Medicaid expansion could spell trouble for patients
Original article https://www.benefitspro.com
By Kathryn Mayer
Medicaid is poised to expand in a big way — thanks to the Patient Protection and Affordable Care Act — but just who is going to treat those new patients?
That’s the major flaw of Medicaid expansion, according to new analysis from HealthPocket, a website that compares and ranks health plans.
HealthPocket’s research found that physicians across the board report low acceptance rates for Medicaid patients — and physician assistants and nurse practitioners are unlikely to fill the gap, raising the question of whether Medicaid expansion will simply leave more Americans insured but with no one to go to for their care.
Only 43 percent of doctors report that they currently accept Medicaid patients. At the same time, physician assistants and nurse practitioners — viewed by many as a potential solution to the primary care physician shortage — report that only 20 percent of them accept Medicaid.
Results of HealthPocket’s study were based on data from National Provider Identifier registry which included information self-reported by more than 1 million health care providers.
“Ensuring there are sufficient health care providers available to the newly insured — even those with private insurance — is a major public health challenge right now,” Kev Coleman, head of research and data at HealthPocket, said in a statement. “But if the current Medicaid acceptance rates hold true for 2014, timely access to care for those relying on Medicaid is likely to become more difficult as enrollees increase for an already inadequate pool of doctors.”
Historically, Medicaid payments to doctors have been lower than payments from both private insurance and Medicare despite being for the same service. According to the Kaiser Family Foundation, Medicaid pays doctors only 66 percent of the amount Medicare pays for the same service.
PPACA includes provisions to raise reimbursements rates of Medicaid compared to Medicare and other plans, but those have not fully been implemented and offer only a temporary two-year increase.
Previous reports also have found that physicians are hesitant to accept Medicaid patients, but HealthPocket’s survey is different because it also examines Medicaid acceptance rates for PAs and NPs, potentially signaling a greater problem than initially thought.
That’s already on top of a continuing — and growing — doctor shortage. The Association of American Medical Colleges predicts there will be a shortage of 90,000 doctors by 2020, half of whom are primary care physicians. The influx of new patients under PPACA will have profound implications for patient access to medical care, doctor groups have warned.
Many states have been struggling with whether not to expand Medicaid, the government health insurance program for the poor, despite the fact that the federal government will pay the full cost of the new enrollees for three years, and much of the costs thereafter, under health reform. Though the administration had intended for the expansion to be mandatory, the Supreme Court ruled last year that states could opt out, leading many Republican governors to do so.
A recent Gallup report also signaled challenges and costs ahead for an expanded Medicaid program: The research found that Medicaid patients are significantly worse health than those with employer-sponsored coverage.
A third of Medicaid patients are obese, while another 22 percent are being treated for depression and 24 percent are being treated for high blood pressure, according to the latest Gallup-Healthways Well Being Index. Medicaid patients are also more likely suffer from diabetes and asthma.
Some researchers worry that those who most need treatment simply won’t be able to access it.
“No matter if you live in a city with a high or low average income, finding a Medicaid provider is a challenge,” Coleman said. “New Medicaid enrollees are going to have to do some digging to make sure they can find a doctor or another type of practitioner willing to see them and accept these reimbursement rates.”
Workers wildly unprepared for health care changes
Original article https://ebn.benefitnews.com
By Tristan Lejeune
The third annual Aflac WorkForces Report, released last week, reveals a sobering gap in employee readiness to handle and take on the shift toward consumer-driven health plans and defined contribution health. A majority of workers (54%) would prefer not to have more control over their insurance options, citing a lack of time and information to manage it effectively, and 72% have never even heard the phrase “consumer-driven health care.”
Aflac and Research Now surveyed 1,884 benefits leaders and 5,229 wage-earners and found arresting disconnects in their expectations, plans and views of the future. For example, 62% of employees think their medical costs will increase, but only 23% are saving money for those hikes. A full three-quarters of the workforce think their employer will educate them about changes to their health care coverage as a result of reform, but only 13% of employers say educating employees about health care reform is important to their organization.
“It may be referred to as ‘consumer-driven health care,’ but in actuality, consumers aren’t the ones driving these changes, so it’s no surprise that many feel unprepared,” says Audrey Boone Tillman, executive vice president of corporate services at Aflac. “The bottom line is if consumers aren’t educated about the full scope of their options, they risk making costly mistakes without a financial back-up plan.”
Aflac reports what many benefits leaders instinctively know: Consumersalready find health insurance decisions intimidating and don’t welcome increased responsibility. Fifty-three percent fear they might mismanage their coverage, leaving their families less protected than they are now. And significant ignorance remains: Plan participants are not very or not at all knowledgeable about flex spending accounts (25%), health savings accounts (32%), health reimbursement accounts (49%) or federal or state health care exchanges (76%).
According to Aflac, 53% of employers have introduced a high-deductible health plan over the past three years, and that trend shows no sign of slowing. Yet more than half of workers have done nothing to prepare for changes from HDHPs, the Affordable Care Act or other system shifts.
“It’s time for consumers to face reality,” Tillman says. “Ready or not, they are being put in control of their health insurance decisions – and that means having to make choices that could have a big impact on personal finances. If employers aren’t offering guidance to workers on how to make crucial benefits decisions, the responsibility lies in the hands of consumers to educate themselves.”
Compliance Alert – Exchange Notice
Two versions of a model exchange notice have been issued by the Department Of Labor which also include basic directions on the requirements of distributing this notice. The first notice pertains to employers who provide coverage, whereas the other notice is for employers who do not offer coverage. The deadline for administering these notices is October 1st, 2013.
Basic employer information is required for both notices. This information will provide data necessary for the employee if they decide to receive exchange coverage. However, the notice does not need to include state-specific information pertaining to the exchange. For your convenience, the links below offer instructions and information on the model notices; and we will keep you updated with more information next week or as this is updated.
Model Exchange Notice for Employers who provide coverage
Model Exchange Notice for Employers who do Not provide coverage
How should insurers pay their PPACA fees?
Original article https://www.benefitspro.com
By Allison Bell
A team at the National Association of Insurance Commissioners is trying to figure out how health insurers should get the cash to pay billions of dollars in Patient Protection and Affordable Care Act fees.
The team -- the Health Care Reform Regulatory Alternatives Working Group -- has come up with five ways insurers could handle the fact that the new PPACA fees are supposed to kick in on Jan. 1.
The working group has described the options in a rough draft of a discussion paper posted on the Health Actuarial Task Force section of the NAIC's website. The NAIC created the group to give regulators from states that are skeptical about PPACA a way to share ideas about how to cope with the law. The discussion paper drafters used estimates from the American Action Forum, a group that opposes PPACA, in the paper draft.
The new PPACA fees could cost health insurers $20 billion in 2014 -- an amount equal to about 3 percent of their revenue, the drafters said, citing the American Action Forum figures.
The drafters talked only about the mechanics of how insurers should handle the fees, not their views about whether insurers should have to pay the fees.
Because the PPACA fees resemble excise taxes, "it seems legitimate for an insurer to include such fees in the premium," the drafters wrote in the paper. "Then the question is when an insurer should reflect the fees in the premium.
The drafters list the following options:
- Have insurers file rates that extend for the entire 12-month policy year. An insurer could include a portion of the PPACA fees payable in 2014 starting on the policy anniversary in 2013.
- Have insurers file rates that extend for the entire 12-month policy year, with no inclusion of PPACA fees in 2013. Let the insurers bill for PPACA fees separately starting Jan. 1, 2014.
- Have insurers file rates that extend for the entire 12-month policy year. Don't let insurers include PPACA fees in the 2013 premium rates but let the insurers have their rates change to reflect the new fees on Jan. 1, 2014.
- Have insurers file rates that extend only until Dec. 31, 2013, with no inclusion of PPACA fees. Require the insurers to submit new filings for rates effective on Jan. 1, 2014.
- Prohibit insurers from including PPACA fees in their rates until the first policy anniversary that occurs on or after Jan. 1, 2014.
States Fear Loss of Health Care Aid
Original article https://www.benefitspro.com
By Ricardo Alonso-Zaldivar
Thousands of people with serious medical problems are in danger of losing coverage under President Barack Obama's health care overhaul because of cost overruns, state officials say.
At risk is the Pre-Existing Condition Insurance Plan, a transition program that's become a lifeline for the so-called "uninsurables" — people with serious medical conditions who can't get coverage elsewhere. The program helps bridge the gap for those people until next year, when under the new law insurance companies will be required to accept people regardless of their medical problems.
In a letter this week to Health and Human Services Secretary Kathleen Sebelius, state officials said they were "blindsided" and "very disappointed" by a federal proposal they contend would shift the risk for cost overruns to states in the waning days of the program. About 100,000 people are currently covered.
"We are concerned about what will become of our high risk members' access to this decent and affordable coverage," wrote Michael Keough, chairman of the National Association of State Comprehensive Health Insurance Plans. States and local nonprofits administer the program in 21 states, and the federal government runs the remaining plans.
"Enrollees also appear to be at risk of increases in both premiums and out-of-pocket costs that may make continued enrollment cost prohibitive," added Keough, who runs North Carolina's program. He warned of "large-scale enrollee terminations at this critical transition time."
The crisis is surfacing at a politically awkward time for the Obama administration, which is trying to persuade states to embrace a major expansion of Medicaid under the health care law. It may undercut one of the main arguments proponents of the expansion are making: that Washington is a reliable financial partner.
The root of the problem is that the federal health care law capped spending on the program at $5 billion, and the money is running out because the beneficiaries turned out to be costlier to care for than expected. Advanced heart disease and cancer are common diagnoses for the group.
Obama did not ask for any additional funding for the program in his latest budget, and a Republican bid to keep the program going by tapping other funds in the health care law failed to win support in the House last week.
There was no immediate response from HHS, which has given the state-based program until next Wednesday to respond to proposed contract terms for the program's remaining seven months.
Delivered last Friday, the new contract stipulated that states will be reimbursed "up to a ceiling."
"The 'ceiling' part is the issue for us," Keough said in an interview. "They are shifting the risk from the federal government, for a program that has experienced huge cost overruns on a per-member basis, to states. And that's a tall order."
At his news conference this week, Obama acknowledged the rollout of his health care law wouldn't be perfect. There will be "glitches and bumps" he said, and his team is committed to working through them. However, it's unclear how the program could get more money without the cooperation of Republicans in Congress.
The pre-existing conditions plan was intended only as a stopgap. The law's main push to cover the uninsured starts next year, with subsidized private insurance available through new state-based markets, as well as an expanded version of Medicaid for low-income people. At the same time, virtually all Americans will be required to carry a policy, or pay a fine.
States are free to accept or reject the Medicaid expansion, and the new problems with the stopgap insurance plan could well have a bearing on their decisions.
Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Counting to 90: ACA and the waiting period
Original article https://ebn.benefitnews.com
By Keith McMurdy
Under the Affordable Care Act, once we decide who we have to offer coverage to, then we have to decide when they get the coverage. Generally the new rule is that a waiting period for coverage cannot exceed 90 days. More recently, the IRS has given us proposed rules on the 90 day waiting period. As with all proposed rules, they are not final until they are final, but these do give employers some additional guidance on how to maintain the correct waiting period.
The proposed regulations define a waiting period as “the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective.” What this means is that once eligibility requirements are met (meaning that an employee is "full time"), coverage must begin 90 calendar days after eligibility is obtained. This includes weekends and holidays. If day 91 falls on a weekend or holiday, the plan sponsor may elect to have coverage be effective earlier than the 90th day, for administrative convenience, but may not delay coverage past the 91st day. So plan sponsors should eliminate any plan provisions that provide that coverage begins at some time after the 90th day (like the first day of the month after the expiration of the 90 day period.)
The proposed rule also provides that a plan may impose eligibility criteria such as completion of a period of days of service (which may not exceed 90 days), attainment of a specific job category, or other criteria, so long as they have not been designed to avoid compliance with the 90 day waiting period. For example, a plan provides coverage only to employees with the title of manager. John is hired on September 1, 2014 as an associate. On April 1, 2015, he is promoted to manager. John must be offered coverage no later than July 1, 2015. This does not mean that John might not have otherwise been offered coverage as a full-time employee. So be wary of reading too much into this job classification option. We still have to measure how many hours John works even as an associate.
Also, there had been some question about certificates of creditable coverage being required after January 1, 2014. The proposed rules provided that these certificates will be phased out by 2015 because ACA's prohibition on exclusions from coverage due to pre-existing health conditions renders them obsolete. Since pre-existing condition exclusions have to be eliminated for plan years beginning on or after January 1, 2014, these certificates are no longer necessary. But they still have to be provided throughout the 2014 plan year.
There are other specifics in the proposed rules that will have to be fleshed out and, again, these rules are proposed and subject to change. But they serve as an ongoing reminder that plan sponsors have to be watchful of how they administer their plans and must make sure that their stated eligibility rules satisfy the requirements of both ERISA and ACA.
The Tomato Paradox of Health Care Reform
Original article https://analytics.ubabenefits.com
By Mick Constantinou
There is an old paradoxical adage that, “Knowledge is knowing that a tomato is a fruit, while wisdom is not putting it in a fruit salad.”
In terms of the promises of the health care reform law(keep, access and affordable), paradoxes like the tomato have come to light, but the Tomato Paradox relates directly to the difference between having knowledge and commanding wisdom.
Most Americans are aware of health care reform and the massive changes to how health insurance and health care will be accessed and regulated beginning this fall. Some companies and individuals have the knowledge (or think they have the knowledge) of how the law will impact them directly, but the variable is the source of their knowledge and whether or not that knowledge is based in fact, political rhetoric or meetings at the water cooler.
The other variable is wisdom. Employers may have the knowledge of “what they must do,” or “do not have to do,” based on the number of FTEs they employ, whether they are fully-insured or self-insured and other factors, but many have not been afforded access to the wisdom to answer the simple question: “What should we do?”
Regardless of whether an employer decides to “play or pay” in 2014 and beyond, there are other subjective factors (hidden costs) of health care reform that will impact company culture and strategic direction. These factors need to be considered in concert with the results of modeling and compliance tools orchestrated by a trusted advisor, including but not limited to:
- Increased reporting burdens, whether you “play or pay”
- Recruitment and retention challenges related to changes in total compensation
- Impacts to employee productivity and morale
- Changes in taxable income for both employers and employees
In simple terms, knowledge is information and facts of which someone is aware, and wisdom is the ability to make correct, common sense judgments and decisions based on the facts. Wisdom is an intangible quality gained through experience and expertise.
What separates insurance sales people from trusted advisors is the experience, expertise and wisdom brought to the unique challenges faced (and overcome) during the benefits renewal process in the era of health care reform.
What’s Ahead this Year as Health Insurance Exchanges are Rolled-out Nationwide
Original article https://www.theihcc.com
By Cindy Gillespie
Exchanges are a key component of the Affordable Care Act (ACA). Here’s a snapshot of exchange developments across the country, potential regulations to watch for, and where exchanges might be by October 2013 for open enrollment and by January 1, 2014, when they are slated to “go live” nationwide.
Health Insurances Exchanges: The Vision
The ACA directed each state to establish two types of exchanges or have the federal government do so on its behalf — the American Health Benefits Exchange (AHBE) for individuals and the Small Business Health Options Program (SHOP) for small employers. Under the statute, individuals are eligible to buy insurance on the AHBE if they are:
- a U.S. citizen or legal alien
- not incarcerated
- a resident of the state in which the exchange is based
AMERICAN HEALTH BENEFITS EXCHANGE
The ACA includes robust premium and cost-sharing subsidies for individuals who purchase insurance through the individual exchange who are living at levels between 100 and 400 percent of the federal poverty level — between approximately $12,000 and $46,000 a year — and who are not eligible for other public insurance programs (i.e. Medicaid, Medicare, Tricare) and who do not receive “affordable” insurance coverage through their employers (that meets minimum value standards).
Employers which have more than 50 employees whom are eligible for tax credit subsidies, either because the employer does not offer coverage or because the coverage offered is unaffordable to the employee according to ACA standards, or not of minimum value, will be subject to a penalty.
SMALL BUSINESS HEALTH OPTIONS PROGRAM
Meanwhile, the ACA allows employers with up to 100 full-time employees to purchase insurance through SHOP, although the state has the option to limit access to employers with 50 employees or less for the first two years. Most states have taken advantage of this option in order to maintain consistency with the outside market’s definition of “small employer.” States also maintain the option to allow employers with more than 100 employees to purchase insurance through the SHOP beginning in 2017, with approval of the U.S. Department of Health and Human Services (HHS).
Tax credit subsidies are also available to employers who purchase coverage on SHOP for employers with less than 25 employees who have an average taxable wage under $50,000 per year. Employers cannot claim the tax credit for more than two consecutive years.
Health Insurances Exchanges: 3 Primary Models
Although the ACA envisioned 50 different exchanges championed by individual states, the reality of ACA implementation has been far different. Indeed, political, logistical, and operational challenges faced by both HHS and the states have led only a subset of states to embrace exchanges. The update below provides a snapshot of how exchanges are developing across the country.
1. STATE-BASED EXCHANGES
Seventeen states and the District of Columbia are developing State-based Exchanges as envisioned under the ACA. These states have received “conditional approval” from HHS to operate them for the 2014 plan year. Under these exchanges, states execute all functions but may turn to the federal government for issues such as tax-credit eligibility determination, risk adjustment, and reinsurance.
While several of these states have been making great strides toward October 1, 2013 open enrollment, others are relatively behind in the planning process and may struggle to meet the impending deadlines. For example, some states still lack legal authority to operate a State-based Exchange, while others have yet to procure any IT-related services necessary to make the exchange function.
2. STATE PARTNERSHIP EXCHANGES
Seven states have received conditional approval from HHS to operate State Partnership Exchanges. This exchange model, not envisioned under the ACA, is an option created by HHS for states that may want to play a small role in exchange operations either permanently or as they move toward a State-based Exchange. States have two primary options for pursuing State Partnership Exchanges: a plan management partnership or a consumer partnership. States also have the choice to participate in both partnership models.
States participating in a plan management partnership assume responsibility for issuer account management and issuer oversight as well as monitoring, quality reporting, and data collection. In addition, these states also play a key role in determining qualified health plan (QHP) certification. Plan management partnerships will recommend which plans should be certified as QHPs to HHS, which has the legal authority to make QHP certifications.
States also have the option to pursue a consumer partnership exchange. States choosing this approach control the day-to-day management of Navigators and in-person consumer assistors, and will have the option to engage in outreach, education, and branding activities. Navigators and in-person consumer assistors will be the “boots on the ground” in states to help educate consumers about plan choices and coverage options. For states choosing a Federally-facilitated Exchange (FFE), consumer partnership states oversee and provide technical assistance to Navigators, but HHS retains authority over the Navigator programs.
3. FEDERALLY-FACILITATED EXCHANGES
Twenty-six states have decided not to pursue a State-based or Partnership Exchange. In these states, the federal government is establishing a Federally-facilitated Exchange (FFE). Under an FFE, the federal government performs all exchange functions with states, maintaining the option to make final Medicaid determination and operate its reinsurance program. Although the option to operate reinsurance programs has yet to gain traction, many FFE states have expressed interest in maintaining the responsibility to make final Medicaid determination for individuals assessed as eligible for Medicaid.
Marketplace Plan Management
Several federal requirements necessary for health insurance plans to be qualified in order to be offered on the exchange are already criteria commonly examined as part of routine, state insurance regulatory activities. HHS has indicated that its preference is to integrate states’ existing regulatory activities into its decision-making for qualified health plan (QHP) certification, even in states with an operating FFE.
To further facilitate this relationship, HHS has indicated it will offer states a marketplace plan management option, essentially allowing states to perform activities associated with a plan management partnership but without requiring them to submit a formal exchange blueprint. HHS guidance dated February 20, 2013 also indicates that states can apply for federal funds to support these activities, similarly as it did for the State-based and State Partnership models.
3 Issues to Watch in 2013
As the clock ticks on the path to open enrollment, there are several issues still under consideration that are worth tracking, particularly for the small and large employer communities.
Recent guidance from HHS indicates that employee choice and premium aggregation will not be required of SHOP exchanges in the 2014 plan year. In the same set of proposed rules, HHS also indicates that federally-facilitated SHOPs (FF-SHOPs) will not offer these services in their first year of operation.
As you may recall, employee choice and premium aggregation (the process of collecting premiums from qualified employers and delivering a single streamlined payment to insurers) are two tools at the disposal of SHOP exchanges to help drive enrollment. This recently proposed approach could potentially undermine the viability of SHOP exchanges and the small business market nationwide.
Additional rules from HHS surrounding 10 essential health benefits indicate that to meet these requirements outside the exchange, health insurance plans will need to either embed pediatric oral services, the tenth category of essential health benefits coverage, or be “reasonably assured” that the individual has obtained dental coverage from an exchange- certified, stand-alone dental plan. This is a new proposal from HHS and is therefore receiving significant scrutiny from several stakeholder groups, as the requirements could cause operational challenges in the market. Stay tuned.
HHS released additional details regarding employers’ interface with the exchange in January. Most interestingly, the rules verify that there is no central databank containing details on employer-sponsored health insurance plans. As a result, until that information is available, exchange applicants must attest to the details surrounding their employer-sponsored health insurance plans when seeking health insurance on the exchange. The exchange will then use available data sources to attempt to verify individuals’ claims. Absent inconsistencies in available information, the exchange will be permitted to proceed to enroll the applicant in a health insurance plan along with the applicable subsidies. Employers will be notified of employees who claim a tax credit on the exchange. However, exchanges must select a valid sample of people for whom employer coverage details could not be verified and verbally call employers for additional information. If the exchange cannot obtain information within 90 days, eligibility will remain unchanged.
Looking Toward 2014
The issues described above are only a select set of developments that have emerged in recent months. Indeed, there are a host of unanswered questions and operational challenges that stand between today and open enrollment. ACA implementation process has passed the window for planned delay. Employers and the health benefits industry should expect for exchanges to “go live” and for tax credits to be available beginning January 1, 2014. The Stakeholders should prepare for implementation, albeit with hiccups along the way, as scheduled.
Health law’s mandate, tax credit could help or hurt employers
Original article https://www.upi.com
By Andrew Hedlund – Medill News Service
Business owners view the new health care law through many different paradigms. Some see it as onerous, while others find it helpful. Research suggests that one of its most contentious provisions, the employer mandate, will have minimal impact.
Joe Olivo is a small business owner who finds the new health care law costly and confusing, particularly next year’s employer mandate. Mark Hodesh is a small business owner who finds the law to be a boon to his business.
Some business owners like Hodesh, the owner of Downtown Home and Garden in Ann Arbor, Mich., qualify for the tax credit, which is available to businesses with fewer than 25 employees to offer health insurance, and do not worry about the mandate, which only kicks in at the 50-employee mark.
Others like Olivo, who is a co-owner of Perfect Printing in Morristown, N.J., do not qualify for the credit and say the requirement that businesses with more than 50 employees must provide health insurance or face fines prevents them from growing.
Starting next year, employers that have 50 or more workers that are full-time, defined in the law as those working more than 30 hours a week, are required to provide coverage for their workers. For those with fewer than 25 employees, they receive a tax credit now of 35 percent of the cost of their employee health insurance costs, and that will increase to 50 percent next year. According to the Congressional Research Service, more than 90 percent of businesses had fewer than 50 employees.
Olivo’s business has 40 full-time employees and offers health insurance. With that number of full-time workers, he will not be subject to the mandate, but it gives him pause when deciding whether to expand the business.
In fact, Olivo is purposely avoiding hitting the 50-employee mark. Any new employees he hires work on a part-time basis. This decision is rooted in the uncertainty surrounding health care costs.
“If I see premiums are not going through the roof,” he said, “and I see there is a stable known situation where I can reasonably expect what will happen, I will have a better incentive to take the risk with my money and grow.”
What he has seen so far is not promising though, he said.
“(What) we’ve already started to see is how the regulation, the amount of work, for a company just under 50 employees,” Olivo said, “that we have to decide to make sure we’re in compliance — start looking at our employee’s hours, making sure we don’t go over the 50 mark because of the severe ramifications,” referring to law’s penalty of $2,000 per employee for any companies with 50 or more employees that don’t provide health insurance. The penalty would not apply to the first 30 employees.
Olivo also said the lack of finality in the IRS’s rules further confuses employers as 2014 draws closer. The agency will hold a public hearing on this provision Tuesday.
However, research on similar employer requirements in San Francisco and Massachusetts by the Urban Institute, National Bureau of Economic Research and the National Opinion Research Center found that the notion the requirement to provide insurance would lead to job loss or could lead to fewer employers offering health insurance was overstated.
In fact, the National Opinion Research Center found in its 2008 study that businesses with three or more employees offering health insurance in Massachusetts increased from 73 percent to 79 percent, though employers were less inclined to consider terminating coverage than national companies.
A study sponsored by the National Bureau of Economic Research found that, based on San Francisco’s efforts, employers nationwide will be less likely to choose the penalty option of this requirement because the Affordable Care Act lacks a public option. San Francisco does offer the equivalent of a public option, which some employers may find preferable.
Elise Gould, a health care economist at the Economic Policy Institute, said she expects the effects of the employer mandate to be minimal.
“I don’t think that it is going to lead to much job loss,” she said. “There may be some shifting in hours to avoid the mandate. I think that would be small though.”
Gould also added that she expects employers to take many different factors into account when considering expansion, with the insurance requirement being just one small factor.
The law attempts to aid small businesses with tax credits as well, though several restrictions come with them: firms must have fewer than 25 employees and pay them less than $50,000 in wages each year, meaning Olivo’s business is ineligible for a credit while Hodesh’s business qualifies.
He met the requirements and received a tax credit, allowing him to hire another employee.
Hodesh has 12 employees so he doesn’t need to worry about crossing the mandate’s 50-employee threshold soon.
“There are pluses and minuses to all issues,” Hodesh said. “And I think that people are focusing on the minus side of the requirements of the Affordable Care Act. They are missing out on all the positives of the law.”
Offering health insurance to his employees is also an important strategy for his store.
“We provide health care as a business tool,” Hodesh said. “We attract and keep good long-term employees, and we don’t have high turnover and we don’t have to train a lot.”
Starting around 2000, though, his company’s health care costs tripled, but the tax credit eased that cost.
“(The credit) gave us the confidence to hire a new person,” he said. “It’s a good deal for me.”
6 key compliance deadlines for 2013 and beyond
As PPACA moves forward, employers must keep track of 6 key compliance deadlines for 2013 and beyond
Original article https://ebn.benefitnews.com
By Kathleen Koster
For plan sponsors, 2013 is a year of crossing Ts and dotting Is on PPACA compliance for their health care plans and strategizing for next year, when the employer mandate and public exchanges go into effect. The health care reform law has many moving parts and a great deal of regulations yet to come, which will keep benefits professionals on their toes all year.
"Employers have never experienced this complexity and oversight in compliance for their health plans. Employers are used to a compliance-rich environment around their retirement plans, but they need an equally robust and hands-on approach to managing the compliance of their health plans," says Mike Thompson, a principal in the human resources services practice of PricewaterhouseCoopers. He adds that "the rules, regulations and level of enforcement have never been greater."
Thompson believes "2013 is a period of strategic re-evaluation of whom the employer will provide benefits to in light of the changes in the individual market allowing guaranteed issue and subsidies for lower- and middle-income Americans."
He believes that employers will also transition around financing as "more employers look at community-type programs with the interest of moving away from their own programs and potentially contributing towards a private exchange or facilitating access to coverage in the open market."
To help employers keep all their compliance ducks in a row while managing and determining long-term strategies for their plans, EBN asked legal and health care experts for top issues to keep in mind for 2013 and beyond.
1. Preparing for the 2014 employer mandate
"At the top of the list is the interpretation of employer responsibility provisions that includes what constitutes minimum essential coverage that employers have to provide or be subject to penalties. Along with that, there are very important issues around the minimum value of the coverage they provide as well as who they have to provide it to," says Paul Dennett, senior vice president of health care reform at the American Benefits Council.
The employer mandate applies only to large employers. Whether an employer is defined as large under PPACA (generally companies with 50 or more employees) depends on the number of its full-time equivalent employees. Companies with 50 or more full-time workers (averaging at least 30 hours per week) must offer minimum health care coverage that is affordable.
In 2013, an employer ought to be determining whether it is a large employer and, therefore, subject to the mandate. "If they offer coverage in 2014, the coverage must meet the minimum value standards and the contributions the employer requires of employees cannot be so high the coverage is unaffordable relative to the employee's household income," says Jean C. Hemphill, practice leader of Ballard Spahr's health care group.
To determine the minimum value, fully insured plans will rely on their insurance carrier for information on whether they meet the minimum value of 60% for their plan. Self-insured plans can turn to an actuary or determine their value with the aid of a government-provided calculator or government-provided checklists.
When it comes to determining the affordability of the plan, an employer cost-sharing arrangement must be affordable relative to the employees' household income, as stated under PPACA. So, "the employee's contribution and cost-sharing obligations can't exceed 9.5% of their household income," says Hemphill.
However, the IRS acknowledges that employers don't know workers' household income, and suggests employers use W-2 wage information instead to determine their plan's affordability.
Hemphill expects more guidance on this issue since employees' contributions are typically much greater for dependents coverage than their own. An employee offered otherwise qualifying coverage by their employer can't use the public exchange unless they prove their employer-sponsored coverage is unaffordable.
The affordability issue may be of greater concern to employers with fairly low-income workforces or for employers not offering comprehensive plans to employees or all employees, such as the mini-medical plans sometimes offered in the retail industry. Employers only need to offer one affordable plan with minimum value to satisfy the rules, however mini-medical plans will be illegal after 2014.
Actuarial experts predict that most high-deductible health plans with deductibles in the $2,000-$3,000 range will most likely qualify, however those with much higher cost-sharing may not meet the minimum value.
While sponsors can vary the deductible and coinsurance amount of HDHPs, they should remember that the higher the deductible, the lower actuarial value of the plan.
"There are variables that can be adjusted in the plan design, but the most important one is where to set the amount of the deductible," says Dennett. He adds that guidance so far has indicated employer contributions toward HSAs or credits toward HRAs will count toward the minimum value. The question is whether the amount contributed is counted 100% to the plan or if it is discounted in the actuarial value formula that HHS would use in the calculation of actuarial value coverage.
Overall, "the Affordable Care Act was designed so employers don't need to make too many plan design changes to their plan," says J.D. Piro, national practice leader for Aon Hewitt's health and benefits legal department. "They may need to open it up to more employees but, generally speaking, they should be able to meet the affordability and minimum value requirements."
2. Public exchanges
Employers are required to provide employees with notice alerting them of the existence of public insurance exchanges. It is thought that the government will issue a model notice for this purpose. At press time, the government had yet to produce this model notice or other guidance about the notice requirement. The March 1 notification deadline has been extended until "late summer or fall," according to a recent FAQ announcement from the Centers for Medicare and Medicaid Services.
"There may still be unanswered questions about whether the state exchanges, partnership exchanges or the federal exchanges are really at an operational readiness stage to be able to go live as of October 2013," says Dennett.
Assuming the exchanges are on track and sponsors receive the guidance they need, they should expect many questions from workers about how the process affects them.
"While most major employers will continue to offer coverage to employees, there will be some confusion around the availability of coverage in the public exchanges and what the implications are [for employees] getting coverage from their employer, says Thompson.
He suggests employees will primarily want to know:
* Do I still have coverage through my employer?
* Am I eligible to get coverage through the exchange?
* Can I potentially get subsidies through the exchange?
* Is it in my best interest to go through the exchange?
3. Waiting periods
Another design-related issue employers must factor into their plans is that under PPACA, waiting periods for health care coverage cannot exceed 90 days. The 90-day period begins when the employee is otherwise eligible for coverage. Employers with a high-turnover workforce that currently have long waiting periods will have to shorten them.
If an employer requires employees to work a minimum number of hours to qualify for coverage, it may need to monitor workers' timesheets in 2013 to determine if and when coverage needs to be offered in 2014; this may be complicated for seasonal employees and other employees with variable hours.
Thompson believes this is part of a larger question of meeting qualifications for providing coverage.
"It's part of a package in my mind," he says. "Employers must evaluate employee classes when looking at whether they meet the minimum threshold of providing coverage to full-time employees. Seasonal, temporary, or contract workers are classes that need to be evaluated in order to avoid or at least understand what the penalties might be."
4. Pre-existing and non-discrimination prohibitions
"The non-discrimination rules are new for insured plans in 2014," says Hemphill. Even though these prohibitions should already be in effect, government agencies have delayed enforcement until they release regulations.
"It will be an important issue because right now there is no requirement to offer coverage to part-time employees, but with the definition of full-time employees as an average of 30 hours per week and new non-discrimination testing rules, the employer obligation may be different," she says.
Either way, employers can expect notice and guidance well before implementation because, "it is a big plan design issue," says Edward I. Leeds, counsel in the employee benefits and executive compensation group at Ballard Spahr.
5. Wellness programs
PPACA includes rules that prohibit plans from discriminating against individuals based on a range of health-related factors. Plans cannot impose restrictions on eligibility or increase employee costs for coverage based on these factors.
"When the government issued guidance under ACA, they actually revised the HIPAA regulations. So now the ACA and HIPAA rules ... will be the same," says Leeds. "By and large the rules follow HIPAA with some changes, the most significant of which is that the potential reward for meeting requirements under the wellness programs will increase as of January 1, 2014."
The potential reward for meeting a wellness requirement will increase from 20% of cost of coverage to 30% of cost of coverage. Incentives related to tobacco cessation will increase up to 50%. (For more details, read "Regs increase wellness rewards," page 28.)
6. Upcoming fees and taxes
Patient-Centered Outcomes Research Institute, established by PPACA, will collect and publish information about clinical effectiveness of treatments for patients. It will be paid for through fees assessed against insurers and self-funded plans equal to $2 ($1 in the first year) per covered life. The assessment will last seven years and eventually be adjusted for inflation. Employers with self-funded plans will need to report and pay these fees starting in July 2013.
The Transitional Reinsurance Program aims to stabilize the individual health insurance market as insurers provide coverage, starting in 2014, to large numbers of individuals who do not currently have coverage and present uncertain risks. The program will provide reinsurance payments to insurers that take on high-risk individuals. The program is funded through a three-year tax (expected to be $63 per covered life in the first year.)
The Additional Medicare Tax, in effect this year, is an additional 0.9% tax applied to high-income individuals. Employers are responsible for withholding the tax from wages or compensation it pays to an employee in excess of $200,000 in a calendar year.