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

 

 

 


More Americans Spending Rather than Saving Tax Refund

Original article https://ebn.benefitnews.com

By Margarida Correia

Most Americans (85%) will receive a federal tax refund averaging $2,803. What will spendthrift Americans do with the money? More than twice as many will spend rather than save it, according to Capital One Bank’s annual taxes and savings survey.

More than a third (35%) plan to spend all or part of the refund, while only 16% will save it. Nearly a quarter (22%) will use the refund to pay down debt and 4% will invest their returns.

Of those who plan to spend all or part of their refund this year, 23% will spend it on vacation. One in three will spend it on everyday expenses and necessities with the rest spending it on various items, including clothing and accessories (16%), iPads, smartphones and other electronics (15%), and major purchases (16%).

Less than half (42%) were aware that that their take-home pay would decline this year due to the recent elimination of the payroll tax holiday by Congress. The awareness was greater among men, with 47% saying they were very aware of the decline in take-home pay, compared with 38% for women.

“At a time when people are seeing smaller paychecks, now more than ever they should take a step back, evaluate their financial goals and consider saving their tax refund,” says Mickey Konson, managing vice president for Retail Banking at Capital One Bank.

The telephone survey polled 1,006 U.S. adults age 18 and over.

Margarida Correia is Associate Editor for Bank Investment Consultant, a SourceMedia publication.


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.

 

 


Most States Fail Transparency Scorecard

Original article https://ebn.benefitnews.com

Thirty-six of the nation's 50 states received either a "D" or an "F" in a report card, issued by two nonprofit organizations, measuring the strength of health care price transparency laws.

"We know from studies that the price for an identical health care procedure performed in the same city can vary by as much as 700%, with no difference in quality," said Francois de Brantes, executive director of Health Care Incentives Improvement Initiative, or HCI3. "When consumers shop for value, they can help rein in health care costs; but to do this, they first need timely and actionable price information."

Burden placed on consumer

The report card, developed by Catalyst for Payment Reform and HCI3, examined multiple factors in arriving at a 100-point scale.

Those factors include levels of price transparency such as:

* Pricing information reported to the state only.

* Pricing information available upon request by an individual consumer.

* Pricing information available in a public report.

* Pricing information available via a public website.

The report card also measured scoring criteria by scope, including:

* Scope of price, including charges, average charge, amount paid by the insurer and amount paid by the consumer (allowed amount).

* Scope of services covered under the law, including all medical services, inpatient services only, outpatient services only, or the most common inpatient and outpatient services.

* Scope of providers affected by the law, including hospitals, physicians and surgical centers.

The groups calculated a score for each level separately and then factored a sum for a total score out of 100 possible points. Every state received a cumulative additive score, taking into account all relevant laws passed in that state. Thus, grades do not reflect individual statutes or bills, but rather each state's overall legislative effort toward price transparency for health care.

The sponsors of the report say the majority of states have very basic laws requiring average charges to be made public, but charges do not reflect what consumers, employers and health plans actually end up paying for care. In many cases, the information is only available upon request, placing a considerable burden on the consumer.

States have duty to protect

"It should be concerning to every lawmaker in the country that 18% of the U.S. economy is shrouded in mystery," de Brantes said. "Without price information, how can we possibly expect consumers to act in a value-conscious way? It is a duty of every state to protect its residents from unfair trade practices, and healthcare consumers are, for the most part, completely left to fend for themselves."

 

This story originally appeared in Health Data Management, a SourceMedia publication.

 


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.


Saxon Financial Consulting Advisor Invited to Participate in Cambridge Leaders Club

Cincinnati, OH  May 6, 2013 – Garry W. Rutledge, Jr. of Saxon Financial Consulting has been selected by his broker-dealer, Cambridge Investment Research, Inc. (Cambridge) to participate in an exclusive Leaders Club workshop. Cambridge rep-advisors were asked to participate based on their outstanding service and exceptional levels of production.

“We are committed to supporting our advisors by offering events where they can network and learn from one another because we believe that the insight shared between thought leaders during these valuable sessions is invaluable,” said Eric Schwartz, CEO and founder. “We plan to add even more events for our advisors in the near future.”

The Leaders Club workshop will be held in conjunction with Cambridge’s annual Ignite conference, September 25-28 in Scottsdale, Arizona.

About Saxon Financial Consulting

Saxon provides comprehensive employee benefit and wealth management services to our clients.  Whether you are a CEO, Small Business Owner or head of household, we utilize a team approach in analyzing and planning a client’s investment portfolio, cash flow, retirement and benefit/insurance needs. Our recommendations are based solely on your specific needs, circumstances and goals. We consistently monitor your goals and offer education to ensure your plan stays on course to meet your needs. The partners have over thirty years of investing and benefit experience and are active members of the community.

Our mission is to partner with clients to establish and achieve financial goals through objective planning and management of assets and/or employee benefits.

Our purpose is to help build, manage and preserve your financial and physical wealth. We put our client’s interest first, act with integrity and honesty, and strive for excellence in every facet of our practice.

Our success is not measured by performance statistics but rather by our clients’ success in achieving their goals.

Our philosophy is to provide our clients with the highest level of service and technical expertise in the management of employee benefits and/or preservation of wealth. The entire staff of Saxon Financial Consulting is firmly committed to this philosophy.

Contact: Garry W. Rutledge, Jr @ 800-847-1733.

Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member of FINRA/SIPC. Investment Advisor

Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Saxon Financial Consulting and Cambridge are not affiliated. Check the background of this investment professional on FINRA’s BrokerCheck.

About Cambridge

Cambridge Investment Research, Inc. (Cambridge), member FINRA/SIPC, is an independent, privately-owned broker-dealer with over 2,200 independent registered representatives and $48.5 billion assets under management.

Cambridge was recognized as one of the Best of Iowa Businesses1 and has been named among the Top Workplaces in Iowa the last two years2. Cambridge also provides innovative fee programs and a full menu of commission offerings to advisors across the nation. Recognized in the industry as The Fee Experts®3, Cambridge has been ranked a fee leader among independent broker-dealers for 12 consecutive years4.

Connect with Cambridge

www.linkedin.com/company/cambridge-investment-research

Insight on Cambridge

www.YouTube.com/joincambridge

1 IA Biz magazine, “Best of Iowa Businesses,” 2010

2 Des Moines Register, “Top Workplaces in Iowa” 2011, 2012

3 THE FEE EXPERTS® is a registered trade mark of Cambridge Investment Research, Inc. for its investment advisory service for investment managers.

4 Financial Planning magazine, June “FP50”, Top 50 Independent Broker-Dealer Issue, 2001-2012.
Securities offered through Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, and investment advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Both are wholly-owned subsidiaries of Cambridge Investment Group, Inc.

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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.