HSAs vs. HRAs: Things Employers Should Consider

Great article from our partner, United Benefit Advisors (UBA) by Bob Bentley on what employers should know about choosing between HSAs and HRAs.

With health care costs and insurance premiums continuing to rise, employers are looking for ways to reduce their insurance expenses. That usually means increasing medical plan deductibles. According to the latest UBA Health Plan Survey, the average in-network single medical plan deductible increased from $2,031 in 2015 to $2,127 in 2016. But shifting costs to employees can be detrimental to an employer’s efforts to attract and retain top talent. Employers are looking for solutions that reduce their costs while minimizing the impact on employees.

One way employers can mitigate increasing deductibles is by packaging a high-deductible health plan with either a health savings account (HSA) contribution or a health reimbursement arrangement (HRA). Either can be used to bridge some or all of the gap between a lower deductible and a higher deductible while reducing insurance premiums, and both offer tax benefits for employers and employees. However, there are advantages and disadvantages to each approach that employers need to consider.

Health Savings Account (HSA) General Attributes

  • The employee owns the account and can take it when changing jobs.
  • HSA contributions can be made by the employer or employee, subject to a maximum contribution established by the government.
  • Triple tax advantage – funds go in tax-free, accounts grow tax-free, and withdrawals are tax-free as long as they are for qualified expenses (see IRS publication 502).
  • Funds may accumulate for years and be used during retirement.
  • The HSA must be paired with an IRS qualified high-deductible health plan (QHDHP); not just any plan with a deductible of $1,300 or more will qualify.

HSA Advantages

  • Costs are more predictable as they are not related to actual expenses, which can vary from year to year; contributions may also be spread out through the year to improve cash flow.
  • Employees become better consumers since there is an incentive to not spend the money and let it accumulate. This can result in an immediate reduction in claims costs for a self-funded plan.
  • HSAs can be set up with fewer administration costs; usually no administrator is needed, and no ERISA summary plan description (SPD) is needed.
  • The employer is not held responsible by the IRS for ensuring that the employee is eligible and that the contribution maximums are not exceeded.

HSA Disadvantages

  • Employees cannot participate if they’re also covered under a non-qualified health plan, which includes Tricare, Medicare, or even a spouse’s flexible spending account (FSA).
  • Employees accustomed to copays for office visits or prescriptions may be unhappy with the benefits of the QHDHP.
  • IRS rules can be confusing; IRS penalties may apply if the employee is ineligible for a contribution or other mistakes are made, which might intimidate employees.
  • Employees may forgo treatment to avoid spending their HSA balance or if they have no HSA funds available.

Health Reimbursement Arrangement (HRA) General Attributes

  • Only an employer can contribute to an HRA; employees cannot.
  • The employer controls the cash until a claim is filed by the employee for reimbursement.
  • HRA contributions are tax deductible to the employer and tax-free to the employee.
  • To comply with the Patient Protection and Affordable Care Act (ACA), an HRA must be combined with a group medical insurance plan that meets ACA requirements.

HRA Advantages

  • HRAs offer more employer control and flexibility on the design of the HRA and the health plan does not need to be HSA qualified.
  • The employer can set it up as “use it or lose it” each year, thus reducing funding costs.
  • An HRA is compatible with an FSA (not just limited-purpose FSA).
  • Depending on the employer group, HRAs can sometimes be less confusing for employees, particularly if the plan design is simple.
  • HRA funds revert to the employer when an employee leaves – which might increase employee retention.

HRA Disadvantages

  • Self-employed individuals cannot participate in HRA funding.
  • There is little or no incentive for employees to control utilization since funds may not accumulate from year to year.
  • More administration may be necessary – HRAs are subject to ERISA and COBRA laws.
  • HRAs could raise HIPAA privacy concerns and create the need for policies and testing.

Both HSAs and HRAs can be of tremendous value to employers and employees. As shown, there are, however, a number of considerations to determine the best program and design for each situation. In some cases, employers may consider offering both, allowing employees to choose between an HSA contribution and a comparable HRA contribution, according to their individual circumstances.

For a comprehensive chart that compares eligibility criteria, contribution rules, reimbursement rules, reporting requirements, privacy requirements, applicable fees, non-discrimination rules and other characteristics of account-based plans, request UBA’s Compliance Advisor,  “HRAs, HSAs, and Health FSAs – What’s the Difference?”.

For information on modest contribution strategies that are still driving enrollment in HSA and HRA plans, read our breaking news release.

For a detailed look at the prevalence and enrollment rates among HSA and HRA plans by industry, region and group size, view UBA’s "Special Report: How Health Savings Accounts Measure Up", to understand which aspects of these accounts are most successful, and least successful.

See the original article Here.

Source:

Bentley B. (2017 May 12). HSAs vs. HRAs: things employers should consider[Web blog post]. Retrieved from address http://blog.ubabenefits.com/hsas-vs.-hras-things-employers-should-consider


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


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/


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


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.

See the original article Here.

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/


New CBO AHCA Score Confirms What We Already Knew

The CBO has just released their final score for the revised version of the American Health Care Act (AHCA). Find how the CBO scored this revised piece of legislation and what it means for you in this article by Mark J. Mazur from Tax Policy Center

Meet the new estimate of the American Health Care Act (AHCA).  It looks a lot like the old one.

On May 24, the Congressional Budget Office (CBO) released its estimate of the revised AHCA, which the House of Representatives passed on May 7.  The revised AHCA allows states to opt out of ACA requirements establishing essential health benefits and permits states establishing high-risk pools to allow insurers to set premiums based on health status.  The modified bill sets aside $8 billion to help subsidize these pools.

Like its predecessor, the revised AHCA has four distinct major components.

  1. One would cut taxes paid by high-income individuals (lower taxes on capital gains, divided, and interest income for households with annual income over $250,000) and by companies in specific industries: health insurance, medical devices, prescription drugs, and indoor tanning salons.
  2. The second is a grab bag of tax reductions, such as loosened rules for flexible spending accounts and health savings accounts, repeal of the tax on individuals who can afford but don’t buy adequate health coverage, and a further delay of the excise tax on high-cost health plans (the so-called “Cadillac Tax”).
  3. The third restructures the tax credits that subsidize health care coverage, moving from existing income-related tax credits for purchasing health insurance on the ACA Marketplaces to age-related tax credits to purchase health insurance.
  4. And the fourth cuts Medicaid spending reducing coverage and essentially paying for the tax cuts.

The chart below shows the tax changes (the first two major components mentioned) go almost entirely to the highest earning households, while providing little or no benefit to the bottom 80 percent of the income distribution.  In fact, TPC estimates that a $37,000 average annual tax cut will go to the 1 percent of the population with the highest earnings (annual income of over $772,000).  The top 0.1 percent of the income distribution would receive an annual tax cut of over $200,000 (annual income over $3.9 million).  (Note that this chart shows the estimates for 2022, but incorporates the tax law changes for 2023 as the AHCA phases in some of the tax changes).

The bottom line: CBO estimates confirm the AHCA is largely a tax bill paired up with Medicaid cuts to offset the costs. And, as in the earlier version of the bill, almost all the benefits go to the highest income households in the country.

See the original article Here.

Source:

Mazur M. (2017 May 24). New CBO AHCA score confirms what we already knew [Web blog post]. Retrieved from address http://www.taxpolicycenter.org/taxvox/new-cbo-ahca-score-confirms-what-we-already-knew


The Facts on the GOP Health Care Bill

Do you know all the facts behind the American Health Care Act (AHCA)? Check out this article by Fact Check and find out about all the details behind the GOP new health care legislation.

House Republicans released their replacement plan for the Affordable Care Act on March 6. How does the GOP’s American Health Care Act differ from the ACA? We look at the major provisions of the amended version of the bill, as of May 4. (The legislation passed the House on May 4 and now goes to the Senate for consideration.)

Is there a requirement to have insurance or pay a tax?

No. For all months after Dec. 31, 2015, the bill eliminates the tax penalties that the ACA imposes on nonexempt individuals for not having health insurance, as well as employers with 50 or more full-time workers who do not offer health insurance to their employees. (To be clear, unless this bill becomes law quickly, those filing their 2016 tax returns will still be subject to the penalty.)

Are insurance companies required to offer coverage regardless of preexisting conditions?

Yes, but there’s a penalty for not having continuous coverage. Under both the ACA and the GOP bill, insurers can’t deny coverage to anyone based on health status. Under the GOP bill, they are required, however, to charge 30 percent higher premiums for one year, regardless of health status, to those entering the individual market who didn’t have continuous coverage, which is defined as a lapse of coverage of 63 days or more over the previous 12 months.

However, an amendment proposed in late April allows states to obtain a waiver that would enable insurers to charge more to people with preexisting conditions who do not maintain continuous coverage. Such policyholders could be charged higher premiums based on health status for one year. After that, provided there wasn’t another 63-day gap, the policyholder would get a new, less expensive premium that was not based on health status. This change would begin in 2019, or 2018 for those enrolling during special enrollment periods.

States with such a waiver would also have to have either a “risk mitigation program,” such as a high-risk pool, or participate in a new Federal Invisible Risk Sharing Program, as a House summary of the amendment says. Beyond those programs, another amendment to the bill would provide $8 billion in federal money over five years to financially aid those with preexisting conditions who find themselves facing higher premiums in waiver states.

For more on this waiver program, see our May 4 article, “The Preexisting Conditions Debate.”

What happens to the expansion of Medicaid?

It will be phased out.

Prior to the ACA, Medicaid was available to groups including qualified low-income families, pregnant women, children and the disabled. The ACA expanded eligibility to all individuals under age 65 who earn up to 138 percent of the federal poverty level (about $16,643 a year for an individual), but only in states that opted for the expansion. Thirty-one states and the District of Columbia have opted in to the expansion, which includes enhanced federal funding, so far. More than 11 million newly eligible adults had enrolled in Medicaid through March 2016, according to an analysis by the Kaiser Family Foundation of data from the Centers for Medicare & Medicaid Services.

Under the Republican health care plan, no new enrollment can occur under this Medicaid expansion, with enhanced federal funds, after Dec. 31, 2019. States that haven’t already opted in to the expansion by March 1, 2017, can’t get the ACA’s enhanced federal funding for the expansion-eligible population.

To be clear, the bill doesn’t eliminate the Medicaid expansion coverage for those who are enrolled prior to 2020 in the current expansion states. But if those enrollees have a break in coverage for more than one month after Dec. 31, 2019, they won’t be able to re-enroll (unless a state wanted to cover the additional cost itself).

The Republican plan includes another notable change to Medicaid. It would cap the amount of federal funding that states can receive per Medicaid enrollee, with varying amounts for each category of enrollee, such as children, and the blind and disabled. Currently, the federal government guarantees matching funds to states for qualifying Medicaid expenses, regardless of cost. Under the GOP bill, states have the option of receiving a block grant, rather than the per-capita amounts, for traditional adult enrollees and children – not the elderly or disabled. States also have the option of instituting work requirements for able-bodied adults, but not pregnant women.

Are insurers required to cover certain benefits?

The latest version of the bill requires insurers to provide 10 essential health benefits mandated by the ACA, unless a state obtains a waiver to set its own benefit requirements. The ACA’s essential health benefits required insurance companies to cover 10 health services: ambulatory, emergency, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative services and devices, laboratory services, preventive care and chronic disease management, and pediatric services including dental and vision.

Beginning in 2020, states could set their own essential health benefits by obtaining a waiver.

At that point, state requirements could vary, as they did before the ACA was enacted. For instance, a 2009 report from the Council for Affordable Health Insurance, a group representing insurance companies, said 47 states had a mandate for emergency service benefits, while 23 mandated maternity care and only three mandated prescription drug coverage.

State Medicaid plans would not have to meet the essential health benefits requirement after Dec. 31, 2019.

Are there subsidies to help individuals buy insurance? How do they differ from the Affordable Care Act?

There are two forms of financial assistance under the ACA: premium tax credits (which would change under the GOP plan) and cost-sharing to lower out-of-pocket costs (which would be eliminated).

Let’s look at the premium tax credits first. They would be available to individuals who buy their own coverage on the individual, or nongroup, market. But instead of a sliding scale based on income, as under the ACA, the Republican plan’s tax credits are based on age, with older Americans getting more. (The plan, however, allows insurers to charge older Americans up to five times more than younger people, as we will explain later.)

The ACA tax credits also take into account the local cost of insurance, varying the amount of the credit in order to put a cap on the amount an individual or family would have to spend for their premiums. The Republican plan doesn’t do that. (See this explanation from the nonpartisan Kaiser Family Foundation for more on how the ACA tax credits are currently calculated.)

There are income limits under the GOP bill. Those earning under $75,000, or $150,000 for a married couple, in modified adjusted gross income, get the same, fixed amounts for their age groups — starting at $2,000 a year for those under age 30, increasing in $500 increments per decade in age, up to $4,000 a year for those 60 and older. The tax credits are capped at $14,000 per family, using the five oldest family members to calculate the amount. This new structure would begin in 2020, with modifications in 2018 and 2019 to give more to younger people and less to older people.

For those earning above those income thresholds, the tax credit is reduced by 10 percent of the amount earned above the threshold. For instance, an individual age 60 or older earning $100,000 a year would get a tax credit of $1,500 ($4,000 minus 10 percent of $25,000).

That hypothetical 60-year-old gets $0 in tax credits under the ACA. But if our 60-year-old earns $30,000 a year, she would likely get more under the ACA than the GOP plan: In Franklin County, Ohio, for instance, the tax credit would be $6,550 under the ACA in 2020 and $4,000 under the Republican plan. (This interactive map from the KFF shows the difference in tax credits under the health care plans.)

As for the cost-sharing subsidies available now under the ACA — which can lower out-of-pocket costs for copays and other expenses for those earning between 100 percent and 250 percent of the federal poverty level  — those would be eliminated in 2020. However, the GOP bill sets up a Patient and State Stability Fund, with $100 billion in funding over nine years with state matching requirements, that can be used for various purposes, including lowering out-of-pocket costs of a state’s residents. An additional $30 billion was added to this fund for other programs: $15 billion would be used to set up the Federal Invisible Risk Sharing Program, another reinsurance program, and $15 billion is set aside specifically for maternity and mental health coverage.

Small-business tax credits would end in 2020. The health insurance marketplaces stay, but the tax credits can be used for plans sold outside of those marketplaces. And the different levels of plans (bronze, silver, etc.) based on actuarial value (the percentage of costs covered) are eliminated; anyone can buy a catastrophic plan, not just those under 30 as is the case with the ACA.

What does the bill do regarding health savings accounts?

It increases the contribution limits for tax-exempt HSAs, from $3,400 for individuals and $6,750 for families now to $6,550 and $13,100, respectively. It allows individuals to use HSA money for over-the-counter drugs, something the ACA had limited to only over-the-counter drugs for which individuals had obtained a prescription.

There were so-called winners and losers in the individual market under the ACA. How would that change under this bill?

Both the current law and the Republican proposal primarily impact the individual market, where 7 percent of the U.S. population buys its own health insurance. As we’ve written many times, how the ACA affected someone in this market depended on their individual circumstances — and the same goes for the House Republicans’ plan. In general, because the ACA said that insurers could no longer vary premiums based on health status and limited the variation based on age, older and sicker individuals could have paid less than they had before, while younger and healthier individuals could have paid more.

The GOP plan allows a wider variation in pricing based on age: Insurers can charge older individuals up to five times as much as younger people, and states can change that ratio. Under the ACA, the ratio was 3:1. So, younger individuals may see lower premiums under this bill, while older individuals could see higher premiums.

Older Americans do get higher tax credits than younger Americans under the Republican plan, but whether that amounts to more or less generous tax credits than under the ACA depends on other individual circumstances, including income and local insurance pricing. Those with low incomes could do worse under the GOP plan, while those who earned too much to qualify for tax credits under the ACA (an individual making more than $48,240) would get tax credits.

We would encourage readers to use the Kaiser Family Foundation’s interactive map to see how tax credits may change, depending on various circumstances. “Generally, people who are older, lower-income, or live in high-premium areas (like Alaska and Arizona) receive larger tax credits under the ACA than they would under the American Health Care Act replacement,” KFF says. “Conversely, some people who are younger, higher-income, or live in low-premium areas (like Massachusetts, New Hampshire, and Washington) may receive larger assistance under the replacement plan.”

A few weeks after the bill was introduced, House Republicans, through an amendment, made a change to a tax provision to create placeholder funding that the Senate could use to boost tax credits for older Americans, as we explain in the next answer.

Also, some individuals with preexisting conditions could see higher premiums under the legislation, if they don’t maintain continuous coverage and live in states that received waivers for pricing some plans based on health status.

Which ACA taxes go away under the GOP plan?

Many of the ACA taxes would be eliminated.

As we said, the bill eliminates all fines on individuals for not having insurance and large employers for not offering insurance. Also, beginning in 2017, for high-income taxpayers, the bill eliminates the 3.8 percent tax on certain net investment income. The 0.9 percent additional Medicare tax on earnings above a threshold stays in place until 2023. The bill repeals the 2.3 percent tax on the sale price of certain medical devices in 2017 and the 10 percent tax on indoor tanning services (effective June 30, 2017). It also gets rid of the annual fees on entities, according to the IRS, “in the business of providing health insurance for United States health risks,” as well as fees on “each covered entity engaged in the business of manufacturing or importing branded prescription drugs.”

It reduces the tax on distributions from health savings accounts (HSAs) not used for qualified medical expenses from 20 percent to 10 percent and the tax on such distributions from Archer medical savings accounts (MSAs) from 20 percent to 15 percent. It lowers the threshold for receiving a tax deduction for medical expenses from 10 percent to 5.8 percent of adjusted gross income. (Originally, the bill lowered the threshold to 7.5 percent, but House Republicans changed that to create some flexibility for potential funding changes the Senate could make. A congressional aide told us that the change is expected to provide $85 billion in spending over 10 years that the Senate could use to boost the tax credit or provide other support for Americans in the 50-64 age bracket.)

And from 2020 through 2025, the bill suspends the so-called “Cadillac tax,” a 40 percent excise tax on high-cost insurance plans offered by employers.

Will young adults under the age of 26 still be able to remain on their parents’ plans?

Yes. The bill does not affect this provision of the ACA.

How does the bill treat abortion? 

It puts a one-year freeze on funding to states for payments to a “prohibited entity,” defined as one that, among other criteria, provides abortions other than those due to rape, incest or danger to the life of the mother. This would include funding to Planned Parenthood under Medicaid, which is most of the organization’s government funding. Under current law, Planned Parenthood can’t use federal money for abortions, except those in cases of rape, incest or risk to the mother’s life.

Also under the GOP plan, tax credits can’t be used to purchase insurance that covers abortion beyond those three exceptions. Health insurance companies would still be able to offer “separate coverage” for expanded coverage of abortions, which individuals could then purchase on their own.

How many people will have insurance under the plan, as compared with the ACA?

The nonpartisan Congressional Budget Office estimated that the legislation, as passed by the House, would lead to 14 million fewer people having insurance in 2018 and 23 million fewer insured in 2026, compared with current law under the ACA.
How much will the bill cost, as compared with the ACA?

CBO estimated that the legislation passed by the House would reduce federal deficits by $119 billion over the next decade, 2017-2026. It would reduce revenues by $992 billion, mostly by repealing the ACA’s taxes and fees, and reduce spending by $1.11 trillion for a net savings of $119 billion, according to CBO.

See the original article Here.

Source:

Robertson L., Gore D., Schipani V.  (2017 May 24). The facts on the GOP health care bill [Web blog post]. Retrieved from address http://www.factcheck.org/2017/03/the-facts-on-the-gop-health-care-bill/


The Effects of Ending the Affordable Care Act’s Cost-Sharing Reduction Payments

Take a look at this interesting article by Kaiser Family Foundation and see how the cost-sharing mandate under the ACA will be affected in the AHCA.

Controversy has emerged recently over federal payments to insurers under the Affordable Care Act (ACA) related to cost-sharing reductions for low-income enrollees in the ACA’s marketplaces.

The ACA requires insurers to offer plans with reduced patient cost-sharing (e.g., deductibles and copays) to marketplace enrollees with incomes 100-250% of the poverty level. The reduced cost-sharing is only available in silver-level plans, and the premiums are the same as standard silver plans.

To compensate for the added cost to insurers of the reduced cost-sharing, the federal governments makes payments directly to insurance companies. The Congressional Budget Office (CBO) estimates the cost of these payments at $7 billion in fiscal year 2017, rising to $10 billion in 2018 and $16 billion by 2027.

The U.S. House of Representatives sued the Secretary of the U.S. Department of Health and Human Services under the Obama Administration, challenging the legality of making the cost-sharing reduction (CSR) payments without an explicit appropriation. A district court judge has ruled in favor of the House, but the ruling was appealed by the Secretary and the payments were permitted to continue pending the appeal. The case is currently in abeyance, with status reports required every three months, starting May 22, 2017.

If the CSR payments end – either through a court order or through a unilateral decision by the Trump Administration, assuming the payments are not explicitly authorized in an appropriation by Congress – insurers would face significant revenue shortfalls this year and next.

Many insurers might react to the end of subsidy payments by exiting the ACA marketplaces. If insurers choose to remain in the marketplaces, they would need to raise premiums to offset the loss of the payments.

We have previously estimated that insurers would need to raise silver premiums by about 19% on average to compensate for the loss of CSR payments. Our assumption is that insurers would only increase silver premiums (if allowed to do so by regulators), since those are the only plans where cost-sharing reductions are available. The premium increases would be higher in states that have not expanded Medicaid (and lower in states that have), since there are a large number of marketplace enrollees in those states with incomes 100-138% of poverty who qualify for the largest cost-sharing reductions.

There would be a significant amount of uncertainty for insurers in setting premiums to offset the cost of cost-sharing reductions. For example, they would need to anticipate what share of enrollees in silver plans would be receiving reduced cost-sharing and at what level. Under a worst case scenario – where only people eligible for sharing reductions enrolled in silver plans – the required premium increase would be higher than 19%, and many insurers might request bigger rate hikes.

While the federal government would save money by not making CSR payments, it would face increased costs for tax credits that subsidize premiums for marketplace enrollees with incomes 100-400% of the poverty level.

The ACA’s premium tax credits are based on the premium for a benchmark plan in each area: the second-lowest-cost silver plan in the marketplace. The tax credit is calculated as the difference between the premium for that benchmark plan and a premium cap calculated as a percent of the enrollee’s household income (ranging from 2.04% at 100% of the poverty level to 9.69% at 400% of the poverty in 2017).

Any systematic increase in premiums for silver marketplace plans (including the benchmark plan) would increase the size of premium tax credits. The increased tax credits would completely cover the increased premium for subsidized enrollees covered through the benchmark plan and cushion the effect for enrollees signed up for more expensive silver plans. Enrollees who apply their tax credits to other tiers of plans (i.e., bronze, gold, and platinum) would also receive increased premium tax credits even though they do not qualify for reduced cost-sharing and the underlying premiums in their plans might not increase at all.

We estimate that the increased cost to the federal government of higher premium tax credits would actually be 23% more than the savings from eliminating cost-sharing reduction payments. For fiscal year 2018, that would result in a net increase in federal costs of $2.3 billion. Extrapolating to the 10-year budget window (2018-2027) using CBO’s projection of CSR payments, the federal government would end up spending $31 billion more if the payments end.

This assumes that insurers would be willing to stay in the market if CSR payments are eliminated.

Methods

We previously estimated that the increase in silver premiums necessary to offset the elimination of CSR payments would be 19%.

To estimate the average increase in premium tax credits per enrollee, we applied that premium increase to the average premium for the second-lowest-cost silver plan in 2017. The Department of Health and Human Services reports that the average monthly premium for the lowest-cost silver plan in 2017 is $433. Our analysis of premium data shows that the second-lowest-cost silver plan has a premium 4% higher than average than the lowest-cost silver plan.

We applied our estimate of the average premium tax credit increase to the estimated total number of people receiving tax credits in 2017. This is based on the 10.1 million people who selected a plan during open enrollment and qualified for a tax credit, reduced by about 17% to reflect the difference between reported plan selections in 2016 and effectuated enrollment in June of 2016.

We believe the resulting 23% increase in federal costs is an underestimate. To the extent some people not receiving cost-sharing reductions migrate out of silver plans, the required premium increase to offset the loss of CSR payments would be higher. Selective exits by insurers (e.g., among those offering lower cost plans) could also drive benchmark premiums higher. In addition, higher silver premiums would somewhat increase the number of people receiving tax credits because currently some younger/higher-income people with incomes under 400% of the poverty level receive a tax credit of zero because their premium cap is lower than the premium for the second-lowest-cost silver plan. We have not accounted for any of these factors.

Our analysis produces results similar to recent estimates for California by Covered California and a January 2016 analysis from the Urban Institute.

See the original article Here.

Source:

Levitt L., Cox C., Claxton G., (2017 April 25). The effects of ending the affordable care act's cost-sharing reduction payments[Web blog post]. Retrieved from address http://www.kff.org/health-reform/issue-brief/the-effects-of-ending-the-affordable-care-acts-cost-sharing-reduction-payments/


Why Private Exchanges Haven't Taken Off As Predicted

Great article from our partner, United Benefit Advisors (UBA) by Paul Rooney.

While the health care affordability crisis has become so significant, questions still linger—will private exchanges become a viable solution for employers and payers, and will they will continue to grow? Back in 2015, Accenture estimated that 40 million people would be enrolled in private exchange programs by 2018; the way we see this model’s growth today doesn’t speak to that. So, what is preventing them from taking off as they were initially predicted? We rounded up a few reasons why the private exchange model’s growth may be delayed, or coming to a halt.

They Are Not Easy to Deploy

There is a reason why customized benefits technology was the talk of the town over the last two years; it takes very little work up-front to customize your onboarding process. Alternatively, private exchange programs don’t hold the same reputation. The online platform selection, build, and test alone can get you three to six months into the weeds. Underwriting, which includes an analysis of the population’s demographics, family content, claims history, industry, and geographic location, will need to take place before obtaining plan pricing if you are a company of a certain size. Moreover, employee education can make up a significant time cost, as a lack of understanding and too many options can lead to an inevitable resistance to changing health plans. Using a broker, or an advisor, for this transition will prove a valuable asset should you choose to go this route.

A Lack of Education and a Relative Unfamiliarity Revolves Around Private Exchanges

Employers would rather spend their time running their businesses than understanding the distinctions between defined contribution and defined benefits models, let alone the true value proposition of private exchanges. With the ever-changing political landscape, employers are met with an additional challenge and are understandably concerned about the tax and legal implications of making these potential changes. They also worry that, because private exchanges are so new, they haven’t undergone proper testing to determine their ability to succeed, and early adoption of this model has yet to secure a favorable cost-benefit analysis that would encourage employers to convert to this new program.

They May Not Be Addressing All Key Employer and Payer Concerns

We see four key concerns stemming from employers and payers:

  • Maintaining competitive benefits: Exceptional benefits have become a popular way for employers to differentiate themselves in recruiting and retaining top talent. What’s the irony? More options to choose from across providers and plans means employees lose access to group rates and can ultimately pay more, making certain benefits less. As millennials make up more of today’s workforce and continue to redefine the value they put behind benefits, many employers fear they’ll lose their competitive advantage with private exchanges when looking to recruit and retain new team members.
  • Inexperienced private exchange administrators: Because many organizations have limited experience with private exchanges, they need an expert who can provide expertise and customer support for both them and their employees. Some administrators may not be up to snuff with what their employees need and expect.
  • Margin compression: In the eyes of informed payers, multi-carrier exchanges not only commoditize health coverage, but perpetuate a concern that they could lead to higher fees. Furthermore, payers may have to go as far as pitching in for an individual brokerage commission on what was formerly a group sale.
  • Disintermediation: Private exchanges essentially remove payer influence over employers. Bargaining power shifts from payers to employers and transfers a majority of the financial burden from these decisions back onto the payer.

It Potentially Serves as Only a Temporary Solution to Rising Health Care Costs

Although private exchanges help employers limit what they pay for health benefits, they have yet to be linked to controlling health care costs. Some experts argue that the increased bargaining power of employers forces insurers to be more competitive with their pricing, but there is a reduced incentive for employers to ask for those lower prices when providing multiple plans to payers. Instead, payers are left with the decision to educate themselves on the value of each plan. With premiums for family coverage continuing to rise year-over-year—faster than inflation, according to Forbes back in 2015—it seems private exchanges may only be a band-aid to an increasingly worrisome health care landscape.

Thus, at the end of it all, change is hard. Shifting payers’, employers’, and ultimately the market’s perspective on the projected long-term success of private exchanges will be difficult. But, if the market is essentially rejecting the model, shouldn’t we be paying attention?

See the original article Here.

Source:

Rooney P. (2017 April 26). Why private exchanges haven't taken off as predicted [Web blog post]. Retrieved from address http://blog.ubabenefits.com/why-private-exchanges-havent-taken-off-as-predicted