HSAs and Employer Responsibilities

Do you know all the responsibilities an employer will face when dealing with HSAs? If not, take a look at this great article from our partner, United Benefit Advisors (UBA) by Vicki Randall and find out about all the HSA responsibilities facing employers.

It’s no secret that one of the primary agenda items of the new Republican administration is to repeal the Patient Protection and Affordable Care Act (ACA) and to sign into law a plan that they feel will be more effective in managing health care costs. Their initial attempt at a new plan, called the American Health Care Act (AHCA), included an increased focus on leveraging health savings accounts (HSAs) to accomplish this goal. As the plan gets debated and modified in Congress, we do not know whether the role of HSAs will be expanded or not, but they will continue to be a part of the landscape in some shape or form.

HSAs first came into existence in 2003 and they have been gaining momentum as a way to deal with increasing health care costs ever since. If you, as a plan sponsor, do not already offer a health plan compatible with an HSA, chances are you’ve at least discussed them during your annual plan reviews. So, what exactly is an HSA and what is an employer’s responsibility relating to one?

An HSA is a tax-favored account established by an individual to pay for certain medical expenses incurred by account holders and their spouses and tax dependents. Anyone can make a contribution to an eligible Individual’s HSA. This includes the individual’s employer. However, if employers contribute to participant HSAs, employers must:

  1. Ensure their health plan meets high-deductible health plan (HDHP) requirements,
  2. Determine eligibility,
  3. Establish contribution method,
  4. Provide W-2 reporting, and
  5. Confirm employer involvement in the HSA does not create an ERISA plan, or cause a prohibited transaction.

High-Deductible Health Plan Requirements

Plan sponsors should make sure their plan meets certain HDHP requirements before making contributions to participants’ HSAs.

Characteristics of an HDHP

An HDHP is a health plan that has statutorily prescribed minimum deductible and maximum out-of-pocket limits. The limits are adjusted annually for inflation.

For example, for 2017, the limits for self-only coverage are:

  • Minimum Deductible: $1,300
  • Maximum Out-of-Pocket: $6,550

The limits for family coverage (i.e., any coverage other than self-only coverage) are twice the applicable amounts for self-only coverage. The limits are adjusted annually for inflation and, for a given year, are published by the IRS no later than June 1 of the preceding year. In addition, an HDHP cannot pay any benefits until the deductible is met. The only exception to this rule is benefits for preventive care.

Eligibility

Eligible Individuals can make or receive contributions to their HSAs. A person is an eligible individual if he or she is covered by an HDHP and is not covered by any other plan that pays medical benefits, subject to certain exceptions.

Employer Contribution Methods

Employers that contribute to the HSAs of their employees may do so inside or outside of a cafeteria (Section 125) plan. The contribution rules are different for each option.

Contributions Outside of a Cafeteria Plan

When contributing to any employee’s HSA outside of a cafeteria plan, an employer must make comparable contributions to the HSAs of all comparable participating employees.

Contributions Made Through a Cafeteria Plan

HSA contributions made through a cafeteria plan do not have to satisfy the comparability rules, but are subject to the Section 125 non-discrimination rules for cafeteria plans. HSA employer contributions will be treated as being made through a cafeteria plan if the cafeteria plan permits employees to make pre-tax salary reduction contributions.

Employer HSA Contribution Amounts

Contributions from all sources cannot exceed certain annual limits prescribed by the IRS. Although employer contributions cannot exceed the applicable limits, employers are only responsible for determining the following with respect to an employee’s eligibility and maximum annual contribution limit on HSA contributions:

  • Whether the employee is covered under an HDHP or low-deductible health plan, or plans (including health flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs) sponsored by that employer; and
  • The employee’s age (for catch-up contributions). The employer may rely on the employee’s representation as to his or her date of birth.

When employers contribute to the HSAs of their employees and retirees, the amount of the contribution is excludable from the eligible individual’s income and is deductible by the employer provided they do not exceed the applicable limit. Withholding for income tax, FICA, FUTA, or RRTA taxes is not required if, at the time of the contribution, the employer reasonably believes that contribution will be excludable from the employee’s income.

Employer Reporting Requirements

An employer must report the amount of its contribution to an employee’s HSA in Box 12 of the employee’s W-2 using code W.

Design and Operational Considerations

Employers should make sure that their involvement in the HSA does not create an ERISA plan, or cause them to become involved in a prohibited transaction. To ensure that contributions will not cause the health plan to become subject to ERISA, certain restrictions exist that employers should be aware of and follow. Employer contributions to an HSA will not cause the employer to have established a health plan subject to ERISA provided:

  • The establishment of the HSA is completely voluntary on the part of the employees; and
  • The employer does not:
    • limit the ability of eligible individuals to move their funds to another HSA or impose conditions on utilization of HSA funds beyond those permitted under the code;
    • make or influence the investment decisions with respect to funds contributed to an HSA;
    • represent that the HSA is an employee welfare benefit plan established or maintained by the employer;
    • or receive any payment or compensation in connection with an HSA.

See the original article Here.

Source:

Randall V. (2017 May 25). HSAs and employer responsibilities [Web blog post]. Retrieved from address http://blog.ubabenefits.com/hsas-and-employer-responsibilities


Kaiser Health Tracking Poll - May 2017: The AHCA's Proposed Changes to Health Care

Find out how the American public feels about the American Health Care Act in this great article by Kaiser Family Foundation.

KEY FINDINGS:
  • With Congress currently discussing the American Health Care Act (AHCA), a plan that would repeal and replace the 2010 health care law, this month’s Kaiser Health Tracking Poll finds that more Americans have an unfavorable view of the plan than a favorable one (55 percent vs. 31 percent, respectively). The share with favorable views of the AHCA is about 20 percentage points lower than the share with favorable views (49 percent) of the 2010 Affordable Care Act (ACA). The majority of Republicans (67 percent) have a favorable view of the AHCA.
  • This month’s survey finds the public has increasingly negative views of how their health care will be affected by proposed changes. In December 2016, after the presidential election but before the release of the Republican plan, less than one-third of the public thought their health care would get worse if the 2010 health care law was repealed. This month’s survey, fielded after House Republicans passed the AHCA, finds larger shares say the cost of health care for them and their family (45 percent), their ability to get and keep health insurance (34 percent), and the quality of their own health care will get worse if Congress passes the AHCA (34 percent).
  • About one in ten (8 percent) think the Senate should pass the AHCA as is, without making any changes to the plan passed by the House. Similar shares – about one-fourth of the public – think the Senate should make either major changes to the legislation (26 percent) or minor changes to it (24 percent), while about three in ten (29 percent) say they do not think the Senate should pass this bill.

The American Health Care Act

On May 4, 2017, the U.S. House of Representatives passed the American Health Care Act (AHCA), the House Republicans’ plan to repeal and replace the Affordable Care Act (ACA).1 With the Senate currently debating the plan and discussing their own approach, the most recent Kaiser Health Tracking Poll finds more Americans have an unfavorable view of the AHCA than a favorable one (55 percent vs. 31 percent, respectively). There is also a considerable enthusiasm gap with a larger share saying that they have a “very unfavorable” view (40 percent) than saying they have a “very favorable” view (12 percent).

MAJORITY OF REPUBLICANS HOLD A FAVORABLE VIEW OF THE AHCA

The AHCA has solid support among the Republican base. Two-thirds of Republicans say they have a favorable view of the plan including three in ten (29 percent) who say they have a “very favorable” view.

FEW SEE AHCA AS FULFILLING PRESIDENT TRUMP’S PROMISES ABOUT HEALTH CARE

Three-fourths (76 percent) of the public thinks the health care plan recently passed by the House does not fulfill most of the promises President Trump has made about health care while 14 percent say it fulfills most or all of his promises.

This viewpoint is shared regardless of party identification with majorities of Democrats (86 percent), independents (79 percent), and Republicans (59 percent) saying the AHCA fulfills some or none of the promises President Trump has made about health care.

MORE AMERICANS VIEW THE ACA FAVORABLY THAN THE AHCA

The Kaiser Family Foundation has been tracking public opinion on the ACA since its passage in 2010. This month’s survey continues to find the public leans more favorable than unfavorable in their views of the 2010 health care law, with 49 percent expressing a favorable view of the ACA compared to 42 perecent expressing an unfavorable view.

In fact, more of the public is favorable in their overall views of the ACA than in their views of the Republican plan to replace the 2010 health care law. About half of Americans have a favorable view of the ACA compared to about three in ten who have a favorable view of the new Republican plan.

Partisanship is the main driver behind support for either the ACA or the AHCA, with a majority of Republicans viewing the AHCA favorably (67 percent), while a majority of Democrats view the ACA favorably (78 percent). More independents view the ACA favorably (48 percent) than view the AHCA favorably (30 percent).

Despite the lack of support for the House Republican plan, a majority of the public (74 percent) say they think it is either “very likely” (37 percent) or “somewhat likely” (36 percent) that the president and Congress will repeal and replace the ACA. About one-fourth of the public say it is either “not too likely” (15 percent) or “not likely at all” (9 percent).

MOST AMERICANS WANT CHANGES TO THE AHCA BEFORE SENATE PASSES THE BILL

About one in ten (8 percent) think the Senate should pass the AHCA as is, without making any changes to the plan passed by the House. Similar shares – about one-fourth of the public – think the Senate should make either major changes to the legislation (26 percent) or minor changes to it (24 percent), while about three in ten say they do not think the Senate should pass this bill.

Attitudes toward what the Senate should do when it comes to the AHCA are largely driven by partisanship with most Republicans (60 percent) saying they think it should pass as is (15 percent) or with minor changes (45 percent) while half of Democrats (51 percent) say the Senate should not pass this bill. Independents are more divided but one-third (34 percent) say the Senate should make major changes to the bill.

ATTITUDES TOWARDS AHCA PROVISIONS

The AHCA – like other health care plans – includes complex policies that the public may not fully understand or pay attention to. In an effort to examine general attitudes towards several of the more well-known provisions, we ask respondents whether after hearing about the specific provision they are “more likely” or “less likely” to support the plan. Much like overall attitudes towards the AHCA, various provisions of the law asked about in this survey do not garner large levels of support from the public. When asked whether individual elements of the Republican replacement plan would make them “more likely” or “less likely” to support the plan, none of the elements receive a majority of the public saying it would make them “more likely” to support it.  The only provision that has a larger share of the public saying it makes them “more likely” than say it makes them “less likely” to support the law is allowing states to implement a Medicaid work requirement (42 percent compared to 28 percent).

There are several provisions currently included in the plan that a majority of the public say makes them “less likely” to support the legislation. These include allowing states to decide if health insurance companies can charge sick people more than healthy people if they haven’t had continuous coverage (65 percent), eliminating the individual mandate and instead allowing insurance companies to charge people 30% higher premiums for a year if they haven’t had continuous coverage (62 percent), allowing states to eliminate the essential health benefit requirement (60 percent), and making changes that would generally decrease what younger people pay for insurance and increase what older people pay (58 percent).

REPUBLICAN SUPPORT FOR SOME ASPECTS OF THE AHCA

There is some support for aspects of the AHCA among Republicans. For example, a majority of Republicans say that the Medicaid work requirement (75 percent) and federal funding for states to set up high-risk pools (59 percent) makes them more likely to support the plan. In addition, about four in ten Republicans say the same about the provisions which stop federal Medicaid payments to Planned Parenthood (45 percent), change Medicaid funding to a per capita cap or block grant system (45 percent), allow states to change the essential health benefits (42 percent), and end the funding for Medicaid expansion (40 percent).

PERCEIVED EFFECTS OF THE AHCA

Overall, about half of Americans say the quality of their own health care (48 percent) and their own ability to get and keep health insurance (47 percent) will stay about the same if the president and Congress pass the health care plan currently being discussed. When it comes to the cost of health care for them and their family, almost half say it will get worse (45 percent) while about one-third say it will stay about the same (36 percent) and 16 percent say it will get better.

Immediately following the 2016 presidential election and prior to the release of the Republican plan, most Americans thought that their health care would stay about the same if the 2010 health care law was repealed. Yet, in this month’s survey which was fielded after House Republicans passed the AHCA, larger shares say the cost of health care for them and their family, their ability to get and keep health insurance, and the quality of their own health care will get worse if Congress passes the AHCA.

See the original article Here.

Source:

Kirzinger A., Dijulio B., Hamel L., Sugarman E., Brodie M. (2017 May 31). Kaiser health tracking poll - may 2017: the AHCA's proposed changes to health care [Web blog post]. Retrieved from address http://www.kff.org/health-costs/report/kaiser-health-tracking-poll-may-2017-the-ahcas-proposed-changes-to-health-care/


Insurer Participation on ACA Marketplaces, 2014-2017

Have you wondered how the health insurance marketplace has fared since the passing of the ACA. Here is a really good article by Ashley Semanskee and Cynthia Cox highlighting the impact the ACA has had on insurance marketplaces across the country.

Since the Affordable Care Act health insurance marketplaces opened in 2014, there have been a number of changes in insurance participation as companies entered and exited states and also changed their footprint within states. Our earlier analyses of insurer participation and some notable company exits can be found here.

In 2014, there were an average of 5.0 insurers participating in each state’s ACA marketplace, ranging from 1 company in New Hampshire and West Virginia to 16 companies in New York. 2015 saw a net increase in insurer participation, with an average of 6.0 insurers per state, ranging from 1 in West Virginia to 16 in New York. In 2016, insurer participation changed in a number of states due to a combination of some new entrants and the failure of a number of CO-OP plans. In 2016, the average number of companies per state was 5.6, ranging from 1 in Wyoming to 16 in Texas and Wisconsin.

In 2017, insurance company losses led to a number of high profile exits from the market. The average number of companies per state in 2017 was 4.3, ranging from 1 company in Alabama, Alaska, Oklahoma, South Carolina and Wyoming to 15 companies in Wisconsin. In 2017, 58% of enrollees (living in about 30% of counties) had a choice of three or more insurers, compared to 85% of enrollees (living in about 63% of counties) in 2016.

Insurer participation varies greatly within states, and rural areas tend to have fewer insurers. On average, metro-area counties have 2.5 insurers participating in 2017, compared to 2.0 insurers in non-metro counties. In 2017, 87% of enrollees lived in metro counties.

There are a number of areas in the country with just one exchange insurer. In 2017, about 21% of enrollees (living in 33% of counties) have access to just one insurer on the marketplace (up from 2% of enrollees living in 7% of counties in 2016). Often, when there is only one insurer participating on the exchange, that company is a Blue Cross Blue Shield or Anthem plan. Before the ACA, many state individual markets were often dominated by Blue Cross Blue Shield plans.

See the original article Here.

Source:

Semanskee A., Cox C. (2017 June 1). Insurer participation on ACA marketplaces, 2014-2017 [Web blog post]. Retrieved from address http://www.kff.org/health-reform/issue-brief/insurer-participation-on-aca-marketplaces-2014-2017/


Why and How to Avoid High-Risk Pools for Americans with Preexisting Conditions

With the passing of the AHCA many people with preexisting conditions can now be put into a high-risk pool by insurers. Here is a great article by Jean P. Hall from Common Wealth Fund on how Americans with preexisting conditions can avoid being put into a high-risk pool.

The American Health Care Act (AHCA)—the U.S. House of Representatives’ bill to repeal and replace the Affordable Care Act (ACA)—would allow states to apply for waivers to reduce existing consumer protections and provide funding for states to set up high-risk pools or other mechanisms for people with preexisting conditions who have lapses in their coverage. In previous posts, I have talked about the high costs and meager coverage associated with high-risk pools that operated before the ACA and the fact that their use did not significantly reduce costs for other people who buy their own health plans in the individual market. Moreover, the Congressional Budget Office analysis of the AHCA finds that the funding it makes available to states for the high-risk pools is inadequate.

In a recent commentary for Annals of Internal Medicine on high-risk pools, I note that people with preexisting conditions constitute roughly 51 percent of Americans. Here, let’s explore who might end up in a high-risk pool, what their experiences might be, and policymakers’ alternative options for stabilizing the marketplaces.

The U.S. Department of Health and Human Services (HHS) estimated that 23 percent of Americans with preexisting conditions had a period of uninsurance in 2014, often because of job changes or periods of financial instability. Young people reaching age 26 who transition off their parents’ coverage also sometimes experienced gaps in coverage—and some of them have preexisting conditions. Should the AHCA become law, individuals with preexisting conditions and lapses in coverage who live in states that obtain waivers to allow insurers to charge people based on their health would likely end up in high-risk pools.

Research has shown that the greater out-of-pocket costs and limited coverage associated with high-risk pools led to enrollees forgoing needed care and experiencing worse outcomes. In fact, before the ACA, high-risk pool enrollees in Kansas were eight times more likely to transition to federal disability programs than members of the general population with these conditions.

Current Medicaid beneficiaries also would be affected. The Congressional Budget Office analysis of the AHCA estimated that 14 million fewer people would have Medicaid coverage as a result of the federal funding cuts. Many of them would be forced to look to the individual insurance market to gain coverage, yet half of these former Medicaid beneficiaries would have serious preexisting conditions. Given the historically very high costs for consumers associated with high-risk pools, the majority of these individuals would likely go uninsured instead. Many would end up using the emergency room to access care once their needs become urgent, and their uncompensated health care costs would be borne by others with insurance. Some would likely suffer serious health consequences, even preventable deaths.

Supporters of the AHCA suggest that the legislation gives states more options to design coverage for their citizens, thereby better meeting their needs. Section 1332 of the ACA, however, already gives states a great deal of flexibility in designing their marketplaces while still providing comprehensive and affordable coverage. Indeed, both Alaska and Minnesota are pursuing 1332 waiver programs to specifically address concerns about high-risk individuals by implementing reinsurance programs, rather than segregating people with preexisting conditions into high-risk pools. These programs would maintain the overall larger pool of insured people in the state while protecting insurers against catastrophic costs. Reinsurance programs, such as the one temporarily instituted under the ACA for its first three years, have historically been proven to bring down premium costs for everyone. Given that reinsurance programs are a more effective and evidence-based mechanism for stabilizing the individual insurance market, state policymakers should strongly consider pursuing these programs under the existing ACA rules instead of establishing high-risk pools. And, federal policymakers should acknowledge and support this mechanism to strengthen the marketplace, bring down costs, and encourage participation by insurers.

See the original article Here.

Source:

Hall J. (2017 June 5). Why and how to avoid high-risk pools for americans with pre-existing conditions [Web blog post]. Retrieved from address http://www.commonwealthfund.org/publications/blog/2017/jun/how-and-why-to-avoid-high-risk-pools


What Challenges Could State Insurance Markets Face Under the House’s American Health Care Act?

Here is a great article by Kaiser Family Foundation on how states' insurance markets will be impacted with the passing of the American Health Care Act (AHCA).

A new brief from the Kaiser Family Foundation outlines options for state insurance markets and challenges that states could face under the House’s replacement for the Affordable Care Act (ACA).

Passed by the House on May 4 and now under consideration by the Senate, the American Health Care Act (AHCA) would reduce the federal government’s role and resources in providing health insurance coverage – particularly for people with low or moderate incomes — while expanding authority and financial responsibility of the states.

The new brief describes provisions of the AHCA over which states have discretion, and it discusses challenges that the bill presents states by significantly reducing both federal payments to Medicaid and funding for subsidies in the non-group insurance market, and by repealing the requirement that individuals have health insurance, a move that could drive up premiums.

The House health bill establishes two main ways for states to address these issues. States may use money from a new Patient and State Stability Fund to offset a portion of the federal spending reductions, and they may obtain a waiver to modify important insurance provisions.

According to the brief, issues and tradeoffs states could face under the AHCA include:

  • Competing demands for reduced federal funding. Resources available through the Patient and State Stability Fund would be less than the spending reductions called for in the House bill.
  • Funding limitations over time. Annual appropriations to the Patient and State Stability Fund don’t grow over time and end entirely after 2026.
  • Waiving essential health benefits vs. limiting availability of coverage. States could lower premium rates in the individual market by using an essential health benefits waiver to reduce the benefits that policies are required to cover. However, insurers may then choose to charge higher premiums to cover important benefits that are no longer defined as essential health benefits, or they may choose not to cover those benefits.
  • Waiving community rating vs. protecting access for people who are sick. A waiver to allow insurers to use health in rating applicants with a coverage gap is another way that states could seek to lower premiums. The bill provides states with options for covering individuals with pre-existing conditions and a gap; however, states would risk some individuals being priced out of the market.

See the original article Here.

Source:

Author (2017 June 5). What challenges could state insurance markets face under the house's american health care act [Web blog post]. Retrieved from address http://www.kff.org/health-reform/press-release/what-challenges-could-state-insurance-markets-face-under-the-houses-american-health-care-act/


Gaps in Coverage Among People With Pre-Existing Conditions

The passing of the American Care Act (ACA) in 2010 brought many changes to the healthcare marketplace. One of the most important changes that this legislation brought was coverage for people with pre-existing conditions. This legislation allowed people with pre-existing conditions to gain access to health care without facing higher premiums. But with the passing of the AHCA the market for pre-existing conditions is on the verge of changing. Check out this great article from Kaiser Family Foundation on how the AHCA will effect people with pre-conditions.

The American Health Care Act (AHCA), which has passed the House of Representatives, contains a controversial provision that would allow states to waive community rating in the individual insurance market. In this brief we estimate the number of people with pre-existing conditions who might be affected by such a policy.

How the State Waiver Provision Works

Under the provision, insurers in states with community rating waivers could vary premiums by health status for enrollees who have had a gap in insurance of 63 or more consecutive days in the last year. The higher (or lower) premiums due to health status would apply for an entire plan year (or the remainder of the year in case of people signing up during a special enrollment period), at which point enrollees would be eligible for a community-rated premium unrelated to their health.

States waiving community rating would be required to set up a mechanism to subsidize the cost of high-risk enrollees, such as a high-risk pool, or participate in a reinsurance arrangement that makes payments directly to insurers. States are not required to set up an alternative source of coverage for people who face higher premiums based on their health.

The bill makes $100 billion available to all states for a variety of purposes, including high-risk pools, reinsurance programs, and cost-sharing subsidies. An additional $15 billion is made available for a federal invisible risk-sharing program, which would be similar to a reinsurance arrangement. Another $15 billion is earmarked for spending on maternal and newborn care, mental health, and substance abuse services for the year 2020.  The AHCA also allocates $8 billion over five years to states that implement community rating waivers; these resources can be used to help reduce premiums or pay out-of-pocket medical expenses for people rated based on their health status.

Premiums varied significantly based on health status in the individual market before the Affordable Care Act (ACA) prohibited that practice beginning in 2014. Insurers in nearly all states were also permitted to decline coverage to people with pre-existing conditions seeking individual market insurance. We estimate that 27% of non-elderly adults have a condition that would have led to a decline in coverage in the pre-ACA market. While insurers would have to offer insurance to everyone under the AHCA, people with declinable pre-existing conditions would likely face very large premium surcharges under an AHCA waiver, since insurers were unwilling to cover them at any price before the ACA.

How Many People Might be Affected by Community Rating Waivers?

The effect of a community rating waiver would depend crucially on how many people with pre-existing conditions have gaps in insurance that would leave them vulnerable to higher premiums.

Using the most recent National Health Interview Survey (NHIS), we estimate that 27.4 million non-elderly adults nationally had a gap in coverage of at least several months in 2015. This includes 6.3 million people (or 23% of everyone with at least a several-month gap) who have a pre-existing condition that would have led to a denial of insurance in the pre-ACA individual market and would lead to a substantial premium surcharge under AHCA community rating waiver.1

Among the 21.1 million people who experienced a gap in coverage and did not have a declinable pre-existing condition, some also had pre-existing conditions (such as asthma, depression, or hypertension) that would not have resulted in an automatic denial by individual market health insurers pre-ACA but that nonetheless could also result in a premium surcharge.

In many cases, people uninsured for several months or more in a year have been without coverage for a long period of time. In other cases, people lose insurance and experience a gap as a result of loss of a job with health benefits or a decrease in income that makes coverage less affordable. Young people may have a gap in coverage as they turn 26 and are unable to stay on their parents’ insurance policies. Medicaid beneficiaries can also have a gap if their incomes rise and they are no longer eligible for the program.

Through expanded Medicaid eligibility and refundable tax credits that subsidized premium in insurance marketplaces, the ACA has substantially reduced coverage gaps. In 2013, before the major provisions of the ACA went into effect, 38.6 million people had a gap of several months, including 8.7 million with declinable pre-existing conditions.

Some people with a gap will ultimately regain coverage through an employer-based plan or Medicaid, and would not be subject to premium surcharges based on their health. However, anyone who has been uninsured for 63 days or more who tries to buy individual market insurance in a state with a community rating waiver would be subject to medical underwriting and potential premium surcharges based on their health.

Uncertainty Around the Estimate

There are a variety reasons why our estimates might understate or overstate number of people with pre-existing conditions who could be subject to premium surcharges under the AHCA.

People with health conditions would have a strong incentive under an AHCA waiver to maintain continuous coverage in order to avoid being charged premiums that could potentially price them out of the insurance market altogether. The question is how many would be able to do so, given the fact that the premium tax credits provided for in the AHCA would be 36% lower on average for marketplace enrollees than under the ACA and would grow more slowly over time. In 2013, before tax credits for individual insurance were available and the ACA’s Medicaid expansion took effect, the number of people with pre-existing conditions who experienced a gap in coverage was 41% higher. Among people with individual market insurance in 2015, we estimate that 3.8 million adults (representing 25% of all adult enrollees) had a pre-existing condition that would have led to a decline before the ACA. These individuals would not be subject to premium surcharges under AHCA community rating waivers, so long as they maintain continuous coverage.  Because individual market subsidies would be significantly reduced under the AHCA, these individuals could face added challenges remaining continuously covered.

About 49% of people with pre-existing conditions who had a gap in coverage in 2015 had incomes at or below 138% of the poverty level, and some of them could be eligible for Medicaid (depending on whether their state has expanded eligibility under the ACA and what eligibility rules are in states that have not expanded). They would not face any coverage restrictions associated with their health status in Medicaid. However, under the AHCA enhanced federal funding for expanding Medicaid would be repealed, and federal matching funds would be capped. The Congressional Budget Office projects that 14 million fewer people would be enrolled in Medicaid by 2026. So, while some people we identify as having a coverage gap would be eligible for Medicaid under the AHCA, many more people currently enrolled in Medicaid would lose that coverage under the AHCA and be uninsured. They would be eligible for premium tax credits, but the AHCA’s subsidies do not scale by income so individual market insurance would likely be unaffordable for people who are poor, including those with pre-existing conditions.

There is also significant uncertainty surrounding how many states would seek to waive community rating under the AHCA. Some states might do so to roll back what they consider to be excessive regulation of the insurance market initiated by the ACA and preserved under the AHCA. Other states might come under pressure to implement waivers from insurers who believe the market would be unstable, given that the AHCA repeals the ACA’s individual mandate. What states decide to do may ultimately have the greatest effect on how many people with pre-existing conditions face potentially unaffordable insurance premiums.

 

See the original article Here.

Source:

Levitt L., Damico A., Claxton G., Cox C., Pollitz K. (2017 May 17). Gaps in coverage among people with pre-existing conditions [Web blog post]. Retrieved from address http://www.kff.org/health-reform/issue-brief/gaps-in-coverage-among-people-with-pre-existing-conditions/?utm_campaign=KFF-2017-May-Pre-Ex-AHCA-Coverage-Gap&utm_medium=email&_hsenc=p2ANqtz-927vhm-poW6B4a5Qht6venQyS6-j9mRL1ecYqhgHd3bWp8UT-yBNineOJVRUwxXkUvJ3TalIEo_JBE9QE5o-n_pzrwyA&_hsmi=52007627&utm_content=52007627&utm_source=hs_email&hsCtaTracking=148c8fd6-8ba2-4f02-a508-45b17365a226|3ae33023-7ef1-44a9-a84c-b2a8d055e6bd


Compliance Recap May 2017

Make sure to stay up-to-date with the most recent rules and regulations from May regarding healthcare legislation thanks to our partners at United Benefit Advisors (UBA).

May was an active month in the employee benefits world. On May 4, 2017, the U.S. House of Representatives passed a bill titled the “American Health Care Act of 2017” (AHCA) to repeal and replace the Patient Protection and Affordable Care Act (ACA).

The Internal Revenue Service (IRS) released its Employer Shared Responsibility affordability percentage indexed for 2018. The U.S. Citizenship and Immigration Services (USCIS) issued redesigned permanent resident cards and employment authorization documents. The USCIS also issued a warning about phone scams targeting immigrants. The Occupational Safety and Health Administration (OSHA) announced that it will delay electronic submission of injury and illness records.

The IRS released dollar limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2018. The IRS released guidance confirming that health flexible spending arrangements (health FSAs) cannot reimburse Medicare premiums. The IRS also released a memo regarding tax treatment of benefits paid under an arrangement that combines a self-funded fixed indemnity heath plan and wellness program.

The Centers for Medicare & Medicaid Services (CMS) announced that it will end the Federally Facilitated SHOP Exchange (FF-SHOP) at the end of 2017. The U.S. Department of Labor (DOL) issued an advisory opinion on an employee welfare benefit plan maintained by an association of employers. The U.S. Supreme Court declined to take an opt-out arrangement case, leaving intact a lower court’s decision that opt-out payments must be included in overtime calculations under the Fair Labor Standards Act (FLSA).

UBA Updates

UBA released three new advisors in May: • House Passes AHCA Bill in

  • House Passes AHCA Bill in First Step to Repeal and Replace the ACA
  • Frequently Asked Questions About Employees’ Reduction in Hours
  • What Qualifying Events Trigger COBRA?

The House Passes AHCA Bill in First Step to Repeal and Replace the ACA

On May 4, 2017, the U.S. House of Representatives passed House Resolution 1628, a reconciliation bill aimed at "repealing and replacing" the ACA. The AHCA will now be sent to the Senate for debate, where amendments can be made, prior to the Senate voting on the bill.

It is widely anticipated that in its current state the AHCA is unlikely to pass the Senate. Employers should continue to monitor the text of the bill and should refrain from implementing any changes to group health plans in response to the current version of the AHCA.

IRS Releases Employer Shared Responsibility Affordability Percentage Indexed for 2018

The Internal Revenue Service (IRS) released its Revenue Procedure 2017-36 that sets the required contribution percentage to determine whether employer-sponsored health coverage is affordable at 9.56 percent for calendar year 2018.

USCIS Issues Redesigned Green Cards and Employment Authorization Documents

The U.S. Citizenship and Immigration Services (USCIS) began issuing the new Permanent Resident Cards (also known as Green Cards) on May 1, 2017. The new cards incorporate enhanced graphics and fraud-resistant security features. These new cards are also part of an ongoing effort between USCIS, U.S. Customs and Border Protection, and U.S. Immigration and Customs Enforcement to enhance document security and deter counterfeiting and fraud.

The new Green Cards and Employment Authorization Documents (EADs):

  • Display the individual’s photos on both sides • Show a unique graphic image and color palette:
    • Green Cards will have an image of the Statue of Liberty and a predominately green palette
    • EAD cards will have an image of a bald eagle and a predominately red palette
  • Have embedded holographic images
  • No longer display the individual’s signature

Also, Green Cards will no longer have an optical stripe on the back.

Some Green Cards and EADs issued after May 1, 2017, may still display the existing design format as USCIS will continue using existing card stock until current supplies are depleted. For more information about the Green Card application process, please visit USCIS.gov/greencard.

USCIS Issues a Warning on Phone Scam Targeting U.S. Immigrants

U.S. immigrants have been targeted by a phone scam that appears as if it is from the Canadian government’s Immigration, Refugees, and Citizenship Canada (IRCC) call center (1-888-242-2100). Recipients of these calls are advised to hang up immediately and check their status by:

  • Making an InfoPass appointment at http://infopass.uscis.gov, or
  • Using myUSCIS to find up-to-date information about their application, or
  • Calling the USCIS National Customer Service Center at 1-800-375-5283.

Scam email or phone calls should be reported to the Federal Trade Commission at http://1.usa.gov/1suOHSS. Suspicious emails may be forwarded to the USCIS webmaster at uscis.webmaster@uscis.dhs.gov. The USCIS will review the emails received and share them with law enforcement agencies as appropriate. Visit the Avoid Scams Initiative at www.uscis.gov/avoid-scams for more information on common scams and other important tips.

OSHA Proposes to Delay Electronic Submission of Injury and Illness Records

In 2016, the Occupational Safety and Health Administration (OSHA) announced that certain high-risk employers of 20 or more employees and employers with 250 or more employees must electronically file Form 300A for workplace illnesses and injuries that occurred in calendar year 2016.

OSHA recently posted a notice on its website stating that “OSHA is not accepting electronic submission of injury and illness logs at this time and intends to propose extending the July 1, 2017 date by which certain employers are required to submit the information from their completed 2016 form 300A electronically.” It should be noted that the requirement to keep records has not changed; only the method in which they are submitted is under scrutiny.

IRS Releases 2018 Amounts for HSAs 

The IRS released Revenue Procedure 2017-37 that sets the dollar limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2018. For

For calendar year 2018, the annual contribution limit for an individual with self-only coverage under an HDHP is $3,450, and the annual contribution limit for an individual with family coverage under an HDHP is $6,900. For

For calendar year 2018, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage or $13,300 for family coverage.

IRS Releases Information Letter to Confirm that FSAs Cannot Reimburse Medicare Premiums

The IRS released its Information Letter Number 2017-0004 to confirmed that a health flexible spending arrangement (health FSAs) cannot reimburse Medicare premium expenses. The IRS cited its Publication 969 which states that an FSA cannot reimburse health insurance premium payments. Because Medicare premiums are premiums for other health coverage, Medicare premiums are not FSA-reimbursable expenses.

IRS Releases Memo Regarding Tax Treatment of Benefits Paid by Self-Funded Health Plans

On May 12, 2017, the IRS released a Memorandum to address the taxability of benefits paid under an arrangement that combines a self-funded fixed indemnity heath plan and wellness program. The IRS specifically refutes the claim that these arrangements provide nontaxable cash payments to employees and employment tax savings for the employer and employees.

The IRS concluded that benefits paid under a such an employer-provided self-funded health plan should be included in an employee’s income and wages if the average amounts received by the employee for participating in a health-related activity predictably exceed the employee’s after-tax contributions.

CMS Plans to End SHOP Exchange

On May 15, 2017, the Centers for Medicare & Medicaid Services (CMS) announced that it will issue rules to essentially end the Federally Facilitated SHOP Exchange (FF-SHOP) at the end of 2017.

Under the rules that CMS intends to propose, HealthCare.gov will continue to make FF-SHOP participation eligibility decisions for small employers regarding the Small Business Health Care Tax Credit, but the FF-SHOP will stop handling SHOP functions, such as processing premium payments or handling employer or employee enrollment, for SHOP plans taking effect on or after on January 1, 2018. CMS intends to allow employers to directly enroll with insurers offering SHOP plans or through FF-SHOPregistered brokers or agents.

DOL Issues Advisory Opinion on Employee Welfare Benefit Plan Sponsored by a Group of Employers

On May 16, 2017, the Department of Labor (DOL) issued its Advisory Opinion to address whether a membership-based organization could fall within ERISA’s definition of “group or association of employers” who sponsor an ERISA employee welfare benefit plan.

Based on the facts presented to the DOL, the DOL concluded that the organization’s membership is comprised of employers engaged in the same industry and that the employers have a genuine organizational relationship unrelated to the health plan through their membership in the organization. The DOL determined, based on the proposed arrangement’s facts, that the participating member employers would be a bona fide group or association of employers under ERISA and that the health plan would be an ERISA employee welfare benefit plan.

U.S. Supreme Court Declines to Take Opt-Out Arrangement FLSA Case

Last year in court case Flores v. City of San Gabriel, the 9th Circuit Court of Appeals (which covers several western states including Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington) determined that when an employer pays cash to an employee for opting out of its health plan, the payment must be considered part of the employee’s “regular rate of pay” under the Fair Labor Standards Act (FLSA). This means that the adjusted rate of pay must be used in calculating compensation for overtime hours.

The City of San Gabriel appealed the 9th Circuit’s decision to the U.S. Supreme Court. On May 15, 2017, the Supreme Court declined to take the case, essentially leaving the decision intact.

Practically speaking, if an employer is in one of the states covered by the 9th Circuit and if the employer calculates compensation for overtime hours, then it should consider this additional FLSA aspect to offering cash in lieu of benefits.

To download the full compliance alert click Here.


What's Really at Stake in the Medicaid Spending Debate

Does the prospect of a $834 billion reduction in Medicaid spending have you worried. Then take a look at this article by Drew Altman of Kaiser Family Foundation and find out how cuts to Medicaid will impact more than just healthcare.

The $834 billion cut in federal Medicaid spending in the American Health Care Act would kick off budget battles in the states that go way beyond Medicaid. We could see cuts to higher education, school funding, corrections, environmental protection or other state priorities — or new taxes, depending on the state.

The bottom line: What began as a Medicaid spending reduction in Congress will end up as a battle of budget priorities.

A new analysis from long time state Medicaid expert Vern Smith at HMA suggests why. To offset the $834 billion in reductions in federal Medicaid spending in the AHCA, states would need to increase their own general fund spending by an average of one third beginning in 2022, and 37% in 2026. States will have to decide whether to eat the reductions and cut their Medicaid programs, raise taxes, or cut spending for other state priorities, or to do some combination of these things.

In the short term, most of the reductions come from curtailing the ACA's Medicaid expansion, and the 31 states plus the District of Columbia that have expanded will be the most affected.

The problem: It's possible that with more flexibility, states could absorb some of the reductions by operating their Medicaid programs more efficiently, but only at the margins.

Medicaid spending is already growing more slowly than Medicare and private insurance on a per capita basis. Virtually all states have already picked the low hanging fruit to rein in their Medicaid costs, and most have already deployed the full spectrum of delivery and payment reforms currently in the arsenal to control spending growth.

Cutting payments to providers is always the Medicaid cut of first resort, but payments to providers are already too low in many states to cut them further.

What to watch: The need to absorb large reductions in Medicaid will pit cabinet agencies, legislative committees and interest groups against one another in some states. Nothing receives more attention from governors, legislators and interest groups than the size of the annual increase in the state general fund and how the increase is divided each year.

The amount of the annual increase that goes to Medicaid is already a sore point in state budgets. Now the annual budget dance will start with a big hole to fill in Medicaid.

It does not seem to have dawned on folks with an interest in state funding for higher education, or corrections, or schools, or environmental protection that the debate about Medicaid could soon become a debate about their issues. But Medicaid is the largest source of federal revenues states receive, and once the proposed reductions trickle down to state budgets, it won't only be a Medicaid debate any longer.

See the original article Here.

Source:

Altman D. (2017 June 2). What's really at stake in the medicaid spending debate [Web blog post]. Retrieved from address https://www.axios.com/whats-really-at-stake-in-the-medicaid-spending-debate-2428102663.html


Analysis: 6.3 Million People with Pre-Existing Conditions Would Be at Risk for Higher Premiums under the House’s Health Bill

Take a look at this interesting article from Kaiser Family Foundation about how people with pre-existing conditions will face higher premiums on their health insurance due to the passing of the AHCA.

A new Kaiser Family Foundation analysis estimates that 6.3 million people — 23 percent of 27.4 million non-elderly adults with a gap of several months in insurance coverage in 2015 – could potentially face higher premiums under the House’s American Health Care Act (AHCA), due to pre-existing health conditions.

The bill, which passed the House earlier this month, allows states to waive community rating in the individual insurance market. Insurers in states with such waivers could vary premiums by health status for an entire plan year for enrollees with a gap in insurance of 63 or more consecutive days in the past year.

People with pre-existing conditions would likely face large premium surcharges under an AHCA waiver, according to the analysis, as insurers would be unable to decline coverage based on a person’s medical history, a practice that was permitted in nearly all states before it was prohibited by the Affordable Care Act in 2014. An earlier analysis from the Foundation estimated that 27 percent of non-elderly adults have a condition that would have led to a coverage refusal in the pre-ACA market.

The new analysis also identifies a second group of people who could be at risk of higher premiums: those with pre-existing conditions now buying their own insurance. It finds that an estimated 3.8 million adults, or about 25 percent of all adult enrollees in the 2015 individual insurance market, had a pre-existing condition that could subject them to higher premiums under an AHCA community rating waiver if they don’t maintain continuous coverage.

The AHCA allocates $8 billion over five years to states with community rating waivers, resources that can be used to help reduce premiums or pay out-of-pocket medical expenses for people rated based on their health status. However, the House bill does not require states to set up an alternate source of coverage for people who face higher premiums based on their health. It is uncertain how many states would waive community rating under the AHCA.

See the original article Here.

Source:

Author (Date). Analysis: 6.3 million people with pre-existing conditions would be at risk for higher premiums under the house's health bill [Web blog post]. Retrieved from address http://www.kff.org/health-reform/press-release/analysis-6-3-million-people-with-pre-existing-conditions-would-be-at-risk-for-higher-premiums-under-the-houses-health-bill/?utm_campaign=KFF-2016-The-Latest&utm_source=hs_email&utm_medium=email&utm_content=52062246&_hsenc=p2ANqtz-_VsXEz5DH19yz9a0M6hl4QfqXSaABYhLLADcvZymz30D-94xqDepLSsy4AGwu-LbtONEahQvbbjampBln3kkIlrAgSlw&_hsmi=52062246


Ten Ways That the House American Health Care Act Could Affect Women

The American Health Care Act (AHCA) will bring a lot of changes to many people and their healthcare. Find out how women's healthcare will be affected by the new legislation in this great article by Kaiser Family Foundation.

Women have much at stake as the nation debates the future of coverage in the United States. Because the Affordable Care Act (ACA) made fundamental changes to women’s health coverage and benefits, changes to the law and the regulations that stem from it would have a direct impact on millions of women with private insurance and Medicaid. On May 4, 2017, the House of Representatives passed the American Health Care Act (AHCA), to repeal and replace elements of the ACA (Appendix Table 1). It would eliminate individual and employer insurance mandates, effectively end the ACA Medicaid expansion, cap federal funds for the Medicaid program, make major changes to the federal tax subsidies available to assist individuals who purchase private insurance, and ban federal Medicaid funds from going to Planned Parenthood. It would also allow states to waive the ACA’s Essential Health Benefits requirements and permit health status as a factor in insurance rating for individuals who do not maintain continuous coverage with the goal of reducing insurance costs.1 The Senate will now take up legislation to repeal and replace the ACA and may consider several elements that the House has approved in the AHCA. This brief reviews the implications of the AHCA for women’s access to care and coverage.

ACA’s Impact on Coverage and Access for Women

Since the ACA’s passage, the uninsured rate has declined to record low levels. Between 2013 and 2015, the uninsured rate among women ages 19 to 64 fell from 17% to 11% (Figure 1). This drop was due in large part to the Medicaid expansion that was adopted by 31 states and DC, and the availability of federal tax credits to subsidize premium costs for many low and modest-income women and men. In addition to coverage improvements, fewer women face affordability barriers since the ACA was enacted. Women have consistently been more likely than men to report that they delay or go without needed care because of costs. The ACA addressed some of these financial barriers by providing subsidies for premiums and cost sharing, eliminating out of pocket costs for preventive services, lifting the lifetime limits on expenses insurance will cover, and requiring minimum levels of coverage for ten Essential Health Benefit categories. Since its passage, the share of women who report that they delayed or went without care due to costs has fallen (Figure 2). This drop has been particularly marked among low-income women, although costs continue to be a greater challenge for this group as well.

1. MEDICAID ELIGIBILITY: EXPANSION AND WORK REQUIREMENTS

Medicaid has been the foundation of coverage gains under the ACA. Eliminating federal funds for the ACA’s Medicaid expansion could leave many of the nation’s poorest women without a pathway to coverage.

Women comprise the majority of Medicaid beneficiaries—before the passage of the ACA and today. Prior to the ACA, compared to men, women were more likely to qualify for Medicaid because of their lower incomes and because they were more likely to meet one of the program’s eligibility categories: pregnancy, parent of a dependent child, over 65, or disability. The ACA eliminates the program’s “categorical” requirements, allowing states to extend Medicaid eligibility to all individuals based solely on income. In the 31 states and DC that have chosen to expand Medicaid, individuals with household incomes up to 138% of the Federal Poverty Level (FPL) qualify, and the federal government finances 95% of the costs.2

It is estimated that by 2015, 11 million adults had gained coverage as a result of the ACA’s Medicaid expansion. This opened the door for continuous coverage to pregnant women who often became ineligible for coverage 60 days after the birth of their baby and had no other pathway to coverage as new mothers. The Medicaid expansion has also helped women who do not have children gain access to coverage, since before the expansion they were ineligible for coverage in most states. If passed, the AHCA bill would withdraw the enhanced federal funds for the Medicaid expansion except for beneficiaries enrolled as of December 31, 2019 who do not have a break in eligibility for more than 1 month. This loss of federal financing would leave states without the funds needed to continue supporting this expansion, potentially forcing some states to roll back eligibility for parents to the very low levels that were in place before the ACA (Figure 3). For example, a single mother of two living in Louisiana or Indiana would not have qualified for Medicaid if her income exceeded $4,687. The Congressional Budget Office (CBO) estimates that, under the House AHCA bill, some states that have already expanded their Medicaid programs would not continue that coverage (some states might also begin to reduce coverage prior to 2020), and that no new states will adopt the expansion.

The AHCA bill would also amend the federal Medicaid statute to allow states to require some beneficiaries, including parents of children 6 and older and adults without disabilities, to show proof of employment. States would have flexibility to design the details of the work requirement within federal guidelines and would receive additional federal support to help cover the administrative costs of this change.

2. CAPPING FEDERAL MEDICAID SPENDING

Medicaid provides health coverage to nearly one in five women in the U.S. Capping the program would limit the federal dollars that states would receive for a program that pays for half of births, three-quarters of all public family planning, and provides supplemental coverage for nearly 1 in 5 senior women on Medicare.

Since its inception in 1965, Medicaid has evolved to become a leading source of coverage for low-income women of all ages (Figure 4). The program provides health coverage to one in five women of reproductive age and one in four Latinas and African American women. Over the years, the program has also expanded to be the largest payor of maternity care and publicly-funded family planning in the U.S.

Medicaid is financed by a combination of federal and state dollars. For most beneficiaries, the federal government pays a percentage of costs, ranging between 50-75% depending on the state. Beginning in 2020, the AHCA would convert federal Medicaid funding from an open-ended matching system to an annual fixed amount of federal dollars. States could choose a “block grant” (for payment of services for children under 18 and poor parents of dependent children) or a “per capita cap” approach for five enrollment groups (the elderly, individuals with disabilities, children, newly eligible adults, and all other adults). While a capped approach would reduce federal spending, it would also shift more responsibility to states to pay more of their own dollars if they want to sustain the program at current levels.

While fixed federal financing would affect all individuals insured by Medicaid, one area that is particularly important for women is the program’s coverage of family planning services. Currently, the federal government requires coverage of family planning services and supplies and pays for 90% of the cost of these services, a higher match than for all other services.3 This higher federal payment rate provides states with an incentive to cover the full range of contraceptive methods. Under a per capita cap structure, states will still be required to cover family planning services, but there will no longer be an enhanced federal matching rate for family planning services provided to most beneficiaries. As a result, there may be less up-front financial incentive for states to cover the more expensive methods of contraception like IUDs, even though they are highly effective at preventing unintended pregnancies. Should states select a block grant option, family planning services would no longer be a mandatory benefit for non-disabled women on Medicaid.

If a state chooses a per capita cap structure, the AHCA would not change the financing structure for stand-alone family planning expansions that are currently in place in over half the states. These limited scope programs have allowed states to extend Medicaid coverage for family planning services to low-income women and men who do not have other family planning coverage. Since the AHCA’s per capita cap does not apply to these programs, states could continue to receive a 90% federal matching rate for them. These programs may become increasingly important to women because the CBO predicts that under this bill the number of uninsured would rise by 24 million over the next 10 years, and these Medicaid family planning programs are often an important source of reproductive care for uninsured women.

Both capped financing approaches would limit states’ ability to respond to rising costs, new and costly treatments, or public health emergencies such as the opioid epidemic or Zika. States may decide to make programmatic cuts such as cutting provider payments, particularly when facing fiscal pressures. For example, on average, Medicaid pays ob-gyns 76% of the Medicare rate4 and a smaller share of the commercial rate. If states were to make further cuts to provider payments or to plans, the pool of participating providers could shrink in response to reduced rates, which could make it harder for many women enrollees to find a participating ob-gyn or cause delays in scheduling appointments.
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3. MEDICAID AND PLANNED PARENTHOOD

Planned Parenthood provides reproductive health services for many low-income women across the nation. Cutting off federal Medicaid payments to the organization could limit the availability of the most effective contraceptives, as well as STI and cancer screenings for many women on Medicaid.

Many low–income women obtain reproductive care at safety-net clinics that receive public funds to pay for the care they provide. The network includes a range of clinics that provide a broad range of primary care services, such as community health centers (CHCs) and health departments as well as specialized clinics that focus on providing family planning services. The largest organization of specialized family planning clinics is Planned Parenthood, which receives federal support through reimbursement for care delivered to women and men on Medicaid, as well as grant funds from the federal Title X family planning program. Despite comprising only 6% of the safety-net clinics that provided subsidized family planning services in 2015, Planned Parenthood clinics served 32% of women (nearly 2 million women) seeking contraceptive care at these centers (Figure 5).

Should it become law, the AHCA would prohibit federal Medicaid payments to Planned Parenthood for one year, even though federal law already prohibits federal dollars from being used to pay for abortions other than those to terminate pregnancies that are a result of rape, incest or a threat to the pregnant woman’s life. The AHCA bill would provide additional funds to CHCs, presumably to compensate for loss of a major provider of care to women, but there are no specifics in the bill that would require the health centers to use these funds to provide services to women. There is also concern that CHCs do not currently have the capacity to fill the gap in care that would arise if Planned Parenthood were no longer a participating Medicaid provider.5 Not all CHCs provide the same range of services as Planned Parenthood, and care at CHCs could be more costly than that provided by specialized family planning providers like Planned Parenthood.6 The CBO’s March 13, 2017 analysis of the AHCA stated that cutting off Medicaid payments to Planned Parenthood for one year would result in loss of access to services in some low-income communities because it is the only public provider in some regions. The report also stated that the policy would result in thousands of additional unintended pregnancies that would be financed by Medicaid.7

4. ABORTION COVERAGE

Private and public coverage of abortion is currently limited in many states through the federal Hyde Amendment and state laws. The AHCA would go further than the ACA to restrict the availability of abortion coverage through private insurance policies.

Since 1976, the federal Hyde Amendment has limited the use of federal funds for abortion only to cases when the pregnancy is a result of rape or incest or is a threat to the woman’s life. Since its first passage over 40 years ago, the amendment has dramatically limited coverage of abortion under Medicaid, as well as other federal programs.8

In private insurance, the ACA explicitly bars abortion from being included as part of the Essential Health Benefit package defined by states and allows states to ban all plans in their Marketplaces from covering abortion. States can also ban abortion coverage in all state regulated private plans.9 As of March 2017, 25 states have laws limiting or banning coverage of abortion in ACA Marketplaces, and of these, 10 states ban abortion coverage in both the Marketplaces and in the private insurance market.

To ensure no federal dollars are used to subsidize abortion coverage, the AHCA bill would no longer make this a state option, rather it would ban abortion coverage in all Marketplace plans as well as prohibit the use of federal tax credits to purchase any plans that cover abortion that are available outside the Marketplace. The bill would limit employer coverage of abortion by disqualifying small employers from receiving tax credits if their plans cover abortion beyond Hyde limitations.

This provision would be in direct conflict with existing state policies in California and New York that require plans to cover abortion. Furthermore, no off market plans in these states would be able to enroll individuals who receive tax credits. Therefore, if enacted, the AHCA’s abortion coverage ban would likely face legal challenges.

5. TAX CREDITS, PREMIUM AND COST-SHARING SUBSIDIES

The AHCA would set the level of tax credit assistance using primarily age, and would repeal the ACA’s cost-sharing protections for low-income individuals. Because women have a lower income than men at all ages, this approach could place women at a disadvantage compared to men.

Women comprise more than half (54%) of ACA marketplace enrollees in the 34 states that use the federally facilitated marketplace, healthcare.gov. Approximately eight in ten (81%) Marketplace beneficiaries receive a premium tax credit, which offsets premium costs and makes them more affordable. In 2015, more than one-third (37%) of women who purchased insurance on their own were low-income ($23,540 for a single person) compared to 31% of men. 10 The current subsidy structure under the ACA provides higher levels of subsidies to those who are low-income, older, and who live in areas with more expensive coverage.

The AHCA, in contrast, would take a very different approach and reduce the amount that the federal government would contribute to subsidies with the goal of reducing federal spending. The AHCA would provide a flat tax credit based on age only up until an income of $75,000 for a single individual, and phases out at higher incomes. This would result in a large decrease in tax subsidies to older Marketplace enrollees compared to what is available to them today.

The AHCA would set aside additional federal funds to assist older enrollees as well as services for pregnant women and newborns and individuals with mental health and substance use disorders, but how those funds would be allocated is still to be determined. Nonetheless, under the AHCA’s tax credit methodology, people with lower incomes would receive significantly less than they do under current law. A higher share of women is poor or low-income than men, because women are more likely than men to head single parent households, work part-year or part-time, are paid less than men for similar work, and take breaks from the workforce to stay home and care for children and aging parents. As a result, this approach could disproportionately disadvantage women. In addition, the AHCA proposes to repeal the cost-sharing subsides available today under the ACA that provide additional protection from the high costs of deductibles, cost-sharing, and co-insurance to individuals with incomes below 250% of the federal poverty level.

6. INSURANCE REFORMS

The ACA banned many of the long-standing discriminatory practices in the individual insurance market that translated into higher cost burdens for women. While the AHCA maintains the gender-rating ban and the dependent coverage expansion, it could allow states to permit insurers to charge higher premiums to individuals with health problems if they have a lapse in coverage.
DEPENDENT COVERAGE

A popular element of the ACA is the provision that requires private health insurers that offer dependent coverage to children to allow young adults up to age 26 to remain on their parents’ insurance plans. This provision was the first in the ACA to take effect, and it increased the availability of insurance to an age group that historically had a high uninsured rate (Table 1). In 2015, 39% of women ages 19 to 25 reported that they were covered as a dependent.

GENDER RATING

Prior to the ACA, non-group insurers in many states charged women who purchase individual insurance more than men for the same coverage, a practice called gender rating.12 Yet, plans sold on the individual market often did not cover many important services for women, such as maternity care, mental health services, and prescription drugs.13 An estimated 6.5 million women purchased coverage on the individual insurance market in 2011, and many of these women paid higher rates than men. Prior to the ACA, most of the women in this market were of reproductive age, working, and had incomes below 250% FPL.14 The ACA bans gender rating and the AHCA would not change this.

PRE-EXISTING CONDITIONS

One of the most popular provisions of the ACA has been the ban on pre-existing condition exclusions. In the years before the ACA was passed, insurance companies often denied or would not renew coverage to individuals with a “preexisting condition,” which included several conditions common among women such as pregnancy, breast cancer, or a prior C-section. The AHCA would not re-instate this practice, but individuals who do not maintain continuous coverage would be charged a penalty when they try to obtain health insurance after having a coverage gap. The penalty could be in the form of higher premium rates (30%) for one year. Alternatively, states could obtain a waiver to allow insurers to again engage in medical underwriting for one year, charging people with health problems higher rates. This would have the effect of raising premiums for people with pre-existing conditions such as pregnancy, prior C-section, or clinical depression.
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7. ESSENTIAL HEALTH BENEFITS

The ACA instituted new rules that require all plans in the individual market as well as Medicaid expansion programs to cover ten categories of benefits. Of particular importance to women has been the inclusion of maternity care, preventive services, and mental health.

The ACA requires all Marketplace plans and Medicaid expansion programs to cover ten categories of “essential health benefits” (EHB). Each state chooses a benchmark benefit plan, which sets the floor for services that plans in that state must cover within each EHB category.15
The AHCA would allow states to apply for a waiver to define their own EHBs beginning in 2020. Waivers would be automatically approved unless the HHS Secretary issues a denial within 60 days of submission. This means states could choose to exclude mental health or maternity care (see pregnancy-related care section below) from their EHB requirements. While the idea of choice sounds appealing to some, it is antithetical to how insurance operates ─ by spreading the costs and risks across the pool of insured individuals. Plans that include a broader range of benefits would be considerably more expensive than they are today. In addition to state-level waivers, the AHCA bill would rescind the EHB requirement for Medicaid expansion programs, meaning that beneficiaries in this group would not be entitled to coverage for all ten categories. Existing Medicaid rules require states to cover some of the categories, such as hospitalization and maternity and newborn care, but others such as substance abuse treatment and prescription drugs are optional and offered at state discretion.Prior to the ACA, there were few federal requirements on what private plans in the individual market had to cover. The ACA established a floor for benefits that individual market plans must cover with the goal of reducing variation and adverse selection by standardizing “meaningful coverage.” This is particularly important for women, as they are the exclusive users of maternity care and more frequent users of services in some other EHB categories, such as prescription drugs and mental health. Mental health services in particular were routinely excluded in individual plans prior to the ACA. Depression, anxiety, and eating disorders are all more common among women than men.

8. PREVENTIVE SERVICES

Currently, all private plans, Medicaid expansion programs, and Medicare must cover recommended preventive services without cost sharing. Important services for women include: breast and cervical cancer screening, osteoporosis screening, pregnancy related services, well woman visits, and contraception.

In addition to EHBs, the ACA included a related requirement that all private plans cover federally-recommended preventive services without charging cost-sharing. In contrast to EHBs, which apply to individually purchased plans and Medicaid expansion only, the preventive services requirement applies to all forms of private insurance, including employer-sponsored and individual market plans. Prior to the ACA, the only federal–level requirements that applied to group plans were for coverage of a minimum length of stay after a delivery, availability of reconstructive surgery following a mastectomy, and parity for mental health services. The preventive services coverage requirement also applies to the Medicaid expansion and Medicare programs. This means that most adults with some form of private or public insurance now have coverage without cost-sharing for all of the services recommended by the U.S. Preventive Services Task Force (USPSTF), immunizations recommended by the federal Advisory Committee on Immunization Practices (ACIP), and services for women recommended by the Health Resources and Services Administration.16

Among the slate of services covered, many are exclusively for women or address conditions that have a disproportionate impact on women (Figure 6). These services address some of the most common conditions for women, including breast cancer, cardiovascular disease, and obesity. For older women, the preventive services policy means that Medicare now covers the full cost of mammograms and bone density screenings, which were previously subject to 20% co-insurance before passage of the ACA.

The AHCA would maintain preventive services requirements for private plans, but would repeal the requirements for the Medicaid expansion population. Preventive services for adults are covered at state option for other Medicaid beneficiaries. States could opt to roll back coverage of preventive services for this group.

9. CONTRACEPTIVE COVERAGE

Today, the majority of women with private insurance have no cost contraceptive coverage. This preventive benefit has reduced women’s out-of-pocket spending on birth control and made the most effective, but often costly, contraceptive methods affordable for most insured women. This provision could be eliminated or modified through regulatory changes without the need for Congressional action.

Current law requires that most private plans include coverage of all FDA-approved contraceptive methods for women at no additional cost. Research has found that the requirement has had a large impact in a short amount of time. For example, in the first two years that the policy was in effect, the share of women with any out of pocket spending on oral contraceptives fell sharply to just 3.0% of women with employer-sponsored insurance (Figure 7).17 Similar effects have been documented for other contraceptives, including IUDs.18

The AHCA bill does not specifically address the contraceptive coverage requirement. However, President Trump and Secretary Price have expressed support for advancing “religious freedom,”19 and this provision has been at the heart of two cases that have reached the Supreme Court where employers have claimed that the requirement violates their religious beliefs. The contraceptive coverage requirement was implemented through a series of agency regulations that included contraception in the package of women’s preventive services, defined the religious exemption and accommodation available to houses of worship and faith-based nonprofits respectively, and clarified that plans must cover 18 contraceptive methods. Since these requirements are in regulations, the Trump Administration can issue new regulations and guidance to permit employers and insurers to cover fewer methods, or to exempt more employers with religious objections without the need for congressional action.20President Trump’s Executive Order Promoting Free Speech and Religious Liberty specifically calls on the Secretaries of Labor, Treasury, and Health and Human Services to amend regulations to protect conscience-based objections to the ACA’s preventive-care mandate.21 The goal of this is to exempt any employer with a religious or moral objection from the contraceptive coverage requirement, even though current regulations already relieve employers from paying for such coverage while assuring that women have coverage for contraceptives.

If the federal requirement is eliminated or scaled back, the scope of contraceptive coverage would again be shaped by employers, insurance plans, and state policy. More than half (28) of states have laws requiring plans in their states to cover contraceptives, but these are more limited than the ACA. Only five of the 28 states require coverage of the full range of contraceptives without cost sharing, but these state-level mandates do not apply to self-funded plans, which cover most insured workers.22

10. PREGNANCY-RELATED CARE

Today, pregnant and postpartum women have a greater range of protections and benefits than they did prior to the ACA. These range from mandatory maternity and newborn coverage, to no-cost prenatal screening, and breastfeeding supports. The AHCA would allow states to define the Essential Health Benefits requirements with a waiver, potentially excluding coverage for maternity care.

Before the ACA, pregnant women seeking insurance in the individual market were routinely turned away as having a pre-existing condition. Furthermore, many individual plans did not cover maternity services because it was not required in this market. Some individual plans offered separate maternity coverage as a rider which could be costly, ranging from roughly $15 to $1600 a month.23 Some plans also imposed a waiting period before the rider took effect. These discriminatory practices were limited to the individual market because coverage for maternity services has been required for decades both under Medicaid and in most employer-sponsored plans due to the Pregnancy Discrimination Act. The ACA changed this by including maternity and newborn care as part of the EHB package that must be included in individual private plans as well as under Medicaid expansion. While some states had required individual plans in their states to cover maternity services to varying degrees prior to the ACA, most did not.24 In addition, the ACA made other improvements through coverage of preventive services such as no-cost prenatal screenings and breastfeeding supports.

The AHCA would weaken some of the protections for pregnant women that are currently in place. By halting funds for Medicaid expansion, some new mothers would lose coverage once the 60-day postpartum period ends and become uninsured. Furthermore, it would permit states to waive the current federal EHB standards, potentially allowing states to remove or scale back maternity services as a required benefit. The bill would also allot funds to the Patient and State Stability Fund for pregnancy and newborn care, but there are no details on how it will be used.

Some have touted the benefits of excluding maternity coverage for those who will not need it such as men and older women as a way of giving policyholders more flexibility to choose their own coverage and purchase less expensive plans. However, this also means that the risk pool for plans that include maternity services would primarily be comprised of women who anticipate using maternity care, and would likely greatly increase costs for women who sought such coverage. Furthermore, given that nearly half of pregnancies are unintended some women would buy coverage that does not include maternity care thinking they won’t need it, only to find out their coverage falls short when they are pregnant.

Conclusion

Today, women’s health coverage levels are at an all-time high. In addition to the coverage gains in the Marketplaces and Medicaid, many of the long-standing discriminatory practices in the individual insurance market that translated into higher cost burdens for women have been banned. Minimum standards for benefits that individual plans must cover through the EHB and the preventive services requirements for all private plans have assured that most insured women have coverage for a broad range of recommended services that they need such as maternity care, mental health services, and preventive services such as mammograms, pap smears, and contraceptives. Recent polling shows that the American public values these protections, including those for poorer women (Figure 8). In addition, while the AHCA would prohibit federal Medicaid funds to Planned Parenthood for one year, 75% of Americans say they favor continued federal funding for Planned Parenthood.

If enacted, the AHCA would alter subsidies for private insurance, eliminate the Medicaid expansion, ban Medicaid funding to Planned Parenthood, place a cap on Medicaid spending, and turn EHB standards over to the states. This legislation would have considerable impact on women, particularly low-income women who rely on subsidies and those who are on Medicaid. The Senate will now take up their own debate about the future of the ACA. In addition to legislation, many of the ACA’s other provisions could be amended through federal-level administrative actions. Given the gains that women have made in access to meaningful and affordable coverage, they have much at stake in the current debate over the future of our nation’s private and public insurance programs.

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Source:

Ranji U., Salganicoff A., Sobel L., Rosenzweig C. (2017 May 8). Ten ways that the house american health care act could affect women [Web blog post]. Retrieved from address http://www.kff.org/womens-health-policy/issue-brief/ten-ways-that-the-house-american-health-care-act-could-affect-women/