer should keep the mailing which shows that the employer sent the statement to the recipient’s last known permanent address and that the statement was returned undeliverable. That way, the employer has proof that it mailed the statement to the recipient’s last known permanent address.
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Change is on the way for employees who get their healthcare through their employer. Take a look at this great article from Employee Benefit News about the mandatory genetic testing that employers can impose on employees on the employer health plan our partner by Richard Stolz
Employers with ambitious health promotion programs may get a break from a thicket of conflicting federal regulation that, critics argue, is discouraging their efforts to address employee health issues holistically.
The “Preserving Employee Wellness Programs Act”— or HR 1313 — cleared an important legislative hurdle March 8 when a majority of members of the House Education and The Workforce Committee, in a party-line vote (22 Republicans in favor, 17 Democrats opposed), approved the measure.
HR 1313’s basic purpose is to clarify that employers can obtain biometric information from employee family members who participate in incentive-based wellness programs using financial incentives without violating the Generic Information Nondiscrimination Act of 2008 (GINA). That is, the incentives don’t amount to unlawful coercion.
The bill still must be approved by more committees before being voted on by the full House of Representatives, and then the Senate. However, given Republican control of Congress, its prospects appear to be strong, unless it becomes bogged down in a larger battle over the Republican Affordable Care Act replacement legislation.
And, it looks promising for employers.
HR 1313 has been supported by, among other groups, the American Benefits Council and the Society for Human Resource Management.
Key language of HR 1313 states the following: “The collection of information about the manifested disease or disorder of a family member shall not be considered an unlawful acquisition of genetic information with respect to another family member as part of a workplace wellness program…”
Testifying in favor of the measure on behalf of the American Benefits Council, Allison Klausner warned that without such legislation, “the future of workplace wellness programs are at risk.”
“Employers… face complex and inconsistent regulation for the design and administration of [wellness] plans, most recently as a result of regulations relating to wellness programs finalized by the EEOC,” stated Klausner, who also serves as Chair of ABC’s Policy Board of Directors.
SHRM lobbyist Chatrane Birbal expressed similar concerns. She believes HR 1313 will “alleviate the confusing and conflicting requirements for wellness programs and provide employers the legal certainty they need to continue to offer employee wellness programs.”
However, the measure is not without detractors. As noted, all 17 Democrats on the Committee opposed the measure. They have found arguments by opposing groups, such as the American Society of Human Genetics, persuasive. “If enacted, this bill would force Americans to choose between access to affordable healthcare and keeping their personal genetic and health information private,” according to Derek Scholes, director of science policy fir the organization.
The fear is that certain health conditions that can be revealed in biometric testing administered in conjunction with incentive-based wellness programs, especially when both employees and their spouses submit to the testing, give employers ammunition to discriminate against employees deemed to pose a serious risk of future high medical claims, either with respect to themselves, or dependents.
Given the simplicity of HR 1313, it could be enacted as-is, unlike the multifaceted Republican ACA-replacement, American Health Care Act, whose fate will not be determined quickly.
Stolz R. (2017 March 10). New bill would allow employers to force genetic testing on workers [Web blog post]. Retrieved from address https://www.benefitnews.com/news/new-bill-would-allow-employers-to-force-genetic-testing-on-workers?brief=00000152-14a7-d1cc-a5fa-7cffccf00000
Does the implementation of the AHCA have you worried about your employee benefits? Take a look at this great article from Employee Benefit News about what the implementaion of the AHCA will mean for employers by Joel Wood.
In breaking down the Congressional Budget Office’s assessment of the proposed American Health Care Act, let’s look at the impact of the AHCA on employer-sponsored plans. The CBO estimates that 2 million fewer Americans will have employer-sponsored coverage in 2020, growing to seven million by 2027. Here’s CBO’s rationale:
These are valid points. The CBO experts are basing their estimates on sound economics and inside the constraints of their authority, and so of course we worry about any proposal that devolves employer-sponsored care. But, we also have to note that the CBO said much the same about the Affordable Care Act, which largely didn’t happen. And CBO notwithstanding, we at the Council of Insurance Agents & Brokers, too, feared something of a death spiral after the ACA was enacted.
The ACA’s employer penalties were very small in comparison to premiums, and it made sense that many would dump their plans, give their employees cash, and send them to the subsidized exchanges. Also, the subsidies were pretty rich — graduating out at 400% of the poverty line. That’s more than $90,000 for a family of four.
What we didn’t take into account in reference to the ACA were a number of things:
So employer-sponsored health insurance has, well, thrived since the enactment of the ACA — perhaps in spite of it, not because of it.
If the CBO is correct and seven million people lose ESI over the next decade, that’s problematic. But it ignores other opportunities that are being created through the proposed GOP bill and Trump Administration executive actions.
Republicans propose significant expansion of HSAs that will compliment higher-deductible ESI plans. They want work-arounds for state mandates on essential health benefits, even though their goal of “buying across state lines” can’t be realized through the tricky budget reconciliation process. And, ultimately, Republicans want to realize the potential for the ACA wellness provisions that have been eviscerated through years of EEOC/ADA/GINA conflicts. That would be a big win for employers.
The most important tradeoff between the “discussion draft” of a few weeks ago and the AHCA is that GOP House leaders junked their plan to tax 10% of employee contributions for ESI plans, in favor of pushing the Cadillac tax out five more years, to 2025.
Personally, I figure I’ve got another decade left in me to lobby for this industry, and that would get me eight years along the way. That’s a terrific tradeoff in my book, especially as Ways & Means Chairman Kevin Brady (R-Texas) emphasized he never intends for that tax to go into effect — it’s purely a budgetary gimmick. And, it’s a ridiculous “score” from CBO anyway. Everybody knows that no employer is going to pay that tax; they’ll work their plan design to get under the numbers.
Where does Donald J. Trump stand on parental leave, minimum wage and other important workplace issues? Here’s what employers need to know.
My conclusions at this moment in time, thus, are:
Sometimes, when lobbying blank-faced Republican leaders on the importance of ESI, I feel like the old BB King lyric: “Nobody loves me but my mother, and she could be jivin’, too.”
But because of, or in spite of, current legislative efforts that are dominating the headlines, I feel relatively well-poised for ESI to continue to be the means through which a majority of Americans receive the health insurance they like and they want to keep. Our job is for them to keep it. Notwithstanding lots of obstacles, we will.
Wood J. (2017 March 21). CBO estimate of AHCA impact on employer-sponsored benefits is off the mark [Web blog post]. Retrieved from address https://www.benefitnews.com/opinion/cbo-estimate-of-ahca-impact-on-employer-sponsored-benefits-is-off-the-mark