Alternative Treatments Could See Wide Acceptance Thanks to Health Care Reform
by: KAISER HEALTH NEWS AND ANKITA RAO
The Affordable Care Act says that insurance companies "shall not discriminate" against any state-licensed health provider, which could lead to better coverage of chiropractic, homeopathic and naturopathic care. Photo by Joe Raedle/Getty Images.
Jane Guiltinan said the husbands are usually the stubborn ones.
When her regular patients, often married women, bring their spouses to the Bastyr Center for Natural Health to try her approach to care, the men are often skeptical of the treatment plan -- a mix of herbal remedies, lifestyle changes and sometimes, conventional medicine.
After 31 years of practice, Guiltinan, a naturopathic physician, said it is not uncommon for health providers without the usual nurse or doctor background to confront patients' doubts. "I think it's a matter of education and cultural change," she said.
As for the husbands -- they often come around, Guiltinan said, but only after they see that her treatments solve their problems.
Complementary and alternative medicine -- a term that encompasses meditation, acupuncture, chiropractic care and homeopathic treatment, among other things -- has become increasingly popular. About four in 10 adults (and one in nine children) in the U.S. are using some form of alternative medicine, according to the National Institutes of Health.
And with the implementation of the Affordable Care Act, the field could make even more headway in the mainstream health care system. That is, unless the fine print -- in state legislation and insurance plans -- falls short because of unclear language and insufficient oversight.
One clause of the health law in particular -- Section 2706 -- is widely discussed in the alternative medicine community because it requires that insurance companies "shall not discriminate" against any health provider with a state-recognized license. That means a licensed chiropractor treating a patient for back pain, for instance, must be reimbursed the same as medical doctors. In addition, nods to alternative medicine are threaded through other parts of the law in sections on wellness, prevention and research.
"It's time that our health care system takes an integrative approach ... whether conventional or alternative," said Sen. Tom Harkin, D-Iowa, who authored the anti-discrimination provision, in an e-mail. "Patients want good outcomes with good value, and complementary and alternative therapies can provide both."
The federal government has, in recent years, tapped providers like Guiltinan, who is also the dean at the Bastyr University College of Naturopathic Medicine, to help advise the federal government and implement legislation that could affect the way they are paid and their disciplines are incorporated into the health care continuum. In 2012, Guiltinan, based in Kenmore, Wash., was appointed to the advisory council of the National Center for Complementary and Alternative Medicine, part of the National Institutes of Health.
Proving that alternative medicine has real, measurable benefits has been key to increasing its role in the system, said John Weeks, editor of the Integrator Blog, an online publication for the alternative medicine community. The Patient-Centered Outcomes Research Institute, created by the health law, is funding studies on alternative medicine treatments to determine their effectiveness.
Weeks said both lawmakers and the general public will soon have access to that research, including the amount of money saved by integrating other forms of medicine into the current health system.
But the challenges of introducing alternative care don't stop with science.
Because under the health care law each state defines its essential benefits plan -- what is covered by insurance -- somewhat differently, the language concerning alternative medicine has to be very specific in terms of who gets paid and for what kinds of treatment, said Deborah Senn, the former insurance commissioner in Washington and an advocate for alternative medicine coverage.
She pointed out that California excluded coverage for chiropractic care in its essential benefits plan, requiring patients to pay out of pocket for their treatment. Senn thinks the move was most likely an oversight and an unfavorable one for the profession. Four other states -- Colorado, Hawaii, Oregon and Utah -- ruled the same way in the past year.
"That's just an outright violation of the law," she said, referring to the ACA clause.
Colorado and Oregon are in the process of changing that ruling to allow chiropractic care to be covered, according to researchers at Academic Consortium for Complementary and Alternative Health Care.
Some states, like Washington, are ahead of the rest of the country in embracing alternative practitioners. The Bastyr University system, where Guiltinan works, treats 35,000 patients a year with naturopathic medicine. Sixty percent of the patients billed insurance companies for coverage.
Guiltinan said a change in the system is not only a boon for alternative medicine doctors, but helps families of all income levels access care normally limited to out-of-pocket payment. That's why some alternative medicine aficianados like Rohit Kumar are hoping the law will increase the ability of his family -- and the larger community - to obtain this kind of care.
Kumar, a 26-year-old business owner in Los Angeles, said his parents and brothers have always used herbs and certain foods when they get sick, and regularly see a local naturopath and herbalist. He's only used antibiotics once, he says, when he caught dengue fever on a trip to India.
While the Kumar family pays for any treatments they need with cash -- the only payment both alternative providers accept -- they also pay for a high-deductible health plan every month to cover emergencies, like when his brother recently broke his arm falling off a bike.
Paying for a conventional health care plan and maintaining their philosophy of wellness is not cheap.
"We pay a ridiculous amount of money every month," Kumar said of the high-deductible insurance. "And none of it goes toward any type of medicine we believe in."
Even so, he said the family will continue to practice a lifestyle that values wellness achieved without a prescription -- a philosophy that Guiltinan also adopted in her practice.
As a young medical technician in a San Francisco hospital, she decided that the traditional medical system was geared more toward managing diseases and symptoms rather than prevention. Naturopathic medicine, on the other hand, seemed to fit her idea of how a doctor could address the root cause of illness.
"The body has an innate ability for healing, but we get in its way," Guiltinan said. "Health is more than the absence of disease."
Pet insurance growing as an employee benefit option
Originally posted on https://www.stockhouse.com
An increasing number of companies in North America are offering pet insurance to employees in an effort to attract better hiring candidates, U.S. experts say.
According to Veterinary Pet Insurance president Scott Liles, around 3400 companies and associations offer the benefits as an employee enticement and retention tool.
Nevada's largest employer, MGM Resorts International (NYSE: MGM, Stock Forum), added pet insurance for employees in 2006 and Chipotle (NYSE: CMG, Stock Forum) has been offering the benefits since 2002.
Of the 165 million pets estimated to reside in the United States, only a small portion are covered by pet insurance, but as veterinary costs rise, an increasing number of employers are providing it as part of their benefits package, with Chipotle subsidizing $10 per month, per pet, for up to three per employee.
The organization says only around a hundred employees take them up on the offer, which covers the low end of pet insurance costs of anywhere up to $57 a month, according to a company official talking with UPI.
Pet retailer PetSmart (NYSE: PETM, Stock Forum) offers insurance for employee pets, offering comprehensive coverage for illness and accidents, coverage for tests, X-rays, medication, hospitalization and surgery, a 5 per cent group rate discount and enrolment fee waiving, and death benefits.
-Chris Parry, Stockhouse.com
How to Best Inform Employees About PPACA
Originally posted July 29, 2013 by Thom Mangan on https://eba.benefitnews.com
Benefit education has long been considered a key component of a successful employee benefit program. However, engaging employees and helping them recognize the value of their program is not easy. It takes ongoing efforts of HR Managers with support from senior management.
The Affordable Care Act creates another new wrinkle for HR managers. I caught up with UBA Partner, Greg Smith of R.W. Garrett Agency, to find out how best to get your employee’s attention — and why it’s so important.
Thom: In addition to the mandated communication material and benefit changes, how does PPACA affect an employer’s communication efforts?
Greg: With the new health insurance marketplaces and Medicaid expansion in most states, the government has a daunting task of educating and informing millions of the nation’s uninsured of the new coverage and subsidies available to them.
To get the word out, the government will spend hundreds of millions of dollars in a broad and expansive advertising campaign starting this month (July).
Employers are also participating in the campaign, as they are required to send out a Model Notice regarding coverage and options in the New Health Insurance Marketplaces.
The Marketplaces and corresponding advertising campaign are focused on the uninsured, who may be eligible for “free” coverage (through Medicaid) or subsidized, reduced premium coverage (in the New Insurance Marketplaces). However, if the employer’s plan provides adequate and affordable coverage, the employees eligible for the plan will not qualify for any subsidized coverage in the New Insurance Marketplace (unless eligible for Medicaid).
Thom: So where does the trouble come in?
Greg: The wrinkle comes from two sources – confusion and human nature:
1. Confusion – Unless explained adequately, the employee may be confused as to why his employer is sending him notice of a New Insurance Marketplace with subsidized coverage, when, in fact, he is not eligible for a subsidy.
2. Human Nature – Employees may misinterpret or misunderstand the message of the government’s advertising and think that by dropping coverage, they may get a better deal in the Marketplace or, worse, believe that their benefits are not as valuable as they are.
Thom: So what is an employer to do to get around these problems, or “wrinkles”?
Greg: I believe employers can get out ahead of the “wrinkle” by pre-empting the government’s advertising with communications of their own. They can lay out the facts of the advertising campaign and reinforce the quality of their own plan.
Just because the White House has delayed the implementation of the employer mandate part of the Affordable Care Act doesn’t mean employers don’t have to communicate options to employees. On the contrary, they would be wise to use the extra year to make sure they and their employees are adequately prepared for the pending changes of 2015.
Rethink rewards on a personal level
Originally posted July 30, 2013 by Tristan Lejeune on https://ebn.benefitnews.com
Estimates from organizations including Mercer and WorldatWork put next year’s average U.S. base salary increase at approximately 3% -- a healthy gain for most of the industrial world, which actually saw pay fall this year, but a disappointing “new normal” for benefits pros who remember sunnier days. With budgets for rewards and compensation stretched like sausage casings – thin and fragile, but holding it all together – companies will be looking for even more low- and no-cost ways to recognize top performers and achievers than they have in years past.
That works just fine for David Olson and Dr. Bob Nelson, co-founders of Recognition PRO. Olson and Nelson have spent years tracking incentivized behavior and corporate rewards, and, like the song says, the best things in life are free. They say the best-motivated workforces aren’t driven by plaques, coffee mugs or even bonuses; they’re driven by deeper personal connections with their managers and coworkers, and personalized recognition that comes from those relationships.
“I’m a culture consulting coach with CEOs” Olson explains how he and Dr. Bob connected a few years ago. “[We] recognized the need to improve employee recognition culture within workforces, and we came up with a unique way to go about doing that,” Olson adds. “Most of the $50 billion [incentive] industry has tried to solve the problem by throwing merchandise at employees. That doesn’t really create a culture of recognition; creating a culture of recognition comes down to strengthening manager-employee relations …”
Nelson, the best-selling author of “1001 Ways to Reward Employees” looks at the problem from a psychological perspective. The ultimate goal of psychology, some say, is to improve behavior – in this case, group behavior. “I’m not in the incentive industry,” Nelson says. “I’m really a behaviorist.” Out of the 13 most-motivating management behaviors, he says, the top nine cost an organization nothing at all.
High-level executives often do not understand company risks
Originally posted July 25, 2013 by Rodd Zolkos on https://www.businessinsurance.com
A new report from Forbes Insights sponsored by Zurich Insurance Group Ltd. suggests that many executives don't understand their companies' exposure to risks or their strategies to manage them.
The survey of 414 U.S. executives in the banking and financial services, real estate, health care and construction industries found that 28% indicated their company had suffered financial damage as a result of operational risk, 27% because of regulatory or compliance risk and 26% as a result of financial risk.
But when asked about the top barriers to effective risk management, 36% of executives in banking and financial services and 29% of those in real estate cited a lack of understanding of how to mitigate exposures as the top barrier. Among construction executives, 43% cited a lack of understanding of the sources of risk as the top barrier, while insufficient risk management budget was cited as the top barrier by 33% of health care executives.
A lack of understanding of how to mitigate risks was the second-greatest barrier cited by construction executives, at 27%, and health care executives, at 30%.
However, large percentages of executives in each industry category indicated they would manage risk no differently in the next three years: 41% of banking and financial services executives, 50% of construction executives, 42% of health care executives and 47% of real estate executives.
Of the total group, 76% of executives rated the need to align risk management with their company's growth strategy as very or extremely important, and 68% said they thought their company was doing so. But only 54% said they were confident or very confident of how aware they were of the risks associated with their company's growth strategies.
The report, “The Sharp Side of Risk: Understanding, Anticipating and Managing Business Risk,” is available here.
Boating, Biking, and Beaching: Summer Safety Tips for Employees
Originally posted by Chris Kilbourne on https://safetydailyadvisor.blr.com
According to the Centers for Disease Control and Prevention (CDC), in one recent year, more than 3,000 Americans were injured and over 700 killed in boating incidents. Of the people killed, more than 70% drowned, and more than 90% of those who drowned were not wearing life jackets.
So the very first boating safety tip to emphasize and reemphasize to employees is that everyone in a boat should be wearing a life jacket, whether or not they can swim.
Alcohol is another factor contributing to boating accidents, injuries, and fatalities. CDC says that alcohol use affects judgment, vision, balance, and coordination, and is involved in about a third of all recreational boating fatalities. Boating under the influence of alcohol is just as deadly as drinking and driving. Not only is it dangerous to operate a boat while under the influence of drugs or alcohol, it's also illegal in every state in the United States.
A third point to emphasize about safe boating is that people who pilot pleasure craft should know what they are doing. This means that they should have taken a safe boating course. CDC reports that more than 7 out of every 10 boating incidents are caused by operator error. Boating education courses teach the rules for safe operation and navigation of recreational boats, and can help boat operators keep their passengers safe.
Safe Biking
In 2010, 618 cyclists were killed and an additional 52,000 were injured in motor vehicle traffic crashes, says the National Highway Traffic Safety Administration (NHTSA).
To prevent bike accidents, injuries and fatalities, NHTSA suggests the following safety precautions:
- All bicyclists should wear a properly fitted bicycle helmet every time they ride. A helmet is the single most effective way to prevent head injury resulting from a bicycle crash.
- Bicyclists are considered vehicle operators. They are required to obey the same rules of the road as other vehicle operators, including obeying traffic signs, signals, and lane markings. When cycling in the street, cyclists must ride in the same direction as traffic.
- Drivers of motor vehicles need to share the road with bicyclists and be courteous, allowing at least 3 feet clearance when passing a bicyclist on the road. Motorist should also look for cyclists before opening a car door or pulling out from a parking space. And they should always yield to cyclists at intersections and as directed by signs and signals. Motorists should be especially watchful for cyclists when making turns, either left or right.
- Bicyclists should increase their visibility to drivers by wearing fluorescent or brightly colored clothing during the day, dawn, and dusk. To be noticed when riding at night, cyclists should use a front light and a red reflector or flashing rear light, and use retro-reflective tape or markings on equipment or clothing.
Safety at the Beach
The United States Lifesaving Association (www.usla.org) offers beachgoers many lifesaving safety tips on their website, including these:
- Don’t swim alone. That way if you have a problem, there is someone there to help.
- Don't swim under the influence. Alcohol impairment affects swimming ability and judgment.
- Swim near a lifeguard. Your chance of drowning at a beach protected by lifeguards is slight.
- If you are caught in a rip current, don't fight it by trying to swim directly to shore. Instead, swim parallel to shore until you feel the current relax, then swim to shore.
- Never dive head first into unknown water. Check for depth and obstructions like rock formations first.
How Much Are Consumers Saving from the ACA’s Medical Loss Ratio Provision?
Originally published Jun 06, 2013 by Cynthia Cox, Gary Claxton and Larry Levitt
Source: https://kff.org/
Most of the conversation around the Affordable Care Act’s Medical Loss Ratio (MLR) provision has centered on the requirement that insurers issue consumer rebates when they fall short of spending a certain portion of premium dollars on health care and quality improvement expenses. This makes sense as rebates are one of the more tangible ways consumers have benefited from the law so far, and it likely contributes to the MLR provision being among the more popular aspects of the health reform law.
However, as we've written before, rebates represent only a portion, albeit the most concrete portion, of the MLR rule’s savings to consumers. The primary role of an MLR threshold is to encourage insurers to spend a certain percentage of premium dollars on health care and quality improvement expenses (80 percent in the individual and small group market and 85 percent in the large group market). The MLR rebate requirement operates as a backstop if insurers do not set premiums at a level where they would be paying out the minimally acceptable share of premiums back as benefits. Only if those thresholds are not met are insurers required to provide rebates to consumers or businesses. (You can read more about the MLR rule here).
Consumers and businesses, therefore, can realize savings in two ways as a result of the MLR requirement: by paying lower premiums than they would have been charged otherwise (as a result of lower administrative costs and profits), or by receiving rebates after the fact. So while insurers paid out considerable amounts for rebates – last year’s rebates totaled $1.1 billion – this is not the whole story for consumers.
Of course, it is hard to know with certainty what premiums would have been if the MLR rules were not in place: we cannot know for sure how insurers would have priced their products or what rates regulators would have allowed (to the extent that they reviewed rates prior to the ACA). It is also difficult to separate out the direct effects of the MLR provision from other aspects of the health reform law, particularly rate review, which works to moderate unreasonable premium increases and thus increase loss ratios. There are also data limitations. For example, prior to new reporting requirements put in place to enforce the MLR provision, there were not good data sources that break out premiums and claims on a consistent basis for major medical coverage by all types of carriers. In the initial years this data became available (2010 and 2011), there were some issues with the quality of the data, particularly regarding expenses for quality improvement and other new categories of administrative expenses that are reported on the exhibit.
Within these limitations, we constructed an analysis that looks at the basic proportion of premiums that health plans paid out as claims for medical care over the three years since the ACA was passed, both before and after the MLR requirement went into effect for coverage in 2011. These proportions do not include adjustments for quality improvement expenses, taxes or other factors that are used when determining whether or not rebates need to be paid; they simply represent the total payments for medical care as a proportion of premiums. This is the traditional way medical loss ratios have been calculated. Generally, if the proportion is rising, that means insurers are paying out more of each dollar they receive on enrollee health care, which in most cases would mean that enrollees are getting better value for the premiums they pay. We then quantify what the change in the traditional MLR means to enrollees by estimating how much they would have paid in premium if the observed MLR for 2010 (before the MLR requirement went into effect) were held constant for 2011 and 2012.1 This approach addresses the following question: If insurers had targeted the same claims to premium ratio for 2011 and 2012 as they achieved in 2010, would premiums have been higher or lower, and by how much? In other words, it addresses how much consumers may have saved in lower premiums as a result of the MLR threshold in addition to receiving rebates.
Our analysis uses insurer data filed to state regulators and compiled by Mark Farrah Associates. These data (filed on the Supplemental Health Care Exhibit) suggest that the main beneficiaries of the MLR rule’s upfront premium savings are people who purchase insurance on their own. The majority of plans sold to small and large businesses were already in compliance with their respective MLR thresholds before the law went into effect, and our analysis shows that traditional MLRs (claims divided by premiums) for group plans have stayed relatively flat over the past three years. In the individual market, by contrast, fewer than half of plans were in compliance with the ACA’s MLR thresholds in 2010, and the average traditional MLRs in this market have been steadily increasing since the requirement went into effect. This means that individual market insurers are devoting a greater portion of premium dollars to health care claims and less to administrative costs and profits compared to before the ACA’s MLR rule went into effect.
This pattern is consistent with the idea that some insurers needed to improve their MLRs to comply with the new rebate requirements. We know that the individual market MLR requirements in the ACA are higher than those that were in effect in many states, and there have been numerous reports that insurers worked to reduce their commissions and other administrative expenses to become more efficient.
So how might these changes have affected premiums? As noted above, one way to address this question is to compute what these consumers would have paid in premiums in 2011 and 2012 had traditional individual market MLRs stayed at 2010 levels (the year before the provision went into effect). Looked at this way, premiums would have been $856 million higher in 2011, and premiums would have been $1.9 billion higher in 2012.
Adding to the premium savings the amount individual market consumers received in rebates yields a total savings of $1.2 billion for 2011. This year, individual market insurers are expecting to issue $241 million in rebates (based on our analysis of early estimates from insurers filed with state insurance departments), bringing the total estimated savings for 2012 to $2.1 billion. While this savings was not distributed evenly (with more going to people enrolled in plans that had low MLRs prior to the law), when averaged across all individual market enrollees, this amounts to a savings of $204 per person ($181 in premium savings and $23 in rebates) in 2012. Taking into account both premium savings and estimated rebates, people purchasing insurance on their own in 2012 spent 7.5% less on average on insurance than they might otherwise have in the absence of the law.
There are some potential limitations to this approach. While the pattern of increasing MLRs over the three years makes sense given the incentives under the ACA and reports of insurer behavior, we do not have comparable data from earlier years to tell us whether or not the 2010 MLR was typical for the pre-ACA period (though the available evidence suggests that it was).2 Also, MLRs in 2011 and 2012 might be overstated because insurers simply underestimated how much health care expenses would rise following the recession, though increasing MLRs still means that consumers have been getting better value for their premium dollars. Finally, rebate amounts for 2012 are based on preliminary estimates filed on the Supplemental Health Care Exhibit to state insurance departments, and actual rebate amounts will be based on insurer filings with the Department of Health and Human Services, which were due June 1.
If insurers’ preliminary estimates hold true, this year’s rebates (at a total of $571 million across all markets) are expected to be about half the amount of last year’s $1.1 billion in insurer rebates. Smaller rebates, however, are not an indication that consumers are now saving less money as a result of the MLR provision, but rather that insurers are coming closer to meeting the ACA’s MLR requirements and that this provision is having its intended effect of consumers getting more value for the money they spend on premiums. In fact, in the individual market, the $241 million consumers are expected to receive in rebates for 2012 represents roughly one tenth of our estimate of the overall savings from the provision in that year. Perhaps ironically, when the MLR provision is working as intended and insurers set premiums to meet the thresholds, consumers save money but are less likely to get a check in the mail as tangible demonstration of those savings.
Footnotes
- See methodology attached
- Based on our analysis of the Accident and Health Experience Exhibit submitted to state regulators, which has been required of all insurance entities since 2006 but is not directly comparable to newer and more precise data, the weighted average traditional loss ratio in 2010 was slightly higher (80%) than the average of previous years (79%). Our premium savings estimates for 2012 and 2011 are thus likely conservative compared with estimates that used MLRs in prior years.
How the ACA affects annual enrollment
Originally published July 25, 2013 by Andrew Molloy on https://ebn.benefitnews.com
Despite the one-year delay of the pay-or-play mandate, there are still several provisions employees need to know about.
With annual benefit enrollments on the horizon, employers need to be prepared now for the changes that health care reform is bringing. Hopefully, employees already know that as of Jan. 1, 2014, they must have health insurance coverage. Beyond this mandate, however, what are some of the other issues of which employers should be aware?
The Affordable Care Act requires employers to tell their employees in writing by Oct. 1 about the new public health care exchanges and how these relate to their workplace benefits. This requirement applies to all employers subject to the Fair Labor Standards Act.
Under the law, employees need to know that they may be eligible for a tax credit and cost-sharing reduction if their employer's plan does not meet certain coverage and affordability requirements and the employee purchases a qualified health plan through a public exchange. Employers must also inform workers that if they choose to purchase their coverage through an exchange, they may not receive any employer contribution toward their premium, nor any related tax advantage.
Employees may still be confused about the exchanges by the time of enrollment. For the most part, those who work for large employers will see little impact since the subsidies offered for a qualified employer-sponsored medical plan will make the choice moot. However, employees of small- to medium-sized companies where health insurance is not available, or isn't affordable, will have to make a decision about whether to go to a public exchange for their coverage. For these employers, it means telling their workers what their options are and are not.
Despite the recently announced one-year delay in the employer shared responsibility requirement, employers still have obligations for 2014 and they'll have to review their medical plans carefully to ensure they meet the essential health benefits mandated by the law. In addition, the plan cannot have any annual coverage limits; cannot exclude people with pre-existing health conditions; must extend coverage to children up to age 26; and must comply with limits on deductibles and out-of-pocket expenses, among other requirements. It is also important to note that the requirement for essential health benefits applies only to individual and small group plans; the requirement does not exist for self-insured plans.
With the pay-or-play delay, employers will not be penalized if their plans do not cover at least 60%, on average, of an employee's health care costs in a given year, or if an employee's premium costs exceed 9.5% of his or her income. Those employees may still be eligible for tax credits on the public exchange, but for 2014 employers will not be subject to penalties if employees receive those tax credits.
Financial responsibility
It's clear that shifts in financial responsibility will continue to affect today's benefits picture. As employers feel the pressure of rising costs and enrollments in their health plans, they are likely to further fuel the already rapid growth of consumer-directed health plans. In fact, 52% of employers surveyed recently anticipated introducing high deductible/consumer-driven health plans in the next three to five years.
Employers should be aware that employees will see any loss of medical coverage or increase in cost sharing as a reduction in compensation. Consequently, employers will need to pay more attention to their company's total benefits package and consider ways to preserve or increase its value.
Above all, during this transitional period of health care reform, employers must clearly communicate benefits options and their value to employees. Employees need to understand that in most cases, their health benefits will remain the same and they won't have to go to the public exchanges for their coverage. They should also be educated about the need for disability coverage and its value.
Using multiple enrollment methods and a variety of learning tools will help ensure a successful benefits enrollment. In fact, research shows that participation is highest when employees have at least three weeks to absorb their benefits-education information, with at least three different ways to learn about their choices.
DOL changes timing of required employer 401(k) and 403(b) disclosures
Originally published by Brian M. Pinheiro and Robert S. Kaplan on https://ebn.benefitnews.com
The U.S. Department of Labor yesterday released Field Assistance Bulletin 2013-2 granting employers that sponsor participant-directed individual account plans (such as 401(k) and 403(b) plans) the ability to delay this year’s disclosure of annual investment-related information to plan participants and beneficiaries. Employers were required to provide the original notice by August 30, 2012. The DOL regulations require that the notice also be distributed “at least annually thereafter.” This means each annual notice would have to be distributed within 12 months of distribution of the prior year’s notice.
Critics of the annual notice requirement have complained that August does not correlate with any other annual participant disclosures for calendar-year retirement plans. Consequently, the DOL is permitting employers a one-time delay in distributing the annual notice. For 2013, the plan sponsor may wait up to 18 months from the date of distribution of the prior notice to distribute the new annual notice. This delay will allow employers to put the annual notice on the same schedule as other annual participant disclosures, such as notices for Qualified Default Investment Alternative or safe harbor status.
Recognizing that some employers have already prepared or mailed notices in anticipation of this August 2013 deadline, the DOL also permits employers who do not take advantage of this relief during 2013 the same 18-month period for 2014 annual notices.
Most third-party administrators and vendors prepare these annual notices for employers. Employers should keep in mind that the notice is an obligation of the plan sponsor and not the vendor. Plan sponsors should carefully review the notice to ensure that it is accurate and meets all legal requirements.
Delay of health reform mandate has employers making hard benefit choices
Originally posted July 14, 2013 by Jerry Geisel on https://www.businessinsurance.com
Some employers may offer health insurance despite mandate delay.
Affected employers face some tough decisions on what approach they will take in the wake of the Obama administration's unexpected decision to delay a key health care reform law provision.
Administration officials this month delayed by one year to 2015 the Patient Protection and Affordable Care Act requirement that employers with 50 or more employees offer qualified coverage to at least 95% of their full-time employees or pay a $2,000 penalty for each full-time employee.
U.S. Treasury Department officials said the delay was necessary to give the agency more time to simplify how employers are to file health care plan enrollment information with the government.
That delay is being welcomed by employers, especially those who have not decided whether they will offer coverage to those not currently eligible; or, if they have decided, the generosity of the coverage they will provide.
“This is a rare opportunity where an employer can make a smart and thoughtful decision,” said John McGowan, a partner with the law firm Baker & Hostetler L.L.P. in Cleveland.
Some employers, especially those that already have told affected employees that they will expand coverage, are less likely to reverse course and hold off that expansion for another year.
“If you already have figured out your strategy, you probably will implement it,” said J.D. Piro, a senior vice president with Aon Hewitt in Norwalk, Conn.
For example, Cumberland Gulf Group in June announced that, effective Oct. 1, employees working as few as 32 hours a week will be eligible for group coverage, down from the current 40-hour-a-week requirement.
Employees working 30 or 31 hours a week will be given the option of working 32 hours to become eligible for coverage in the company's self-insured plans. For employees who work less than 30 hours, the company will assist them in finding coverage through public insurance ex-changes.
Through that expansion of coverage, which will affect about 1,500 employees, Cumberland Gulf, a $15 billion Framingham, Mass.-based company that owns convenience stores and the Gulf Oil brand, will be shielded from the health care reform law's $2,000 per-employee penalty, which is triggered when coverage is not offered to full-time employees — those working at least 30 hours per week.
That expansion of coverage will remain on track, said John McMahon, Cumberland Gulf's senior vice president and chief of human resources.
“We are going to continue on the path we have laid out. Our strategy is to create a great place to work and to be an employer of choice,” Mr. McMahon said, adding that the company is getting very positive feedback from current and prospective employees.
Other employers who also have announced plans to expand coverage eligibility, though, may find themselves between a “rock and a hard place,” said Ed Fensholt, senior vice president and director of compliance services for Lockton Benefit Group in Kansas City, Mo.
Those employers “will have to weigh the cost savings by pulling the plug for a year with the confusion and damage to employee relations that would occur,” Mr. Fensholt said.
Employers that do not offer coverage to all eligible employees and have not made final decisions on whether they will expand coverage also face issues.
For example, if they wait until 2015 to offer coverage, they could be at a disadvantage if their competitors decide to extend coverage next year, said Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington.
There are other issues for employers not currently offering coverage to consider. By not offering coverage, their lower- and middle-income employees will be eligible for premium subsidies to purchase policies from insurers offering coverage in public insurance exchanges.
Then, in 2015, when the coverage mandate kicks in, the employer could offer a plan that is just rich enough to pass the law's minimum value test, denying employees the government subsidies for exchange coverage they received in 2014.
“Then, you have an employee relations issue,” Mr. Fensholt said.
That issue will be less likely to develop, experts say, if the employees received employer coverage beginning in 2014 and never enrolled in exchanges.
“Some employees will be disappointed. It could be an awkward situation,” said Frank McArdle, an independent benefits consultant in Bethesda, Md.
Still, there are plenty of employers not providing coverage who will decide against offering coverage in 2014.
Employers “may not want to move forward until the dust settles. Some are wondering if the regulations and requirements will actually change during this interim period,” said Michael Thompson, a principal with PricewaterhouseCoopers L.L.P. in New York.
In addition, by waiting, employers will have a better sense of whether Congress will act in the coming months to change the employer mandate, experts say.
For example, prior to the Treasury Department delay, bills were introduced that would change the definition of a full-time employee to those working 40 hours a week — compared with the law's 30-hour threshold — while other measures would exempt more small employers from the requirement to either offer coverage or pay the $2,000 per-employee fine.
While it is difficult to imagine Congress reaching a bipartisan consensus, “anything is possible,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.