March 2018 Compliance Recap

From UBA Benefits, here is your March 2018 Compliance Recap - everything you need to know that's been happening in the employee benefits world.

March was a quiet month in the employee benefits world.

The Internal Revenue Service (IRS) released a bulletin that lowered the family contribution limit for health savings account (HSA) contributions. The U.S. Department of Labor (DOL) updated its model Premium Assistance Under Medicaid and the Children’s Health Insurance Program notice (CHIP notice).

The IRS issued its updated Employer’s Tax Guide to Fringe Benefits, issued transition relief regarding HSA eligibility of individuals with health insurance that provides benefits for male sterilization or male contraceptives without a deductible, and issued its updated Guide on Health Savings Accounts and Other Tax-Favored Health Plans.

UBA Updates

UBA released two new advisors:

UBA updated existing guidance: 2018 Annual Benefit Plan Card

IRS Releases Adjusted Annual Inflation Factor

The Internal Revenue Service (IRS) released its Internal Revenue Bulletin No. 2018-10 that adjusted the annual inflation factor from the Consumer Price Index (CPI) to a new factor called a chained CPI. This is retroactively effective to January 1, 2018.

As a result of the change, the family contribution limit for Health Savings Account contributions is lowered to $6,850 from $6,900. Individuals with family coverage who planned to contribute to the full family amount should decrease their contributions going forward.

Review our updated 2018 Annual Benefit Plan Card and read more.


DOL Updates Employer CHIP Notice

The U.S. Department of Labor (DOL) updated its model Premium Assistance Under Medicaid and the Children’s Health Insurance Program notice (CHIP notice).

Employers that provide health insurance coverage in states with premium assistance through Medicaid or the Children’s Health Insurance Program (CHIP) must provide their employees with the CHIP notice before the start of each plan year. The CHIP notice provides information to employees on how to apply for premium assistance, including how to contact their state Medicaid or CHIP office. The DOL usually updates its model CHIP notice biannually.

IRS Issues Updated Employer’s Tax Guide to Fringe Benefits

The Internal Revenue Service (IRS) issued its 2018 Publication 15-B which contains information for employers on the employment tax treatment of fringe benefits. The guide is updated to reflect, among other items:

  • The suspension of qualified bicycle commuting reimbursements from an employee’s income for any tax year beginning after December 31, 2017, and before January 1, 2026.
  • The suspension of the exclusion for qualified moving expense reimbursements from an employee’s income for tax years beginning after December 1, 2017, and before January 1, 2026. However, the exclusion remains available for a U.S. Armed Forces member on active duty who moves because of a permanent change of station.
  • Limits on the deduction by employers for certain fringe benefits, such as meals and transportation commuting benefits.
  • The definition of items that aren’t tangible personal property for purposes of employee achievement awards.

The guide lists fringe benefits’ tax treatment in its Table 2-1 “Special Rules for Various Types of Fringe Benefits.”

IRS Issues Transition Relief Notice for Plans with Male Sterilization or Contraceptive Benefit

Recently, some states adopted laws that require certain health insurance policies to provide benefits for male sterilization and male contraceptives without cost-sharing.

However, under health saving account (HSA) eligibility requirements, a high deductible health plan (HDHP) generally may not provide benefits for any year until the minimum deductible for that year is satisfied. Although an HDHP may provide preventive care without a deductible or with a deductible that is below the minimum annual amount required by HSA eligibility requirements, male sterilization and male contraceptives are not considered preventive care under the Social Security Act or any Treasury Department guidance.

The Internal Revenue Service (IRS) released its Notice 2018-12 (Notice) to clarify that if a health plan provides benefits for male sterilization or male contraceptives before satisfying the minimum deductible for an HDHP, then the plan is not an HDHP, regardless of whether state law requires coverage of such benefits. Further, an individual who is not covered by an HDHP with respect to a month is not an HSA-eligible individual and may not deduct contributions to an HSA for that month. Similarly, HSA contributions made by an employer on behalf of the individual are not excludible from income and wages.

To allow states time to change their laws so their residents will be able to purchase health insurance coverage that qualifies as an HDHP, the Notice provides transition relief for periods before 2020 to individuals who are, have been, or become participants in or beneficiaries of a health insurance policy that provides benefits for male sterilization or male contraceptives without a deductible or with a deductible below the minimum deductible for an HDHP.

During the transition relief period, an individual with this type of health insurance policy will not be treated as HSA-ineligible, merely because the policy fails to qualify as an HDHP.

IRS Issues Updated Guide on Health Savings Accounts and Other Tax-Favored Health Plans

The Internal Revenue Service (IRS) updated its Publication 969 for taxpayers to use in preparing their 2017 returns. The publication explains health savings accounts (HSAs), medical savings accounts (Archer MSAs and Medicare Advantage MSAs), health flexible spending arrangements (FSAs), and health reimbursement arrangements (HRAs).

Question of the Month

  1. How does a person who is 65 years old or older maintain HSA eligibility and continue working? Also, when the person plans to retire, what should the person do about HSA contributions to avoid IRS penalties?
  2. To maintain HSA eligibility, an individual who is working and age 65 or older must:
  • Not apply for or waive Medicare Part A, and
  • Not apply for Medicare Part B, and
  • Waive or delay Social Security benefits.

For example, if a person delays Social Security benefits and delays Medicare Part A and B, retires at the end of April at the age of 65 or older, and applies for Social Security benefits and Medicare on May 1, 2018, then the general rule is that the person’s Social Security entitlement and Medicare Part A coverage will be retroactive for six months, meaning that the benefits would be retroactively effective as of November 2017.

IRS regulations state that a person can’t contribute to an HSA when the person has Medicare, so a person would need to stop contributing six months in advance of applying for Social Security benefits and Medicare. If a person contributes to an HSA after Medicare coverage begins, then the person may be subject to IRS penalties.

4/3/2018


Medicare Advantage payments to see 3.4 percent increase next year

 
About 21.4 million people are enrolled in Medicare Advantage plans, while 37.7 million rely on standard Medicare. (Image: Shutterstock)

 

The U.S. agency that oversees Medicare said it will increase payments to privately run health plans for the elderly by an average of 3.4 percent next year, almost double the amount it had previously estimated.

That’ll be a boon for insurers such as UnitedHealth Group Inc. and Humana Inc. that have big businesses selling the private plans, known as Medicare Advantage. Including changes based on how sick or healthy people are, the total increase in payments to insurers is estimated to be about 6.5 percent, on average, the Centers for Medicare and Medicaid Services said in a statement Monday.

Medicare Advantage is an important source of growth for health insurers as the U.S. population ages and more people opt for the private plans, rather than the traditional Medicare program. About 21.4 million people are enrolled in the private plans, while 37.7 million rely on standard Medicare.

Medicare Advantage has drawn plenty of interest from both startups and established firms. Walmart Inc. may be seeking a broader partnership with Humana Inc. in part to benefit from growing enrollment in the plans, Bloomberg reported late last week. CVS Health Corp. agreed to acquire Aetna Inc. late last year in a bet in part on providing better care for seniors.

Source: Tracer Z. (3 April 2018). "Medicare Advantage payments to see 3.4 percent increase next year" [Web Blog Post]. Retrieved from Benefits Pro.


Medicare Out-Of-Pocket Expenses Q&A

 

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How much does the average Medicare recipient pay out of pocket for medical expenses?

Q: How much does the average Medicare recipient pay out of pocket for medical coverage and expenses?

A: According to a Kaiser Family Foundation study published in 2018, the average Medicare beneficiary paid $5,503 in 2013, including premiums and out-of-pocket costs for covered care, as well as out-of-pocket costs for things like dental care and long-term care, which are not covered by Medicare. This amounted to 41 percent of the average per capita Social Security income — and that’s expected to increase to 50 percent by 2030.

The Kaiser Family Foundation study included both Original Medicare and Medicare Advantage enrollees. 28 percent of all Medicare beneficiaries were enrolled in Medicare Advantage plans as of 2013. It’s likely that total enrollee spending on Medicare has increased since 2013, as premiums, deductibles, and coinsurance have increased. But for seniors who end up in the Medicare Part D donut hole, total out-of-pocket spending may have decreased, as the Affordable Care Act has been gradually closing the Part D donut hole. But average prices for prescription drugs — and thus, the total amount that people pay in coinsurance, which is a percentage of the cost — have increased since 2013, so people who don’t end up in the donut hole may be paying more for their Part D prescriptions than they were several years ago.

In 2018, the standard Part B premium is $134/month, although most enrollees are paying about $130/month. In 2013, Part B premiums were $104.90/month. The Part B deductible is $183 in 2018. That’s the same as it was in 2017, but it was only $147 in 2013. The Part A deductible and coinsurance also increased slightly in 2018, as did the premium for Part A that applies to people who don’t have enough work history (or a spouse with enough work history) to qualify for premium-free Medicare Part A.

—medicareresources.org


Medicare Beneficiaries’ Out-of-Pocket Health Care Spending as a Share of Income Now and Projections for the Future

In this report from Kaiser Family Foundation, we are going to take a look at the past and current out-of-pocket health care expenses in relation to Medicare.


Medicare helps pay for the health care needs of 59 million people, including adults ages 65 and over and younger adults with permanent disabilities. Even so, many people on Medicare incur relatively high out-of-pocket costs for their health care, including premiums, deductibles, cost sharing for Medicare-covered services, as well as spending on services not covered by Medicare, such as long-term services and supports and dental care. The financial burden of health care can be especially large for some beneficiaries, particularly those with modest incomes and significant medical needs. Understanding the magnitude of beneficiaries’ current spending burden, and the extent to which it can be expected to grow over time, relative to income, provides useful context for assessing the implications of potential changes to Medicare or Medicaid that could shift additional costs onto older adults and younger people with Medicare.

In this report, we assess the current and projected out-of-pocket health care spending burden among Medicare beneficiaries using two approaches. First, we analyze average total per capita out-of-pocket health care spending as a share of average per capita Social Security income, building upon the analysis conducted annually by the Medicare Trustees. Second, we estimate the median ratio of total per capita out-of-pocket spending to per capita total income, an approach that addresses the distortion of average estimates by outlier values for spending and income. Under both approaches, we use a broad measure of Medicare beneficiaries’ total out-of-pocket spending that includes spending on health insurance premiums, cost sharing for Medicare-covered services, and costs for services not covered by Medicare, such as dental and long-term care. We present estimates of the out-of-pocket spending burden for Medicare beneficiaries overall, and by demographic, socioeconomic, and health status measures, for 2013 and projections for 2030, in constant 2016 dollars.

KEY FINDINGS

  • In 2013, Medicare beneficiaries’ average out-of-pocket health care spending was 41 percent of average per capita Social Security income; the share increased with age and was higher for women than men, especially among people ages 85 and over.
  • Medicare beneficiaries’ average out-of-pocket health care spending is projected to rise as a share of average per capita Social Security income, from 41 percent in 2013 to 50 percent in 2030 (Figure 1).

Figure 1: Medicare beneficiaries’ average out-of-pocket health care spending as a share of average per capita Social Security income is projected to rise from 41% in 2013 to 50% in 2030

  • Half of beneficiaries in traditional Medicare spent at least 14 percent of their per capita total income on out-of-pocket health care costs in 2013. The spending burden was higher for people ages 85 and over, in poor health, and with modest incomes.
  • More than one-third (36 percent) of beneficiaries in traditional Medicare, and half of those with incomes below $20,000, spent at least 20 percent of their per capita total income on out-of-pocket health care costs in 2013. By 2030, more than 4 in 10 (42 percent) traditional Medicare beneficiaries are projected to spend at least 20 percent of their total income on health-related out-of-pocket costs.

Read the full report.

Source:
Cubanski J., Neuman T. (26 January 2018). "Medicare Beneficiaries’ Out-of-Pocket Health Care Spending as a Share of Income Now and Projections for the Future" [Web Blog Post]. Retrieved from address https://www.kff.org/medicare/report/medicare-beneficiaries-out-of-pocket-health-care-spending-as-a-share-of-income-now-and-projections-for-the-future/

Pressure Builds To Cut Medicare Patients In On Prescription Deals

In this article from Kaiser Health News, the stupendous rise of prescription costs is finally addressed. What steps are being taken to reduce costs for Medicare patients? Find out below.


Medicare enrollees, who have watched their out-of-pocket spending on prescription drugs climb in recent years, might be in for a break.

Federal officials are exploring how beneficiaries could get a share of certain behind-the-scenes fees and discounts negotiated by insurers and pharmacy benefit managers, or PBMs, who together administer Medicare’s Part D drug program. Supporters say this could help enrollees by reducing the price tag of their prescription drugs and slow their approach to the coverage gap in the Part D program.

The Centers for Medicare & Medicaid Services (CMS) could disclose the fees to the public and apply them to what enrollees pay for their drugs. However, there’s no guarantee that such an approach would be included in a proposed rule change that could land any day, according to several experts familiar with the discussions.

“It’s obvious something has to be done about this. This is causing higher drug prices for patients and taxpayers,” Rep. Earl “Buddy” Carter (R-Ga.), a pharmacist, said this week.

While Medicare itself cannot negotiate drug prices, the health insurers and PBMs have long been able to negotiate with manufacturers who are willing to pay rebates and other discounts so their products win a good spot on a health plan’s list of approved drugs.

Federal officials described these fees in a January fact sheet as direct and indirect remuneration, or DIR fees.

In recent years, pharmacies and specialty pharmacies have also begun paying fees to PBMs. These fees, which are different than the rebates and discounts offered by manufacturers, can be controversial, in part, because they are retroactive or “clawed back” from the pharmacies.

The controversy is also part of the reason advocates, such as pharmacy organizations, have lobbied for this kind of policy change.

PBMs have long contended that they help contain costs and are improving drug availability rather than driving up prices.

Pressure has been building for the administration to take action. Earlier this year, the federal agency’s fact sheet set the stage for change, describing how the fees kept Medicare Part D monthly premiums lower but translated to higher out-of-pocket spending by enrollees and increased costs to the program overall.

In early October, Carter led a group of more than 50 House members in a letter urging Medicare to dedicate a share of the fees to reducing the price paid by Part D beneficiaries when they buy a drug. Also in the House, Rep. Morgan Griffith (R-Va.) introduced a related bill.

On the Senate side, Chuck Grassley (R-Iowa) and 10 other senators sent a letter in July to CMS Administrator Seema Verma as well as officials at the Department of Health and Human Services asking for more transparency in the fees — which could lead to a drop in soaring drug prices if patients get a share of the action.

A response from Verma last month notes that the agency is analyzing how altering DIR requirements would affect Part D beneficiary premiums — a key point that muted previous political conversations.

But advocates say the tone of discussions with the agency and on Capitol Hill have changed this year. That’s partly because Medicare beneficiaries have become more vocal about their rising out-of-pocket costs, increasing scrutiny of these fees.

Ellen Miller, a 70-year-old Medicare enrollee in New York City’s borough of Queens, sent a letter to the Trump administration demanding lower drug prices. Miller’s prescription prices went up this year, sending her into the Medicare “doughnut hole” by April, compared with October in 2016. With coverage, Miller pays about $200 a month for several prescriptions that help her cope with COPD, or chronic obstructive pulmonary disease, as well as another chronic illness.

In the doughnut hole, where coverage drops until catastrophic coverage kicks in, her out-of-pocket costs climb to $600 a month.

It’s “ridiculous, and that doesn’t count my medical bills,” Miller said.

The number of Medicare Part D enrollees with high out-of-pocket costs, like Miller, is on the rise. And in 2015, 3.6 million Medicare Part D enrollees had drug spending above the program’s catastrophic threshold of $7,062, according to a report released this week by the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

Supporters of the rule change say making the fees more transparent and applying them to what enrollees pay would provide relief for beneficiaries like Miller.

The Pharmaceutical Care Management Association (PCMA), which represents the PBMs who negotiate the rebates and discounts, says changing the fees would endanger the Part D program.

“In Medicare Part D, you have one of the most successful programs in health care,” said Mark Merritt, president and chief executive of PCMA. “Why anybody would choose to destabilize the program is beyond me.”

CMS declined to comment on a vague reference to a pending rule change, which was posted in September.

For now, though, according to the CMS fact sheet, the fees pose two compounding problems for seniors and the agency:

  • Enrollees pay more out-of-pocket for each drug, causing them to reach the program’s coverage gap quicker. In 2018, the so-called doughnut hole begins once an enrollee and the plan spends $3,750 and ends at $5,000 out-of-pocket, and then catastrophic coverage begins.
  • Medicare, thus taxpayers, pays more for each beneficiary. Once enrollees reach the threshold for catastrophic coverage, Medicare pays the bulk cost of the drugs.

CVS Health, one of the nation’s top three PBMs, released a statement in February calling the fees part of a pay-for-performance program that helps improve patient care. The fees, CVS noted, are fully disclosed and help drive down how much Medicare pays plans that help run the program.

“CVS Health is not profiting from this program,” the company noted.

Express Scripts, also among the nation’s top three PBMs, agreed that the fees lower costs and give incentives for the pharmacies to deliver quality care. As for criticism from the pharmacies, Jennifer Luddy, director of corporate communications for the company, said, “We’re not administering fees in a way that penalizes a pharmacy over something they cannot control.”

Regardless, even if a rule is changed or a law is passed, there is some question as to how easily the fees can translate into lower costs for seniors, in part because the negotiations are so complicated.

When the Medicare Payment Advisory Commission, which provides guidance to Congress, discussed the negotiations in September, Commissioner Jack Hoadley thanked the presenters and said, “In my eyes, what you’ve revealed is a real maze of financial … entanglements.”

Tara O’Neill Hayes, deputy director of health care policy at the conservative American Action Forum, said passing on the discounts and fees to beneficiaries when they buy the drug could be difficult because costs crystallize only after a sale has occurred.

“They can’t be known,” said Hayes, who created an illustration of the negotiations.

“There’s money flowing many different ways between many different stakeholders,” Hayes said.

 

Source:
Tribble S. (10 November 2017). "Pressure Builds To Cut Medicare Patients In On Prescription Deals" [Web blog post]. Retrieved from address https://khn.org/news/pressure-builds-to-cut-medicare-patients-in-on-prescription-deals/


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Medicare Advantage: How Robust Are Plans’ Physician Networks?


You can read the original article here.

Source:

Jacobson G. (5 October 2017). "Medicare Advantage: How Robust Are Plans’ Physician Networks?" [Web Blog Post]. Retrieved from address https://www.kff.org/medicare/report/medicare-advantage-how-robust-are-plans-physician-networks/

One of the biggest trade-offs between Medicare Advantage and traditional Medicare is that Medicare Advantage plans have a more limited network of doctors and other providers. The size and breadth of provider networks can be an important factor for beneficiaries when choosing between traditional Medicare and Medicare Advantage, and among Medicare Advantage plans. As of 2017, 19 million of the 58 million people on Medicare (33%) are enrolled in a Medicare Advantage plan, yet little is known about their provider networks.

19 million people on Medicare are in a #MedicareAdvantage plan, yet little is known about their provider networks. 

This report is the first known study to examine the size and composition of Medicare Advantage plans’ physician networks. This analysis draws upon data from 391 plans, offered by 55 insurers in 20 counties, and accounted for 14% of all Medicare Advantage enrollees nationwide in 2015. Key findings include:

Figure ES-1: One in three Medicare Advantage enrollees were in plans with narrow physician networks

  • More than three in ten (35%) Medicare Advantage enrollees were in narrow-network plans while about two in ten (22%) were in broad-network plans. To some degree, the relative narrowness of plan networks masks the total number of physicians that enrollees could access, particularly in larger counties.
  • Medicare Advantage networks included less than half (46%) of all physicians in a county, on average.
  • Network size varied greatly among Medicare Advantage plans offered in a given county. For example, while enrollees in Erie County, NY had access to 60% of physicians in their county, on average, 16% of the plans in Erie had less than 10% of the physicians in the county while 36% of the plans had more than 80% of the physicians in the county.
  • Access to psychiatrists was typically more restricted than for any other specialty. Medicare Advantage plans had 23% of the psychiatrists in a county, on average; 36% of plans included less than 10% of psychiatrists in their county. Some plans provided relatively little choice for other specialties as well; 20% of plans included less than 5 cardiothoracic surgeons, 18% of plans included less than 5 neurosurgeons, 16% of plans included less than 5 plastic surgeons, and 16% of plans included less than 5 radiation oncologists.
  • Broad-network plans tended to have higher average premiums than narrow-network plans, and this was true for both HMOs ($54 versus $4 per month) and PPOs ($100 versus $28 per month).

Insurers may create narrow networks for a variety of reasons, such as to have greater control over the costs and quality of care provided to enrollees in the plan. The size and composition of Medicare Advantage provider networks is likely to be particularly important to enrollees when they have an unforeseen medical event or serious illness. However, accessing the information may not be easy for users, and comparing networks could be especially challenging. Beneficiaries could unwittingly face significant costs if they accidentally go out-of-network. Differences across plans, including provider networks, pose challenges for Medicare beneficiaries in choosing among plans and in seeking care, and raise questions for policymakers about the potential for wide variations in the healthcare experience of Medicare Advantage enrollees across the country.

You can read the original article here.

Source:

Jacobson G. (5 October 2017). "Medicare Advantage: How Robust Are Plans’ Physician Networks?" [Web Blog Post]. Retrieved from address https://www.kff.org/medicare/report/medicare-advantage-how-robust-are-plans-physician-networks/