Medicaid Election
Source: United Benefit Advisors
Medicaid is a joint state-federal program. States are not required to participate in Medicaid, but all of the states currently do. The federal government pays 50 percent to 75 percent of the cost of Medicaid. In return, the states must follow a variety of rules, although they have the ability to make a number of choices. Currently, to obtain federal funding the states must provide Medicaid to pregnant women and children under age six with family incomes below 133 percent of FPL, to children aged six through 18 with family incomes below 100 percent of FPL, and to disabled and elderly adults who qualify for Supplemental Security Income based on low income and assets. Some states currently provide Medicaid to working parents and adults without dependents, but many do not, or do so only for those with incomes well below FPL.
In an effort to reduce the number of uninsured, PPACA would require Medicaid to cover virtually all adults with household incomes at or below 133 percent of FPL as of Jan.1, 2014. The federal government would pay 100 percent of the cost of coverage for the expanded coverage group during 2014 through 2016, and then gradually decrease its contribution to 90 percent of the cost for 2020 and later years. The Supreme Court ruled that Congress did not have the power to cut off all Medicaid funding if a state didn’t expand Medicaid to meet the expanded eligibility under PPACA, so states are now deciding whether expanding Medicaid eligibility makes sense for them.
Individuals who are eligible for Medicaid will not be eligible for premium subsidies. This means that employers in states that choose not to increase Medicaid eligibility may have to pay penalties on more employees than those in states that have chosen to expand Medicaid eligibility.
Click Map to See results for your state
Exchange Election
Source: United Benefit Advisors
The purpose of an exchange is to make it simpler for individuals and small businesses to obtain coverage. The exchanges will not provide insurance, but they will provide a way for people to compare the cost and coverage available from different insurers, provide resources to individuals to help them choose a plan, and oversee the insurance options available through the exchanges. Virtually all Americans will be able to buy coverage through an exchange, even if they have access to coverage through an employer. However, premium subsidies will not be available to people who have access to adequate coverage through their employer, no matter how large or small their employer is, but who choose to buy through the exchange instead. Recently, the government has begun calling the exchanges the “health insurance marketplace.”
Each state will choose its own “essential health benefits” package, although all insurance provided to individuals and small groups (generally, those with 100 or fewer employees) must provide certain types of “essential” coverage. (Self-funded and large employers are not required to provide the “essential health benefits.” Instead, these plans will need to cover “core” benefits (hospital and emergency care, physician and mid-level practitioner care, pharmacy, and laboratory and imaging) at a 60 percent actuarial value to avoid employer penalties.)
For additional information on each state’s EHB, go here: Additional Information on Proposed State Essential Health Benefits Benchmark Plans | cciio.cms.gov
Employers should understand that even if they offer coverage to their employees, they will have some interaction with the exchanges. If any employee chooses to purchase coverage through the exchange and requests a premium subsidy, the exchange will need information about the coverage offered to employees from the employer.
Currently there is debate about whether people in a federally-facilitated exchange will be eligible for the premium tax subsidy. The federal government’s position is that these people will be eligible for the subsidy, as it was not Congress’ intent to treat people differently based upon where they live. Employers hoping to avoid the play or pay penalty have an interest in this question because penalties are triggered by the employee’s receipt of a premium tax subsidy through the exchange. If subsidies are not available through the federally facilitated exchanges, employers in those states would not be subject to penalties. This issue likely will be settled by the courts (Oklahoma has filed a lawsuit), but in the meantime, employers in states that will have FFEs should not assume the penalties will not apply to them. Also, note that those who obtain coverage through private exchanges will not be eligible for the premium tax subsidies.
Whether a state runs its own exchange is a year by year decision, so, for example, a state that has an FFE or a partnership exchange for 2014 could run its own exchange in 2015.
Click Map to See results for your state
The States: Where They Stand
| State | Type of Exchange | Medicaid Expansion |
| Alabama | Federal | No |
| Alaska | Federal | Undecided |
| Arizona | Federal | Yes |
| Arkansas | Partnership | Yes |
| California | State | Yes |
| Colorado | State | Yes |
| Connecticut | State | Yes |
| Delaware | Partnership | Yes |
| Florida | State | Yes |
| Georgia | Federal | Undecided |
| Hawaii | Federal | No |
| Idaho | State | Yes |
| Illinois | State | No |
| Indiana | Federal | Undecided |
| Iowa | Partnership | Undecided |
| Kansas | Federal | Undecided |
| Kentucky | State | Undecided |
| Louisiana | Federal | No |
| Maine | Federal | No |
| Maryland | State | Yes |
| Massachusetts | State | Yes |
| Michigan | Partnership | Undecided |
| Minnesota | State | Yes |
| Mississippi | Federal | No |
| Missouri | Federal | Yes |
| Montana | Federal | Yes |
| Nebraska | Federal | Undecided |
| Nevada | State | Yes |
| New Hampshire | Federal | Undecided |
| New Jersey | Federal | Undecided |
| New Mexico | State | Yes |
| New York | State | Undecided |
| North Carolina | Federal | No |
| North Dakota | Federal | Undecided |
| Ohio | Federal | Yes |
| Oklahoma | Federal | No |
| Oregon | State | Undecided |
| Pennsylvania | Federal | Undecided |
| Rhode Island | State | Yes |
| South Carolina | Federal | No |
| South Dakota | Federal | No |
| Tennessee | Federal | Undecided |
| Texas | Federal | No |
| Utah | State | Undecided |
| Vermont | State | Yes |
| Virginia | Federal | Undecided |
| Washington | State | Yes |
| West Virginia | Partnership | Undecided |
| Wisconsin | Federal | Undecided |
| Wyoming | Federal | Undecided |
Source for exchange elections: Kaiser Family Foundation
Source for Medicaid expansion: The Advisory Board Co.
Want to engage in retirement planning? Watch your words
Source: https://eba.benefitnews.com
By Margarida Correia
If you want to engage investors in the retirement planning process, avoid talking about “financial planning” or worse, “retirement income.” Both elicit very negative responses from investors, Timothy Noonan, managing director of Capital Market Insights at Russell Investments, said at a media roundtable this month.
When investors hear “retirement income,” they think they’re about to be sold an insurance product and are reminded of their private retirement “sins,” such as not saving enough or robbing their 401(k)s, he said. And the mention of financial planning is likely to make most investors yawn. The topic is boring and technical, according to a two-year study of major markets in the United States, Canada and the U.K, commissioned by Russell.
HR/benefits professionals should talk instead about “lifestyle design,” a concept that appeals to investors. “If you want a get a disengaged person to re-engage, maybe you should try talking to them about what you can do to help them design a lifestyle that’s sustainable,” Noonan said.
Russell Investments has taken the research to heart, naming its recently launched retirement planning tool the Retirement Lifestyle Solution and the tool’s main software component Retirement Lifestyle Planner. The new tool is based on the concept of adaptive investing, a style of investing that investors are responsive to, according to the two-year study.
Investors see adaptive investing as a middle ground between the investing style extremes of changing asset allocations frequently and not changing them at all. More importantly, it incorporates “asset-liability matching,” which is central in getting “individual investors to engage meaningfully on preparing for their retirement and getting income from their retirement portfolios,” Noonan says.
“Fundamentally, adaptive investing is managing your portfolio and building an asset allocation that is connected to the spending it has to support,” says Rod Greenshields, consulting director of Russell Investments’ private client consulting group.
One of the major roadblocks to getting investors to think about and plan for retirement is their inability to visualize themselves in the future. By matching their assets to their liabilities in the future, the tool helps investors overcome this visualization difficulty, according to Noonan.
Top 5 issues facing physicians, patients in 2013
Source: https://www.benefitspro.com
By Kathryn Mayer
As health reform continues to changes the landscape of our country’s health system, what’s to watch in this new year? A lot, industry insiders say.
Lou Goodman, president of The Physicians Foundation and CEO of the Texas Medical Association, says 2013 will be “a watershed year” for the U.S. health care system. Most of those changes will have a big impact on both patients and the physicians caring for them.
“It’s clear that lawmakers need to work closely with physicians to ensure we're well prepared to meet the demands of 30 million new patients in the health care system and to effectively address the impending doctor shortage and growing patient access crisis.”
The Physicians Foundation identified five issues that are likely to have a significant impact on patients and physicians in 2013.
1. Ongoing uncertainty over PPACA
Despite the Supreme Court decision upholding most of the provisions in the Patient Protection and Affordable Care Act and the re-election of President Obama, considerable uncertainty persists among patients and physicians regarding actual implementation of the act. Much of the law has yet to be fully defined and a number of key areas within PPACA—including accountable care organizations, health insurance exchanges, Medicare physician fee schedule and the independent payment advisory board—remain nebulous, the foundation says. Their research found that uncertainty surrounding health reform was among the key factors contributing to 77 percent of physicians being pessimistic about the future of medicine. In 2013, physicians will need to closely monitor developments around the implementation of these critical provisions, to understand how they will directly affect their patients and ability to practice medicine.
2. More consolidation
Consolidation means bigger, but is bigger better? Large hospital systems and medical groups continue to acquire smaller/solo private practices at a steady rate. According to the foundation's report pertaining to the future of U.S. medical practices, many physicians are seeking employment with hospital systems for income security and relief from administrative burdens. But increased consolidation may potentially lead to monopolistic concerns, raise cost of care, and reduce the viability and competitiveness of solo/private practice. As the trend toward greater medical consolidation continues across 2013, it will be vital to monitor for possible unintended consequences related to patient access and overall cost of care.
3. A scramble to fix the doctor shortage
In 2014, PPACA will introduce more than 30 million new patients to the U.S. health care system, a provision that has considerable implications relative to patient access to care and physician shortages. According to the Foundation’s Biennial Physician Survey, Americans are likely to experience significant challenges in accessing care if current physician practice patterns continue. If physicians continue to work fewer hours, more than 47,000 full-time-equivalent physicians will be lost from the workforce in the next four years. Moreover, 52 percent of physicians have limited the access of Medicare patients to their practices or are planning to do so. As the 12-month countdown to 30 million continues across 2013, physicians and policy makers will need to identify measures to help ensure a sufficient number of doctors are available to treat these millions of new patients – while also ensuring the quality of care provided to all patients is in no way compromised.
4. Erosion of physician autonomy
The Physicians Foundation believes that physician autonomy – particularly related to a doctor’s ability to exercise independent medical judgments without non-clinical personnel interfering with these decisions – is markedly deteriorating. Many of the factors contributing to a loss of physician autonomy include problematic and decreasing reimbursements, liability/defensive medicine pressures and an increasingly burdensome regulatory environment. In 2013, physicians will need to identify ways to streamline these processes and challenges, to help maintain the autonomy required to make the clinical decisions that are best for their patients.
5. Growing administrative burdens
Increasing administrative and government regulations were cited as one of the chief factors contributing to pervasive physician discontentment, according to the Foundation’s 2012 Biennial Physician Survey. Excessive “red tape” regulations are forcing many physicians to decrease their time spent with patients in order to deal with non-clinical paper work and other administrative burdens. In 2013, physicians and policy makers will need to work closely together to determine steps that will effectively reduce gratuitous regulations that negatively affect physician–patient relationships. According to a recent Foundation report, the creation of a Federal Commission for Administrative Simplification in Medicine could help reduce these regulations by evaluating and reducing cumbersome physician reporting requirements that do not result in cost savings or measurable reductions in patient risk.
Seven voluntary products to watch in 2013
Source: https://www.benefitspro.com
By Katie Kuehner-Hebert
More and more employers this year will begin offering voluntary employee benefits to their workers in preparation for the “real game changer” in 2014—the further implementation of the Patient Protection and Affordable Care Act.
A decade ago, voluntary products were offered mainly by larger employers as a way to increase engagement, but now organizations of all sizes are broadening their menu of voluntary benefits to offset coverage gaps, as employers further reduce their contributions to cut costs, according to MetLife’s latest annual employee benefits study, released in March.
Indeed, sales of voluntary benefits in 2011 rose 4.5 percent from a year earlier, to $5.478 billion, according to research from Eastbridge Consulting Group.
The trend will continue next year as more employers are mandated to provide health care plans for their workers under the PPACA. As a result, brokers and carriers alike expect further increases in employee deductibles and out-of-pocket responsibilities—spelling greater opportunity for the sale of voluntary products.
“You’re going to see a tremendous amount of movement next summer, as employers start preparing for 2014 when the exchanges will be launched,” says John Conkling, a vice president at Fringe Benefits Group Inc. in Austin, Texas. “We may see some shifts in the classification between full-time and part-time employees, which will create some new benefit opportunities. That has a lot of HR and benefits departments developing strategies right now, and it will only strengthen the voluntary benefits market.”
The new law’s medical loss ratio will also spur more brokers to push voluntary products, says Steve Hannah, regional vice president of group benefit services at Mutual of Omaha. Out of every premium dollar, $0.85 has to be used to pay claims, leaving $0.15 cents to pay for carrier expenses, including broker commissions.
“Brokers are now deciding whether to cut staff or services, or merge with other brokers,” Hannah says. “There’s also a mass influx of brokers, and some are now calling themselves ‘voluntary benefit experts.’”
Brokers also are capitalizing on the rising popularity of voluntary benefits among employees, he says. According to a Hartford study, employees who are offered voluntary benefits reported higher satisfaction with their benefits than did those who were not offered voluntary products (64 percent and 56 percent, respectively).
Here are seven voluntary products to watch.
1) Critical illness/cancer
Both cancer and critical illness product sales were up in 2011, according to Eastbridge. Cancer sales rose 2 percent from 2010, to $409 million, while critical illness sales jumped 20 percent, to $243 million.
“Critical illness/cancer policies are going to explode in 2013,” says Mathew Gahm, founder and managing director of M P Gahm & Associates Inc. in Colorado Springs. Colo.
“At least one in three adults will be diagnosed with a critical illness or cancer,” Gahm says. “The max out-of-pocket is between $5,000 to $10,000-plus in many health care policies, but very few people have that type of money to pay if something bad happens.”
Millennials are participating in critical illness at a slightly higher rate than boomers (27 percent to 14 percent respectively), according to the Hartford study.
Glenn Petersen, vice president, group voluntary and worksite benefits at MetLife in New York City, says Gen Yers might opt for these products because younger people tend to have a limited amount of savings to meet all the costs of a serious illness or accident. However, all age groups are likely to see a need for such polices, particularly if brokers and employers thoroughly explain their value and features, Petersen says.
“A Gen X member might need all the extra cash they have saved to meet children’s and household expenses,” he says. “Boomers might want a lump sum payment to take care of ancillary expenses and not have to tap retirement savings.”
2) Accident
Accident sales accounted for 13 percent of total voluntary sales in 2011, with a 14 percent increase over 2010 accident sales, to $738 million, according to Eastbridge.
Accident plans will become even more prevalent in 2014 as deductibles and out-of-pocket expenses are increased even further due to the implementation of health reform, Conkling says.
“People are going to realize that if they go to the emergency room, they are going to be responsible for the first $2,000, so a $5 a week accident policy can pay for that tremendous out-of-pocket expense,” he says. “Plus, they might have another $2,000 in hospital stay expenses as well.”
Moreover, brokers are going to increasingly sell these types of voluntary products to replace revenues, Conkling says. Depending on the structure of the benefit, some accident policies have hospital administration riders on them, while other carriers may sell separate hospital indemnity plans, he says. All of these benefits are being sold in conjunction with major medical plans as supplemental plans.
3) Hospital indemnity and other gap plans
Look for hospital indemnity/supplemental medical products to have great potential for sales upticks in the coming year.
“Medical bridge plans cover some but not all of the employees’ expenses incurred under a standard medical plan thus reducing employees out of pocket costs for high deductible plans,” says Tom Wagoner, president of Accelerated Benefits in Columbus, Ohio.
Traditional gap plans pay to fill a deductible and is integrated 100 percent with the employee’s medical plan, he says. In more recent years, medical bridge plans have replaced traditional gap plans and now contain specific schedules of benefits for a variety of medical services, such as hospital confinement, outpatient services, MRI and CT scans.
“But they don’t cover everything and there are a lot of holes in those plans,” Wagoner says. “A lot of people selling them are not disclosing those holes and that could be a problem. But they are going to be popular even with all the holes. We definitely think producers are going to be moving more toward integrated plans with the medical versus the life and disability traditional plans.”
4) Long-term health care insurance bundled with life policies
Dan Johnson, vice president of sales and marketing for voluntary benefits at Trustmark Insurance in Lake Forest, Ill., says that bundled life and long-term care products are gaining in popularity, as many carriers stopped offering stand-alone long-term health care insurance.
“Their hope was when they originally priced the products, groups that implemented the product would spread out participation among more age groups within the active employee population,” Johnson says. “This did not occur as often as they assumed and it affected their spread of risk, rates and profitability. The continued escalation of health care costs, along with long-term health care facility cost escalation made these products unprofitable.”
Conversely, the hybrid universal life contracts that have long-term care as an integrated benefit are becoming more popular and have changed with the needs of the customer and the market over the years, he says.
“The big question from brokers and employers who have been burned by this long-term care exit is, whether the products still being sold in the market are priced properly or will they be affected down the road with more exits to the market due to the products profitability,” Johnson says. “With our universal life with living benefits product, we’ve been able to spread the risk of across many insureds and age groups. We have 20-year-old employees buying this bundled product along with 65 year olds.”
Moreover, when using this hybrid product, the insured person can always get a death benefit if the benefit restoration rider is purchased, even if the insured also uses the long-term care benefit for long-term care, home health care, adult daycare and assisted-living care, he says.
5) Life and disability
Life insurance continues to be the top selling business line, according to Eastbridge. Total life sales in 2011 were $1.347 billion, up about 1.3 percent over 2010.
However, studies show that life insurance isn’t a mature market. According to the Life Insurance and Market Research Association, 56 percent of U.S. households didn’t have an individual policy as of 2010, and 30 percent lacked any coverage, not even through an employer’s group benefits plan.
This represents an opportunity for brokers to educate workers about the value of supplemental life and disability if their coverage is inadequate, Petersen says.
“As they make decisions, employees can benefit immensely if is it pointed out to them that their needs can change as life circumstances change—for example through the birth of children,” he says. “Purchase decisions are made on the basis of solving a real-life problem or exposure, where the employee can see the value of a certain benefit.”
6) Dental and vision
In the past, employers might have paid for dental and vision along with major medical plans, but as employers continue to struggle to manage their budget, particularly as medical costs increase, dental and vision are increasingly becoming voluntary benefits, Conkling says.
“These voluntary benefits are also becoming more important to employees, as their out-of-pocket costs continue to increase due to the increasing popularity of consumer-driven plans,” he says.
According to Eastbridge, dental sales increased 22 percent in 2011, to $610 million, while vision sales increased 8 percent, to $231 million.
7) Legal benefits
Donald Rowe, vice president of employee benefits worksite marketing at Legal Club of America, says that more employers are offering legal benefits because “most employees don’t leave their personal problems in the parking lot when they come into work.”
“These issues interfere with their productivity,” Rowe says. “Rather than pretending employees don’t have those issues, employers give them solutions.”
While family law issues such as adoption, divorce, wills and power of attorney continue to be the most popular reasons to utilize legal benefits, the recession has caused more people to use them for home foreclosures and bankruptcies, he says.
Dennis Healy, vice president of sales for ARAG Legal Solutions in Boston, predicts that in 2013, “true legal insurance” products will become more popular than discounted legal benefits or “do-it-yourself” online templates.
“Employers will want to retain their best employers by offering a menu of rich benefit offerings, particularly if they are having to lower their participation in health care plans,” Healy says.
Marcia Bowers, sales and marketing director at Hyatt Legal Plans, a Cleveland, Ohio unit of MetLife, agrees that true insurance products are on the upswing, including “mini-legal packages” that are tied to another benefit, such as life insurance and disability.
Fighting over the flu
Source: https://www.benefitspro.com
By Kathryn Mayer
I feel like we’ve been debating to the point of excess recently. Right now, we’re all about the gun debate. And the debt ceiling. And abortion. And Lance Armstrong.
And maybe it’s partly the industry I cover that’s so prone to getting people fired up about things that I feel it even more—what’s causing rising health care premiums? Can the government really tell us we have to buy health insurance? Whose fault is it that we’re getting so fat? Should we raise the Medicare age?
Sure, I like a good debate as much as the next person, but it makes me a little worried about our quick reaction to cry controversy when it’s over the flu.
We’ve heard a lot about the flu season so far. Even though it’s still early in the season, we’ve heard the words “epidemic,” and “widespread” being thrown around a lot, so it doesn’t sound good.
Of course, it’s not something to take lightly: It’s highly contagious, it costs businesses and employers millions of dollars and it takes tens of thousands of lives a year.
So it’s not really a surprise that we keep getting reminded—from our doctors, from insurers, from the CDC—to get our flu shots to help prevent the flu season from getting worse. And that’s where the debate comes in.
There are a ton of people who simply refuse to get the flu vaccine. But it’s been the health care workers who have refused it who’ve been making headlines. As one example, an Indiana hospital fired eight employees—including three veteran nurses—after they refused mandatory flu shots. It sparked the debate over employee personal rights or patient safety.
Mandatory flu vaccinations for health care workers are becoming more and more common—a number of medical organizations—including the CDC—have recommended it, citing patient health and well-being as a top priority. It’s no surprise as to why: People who are most at risk are already in the hospital. Within a few years, I’m sure it will be less common for hospital and health care workers not to have the mandated vaccine—and it’s a good idea.
Of course, there’s ton of excuses floating around for not getting it: egg allergies (the FDA has approved an egg-free vaccine); fear of needles (there’s a nasal flu vaccine), being so healthy they won’t get the flu (vaccines often work best in healthy people), and religious beliefs (which is so vague, it’s almost the perfect excuse).
This doesn’t even address the irony that these are the same people promoting healthy living and the vaccines themselves. I’m all for personal rights, but when it directly affects the health of other people, I get concerned.
This isn’t about more government mandates or whatever haters want to call it; it’s about social consideration.
No vaccine is ever guaranteed—and the flu shot is one of them. It’s only prevents getting the flu 60 percent or 70 percent or so of the time. But we also know that even for those who get the flu after the vaccine, it significantly slows down the virus.
This debate has as much relevance for me as arguing over washing our hands—which, if you haven’t heard—is a good thing to do, too.
Authors expose obesity myths
Source: https://www.benefitspro.com
By Marilyn Marchione
Fact or fiction? Sex burns a lot of calories. Snacking or skipping breakfast is bad. School gym classes make a big difference in kids' weight.
All are myths or at least presumptions that may not be true, say researchers who reviewed the science behind some widely held obesity beliefs and found it lacking.
Their report in Thursday's New England Journal of Medicine says dogma and fallacies are detracting from real solutions to the nation's weight problems.
"The evidence is what matters," and many feel-good ideas repeated by well-meaning health experts just don't have it, said the lead author, David Allison, a biostatistician at the University of Alabama at Birmingham.
Independent researchers say the authors have some valid points. But many of the report's authors also have deep financial ties to food, beverage and weight-loss product makers — the disclosures take up half a page of fine print in the journal.
"It raises questions about what the purpose of this paper is" and whether it's aimed at promoting drugs, meal replacement products and bariatric surgery as solutions, said Marion Nestle, a New York University professor of nutrition and food studies.
"The big issues in weight loss are how you change the food environment in order for people to make healthy choices," such as limits on soda sizes and marketing junk food to children, she said. Some of the myths they cite are "straw men" issues, she said.
But some are pretty interesting.
Sex, for instance. Not that people do it to try to lose weight, but claims that it burns 100 to 300 calories are common, Allison said. Yet the only study that scientifically measured the energy output found that sex lasted six minutes on average — "disappointing, isn't it?" — and burned a mere 21 calories, about as much as walking, he said.
That's for a man. The study was done in 1984 and didn't measure the women's experience.
Among the other myths or assumptions the authors cite, based on their review of the most rigorous studies on each topic:
—Small changes in diet or exercise lead to large, long-term weight changes. Fact: The body adapts to changes, so small steps to cut calories don't have the same effect over time, studies suggest. At least one outside expert agrees with the authors that the "small changes" concept is based on an "oversimplified" 3,500-calorie rule, that adding or cutting that many calories alters weight by one pound.
—School gym classes have a big impact on kids' weight. Fact: Classes typically are not long, often or intense enough to make much difference.
—Losing a lot of weight quickly is worse than losing a little slowly over the long term. Fact: Although many dieters regain weight, those who lose a lot to start with often end up at a lower weight than people who drop more modest amounts.
—Snacking leads to weight gain. Fact: No high quality studies support that, the authors say.
—Regularly eating breakfast helps prevent obesity. Fact: Two studies found no effect on weight and one suggested that the effect depended on whether people were used to skipping breakfast or not.
—Setting overly ambitious goals leads to frustration and less weight loss. Fact: Some studies suggest people do better with high goals.
Some things may not have the strongest evidence for preventing obesity but are good for other reasons, such as breastfeeding and eating plenty of fruits and vegetables, the authors write. And exercise helps prevent a host of health problems regardless of whether it helps a person shed weight.
"I agree with most of the points" except the authors' conclusions that meal replacement products and diet drugs work for battling obesity, said Dr. David Ludwig, a prominent obesity research with Boston Children's Hospital who has no industry ties. Most weight-loss drugs sold over the last century had to be recalled because of serious side effects, so "there's much more evidence of failure than success," he said.
To Open Eyes, W-2s List Cost of Providing a Health Plan
Source: https://www.nytimes.com
By Robert Pear
As workers open their W-2 forms this month, many will see a new box with information on the total cost of employer-sponsored health insurance coverage. To some, it will be a surprise, perhaps even a shock.
Workers often have little idea how much they and their employers are paying for coverage. In many cases, economists say, workers give up cash compensation to get and keep health benefits.
The disclosures, required by the 2010 health care law, are meant to make workers more cost-conscious. Health benefits are still tax-free. But labor unions and employer groups say it could be easier to tax them in the future, now that employers must report their value to the government.
The new information appears in Box 12 of the standard W-2 form, with a two-letter code, DD. The box shows the “cost of employer-sponsored health coverage.” And that amount is not taxable, the Internal Revenue Service says on the back of the form.
Jay J. Makled, a union steward for the United Automobile Workers at the Ford plant in Dearborn, Mich., described his reaction after seeing that his health coverage cost nearly $16,000 last year: “It’s quite expensive. I was surprised to see how much the company was paying for that benefit.”
Hourly employees represented by the union there said they generally did not pay any of the premium.
The number on the W-2 form is supposed to reflect the part of the cost paid by the employer and the part paid by the employee.
Prof. Nicole Huberfeld, an expert on health law at the University of Kentucky, who received her W-2 form on Monday, said, “Most people who get health insurance from their employers have no idea how much it costs.”
“People are often shocked when they see the cost, $12,000 to $16,000 a year,” Ms. Huberfeld said. “Many Americans believe this is something they get free. But employers pay lower wages because they provide insurance.”
In 2012, according to an annual survey by the Kaiser Family Foundation, premiums for employer-sponsored health insurance averaged $5,615 a year for single coverage and $15,745 for family coverage. Over five years, the costs have increased 25 percent for individual coverage and 30 percent for family coverage.
“Health coverage is a big piece of people’s income and a large part of the social welfare budget,” said C. Eugene Steuerle, a tax economist at the Urban Institute. “But the benefits are not taxable, and most of the spending is hidden, so we don’t consider the trade-offs. If we want to get control of health care costs, people have to be aware of them.”
That is the goal of the disclosure requirement, which was proposed by a bipartisan group of senators: two Republicans, Charles E. Grassley of Iowa and Michael B. Enzi of Wyoming, and two Democrats, Max Baucus of Montana and Ron Wyden of Oregon.
Congress acted after Peter R. Orszag, then the director of the Congressional Budget Office, told lawmakers: “The economic evidence is overwhelming, the theory is overwhelming, that when your firm pays for your health insurance, you actually pay through reduced take-home pay. The firm is not giving that to you for free.”
The tax-free treatment of employer-provided health benefits is the largest tax break in the tax code, costing the government roughly $180 billion a year in lost revenue, or 80 percent more than the home mortgage interest deduction, according to the administration.
Katie W. Mahoney, the executive director of health policy at the U.S. Chamber of Commerce, said, “It’s useful for employees to know the value of coverage their employers provide.” But she said some employers worried that reporting the benefit on the W-2 form could lead to taxing the benefit.
“That’s not the intent of the current requirement,” Ms. Mahoney said. “But once the information is collected by the government, it’s very easy for another administration to have a different intent.”
An employee of the A.F.L.-C.I.O. whose health coverage was listed as costing more than $20,000 said: “That knocks my socks off. When I saw the number, my eyes popped out. I appreciate my employer all the more.”
The employee said he had been told not to discuss the cost publicly because the union did not want to suggest that some employees had “Cadillac coverage.”
An employer that fails to comply with the reporting requirement could be subject to penalties of $200 per W-2 form, up to a maximum of $3 million, tax lawyers said.
Employers are exempt from the reporting obligation if they are required to file fewer than 250 W-2 forms, the I.R.S. said. That could change, but the agency said employers would be given at least six months’ notice.
Additional proposed regulations addressing open issues under PPACA
The Department of Health and Human Services (HHS), the Internal Revenue Service (IRS) and the Department of Labor (DOL) have recently issued more FAQs and proposed rules that address several employer obligations under the Patient Protection and Affordable Care Act (PPACA).
Notice of Exchange Has Been Delayed
On Jan. 24, 2013, the DOL issued a FAQ that delays the due date for providing employees with a notice about the affordable health exchanges. The notice had been due March 1, 2013 but the due date has been delayed until late summer or early fall of 2013. The delay will result in the notice being provided closer to the start of open enrollment for the exchanges, which will begin Oct. 1, 2013, for a Jan. 1, 2014, effective date.
To read the FAQ, click here: https://www.dol.gov/ebsa/faqs/faq-aca11.html
HRA Restrictions
Because PPACA prohibits annual dollar limits on essential health benefits, HRAs that are not integrated with other group health coverage (usually a major medical plan) will not be permitted after Jan. 1, 2014.
The Jan. 24, 2013, DOL FAQ also addresses HRAs, and states that an employer-provided HRA will not be considered integrated (and therefore will not be allowed) if it:
- Provides coverage through individual policies or individual market coverage; or
- Credits amounts to an individual when the individual is not enrolled in the other, major medical coverage
Existing HRAs that cannot meet the 2014 requirements generally will be allowed to reimburse expenses incurred after 2014, in accordance with the terms of the plan.
Premium Tax Credit/Subsidy
On Feb. 1, 2013, the IRS issued a final regulation that provides the long awaited answer of whether family members of an employee who has access to affordable self-only coverage are eligible for a premium tax credit/subsidy. The answer is that they are not – if the employee has access to affordable self-only coverage, the spouse and children are also considered to have access to affordable employer-sponsored coverage, and therefore the spouse and children are not eligible for premium tax credits/subsidies. To read the final IRS rule, click here:
https://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02136.pdf
Minimum Essential Coverage
On Feb. 1, 2013, HHS and the IRS issued two proposed regulations that provide details on the individual shared responsibility requirement.
PPACA requires that non-exempt individuals obtain “minimum essential coverage” or pay a penalty. Minimum essential coverage includes individual insurance, Medicare, Medicaid, CHIP, TRICARE, VA and similar government programs, and employer-sponsored coverage. The proposed IRS rule defines minimum essential “employer-sponsored” coverage as an insured or self-funded governmental or ERISA welfare benefit plan that provides medical care directly or through insurance or reimbursement. (An HMO is considered an insured plan.)
Generally, any policy offered in the small or large group market that meets the above requirements will be minimum essential coverage. The proposed IRS regulation states that these types of coverage will not qualify as minimum essential employer-sponsored coverage:
- Accident only
- Disability income: Liability, including general, automobile, and supplemental liability;
- Workers compensation
- Automobile medical payment
- Credit only
- On-site medical clinics
- Limited scope dental or vision
- Long-term care, nursing home care, home health care, community-based care or any combination of these
- Specified diseases or illness
- Hospital indemnity or other fixed indemnity insurance
- Medicare supplement
- Similar limited coverage
Public comments are due March 18, 2013. To read the proposed IRS rule, click here: https://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02141.pdf
The HHS proposed rule provides details on how an individual can claim an exemption from the individual shared responsibility penalty.
Public comments on this rule also are due March 18, 2013. To read the proposed HHS rule, click here: https://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02139.pdf
Women’s Preventive Care Services
Proposed rules that would make it simpler for religious organizations and religious-affiliated not-for-profit organizations like hospitals and schools that have a religious objection to providing contraceptive services were released by the DOL on Feb. 1, 2013. These employers would notify their insurer of their objection, and the insurer automatically would be required to notify the employees that it will provide the coverage without cost sharing or other charges through separate individual health insurance policies.
For religious-affiliated workplaces that self-insure, the third party administrator would be expected to work with an insurer to arrange no-cost contraceptive coverage through separate individual health insurance policies.
The administration believes the cost of free contraceptive coverage will be offset by fewer maternity claims, but is exploring allowing an offset of the cost against federally facilitated exchange user fees.
The proposed rule offers no exemption for private employers that object to covering contraceptive services on religious or moral grounds.
The proposed rule is here: https://www.ofr.gov/OFRUpload/OFRData/2013-02420_PI.pdf
Important: Some of these rules are still in the “proposed” stage, which means that there may be changes when the final rule is issued. Employers should view the proposed rules as an indication of how plans will be regulated beginning in 2014, but need to understand that changes are entirely possible.