How Employers Should Proceed After the AHCA’s Collapse

Take a look at the great article from Employee Benefits Advisor on what employers need to know about healthcare with the collapse of the AHCA by Alden J. Bianchi and Edward A. Lenz.

The stunning failure of the U.S. House of Representatives to pass the American Health Care Act has political and policy implications that cannot be forecasted. Nor is it clear whether or when the Trump administration and Congress will make another effort to repeal and replace, or whether Republicans will seek Democratic support in an effort to “repair,” the Affordable Care Act. Similarly, we were unable to predict whether and to what extent the AHCA’s provisions can be achieved through executive rulemaking or policy guidance.

Here are some ways the AHCA’s failure could impact employers in the near term.

Immediate impact on employers
Employers were not a major focus of the architects of the ACA, nor were they a major focus of those who crafted the AHCA. This is not surprising. These laws address healthcare systems and structures, especially healthcare financing. Rightly or wrongly, employers have not been viewed by policymakers as major stakeholders on those issues.

In a blog post published at the end of 2014, we made the following observations:

The ACA sits atop a major tectonic plate of the U.S. economy, nearly 18% of which is healthcare-related. Healthcare providers, commercial insurance carriers, and the vast Medicare/Medicaid complex are the law’s primary stakeholders. They, and their local communities, have much to lose or gain depending on how healthcare financing is regulated. The ACA is the way it is largely because of them. Far more than any other circumstance, including which political party controls which branch of government, it is the interests of the ACA’s major stakeholders that determine the law’s future. And there is no indication whatsoever that, from the perspective of these entities, the calculus that drove the ACA’s enactment has changed. U.S. employers, even the largest employers among them, are bit players in this drama. They have little leverage, so they are relegated to complying and grumbling (not necessarily in that order).

With the AHCA’s collapse, the ACA remains the law of the land for the foreseeable future. The AHCA would have zeroed out the penalties on “applicable large” employers that fail to make qualified offers of health coverage, but the bill’s failure leaves the ACA’s “play or pay” rules in full force and effect. The ACA’s reporting rules, which the AHCA would not have changed, also remain in effect. This means, among other things, that many employers, especially those with large numbers of part-time, seasonal, and temporary workers that face unique compliance challenges, will continue to be in the position of “complying and grumbling.”

This does not mean that nothing has changed. The leadership of the Departments of Health and Human Services, Labor and Treasury has changed, and these agencies are now likely to be more employer-friendly. Thus, even though the ACA is still the law, the regulatory tone and tenor may well be different. For example, although the current complex employer reporting rules will remain in effect, the Treasury and IRS might find administrative ways to simplify them. Similarly, any regulations issued under the ACA’s non-discrimination provisions applicable to insured health plans (assuming they are issued at all) likely will be more favorable to employers than those issued under the previous administration.

There are also unanticipated consequences of the AHCA’s failure that employers might applaud. We can think of at least two.
1. Stemming the anticipated tide of new state “play or pay” laws
The continuation of the ACA’s employer mandate likely will put on hold consideration by state and local governments of their own “play or pay” laws.

In anticipation of the repeal of the ACA’s employer mandate, the Governor of Massachusetts recently introduced a budget proposal that would reinstate mandated employer contributions to help cover the costs of increased enrollment in the Medicaid and Children’s Health Insurance Program, known as MassHealth. Under the proposal, employers with 11 or more full-time equivalent employees would have to offer full-time employees a minimum of $4,950 toward the cost of an employer group health plan, or make an annual contribution in lieu of coverage of $2,000 per full-time equivalent employee. While the Governor’s proposal is not explicitly conditioned on repeal of the ACA’s employer mandate, the ACA’s survival may prompt a reconsideration of that approach.

California lawmakers were also considering ACA replacement proposals, including a single-payer bill introduced last month by Democratic state senators Ricardo Lara and Toni Atkins. Had the ACA’s employer mandate been repealed, those proposals were likely just the tip of an iceberg. When the ACA was enacted in 2010, Hawaii, Massachusetts, and San Francisco were the only jurisdictions with their own healthcare mandates on the books. But in the prior two-year period, before President Obama was elected and made healthcare reform his top domestic priority, more than two dozen states had introduced various “fair share” health care reform bills aimed at employers.

Most of the state and local “play or pay” proposals would have required employers to pay a specified percentage of their payroll, or a specified dollar amount, for health care coverage. Some required employers to pay employees a supplemental hourly “health care” wage in addition to their regular wages or provide health benefits of at least equal value. California, Illinois, Pennsylvania, and Wisconsin considered single-payer proposals.

To be sure, any state or local “play or pay” mandates would be subject to challenge based on Federal preemption under the Employee Retirement Income Security Act (ERISA). While some previous “play or pay” laws were invalidated under ERISA (e.g., Maryland), others (i.e., San Francisco) were not. In sum, given the failure of the AHCA, there would appear to be no rationale, at least for now, for any new state or local “play or pay” laws to go forward.

2. Avoiding upward pressure on employer premiums as a result of Medicaid reforms
The AHCA proposed to reform Medicaid by giving greater power to the states to administer the Medicaid program. Under an approach that caps Medicaid spending, the law would have provided for “per capita allotments” and “block grants.” Under either approach, the Congressional Budget Office, in its scoring of the AHCA, predicted that far fewer individuals would be eligible for Medicaid.

According to the CBO: CBO and JCT estimate that enacting the legislation would reduce federal deficits by $337 billion over the 2017 to 2026 periods. That total consists of $323 billion in on-budget savings and $13 billion in off-budget savings. Outlays would be reduced by $1.2 trillion over the period, and revenues would be reduced by $0.9 trillion. The largest savings would come from reductions in outlays for Medicaid and from the elimination of the ACA’s subsidies for non-group health insurance.

While employers rarely pay attention to Medicaid, the AHCA gave them a reason to do so. Fewer Medicaid-eligible individuals would mean more uncompensated care — a significant portion of the costs of which would likely be passed on to employers in the form of higher premiums. As long as the ACA’s expanded Medicaid coverage provisions remain in place, premium pressure on employers will to that extent be avoided.

Long-term impact on employers
As we conceded at the beginning, it’s not clear how the Republican Congress and the Administration will react to the AHCA’s failure. If the elected representatives of both political parties are inclined to try to make the current system work, however, we can think of no better place that the prescriptions contained in a report by the American Academy of Actuaries, entitled “An Evaluation of the Individual Health Insurance Market and Implications of Potential Changes.”

The actuaries’ report does not address, much less resolve, the major policy differences between the ACA and the AHCA over the role of government — in particular, the extent to which taxpayers should be called on to fund the health care costs of low-and moderate-income individuals, and whether U.S. citizens should be required to maintain health coverage or pay a penalty. And even if lawmakers can reach consensus on those contentious issues, they still would have to agree on the proper implementing mechanisms.

But whatever the outcome, employers are unlikely to play a major role.

See the original article Here.

Source:

Bianchi A. & Lenz E. (2017 April 6). How employers should proceed after the AHCA’s collapse [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/how-employers-should-proceed-after-the-ahcas-collapse


ACA Market Stabilization Final Rule

Make sure you are staying up-to-date with the most recent rulings and changes regarding healthcare thanks to our partner United Benefit Advisors (UBA).

On April 18, 2017, the Department of Health and Human Services’ (HHS) Centers for Medicare & Medicaid Services (CMS) published its final rule regarding Patient Protection and Affordable Care Act (ACA) market stabilization.

The rule amends standards relating to special enrollment periods, guaranteed availability, and the timing of the annual open enrollment period in the individual market for the 2018 plan year, standards related to network adequacy and essential community providers for qualified health plans, and the rules around actuarial value requirements.

The proposed changes primarily affect the individual market. However, to the extent that employers have fully-insured plans, some of the proposed changes will affect those employers’ plans because the changes affect standards that apply to issuers.

The regulations are effective on June 17, 2017.

Guaranteed Availability of Coverage

The guaranteed availability provisions require health insurance issuers offering non-grandfathered coverage in the individual or group market to offer coverage to and accept every individual and employer that applies for such coverage unless an exception applies. Individuals and employers must usually pay the first month’s premium to activate coverage.

CMS previously interpreted the guaranteed availability provisions so that a consumer would be allowed to purchase coverage under a different product without having to pay past due premiums. Further, if an individual tried to renew coverage in the same product with the same issuer, then the issuer could apply the enrollee’s upcoming premium payments to prior non-payments.

Under the final rule and as permitted by state law, an issuer may apply the initial premium payment to any past-due premium amounts owed to that issuer. If the issuer is part of a controlled group, the issuer may apply the initial premium payment to any past-due premium amounts owed to any other issuer that is a member of that controlled group, for coverage in the 12-month period preceding the effective date of the new coverage.

Practically speaking, when an individual or employer makes payment in the amount required to trigger coverage and the issuer lawfully credits all or part of that amount to past-due premiums, the issuer will determine that the consumer made insufficient initial payment for new coverage.

This policy applies both inside and outside of the Exchanges in the individual, small group, and large group markets, and during applicable open enrollment or special enrollment periods.

This policy does not permit a different issuer (other than one in the same controlled group as the issuer to which past-due premiums are owed) to condition new coverage on payment of past-due premiums or permit any issuer to condition new coverage on payment of past-due premiums by any individual other than the person contractually responsible for the payment of premiums.

Issuers adopting this premium payment policy, as well as any issuers that do not adopt the policy but are within an adopting issuer’s controlled group, must clearly describe the consequences of non-payment on future enrollment in all paper and electronic forms of their enrollment application materials and any notice that is provided regarding premium non-payment.

Annual Open Enrollment Periods

Currently, annual Exchange open enrollment for plan year 2018 begins on November 1, 2017, and ends on January 31, 2018. Under the final rule, the open enrollment period will shorten; it will begin on November 1, 2017, and end on December 15, 2017. This open enrollment period will be consistent with the month-and-a-half open enrollment period beginning with and after the open enrollment for the 2019 benefit year.

Special Enrollment Periods

Starting in June 2017, all new consumers who seek to enroll in Exchange coverage through applicable special enrollment periods will be subject to pre-enrollment eligibility verification. This will include all states served by HealthCare.gov. This pre-enrollment verification will apply to the individual market only, not to special enrollment periods under the Small Business Health Options Program (SHOP).

New dependents can enroll in a new qualified health plan (QHP) at any metal level if they enroll in a separate QHP from other existing enrollees; however, if the new dependent is enrolling in the same QHP as those who are already QHP enrollees, then the dependent and existing QHP enrollees are restricted from changing plans or metal levels. This does not apply to the small group market or SHOP.

Consumers who were terminated from coverage due to premium nonpayment will not be allowed to enroll in coverage mid-year through a special enrollment period due to loss of minimum essential coverage.

For consumers who are newly enrolling in QHP coverage through the Exchange through the special enrollment period for marriage, at least one spouse must have had minimum essential coverage for one or more days during the 60 days preceding the marriage date, or must have lived in a foreign country or a U.S. territory for one or more days during the 60 days preceding the marriage date. This applies to the individual market only. This does not apply to the small group market or SHOP.

For consumers who are newly enrolling in QHP coverage through the Exchange through the special enrollment period for a permanent move, the consumer will need to provide documentation of the move and evidence of prior coverage for one or more days in the 60 days preceding the move, unless the consumer is moving to the U.S. from a foreign country or a U.S. territory. This applies to the individual market. The requirement to show prior coverage for the permanent move special enrollment period is applicable to the SHOP. Further, CMS intends to release guidance on documentation that will be acceptable for this special enrollment period.

For the remainder of 2017 and for future plan years, CMS will significantly limit the use of the exceptional circumstances special enrollment period by using a more rigorous test that will require consumers to provide supporting documentation. CMS intends to provide guidance on situations that will meet the more rigorous test and on documentation that consumers will be required to provide. This applies to the individual market only.

A consumer may request and the Exchange must provide for a coverage effective date that is no more than one month later than the consumer’s effective date would ordinarily have been, if the special enrollment period verification process delays the enrollment so that the consumer would be required to pay two or more months of retroactive premium to effectuate coverage or avoid cancellation. This applies to the individual market and SHOP.

The final rule indicates that the following special enrollment periods are no longer available:

  • Consumers who enrolled with an advance premium tax credit (APTC) that is too large because of a redundant or duplicate policy
  • Consumers who were affected by a temporary error in the treatment of Social Security Income for tax dependents
  • Lawfully present non-citizens that were affected by a temporary error in the determination of their APTC eligibility
  • Lawfully present non-citizens with incomes below 100 percent of federal poverty level (FPL) who experienced certain processing delays
  • Consumers who were eligible for or enrolled in COBRA and were not sufficiently informed about their coverage options

Continuous Coverage

CMS solicited and received comments on policies that would promote continuous coverage; however, CMS did not take any action in this final rule regarding such policies.

Health Insurance Issuer Standards under the ACA, Including Standards Related to Exchanges

Under the ACA, issuers of non-grandfathered individual and small group health insurance plans, including QHPs, must ensure that the plans adhere to certain levels of coverage.

A plan’s coverage level, or actuarial value (AV), is determined based on its coverage of the essential health benefits (EHBs) for a standard population. The ACA requires a bronze plan to have an AV of 60 percent, a silver plan to have an AV of 70 percent, a gold plan to have an AV of 80 percent, and a platinum plan to have an AV of 90 percent. The HHS Secretary issues regulations on the calculation of AV and its application to coverage levels; the ACA authorizes the Secretary to develop guidelines to provide for de minimis variation in the actuarial valuations used in determining the level of coverage of a plan to account for differences in actuarial estimates.

The final rule amends the definition of de minimis to a variation of -4/+2 percentage points, rather than +/-2 percentage points for all non-grandfathered individual and small group market plans (other than bronze plans meeting certain conditions) that are required to comply with AV. For example, a silver plan could have an AV between 66 and 72 percent. For bronze plans that either cover and pay for at least one major service, other than preventive services, before the deductible or meet the requirements to be a high deductible health plan, the allowable variation in AV will be -4/+5 percentage points. This applies to plans beginning on or after January 1, 2018. CMS’ revised 2018 AV Calculator (scroll to Plan Management, Guidance) reflects the amended AV de minimis range.

Network Adequacy

CMS will rely on state reviews for network adequacy in states where a federally facilitated exchange (FFE) is operating as long as the state has a sufficient network adequacy review process. In states that do not have the authority and means to conduct sufficient network adequacy reviews, CMS will rely on an issuer’s accreditation (commercial, Medicaid, or Exchange) from an HHS-recognized accrediting entity. CMS will use the following three accrediting entities for 2018 plan year network adequacy reviews: the National Committee for Quality Assurance, URAC, and the Accreditation Association for Ambulatory Health (these accrediting entities were previously recognized by HHS for QHP accreditation).

Unaccredited issuers are required to submit an access plan as part of the QHP application; the access plan must demonstrate that an issuer has standards and procedures in place to maintain an adequate network consistent with the National Association of Insurance Commissioners’ (NAIC’s) Health Benefit Plan Network Access and Adequacy Model Act.

Essential Community Providers

Essential community providers (ECPs) include providers that serve predominantly low-income and medically underserved individuals; issuers must meet requirements for ECPs’ inclusion in QHP provider networks.

CMS will lower the minimum percentage of network participating practitioners; an issuer will satisfy the regulatory standard if the issuer contracts with at least 20 percent of available ECPs in each plan’s service area to participate in the plan’s provider network. Also, CMS will continue to allow an issuer’s ECP write-ins to count toward the satisfaction of the ECP standard, if the written-in provider has submitted an ECP petition to HHS no later than the issuer submission deadline for QHP application changes.

Conclusion

The final rule adopts almost all the proposed rule’s provisions. The primary changes from the proposed rule to the final rule are: clarifications to the scope of the guaranteed availability policy regarding unpaid premiums, changes to special enrollment period provisions, updates to the definitions and general standards for eligibility determinations, and clarification regarding states’ roles.

CMS acknowledges that these provisions’ net effect on enrollment, premiums and total premium tax credit payments is uncertain. However, CMS determined that these regulations are urgently needed to stabilize markets, incentivize issuers to enter or remain in the market, and ensure premium stability and consumer choice.

To download the full compliance alert click Here.


Tax Treatment of Fixed Indemnity Health Plans

Great article from our partner, United Benefit Advisors (UBA) by Danielle Capilla

A fixed indemnity health plan pays a specific amount of cash for certain health-related events (for example, $40 per office visit or $100 per hospital day). The amount paid is neither related to the medical expense incurred, nor coordinated with other health coverage. Further, a fixed indemnity health plan is considered an “excepted benefit.”

Under HIPAA, fixed dollar indemnity policies are excepted benefits if they are offered as “independent, non-coordinated benefits.” Under the Patient Protection and Affordable Care Act (ACA), excepted benefits are not subject to the ACA’s health insurance requirements or prohibitions (for example, annual and lifetime dollar limits, out-of-pocket limits, requiring individual and small-group policies to cover ten essential health benefits, etc.). This means that excepted benefit policies can exclude preexisting conditions, can have dollar limits, and do not legally have to guarantee renewal when the coverage is cancelled.

Further, under the ACA, excepted benefits are not minimum essential coverage so a large employer cannot comply with its employer shared responsibility obligations by offering only fixed indemnity coverage to its full-time employees.

Some examples of fixed indemnity health plans are AFLAC or similar coverage, or cancer insurance policies.

Recently, the IRS released a Memorandum on the tax treatment of benefits paid by fixed indemnity health plans that addresses two questions:

  1. Are payments to an employee under an employer-provided fixed indemnity health plan excludible from the employee’s income under Internal Revenue Code §105?
  2. Are payments to an employee under an employer-provided fixed indemnity health plan excludible from the employee’s income under Internal Revenue Code §105 if the payments are made by salary reduction through a §125 cafeteria plan?

See the original article Here.

Source:

Capilla D. (2017 March 9).Tax treatment of fixed indemnity health plans [Web blog post]. Retrieved from address http://blog.ubabenefits.com/tax-treatment-of-fixed-indemnity-health-plans


CMS Allows States to Extend Life of "Grandmothered" or Transitional Health Insurance Policies

Great article from our partner, United Benefit Advisors (UBA) by Danielle Capilla

On February 23, 2017, the Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS) released its Insurance Standards Bulletin Series, in which it re-extended its transitional policy for non-grandfathered coverage in the small group and individual health insurance markets.

States may permit issuers that have renewed policies under the transitional policy continually since 2014 to renew such coverage for a policy year starting on or before October 1, 2018; however, any policies renewed under this transitional policy must not extend past December 31, 2018.

If permitted by applicable state authorities, health insurance issuers may choose to continue certain coverage that would otherwise be cancelled, and affected individuals and small businesses may choose to re-enroll in such coverage.

As background, CMS’ transitional policy was first announced in November 14, 2013; CMS had most recently extended the transitional policy on February 29, 2016, for an additional year for policy years beginning on or before October 1, 2017, provided that all policies end by December 31, 2017.

Policies subject to the transitional relief are not considered to be out of compliance with the ACA’s single risk pool requirement or the following Public Health Service Act (PHS Act) provisions:

  • Section 2701 – relating to fair health insurance premiums
  • Section 2702 – relating to guaranteed availability of coverage
  • Section 2703 – relating to guaranteed renewability of coverage
  • Section 2704 – relating to the prohibition of pre-existing condition exclusions or other discrimination based on health status, with respect to adults, except with respect to group coverage
  • Section 2705 – relating to the prohibition of discrimination against individual participants and beneficiaries based on health status, except with respect to group coverage
  • Section 2706 – relating to non-discrimination in health care
  • Section 2707 – relating to comprehensive health insurance coverage
  • Section 2709 – relating to coverage for individuals participating in approved clinical trials

However, issuers can choose to adopt some of or all these provisions in their renewed policies.

Practically speaking, grandmothering provides some small employers the option to maintain a pre-ACA health plan. Although not every state allows grandmothering of policies and not all insurance carriers offer the option in those states endorsing it, there are still some employers in the 35 states that allow grandmothering who are able to be composite rated (rates based on the health status of the group), which protects young, healthy groups in particular. Grandmothered groups with older, unhealthy populations could still move to community-rated ACA- compliant plans, which were generally less costly for them, giving all groups the flexibility to save money. The UBA Health Plan Survey finds that though this grandmothered group is shrinking (8.1% of all plans compared to 17% in 2015), these employers have helped to keep overall average increases in check. In fact, premium renewal rates (the comparison of similar plan rates year over year) have increased an average of 5.9% for all plans—up only slightly from last year’s 5.6% increase. Small groups who found temporary protection this year through grandmothering and the PACE Act (depending on their state) were a significant factor in overall cost mitigation.

See the original article Here.

Source:

Capilla D. (2017 March 21). CMS allows states to extend life of “grandmothered” or transitional health insurance policies[Web blog post]. Retrieved from address http://blog.ubabenefits.com/cms-allows-states-to-extend-life-of-grandmothered-or-transitional-health-insurance-policies


Workplace Cybersecurity Begins with Employees

Great article from our partner, United Benefit Advisors (UBA) by Tara Marshall

I’ve looked at clouds from both sides now
From up and down and still somehow
It’s cloud illusions I recall
I really don’t know clouds at all

— Joni Mitchell, “Both Sides, Now”

And like that song from 1969, it appears that most employees really don’t know cloud computing at all. In an article on the Society for Human Resource Management’s website titled, “Public Enemy No. 1 for Employers? Careless Cloud Users, Study Says,” a North American IT solutions and managed services provider called Softchoice found that 1 in 3 users of cloud-based apps (e.g., Google Docs and Dropbox) download the app without letting their IT department know. Cloud computing became popular a few years ago because people could store all their documents, photos, and other information and then access that data from anywhere at any time and on any device.

What makes this such a bad situation is not the cloud computing itself, but that the vast majority of employees lack any sense of cybersecurity. That same study found that 1 in 5 employees:

  • Keep their passwords in plain sight (e.g., on Post-it Notes on their desks).
  • Have accessed work files from a device that was not password-protected.
  • Have lost devices that weren’t password-protected.

Complicating this further is that the employees who actually do use passwords usually have weak passwords. That is, they are easy to guess (e.g., “1234,” “password,” or their username). Rather than leave a company and its network vulnerable to attack, some IT people suggest a ban on cloud accounts for work.

Security breaches involving a company’s intellectual property can be very costly. Sometimes referred to as “ransomware,” the important data of an organization will either be stolen or encrypted and will not be released until a fee is paid.

A better solution to a ban on cloud accounts would be to educate employees on the necessity for cyber security, train them to improve their online security habits, and remind them that IT rules are in place to make a company more secure, not make it more difficult for employees to be productive. Cyber thieves are clever and when they can’t break into a system using technology, they often rely on the flaws of human nature.

As we become more and more connected to the Internet, we leave ourselves and the companies where we work more accessible to cyber threats. It’s imperative that employees keep everything locked down.

See the original article Here.

Source:

Marshall T. (2017 March 14). Workplace cybersecurity begins with employees [Web blog post]. Retrieved from address http://blog.ubabenefits.com/workplace-cybersecurity-begins-with-employees


Compliance Recap March 2017

Make sure to stay up-to-date with the most recent changes to the ACA, thanks to our partners at United Benefit Advisors (UBA).

In March, the employee benefits world watched as the House Speaker unveiled a proposal to replace parts of the Patient Protection and Affordable Care Act (ACA) with the American Health Care Act (AHCA). The AHCA bill was withdrawn from consideration by the full House on March 24 because it appeared that there would not be enough votes to pass the AHCA.

On March 13, 2017, the U.S. Senate approved Seema Verma as the new administrator of the Centers for Medicare & Medicaid Services (CMS), which spends more than a $1 trillion annually on health care programs.

The IRS updated its Q&As to address whether family members of an employee who declines employer-sponsored coverage would be eligible for a premium tax credit for Marketplace coverage. The IRS updated its Publication 969 regarding health savings accounts and other tax-favored health plans. The IRS released its Information Letter regarding the treatment of cafeteria plan forfeitures. The Department of Labor (DOL) released an advisory opinion on whether an association’s administrative services program was an ERISA employee welfare benefit plan or a multiple employer welfare arrangement (MEWA).

UBA Updates

UBA released one new resource in March: Important News Regarding the Employer-Tax Exclusion for Health Insurance

UBA updated existing guidance:

IRS Updates Guidance on Premium Tax Credit Eligibility When Employer-Sponsored Health Plan Coverage is Offered to an Employee’s Spouse and Children

The IRS updated its Questions and Answers on the Premium Tax Credit. Specifically, Q&A 15 addresses a situation in which an employer offers minimum value, affordable coverage to an employee, the employee’s spouse, and the employee’s children. The plan only allows the spouse and dependent to enroll if the employee enrolls. The employee declines to enroll.

The IRS determined that all three family members are not eligible for a premium tax credit for Marketplace coverage because they could have enrolled in the employer-sponsored coverage through the employee’s coverage and the coverage would have been minimum value and affordable.

IRS Updates Its Publication 969

The Internal Revenue Service (IRS) updated its Publication 969 Health Savings Accounts and Other Tax-Favored Health Plans for use in preparing 2016 tax returns. The publication describes HSAs, MSAs, FSAs, and HRAs, including eligibility requirements, contribution limits, and distribution information.

IRS Releases Information Letter

IRS released Information Letter Number 2016-0077, in which it explains how an employer may dispose of a flexible benefit plan’s unused funds when an employer ceases business operations and terminates a plan and when a participant forfeits funds to an ongoing plan.

The plan documents will determine how an employer may dispose of unused funds when a cafeteria plan terminates. Unused funds will not revert to the U.S. Treasury.

The IRS explained that the Internal Revenue Code (IRC) Section 125 rules apply to funds forfeited by a participant in an ongoing plan. Per IRC Section 125, the participants’ forfeited funds may be:

  • Retained by the employer maintaining the plan,
  • Used to defray plan expenses, or
  • Returned to current participants and allocated on a reasonable and uniform basis (but not based on claims experience).

Finally, the IRS explained that when an employee terminates employment, IRC Section 125 prohibits the plan from reimbursing health care expenses incurred after the employee terminates employment and no longer participates in the plan.

DOL Issues Advisory Opinion

On January 13, 2017, the Department of Labor (DOL) issued Advisory Opinion 2017-01A. The DOL determined that an association’s administrative services program for its members’ employee benefits plan is not an ERISA employee welfare benefit plan and not a multiple employer welfare arrangement (MEWA).

As background, the association is comprised of large employers that sponsor self-insured benefit plans through administrative services only (ASO) agreements with insurance companies. The association has a member-owned and member-funded cooperative that analyzes health care spending, utilization, and outcomes; however, the association does not and will not provide insurance services to its members; determine benefit levels, administer plans, benefits, or claims; facilitate payment of ASO fees to insurers; or file or process claims.

The DOL determined that the program is not an ERISA employee welfare benefit plan because it has no employee participants and it does not offer or provide benefits to employees or their dependents.

The DOL determined that the program is not a MEWA because it is not an arrangement established or maintained to provide welfare benefits to employees of two or more employers. Further, the DOL determined that the program does not operate as a MEWA because no component of the program underwrites or guarantees welfare benefits, provides welfare benefits through group insurance contracts covering more than one employer, pools welfare benefit risk among participating employers, or provides similar insurance or risk spreading functions.

Question of the Month

Q. What obligations does an employer have when it receives returned Form 1095-Bs marked as undeliverable by the U.S. postal service?

A. Under IRS guidance, the employer fulfills its responsibility to furnish the statement to an individual if it mails the statement to the recipient’s last known permanent address (unless the recipient affirmatively consented to receive the statement in electronic format).

Practically speaking, the employer should keep the mailing which shows that the employer sent the statement to the recipient’s last known permanent address and that the statement was returned undeliverable. That way, the employer has proof that it mailed the statement to the recipient’s last known permanent address.

To download the full recap click Here.

 


CBO estimate of AHCA impact on employer-sponsored benefits is off the mark

Does the implementation of the AHCA have you worried about your employee benefits? Take a look at this great article from Employee Benefit News about what the implementaion of the AHCA will mean for employers by Joel Wood.

In breaking down the Congressional Budget Office’s assessment of the proposed American Health Care Act, let’s look at the impact of the AHCA on employer-sponsored plans. The CBO estimates that 2 million fewer Americans will have employer-sponsored coverage in 2020, growing to seven million by 2027. Here’s CBO’s rationale:

  • The mandate penalties are eliminated, and thus many will drop.
  • The tax credits are available to people with a broader range of incomes than the Obamacare credits/subsidies
  • Some employers will drop coverage and increase compensation in the belief that non-group insurance is a close substitute.

These are valid points. The CBO experts are basing their estimates on sound economics and inside the constraints of their authority, and so of course we worry about any proposal that devolves employer-sponsored care. But, we also have to note that the CBO said much the same about the Affordable Care Act, which largely didn’t happen. And CBO notwithstanding, we at the Council of Insurance Agents & Brokers, too, feared something of a death spiral after the ACA was enacted.

The ACA’s employer penalties were very small in comparison to premiums, and it made sense that many would dump their plans, give their employees cash, and send them to the subsidized exchanges. Also, the subsidies were pretty rich — graduating out at 400% of the poverty line. That’s more than $90,000 for a family of four.

What we didn’t take into account in reference to the ACA were a number of things:

  • A core assumption of the ACA was that states would all be forced to expand Medicaid to 138% of the poverty line, and the exchange subsidies would kick in above that amount. The courts struck that down and 19 (all-red) states never adopted the expansion, creating a massive donut hole.
  • We underestimated how chaotic would be the rollout of Healthcare.gov.
  • We knew the exchanges would be a model of adverse selection, but a “bailout” of insurance carriers through the “risk corridor” program was supposed to keep them in the game. Republicans balked, sued, and the reinsurance payments have been so lacking that most of the exchanges are currently in a “death spiral” (as described by Mark Bertolini, CEO of Aetna).

So employer-sponsored health insurance has, well, thrived since the enactment of the ACA — perhaps in spite of it, not because of it.

If the CBO is correct and seven million people lose ESI over the next decade, that’s problematic. But it ignores other opportunities that are being created through the proposed GOP bill and Trump Administration executive actions.

Employers-sponsored opportunities
Republicans propose significant expansion of HSAs that will compliment higher-deductible ESI plans. They want work-arounds for state mandates on essential health benefits, even though their goal of “buying across state lines” can’t be realized through the tricky budget reconciliation process. And, ultimately, Republicans want to realize the potential for the ACA wellness provisions that have been eviscerated through years of EEOC/ADA/GINA conflicts. That would be a big win for employers.

The most important tradeoff between the “discussion draft” of a few weeks ago and the AHCA is that GOP House leaders junked their plan to tax 10% of employee contributions for ESI plans, in favor of pushing the Cadillac tax out five more years, to 2025.

Personally, I figure I’ve got another decade left in me to lobby for this industry, and that would get me eight years along the way. That’s a terrific tradeoff in my book, especially as Ways & Means Chairman Kevin Brady (R-Texas) emphasized he never intends for that tax to go into effect — it’s purely a budgetary gimmick. And, it’s a ridiculous “score” from CBO anyway. Everybody knows that no employer is going to pay that tax; they’ll work their plan design to get under the numbers.

President Trump’s stance on 10 key benefit issues

Where does Donald J. Trump stand on parental leave, minimum wage and other important workplace issues? Here’s what employers need to know.

My conclusions at this moment in time, thus, are:

  • Have we won the war among GOP leaders with respect to “hands off” of ESI while trying to solve the death-spiral problems in the individual/exchange marketplace? Not yet. We won a battle, not a war. Sadly and frustratingly, too many Republican leaders have bought into the elite conservative/libertarian economic intelligentsia that pure consumerism should drive healthcare, and that ESI is an “historic accident.” As our friend Ed Fensholt at Lockton always says, “Penicillin was an historic accident, too, but look how that turned out.”
  • Was former Speaker John Boehner right recently when he said that there’s no way you can get to the requisite 51 votes in the Senate right now with this current AHCA construct? You bet he was right. If you do the House plan and defund Planned Parenthood, you lose votes of pro-choice Republicans in the Senate. If Ryan and Trump relent to the Freedom Caucus on hacking the Medicaid expansion in 2018 instead of 2020, they’ll lose votes of Republicans in Medicaid-expanded states. In any event, they probably lose the votes of Ted Cruz (R-Texas) and Ben Sasse (R-Neb.) and a number of other Republicans who view the AHCA as “Obamacare Lite” and demand a more straightforward repeal.
  • Was Paul Ryan (R-Wis.) right when he said this on Face the Nation recently? “Look,” he said, “the most important thing for a person like myself who runs for office and tells the people we’re asking to hire us, ‘This is what I’ll do if I get elected.’ And then if you don’t do that, you’re breaking your word.” You bet he’s right. Republicans ran on this. They voted 60 times in the House to repeal the ACA. If they can’t do this, they can’t do tax reform, they can’t do 12 appropriations bills. Their margins for error (21 votes in the House; two in the Senate) are almost impossibly narrow, and the press hates this bill. But I wouldn’t pronounce this effort dead, by a long stretch.

Sometimes, when lobbying blank-faced Republican leaders on the importance of ESI, I feel like the old BB King lyric: “Nobody loves me but my mother, and she could be jivin’, too.”
But because of, or in spite of, current legislative efforts that are dominating the headlines, I feel relatively well-poised for ESI to continue to be the means through which a majority of Americans receive the health insurance they like and they want to keep. Our job is for them to keep it. Notwithstanding lots of obstacles, we will.

See the original article Here.

Source:

Wood J. (2017 March 21). CBO estimate of AHCA impact on employer-sponsored benefits is off the mark [Web blog post]. Retrieved from address https://www.benefitnews.com/opinion/cbo-estimate-of-ahca-impact-on-employer-sponsored-benefits-is-off-the-mark


Keeping Pace with the Protecting Affordable Coverage for Employees Act

Great article from our partner, United Benefit Advisors (UBA) abut the change coming to the ACA thanks to PACE by Vicki Randall

Last fall, President Barack Obama signed the Protecting Affordable Coverage for Employees Act (PACE), which preserved the historical definition of small employer to mean an employer that employs 1 to 50 employees. Prior to this newly signed legislation, the Patient Protection and Affordable Care Act (ACA) was set to expand the definition of a small employer to include companies with 51 to 100 employees (mid-size segment) beginning January 1, 2016.

If not for PACE, the mid-size segment would have become subject to the ACA provisions that impact small employers. Included in these provisions is a mandate that requires coverage for essential health benefits (not to be confused with minimum essential coverage, which the ACA requires of applicable large employers) and a requirement that small group plans provide coverage levels that equate to specific actuarial values. The original intent of expanding the definition of small group plans was to lower premium costs and to increase mandated benefits to a larger portion of the population.

The lower cost theory was based on the premise that broadening the risk pool of covered individuals within the small group market would spread the costs over a larger population, thereby reducing premiums to all. However, after further scrutiny and comments, there was concern that the expanded definition would actually increase premium costs to the mid-size segment because they would now be subject to community rating insurance standards. This shift to small group plans might also encourage mid-size groups to leave the fully-insured market by self-insuring – a move that could actually negate the intended benefits of the expanded definition.

Another issue with the ACA’s expanded definition of small group plans was that it would have resulted in a double standard for the mid-size segment. Not only would they be subject to the small group coverage requirements, but they would also be subject to the large employer mandate because they would meet the ACA’s definition of an applicable large employer.

See the original article Here.

Source:

Randall V. (2017 February 16). Keeping pace with the protecting affordable coverage for employees act [Web blog post]. Retrieved from address http://blog.ubabenefits.com/keeping-pace-with-the-protecting-affordable-coverage-for-employers-act


SBC Template, and Required Addendums for Covered Entities under ACA Section 1557

Make sure to stay updated with all the recent rules and regulation regarding the ACA, thanks to our partners at United Benefits Advisor (UBA).

A Summary of Benefits and Coverage (SBC) is four page (double-sided) communication required by the federal government. It must contain specific information, in a specific order, and with a minimum size type, about a group health benefit’s coverage and limitations. If an employer providing an SBC is a covered entity under the ACA’s Section 1557, additional requirements apply.

On April 6, 2016, the Centers for Medicare and Medicaid Services (CMS), the Department of Labor (DOL), and the Department of the Treasury issued the final 2017 summary of benefits and coverage (SBC) template, group and individual market SBC instructions, uniform glossary of coverage and medical terms, a coverage example calculator, and calculator instructions.

The SBC is to be used by all health plans, including individual, small group, and large group; insured and self-insured; grandfathered, transitional, and ACA compliant. The new SBC must be used for plan years with open enrollment periods beginning after April 1, 2017. It will not be used for marketplace plans for the 2017 coverage year.

For fully insured plans, the insurer is responsible for providing the SBC to the plan administrator (usually this is the employer). The plan administrator and the insurer are both responsible for providing the SBC to participants, although only one of them actually has to do this.

For self-funded plans, the plan administrator is responsible for providing the SBC to participants. Assistance may be available from the plan administrator’s TPA, advisor, etc., but the plan administrator is ultimately responsible. (The plan administrator is generally the employer, not the claims administrator.)

Changes

The template includes a new “important question” that asks “Are there services covered before you meet your deductible?” and requires family plans to disclose whether or not the plan has embedded deductibles or out-of-pocket limits. This is reported in the “Why This Matters” column in relation to the question “what is the overall deductible?” and plans must list “If you have other family members on the policy, they have to meet their own individual deductible until the overall family deductible has been met” or alternatively, “If you have other family members on the policy, the overall family deductible must be met before the plan begins to pay.”

Tiered networks must be disclosed and the question “Will you pay less if you use a network provider?” is now included. The SBC also includes language that warns participants that they could receive out-ofnetwork providers while they are in an in-network facility. The SBC also indicates that a consumer could receive a “balance bill” from an out-of-network provider.

The “explanatory coverage page” was dropped from the template.

The coverage examples provided clarify the “having a baby” example and the “managing type 2 diabetes” example, in addition to providing a third example of “dealing with a simple fracture.” The coverage example must be calculated assuming that a participant does not earn wellness credits or participate in an employer’s wellness program. If the employer has a wellness program that could reduce the employee’s costs, the employer must include the following language: “These numbers assume the patient does not participate in the plan’s wellness program. If you participate in the plan’s wellness program, you may be able to reduce your costs. For more information about the wellness program, please contact: [insert].”

The column for “Limitations, Exceptions, & Other Important Information” must contain core limitations, which include:

  • When a service category or a substantial portion of a service category is excluded from coverage (that is, the column should indicate “brand name drugs excluded” in health benefit plans that only cover generic drugs);
  • When cost sharing for covered in-network services does not count toward the out-of-pocket limit;
  • Limits on the number of visits or on specific dollar amounts payable under the health benefit plan; and  When prior authorization is required for services.
  • When prior authorization is required for services.

The template and instructions indicate that qualified health plans (those certified and sold on the Marketplace) that cover excepted abortions (such as those in cases of rape or incest, or when a mother’s life is at stake) and plans that cover non-excepted abortion services must list “abortion” in the covered services box. Plans that exclude abortion must list it in the “excluded services” box, and plans that cover only excepted abortions must list in the “excluded services” box as “abortion (except in cases of rape, incest, or when the life of the mother is endangered).” Health plans that are not qualified health plans are not required to disclose abortion coverage, but they may do so if they wish

Impact of Section 1557 of the ACA – Addendum Required for Covered Entities

On May 13, 2016, the Department of Health and Human Services (HHS) issued a final rule implementing Section 1557 of the Patient Protection and Affordable Care Act (ACA), which took effect on July 18, 2016. Under these regulations, covered entities must provide notices stating they do not discriminate on certain grounds in “significant public-facing publications.” HHS has gone on to confirm that an SBC is a significant public-facing publication.

ACA Section 1557 provides that individuals shall not be excluded from participation, denied the benefits of, or be subjected to discrimination under any health program or activity which receives federal financial assistance from HHS on the basis of race, color, national origin, sex, age, or disability. The rule applies to any program administered by HHS or any health program or activity administered by an entity established under Title I of the ACA. These applicable entities are “covered entities” and include a broad array of providers, employers, and facilities. State-based Marketplaces are also covered entities, as are FederallyFacilitated Marketplaces.

The final regulations are aimed primarily at preventing discrimination by health care providers and insurers, as well as employee benefits programs of an employer that is principally or primarily engaged in providing or administering health services or health insurance coverage, or employers who receive federal financial assistance to fund their employee health benefit program or health services. Employee benefits programs include fully insured and self-funded plans, employer-provided or sponsored wellness programs, employer provided health clinics, and longer-term care coverage provided or administered by an employer, group health plan, third party administrator, or health insurer

Practically speaking, employers with fully insured group health plans will be subject to the regulations (because the carrier is a covered entity and is prohibited from selling discriminatory plans), and many self funded employers will be considered a covered entity based on their business model or financial details. Furthermore, most third party administrators (TPAs) will be considered a covered entity. The Office of Civil Rights (OCR) will investigate a TPA when there is alleged discrimination in the administration of the plan. However, if the alleged discrimination is in benefit plan design (that is, the choice of the employer), the OCR will process the complaint against the employer or plan sponsor. If the OCR lacks jurisdiction over the employer, it will refer the matter to the Equal Employment Opportunity Commission (EEOC). This means that employers who are not covered entities, but have a self-funded group health plan that utilizes a TPA that is a covered entity, could become the subject of an EEOC investigation for discriminatory business practices.

Employers with self-funded group health plans should seek legal counsel to determine if they are a covered entity, and to obtain legal advice on the applicability of these regulations to their individual situation.

Covered entities must take steps to notify beneficiaries, enrollees, applicants, or members of the public of their nondiscrimination obligations with respect to their health programs and activities. Covered entities are required to post notices stating that they do not discriminate on the grounds prohibited by Section 1557, and that they will provide free (and timely) aids and services to individuals with limited English proficiency and disabilities. These notices must be posted in conspicuous physical locations where the entity interacts with the public, in its significant public-facing publications, and on its website home page. In addition, covered entities that employ 15 or more persons must designate a responsible employee to coordinate the entity’s compliance with the rule and adopt a grievance procedure. Employers who are covered entities should seek advice of counsel on the ways these requirements apply to them and their group health plan, and employers who are not covered entities but have a fully insured group health plan should discuss how the insurance carrier will meet these requirements.

The OCR has provided a model notice and model statement of nondiscrimination, and taglines for employers to use. The OCR has also created an FAQ and table relating to the top 15 languages spoken in each state.

HHS has stated that an SBC is a publication that is “significant” under the Section 1557 regulations. As a result, CMS requires the use of an addendum to the SBC to accommodate applicable language access standards. Accordingly, covered entities required to provide an SBC must include the nondiscrimination notice and taglines in its addendum along with other applicable language access standards. This addendum must contain only the Section 1557 nondiscrimination notice and taglines and other applicable language access information.

To download the full compliance alert click Here.


Health Law’s 10 Essential Benefits: A Look At What’s At Risk In GOP Overhaul

Great article from Kaiser Health News about all the changes that could be coming with the ACA overhaul by Michelle Andrews

As Republicans look at ways to replace or repair the health law, many suggest shrinking the list of services insurers are required to offer in individual and small group plans would reduce costs and increase flexibility. That option came to the forefront last week when Seema Verma, who is slated to run the Centers for Medicare & Medicaid Services in the Trump administration, noted at her confirmation hearing that coverage for maternity services should be optional in those health plans.

Maternity coverage is a popular target and one often mentioned by health law critics, but other items also could be watered down or eliminated.

There are some big hurdles, however. The health law requires that insurers who sell policies for individuals and small businesses cover at a minimum 10 “essential health benefits,” including hospitalization, prescription drugs and emergency care, in addition to maternity services. The law also requires that the scope of the services offered be equal to those typically provided in employer coverage.

“It has to look like a typical employer plan, and those are still pretty generous,” said Timothy Jost, an emeritus professor at Washington and Lee University Law School in Virginia who is an expert on the health law.

Since the 10 required benefits are spelled out in the Affordable Care Act, it would require a change in the law to eliminate entire categories or to water them down to such an extent that they’re less generous than typical employer coverage. And since Republicans likely cannot garner 60 votes in the Senate, they will be limited in changes that they can make to the ACA. Still, policy experts say there’s room to “skinny up” the requirements in some areas by changing the regulations that federal officials wrote to implement the law.

Habilitative Services

The law requires that plans cover “rehabilitative and habilitative services and devices.” Many employer plans don’t include habilitative services, which help people with developmental disabilities such as cerebral palsy or autism maintain, learn or improve their functional skills. Federal officials issued a regulation that defined habilitative services and directed plans to set separate limits for the number of covered visits for rehabilitative and habilitative services.

Those rules could be changed. “There is real room for weakening the requirements” for habilitative services, said Dania Palanker, an assistant research professor at Georgetown University’s Center on Health Insurance Reforms who has reviewed the essential health benefits coverage requirements.

Oral And Vision Care For Kids

Pediatric oral and vision care requirements, another essential health benefit that’s not particularly common in employer plans, could also be weakened, said Caroline Pearson, a senior vice president at Avalere Health, a consulting firm.

Mental Health And Substance Use Disorder Services

The health law requires all individual and small group plans cover mental health and substance use disorder services. In the regulations the administration said that means those services have to be provided at “parity” with medical and surgical services, meaning plans can’t be more restrictive with one type of coverage than the other regarding cost sharing, treatment and care management.

“They could back off of parity,” Palanker said.

Prescription Drugs

Prescription drug coverage could be tinkered with as well. The rules currently require that plans cover at least one drug in every drug class, a standard that isn’t particularly robust to start with, said Katie Keith, a health policy consultant and adjunct professor at Georgetown Law School. That standard could be relaxed further, she said, and the list of required covered drugs could shrink.

Preventive And Wellness Services And Chronic Disease Management

Republicans have discussed trimming or eliminating some of the preventive services that are required to be offered without cost sharing. Among those requirements is providing birth control without charging women anything out of pocket. But, Palanker said, “if they just wanted to omit them, I expect that would end up in court.”

Pregnancy, Maternity And Newborn Care

Before the health law passed, just 12 percent of health policies available to a 30-year-old woman on the individual market offered maternity benefits, according to research by the National Women’s Law Center. Those that did often charged extra for the coverage and required a waiting period of a year or more. The essential health benefits package plugged that hole very cleanly, said Adam Sonfield, a senior policy manager at the Guttmacher Institute, a reproductive health research and advocacy organization.

“Having it in the law makes it more difficult to either exclude it entirely or charge an arm and a leg for it,” Sonfield said.

Maternity coverage is often offered as an example of a benefit that should be optional, as Verma advocated. If you’re a man or too old to get pregnant, why should you have to pay for that coverage?

That a la carte approach is not the way insurance should work, some experts argue. Women don’t need prostate cancer screening, they counter, but they pay for the coverage anyway.

“We buy insurance for uncertainty, and to spread the costs of care across a broad population so that when something comes up that person has adequate coverage to meet their needs,” said Linda Blumberg, a senior fellow at the Health Policy Center at the Urban Institute.

See the original article Here.

Source:

Andrews M. (2017 February 21). Health law’s 10 essential benefits: a look at what’s at risk in GOP overhaul [Web blog post]. Retrieved from address http://khn.org/news/health-laws-10-essential-benefits-a-look-at-whats-at-risk-in-gop-overhaul/