Is PPACA a Threat to Employer-Sponsored Plans?
Originally posted February 27, 2014 by Linda Bergthold on https://www.healthinsurance.org
If you are among the 60 percent of Americans who have health insurance coverage through your workplace, you may be worried about how the Affordable Care Act (aka Obamacare) is affecting your coverage.
There are so many rumors circulating about the impact of the new law on private companies that it is not surprising you may be concerned. First, there was a threat that employers would drop their full-time employees to part-time to avoid penalties in the law. Then we heard that they might drop your coverage altogether or raise your premiums because of the law. A few weeks ago, the Obama Administration delayed the implementation of the law forsome employers even longer.
Should any of this keep you awake at night?
To address some of these concerns, I asked Larry Levitt, the Senior Vice President for Special Initiatives at the Kaiser Family Foundation, to respond to some questions about employer-sponsored coverage. Larry has been working in health policy for over 25 years and was a Senior Health Policy Advisor in the Clinton Administration.
Are employers dropping health benefits?
Linda Bergthold: Despite all the dire warnings about medium- or large-size employers dropping their health insurance benefits or making significant changes, does it look like the Affordable Care Act is having that impact? Other than pure political pressure, why did the Administration delay the mandate for employers between 51 and 100 employees to provide insurance?
Larry Levitt: I always believed that the fear of larger employers dropping health benefits now or in the near future was highly exaggerated. The vast majority (93 percent) of firms with 50 or more employees already offer health coverage to their workers. They do so voluntarily to attract a quality workforce. That’s not likely to change anytime soon.
Over time, a small number of firms may drop health benefits. This is consistent with what the Congressional Budget Office has projected, showing a modest decline in employer coverage over time. Those that do drop benefits are likely to be smaller businesses not subject to the requirement to offer coverage or pay a penalty, and lower-wage firms where the tax exemption for employer-provided health benefits is lower and the availability of premium tax credits in exchanges under the Affordable Care Act (ACA) provide greater subsidies for their workers.
Ultimately, employers will likely make economic judgments about whether to offer benefits or not, balancing a variety of factors such as:
- The value of the tax exemption for employer-provided insurance, which is greater for higher-wage employees whose desires are likely to carry the most weight.
- The penalty for not offering coverage for medium and large firms.
- Perceptions about the attractiveness of insurance in exchanges vs. employer coverage.
One consequence of the problematic rollout of the exchanges is that employers are likely to be even more cautious about making changes in their offering of health benefits until they see how the new marketplace works over time.
For a variety of reasons, regulations for the employer requirement were issued very late, and there were some complicated details to work out around employer reporting. That led to a delay in the coverage requirement for one year, and a subsequent phase-in of the requirement for another year. This provides for a gradual transition in much the same way that the law phased-in the individual mandate.
Are they changing hourly requirements?
Linda Bergthold: There has also been a lot of hype about employers reducing employees to part-time status to avoid requirements of the ACA. Are you aware of any data that shows employers changing hourly requirements? If you are an employee working 35 hours a week, what can you expect?
Larry Levitt: The aggregate data show no systematic shift to part-time work, and the recent CBO report on the labor effects of the ACA said there is no compelling evidence that such a shift is occurring.
That should not be surprising. The employer requirement was delayed, so there has been no economic incentive to reduce worker hours. And, reducing hours is not always so easy. The work still needs to get done, so it could mean more disruption and greater costs associated with hiring and training.
That said, there have been anecdotal reports of some employers reducing work hours of some part-time workers in anticipation of the requirement to offer coverage to those working an average of 30 or more hours per week. That will no doubt continue to occur, though it’s unlikely to add up to many people in aggregate terms.
It’s also important to put all this in context. Employers that offer coverage have always had hour thresholds that determine eligibility for health benefits. All the ACA did was make those thresholds uniform. Any time you require such uniformity, there will be some amount of movement and change on the margin.
Shifting from a 30-hour threshold to 40 hours would largely undermine the employer requirement to offer coverage. It would be a relatively simple matter for employers to reduce work hours for employees not offered coverage to just below that 40-hour threshold with minimal disruption to their businesses. It’s certainly a reasonable debate as to whether employers should be required to offer coverage or pay a penalty, but such a significant change would have economic consequences, significantly reducing revenue to the federal government and raising costs.
Are mandated benefits driving up costs?
Linda Bergthold: Most employer-sponsored health benefit packages are quite comprehensive and already include almost all of the essential benefits required by the ACA. The exception might be rehabilitation and MH/SA (Mental Health/Substance Abuse) benefits that are not always included in every benefit plan. Is there any evidence that requiring essential benefits has driven up employer benefit costs?
Larry Levitt: With a few minor exceptions, such has habilitationand mental health parity in some cases, the essential benefits in the ACA are very similar to what employers already provide. In fact, states had a variety of options for setting benchmarks for the essential benefits, and in the vast majority of cases chose one of the largest existing small-business plans in the state, so the package is based in large part on what most employers were already providing.
There is some confusion, though, about what benefit rules apply to employers. Medium and large employers do not have to offer the essential benefits (although many already do, per above). Small-business insurance does have to include the essential benefits, but again, the effect is likely to be modest. And, small businesses that self-insure, which may be a growing trend — are not subject to the benefit requirements.
The private exchange trend
Linda Bergthold: Large-employee benefit firms like Mercer, Aon Hewitt and Towers Watson are all offering “private exchanges” to their large-employer clients. These exchanges give employees or retirees more choice of carriers and plans and ultimately propose to lower costs. How do you view the “private” exchange trend? Do you see a two-track exchange landscape – one for individuals and low -income citizens and the other for middle and upper class people with job-based benefits? What would the impact on the public exchanges be in that case?
Larry Levitt: These new private exchange share a name with the ACA but are really quite different. For example, there are nopremium subsidies for low- and middle-income enrollees in private exchanges.
These efforts are more part of a long-running discussion about the potential for employers to move towards a defined contribution approach for health insurance, much the way they did for pensionsthrough the shift to 401(k) plans. This may – with an emphasis on “may” – finally be happening for a variety of reasons. Maybe it’s the semantic similarity to the ACA exchanges. Maybe it’s a response to the long-term trend of health insurance costs rising faster than inflation and wages (even though we are at this moment in a period of historically low increases in premiums). Or, maybe it’s in anticipation of the so-called Cadillac plan tax, which will impose a40 percent tax on high-cost plans beginning in 2018 and will provide a strong incentive to reduce the cost and growth of employer-sponsored health benefits.
Private exchanges, like ACA exchanges, provide individual employees with a choice of health plans, though they also facilitate employers turning their contributions towards coverage into what is in effect a voucher, shifting the risk of rising costs to employees.
I don’t think private exchanges represent a two-track landscape any more than the reality that most people of working age will still get their insurance through employers, while some will be covered through Medicaid or ACA exchanges. And, the ACA will significantly equalize coverage across the population, so what kind of insurance people have access to will vary much less than it did historically.
The future of employer-based benefits
Linda Bergthold: What do you see as the future of our employer-based benefit approach? Will the economics of health reform ultimately force employers to drop this benefit and send employees to the public exchanges, which may turn out to provideless costly coverage?
Larry Levitt: There’s nothing inherently advantageous to our employer-based health insurance system, which is mostly an accident of history. Proposals from the right and the left have both advocated moving away from it.
However, employer-based coverage does do a remarkable job of pooling risk and facilitating people to sign up for coverage. And, any significant dropping of coverage by employers – which I don’t think is likely – would increase government expenditures for premium subsidies.
While the ACA does not require a shift away from employer-sponsored insurance, it does provide some of the same benefits as breaking the tie between employment and health insurance coverage. People who lose their jobs will no longer lose their insurance in most cases, with expanded Medicaid coverage, guaranteed access to private insurance, and premium subsidies in exchanges.
This will largely eliminate the problem of “job lock” where people stay in a job simply because they fear losing their insurance. (Note that some people are still left out, in particular many poor adults in states that choose not to expand Medicaid.)
So, while there is some uncertainty around the future of employer-based health insurance under the ACA, there is now a safety net that didn’t exist before, if the availability of employer coverage declines.
Analysis questions value of ACA deductible cap
Originally posted February 14, 2014 by Bruce Shutan on https://ebn.benefitnews.com
In a sign of just how difficult it is to rein in out-of-pocket costs, 35% of 2014 bronze-level plans in the Small Business Health Options Program exchange had deductibles that exceeded suggested annual caps under the Affordable Care Act. The conclusion was based on a HealthPocket analysis of government data from small group health plans in 32 states.
Another key finding was that the lowest level of coverage generated the highest possible costs. A whopping 96% of 2014 bronze-metal SHOP plans, for example, had deductibles of more than the ACA’s $2,000 individual and $4,000 family limits. That same result wasn’t nearly as prevalent for silver or gold plans (28% and 6%, respectively, for individuals and 88% and 6%, respectively, for families), nor was it an issue at the platinum level.
At the bronze level, the medical deductible for an individual enrollee averaged more than twice the amount of the original deductible limit at $4,216 and $8,667 for family coverage, while the annual cap on out-of-pocket costs averaged $6,224 for an individual and $12,518 for a family.
Any strict enforcement of the deductible caps could have substantially narrowed the inventory of health plans in the SHOP exchange, according to the study, which found that fewer than 4% of bronze-tier plans would have satisfied the ACA limits for individual and family enrollees. Small group plans are able to exceed the deductible caps only under the condition of necessity.
“The government effectively abandoned the deductible cap since it would prevent a significant minority of plans from meeting their actuarial value requirements,” explains Kev Coleman, head of research and data at HealthPocket, Inc. and a co-author of the study. He says the U.S. Department of Health and Human Services indicated in February 2013 that these deductible limits must be “applied so as to not affect the actuarial value of any health plan.”
But if the first few months of the HIX marketplace are any indication, there could be changes made that force plans to be re-designed. The study noted that if the deductible cap waivers are removed from future regulations, “then almost all qualified bronze plans would have to decrease their deductibles to satisfy the limits. Decreased deductibles could, in turn, require increases in other categories of enrollee cost-sharing such as co-payments in order for the plans to maintain their actuarial values.”
Last August, U.S. Rep. Tom Reed (R-NY) introduced H.R. 2995, which would eliminate the deductible caps for SHOP marketplace plans. The bill, which was referred to the House Committee on Energy and Commerce, has five co-sponsors.
Dental health savings plans suppress employer ACA aches
Originally posted February 14, 2014 by Michael Giardina on https://ebn.benefitnews.com
Industry onlookers are saying that the voluntary exemption in the Affordable Care Act will do little to improve dental health across the nation as projections point to federal and health exchanges doing little to lower costs for Americans. However, can private dental exchanges and savings plans help to fill this void?
With more than 120 million Americans in need of dental coverage according to data from the National Association of Dental Plans, DentalPlans.com, an exchange that has been in operation since 1999, says that adults will find that stand-alone dental plans will only be available on public exchanges with the purchase of medical insurance plans.
“The ACA does not require adults to be covered for dental services in medical plans,” says Jennifer Stoll, president of DentalPlans.com . “Therefore, adult dental benefits have to be purchased separately, because they are optional under the law.”
Due to the ACA, the NADP explains that about 30 to 40 million will enter the dental plan market while about 10 to 20 million will lose or change their current plans. Because of these expected changes, Stoll says employees can benefit with the savings plan model.
“Purchasing a dental savings plan can help the employee get the oral care they need with savings of 10% to 60% off what they would pay out-of-pocket,” says Stoll.
The American Dental Association said in a recent report that an estimated 5.3 million adults will attain oral health coverage as a result of the ACA. This will reduce the number of adults without dental benefits by about 5%, according to the April 2013 study, which notes that more than 8.7 million children will benefit from the new provisions.
“The ACA is a missed opportunity, and we have a long way to go in ensuring access to oral health for all Americans,” says Dr. Marko Vujicic, managing vice president of the ADA’s Health Policy Resource Centers. “This is especially true for adults, who have experienced greater financial barriers to dental care in recent years.”
Communicating these financial barriers could help employers and employees. DentalPlans.com currently offers plans to employers that start $6.00 per employee/month. For an average family, which includes two adults and two dependent children, families can save $626 on annual ADA recommended treatments, says the dental savings plan retailer.
DentalPlans.com offers more than 30 different plans, which fall under brands like Aetna, Careington, Signature Wellness and UNI-CARE.
“Since dental care for adults is not a required Essential Health Benefit under the ACA, employers are able to offer savings plans to their employees any time,” Stoll explains. “The plans can be offered completely voluntary with no employer contribution requirement. The employer is able to offer a dental savings plans that are affordable rather than offering nothing at all.”
But can dental health translate into more productive employees? Stoll says yes. Dental insurance can treat adults in the early stages of bleeding gums, infections and cavities so that employees do not miss work when the pain becomes unbearable.
“Adults miss work due to their own dental illnesses, but also many adults stay home with kids who have to miss school due to toothaches and dental illness as well,” Stoll says.
Moreover, Stoll explains that dental insurance, a missed and often forgotten voluntary option, can become an “added benefit to an employee’s compensation package.”
“Employers experienced enhanced productivity and performance of employees because they could take better care of their own and their families’ oral health,” Stoll explains. “With the recent slowdown in the economy, many employers wonder if they can continue to offer dental benefits to their employees.”
Final Employer ACA Regs from IRS Provide Transition Relief to Mid-Sized Employers
Originally posted on https://www.ifebp.org
The Internal Revenue Service (IRS) issued final regulations implementing the employer responsibility provisions under the Affordable Care Act (ACA) that take effect in 2015.
The final rules implement the employer shared responsibility provisions of the ACA, under section 4980H of the Internal Revenue Code. The rules make a number of changes in response to input on the proposed regulations issued in December 2012.
Highlights of the rules include addressing a number of questions about how plans can comply with the employer shared responsibility provisions; ensuring that volunteers such as firefighters and emergency responders do not count as full-time employees; and phasing in provisions for businesses with 50 to 99 full-time employees and those that offer coverage to most but not yet all of their full-time workers.
The final rules provide, for 2015, that:
- The employer responsibility provision will generally apply to larger firms with 100 or more full-time employees starting in 2015 and employers with 50 to 99 full-time employees starting in 2016.
- To avoid a payment for failing to offer health coverage, employers need to offer coverage to 70 percent of their full-time employees in 2015 and 95 percent in 2016 and beyond, helping employers that, for example, may offer coverage to employees with 35 or more hours, but not yet to that fraction of their employees who work 30 to 34 hours. (Proposed regulations would have required employers to offer coverage to 95 percent of their full-time employees in 2015.)
Various Employee Categories
The final regulations provide clarifications regarding whether employees of certain types or in certain occupations are considered full-time, including:
- Volunteers: Hours contributed by bona fide volunteers for a government or tax-exempt entity, such as volunteer firefighters and emergency responders, will not cause them to be considered full-time employees.
- Educational employees: Teachers and other educational employees will not be treated as part-time for the year simply because their school is closed or operating on a limited schedule during the summer.
- Seasonal employees: Those in positions for which the customary annual employment is six months or less generally will not be considered full-time employees.
- Student work-study programs: Service performed by students under federal or state-sponsored work-study programs will not be counted in determining whether they are full-time employees.
- Adjunct faculty: Based on the comments received, the final regulations provide as a general rule that, until further guidance is issued, employers of adjunct faculty are to use a method of crediting hours of service for those employees that is reasonable in the circumstances and consistent with the employer responsibility provisions. However, to accommodate the need for predictability and ease of administration and consistent with the request for a “bright line” approach suggested in a number of the comments, the final regulations expressly allow crediting an adjunct faculty member with 2 ¼ hours of service per week for each hour of teaching or classroom time as a reasonable method for this purpose.
U.S. Treasury Press Release
U.S. Treasury Fact Sheet
IRS Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act
Look Out for the ACA’s ‘Double Whammy’ in 2016
Originally posted January 21, 2014 by Daniel Hood on https://eba.benefitnews.com
While they are currently exempt from the employer mandate to provide insurance and not considered part of the “Small Group Market”, small businesses with between 50 and 100 employees will find that all that changes for the worse in 2016, according to Mark Dietrick, CPA, ABV, author of The Financial Professionals Guide to Healthcare Reform and past chair of the American Institute of CPAs’ National Healthcare Industry Conference Committee.
Speaking in an American Institute of CPAs’ online conference, “Health Care Reform: A Deep Dive into the Affordable Care Act,” Dietrich explained that by 2016 the employer mandate will kick in for companies with between 50 and 100 employees, and they will be moved into the “Small Group Market” for insurance coverage.
In the Small Group Market, insurers charge higher premiums, not least because, “It’s cheaper to insure 200 people under a single contract than it is to insure 40 groups of five under 40 contracts, or 200 individuals” Dietrich said. While the group had previously been for companies with 50 or fewer employees, the ACA raised the limit to 100 employees — though the increase was put off to 2016 because the law gave states the option to postpone, which they all took.
It is one of the “least understood” parts of the ACA, Dietrich said. “By 2016, those with between 50 and 100 employees will be pushed into the Small Group, where the rates are higher. They need to think about it now, or they will be facing rate shock.”
“The reason they’re forcing these people into the Small Group Market is to expand the actuarial base and to absorb some of the expected losses,” he said. At the same time, Small Group premiums are likely to rise even more, he said, because of the benefit requirements in the ACA, which limit deductibles and don’t allow insurers to turn down those with pre-existing conditions.
Worse yet, he warned, states may eventually merge the Small Group Market with the markets for individuals. “If states don’t get the enrollment of young people that they expect [to make state insurance exchanges viable], then the likelihood of states combining the Small Group and individual markets will go up.”
If the two are merged, premiums will likely rise even more. Among other things, individual deductibles tend to be higher, but the ACA caps deductibles.
Possible Solutions
Dietrich noted that these rules don’t apply to the Large Group Market – and to companies that are self-insured.
“Virtually every large company in the country is self-insured,” he explained. “They insure them themselves, but work through an insurance company. … Ordinarily, I wouldn’t have suggested self-insuring for a business with less than 100 employees, but the insurance industry is offering new products to help companies escape some of the more burdensome requirements of the ACA.”
He’s seen a similar change in previous circumstances -- specifically under the health insurance reform program instituted early in the decade in Massachusetts, which many cite as the model for the ACA: “The pattern of looking for self-insurance has been running in Massachusetts for eight years.”
“Play or Pay” Rules Delayed Until 2016 for Smaller Employers
Originally posted by https://blog.thinkhr.com
The Department of the Treasury and the Internal Revenue Service announced today that the Affordable Care Act’s health coverage mandate for employers with more than 50 employees but fewer than 100 employees working at least 30 hours per week will be delayed another year until 2016.
Employers with over 100 employees working at least 30 hours per week will become subject to the health coverage mandate under the Affordable Care Act (ACA) as previously announced beginning in January 2015. If these employers decide not to offer insurance to their employees, they will make an employer shared responsibility payment beginning in 2015 to help offset the costs to taxpayers for employees getting tax credits through the Health Insurance Marketplace.
“While about 96 percent of employers are not subject to the employer responsibility provision, for those employers that are, we will continue to make the compliance process simpler and easier to navigate,” said Assistant Secretary for Tax Policy Mark J. Mazur in the Treasury press release. “Today’s final regulations phase in the standards to ensure that larger employers either offer quality, affordable coverage or make an employer responsibility payment starting in 2015 to help offset the cost to taxpayers of coverage or subsidies to their employees.”
Today’s announcement included final regulations for implementing the employer shared responsibility provisions under the ACA, often referred to as the “Play or Pay” rules that will take effect in 2015.
To avoid this payment for the failure to offer affordable coverage meeting the minimum requirements as set forth in the regulations, these large employers will need to offer coverage to 70 percent of their full-time employees in 2015 and 95 percent starting in 2016. Full-time employment is defined as regularly working at 30 or more hours per week.
The immediate practical impact for employers includes:
- For employers with fewer than 50 employees: No impact, as this group was not subject to the employer shared responsibility provisions previously.
- For employers with 50 to 99 employees: For employers in this group that do not provide full-time employees with quality affordable health insurance, they will not have to pay any employer responsibility penalties in 2015. For 2015, this group will still be subject to provide an employee and coverage report as outlined in the ACA rules but will have until 2016 before the employer responsibility payments begin.
- For employers with 100 or more employees: Employers in this group are still subject to the mandate starting in 2015. What follows below are the highlights of the final regulations released today impacting the mandate for these employees to comply in 2015.
Key Elements of the Final Rules Impacting Employers with 100+ Employees in 2015
According to the Treasury Department Fact Sheet, the final regulations include the following changes:
- Coverage Thresholds: To avoid a payment for failing to offer health coverage, employers need to offer coverage to 70 percent of their full-time employees in 2015 and 95 percent starting in 2016. The original ACA rules required the 95 percent coverage beginning immediately.
- Full-time Employee Definitions:
- Volunteers: Bona fide volunteers for a government or tax-exempt entity, such as volunteer firefighters and emergency responders, will not be considered full-time employees.
- Educational employees: Teachers and other educational employees will not be treated as part-time for the year simply because their school is closed or operating on a limited schedule during the summer.
- Seasonal employees: Those in positions for which the customary annual employment is six months or less generally will not be considered full-time employees.
- Student work-study programs: Service performed by students under federal or state-sponsored work-study programs will not be counted in determining whether they are full-time employees.
- Adjunct faculty: Until further guidance is issued, employers of adjunct faculty are to use a method of crediting hours of service for those employees that is reasonable in the circumstances and consistent with the employer responsibility provisions. However, to accommodate the need for predictability and ease of administration and consistency, the final regulations expressly allow crediting an adjunct faculty member with 2 ¼ hours of service per week for each hour of teaching or classroom time as a reasonable method for this purpose.
- Full-time Employee Measurements: The final rules remain unchanged from the proposed rules that allow employers to use an optional look-back measurement method to determine whether employees with varying hours and seasonal employees are full-time. On a one-time basis, in 2014 preparing for 2015, plans may use a measurement period of six months even with respect to a stability period – the time during which an employee with variable hours must be offered coverage – of up to 12 months.
- Affordability Safe Harbors: As with the proposed regulations, the final rules provide safe harbors for employers to determine whether the coverage they offer is affordable to employees, including the W-2 wages, employees’ hourly rates, or the federal poverty level.
- Other Provisions of the Final Regulations:
- Employers first subject to shared responsibility provision: Employers can determine whether they had at least 100 full-time or full-time equivalent employees in the previous year by reference to a period of at least six consecutive months, instead of a full year.
- Non-calendar year plans: Employers with plan years that do not start on January 1 will be able to begin compliance with employer responsibility at the start of their plan years in 2015 rather than on January 1, 2015, and the conditions for this relief are expanded to include more plan sponsors.
- Dependent coverage: The policy that employers offer coverage to their full-time employees’ dependents will not apply in 2015 to employers that are taking steps to arrange for such coverage to begin in 2016.
Treasury and the IRS stated that additional final regulations will be forthcoming to streamline the ACA reporting requirements. Final rules will be published in the Federal Register on February 12th. We will continue to provide updates as more information is known.
For more information:
Treasury Press Release: https://www.treasury.gov/press-center/press-releases/Pages/jl2290.aspx
Treasury Fact Sheet: https://www.treasury.gov/press-center/press-releases/Documents/Fact%20Sheet%20021014.pdf
IRS Regulations (227 pages): https://s3.amazonaws.com/public-inspection.federalregister.gov/2014-03082.pdf
Taking A Strategic Look at Health Insurance and PPACA
Originally posted February 05, 2014 by Thom Mangan on https://eba.benefitnews.com
I checked in with Peter Freska, CEBS, Benefits Advisor with UBA Partner Firm, The LBL Group, and asked him what he’s seeing in the employer-sponsored insurance marketplace. Peter specializes in the large employer market and emphasizes long-term strategic planning to his clients.
Thom: Peter, what are you seeing as the top questions on employers’ minds as they begin to plan (if they have not already) for how best to adapt to the changing health insurance market?
Peter: Healthcare.gov offers some interesting insight into what business owners are asking, with the following questions:
While these questions may be a good place to start, employers are still faced with rising insurance premiums and reduced benefits. Planning for next year has always been important, but unfortunately, many employers only look as far ahead as the next renewal. The health care landscape is rapidly changing. With the current insurance companies re-filing new plans and networks, and new companies trying to break into the health insurance market and the continued vertical and horizontal integration of health care delivery systems — well, the times they are a-changin’.
Thom: What, currently, is the most pressing aspect of health care reform in the eyes of many employers?
Peter: As it sits, the “Cadillac Tax” legislation that’s slated to take effect on January 1, 2018.
Employers who provide health plans that are too rich (“Cadillac plans”) must pay a non-deductible 40% excise tax on the value of health plan coverage that exceeds $10,200 (indexed) for individual coverage and $27,500 (indexed) for family coverage. Value is based on both employer and employee contributions for medical coverage, health FSAs, HRAs, onsite clinics and employer HSA contributions.
Thom: Yes, according to the most recent UBA Health Plan Survey, employers in the Northeast are particularly at risk of facing the “Cadillac Tax” because of their high annual cost per employee (total cost). The Northeast has the highest total cost in the country at $10,808 per employee, which also saw the largest increase in cost at 5.35% (mostly because they still offer low deductible plans). The Southeast, however, remains the lowest cost region at $7,846 per employee with a renewal of 1.98%. A combination of non-deductible plans in the Northeast with a prevalence of massive state-mandated benefits is what’s driving the high costs of the Northeast (if fully insured).
So this impending tax poses some interesting questions for employers. What are they doing to prepare for this event?
Peter: Good question, Thom. Some wonder if they even should plan for this event! Many feel that these limits are too low, as there are plans today that exceed these numbers. Others feel that the inflation rate that the health plan values are indexed to after 2018 (CPI-U + 1%) is too low, stating that it does not meet medical inflation rates (Health Policy Briefs – Excise Tax on ‘Cadillac’ Plans).
But ultimately, when coming face-to-face with this excise tax, businesses will have to get their costs under control in order to avoid it. The question is, how do they do that?
We’ll likely see more of the same that they have done for many years: more managed care and cost shifting through contribution and benefit changes. The question that remains is, “will this be enough?” As medical costs continue to rise and more minimum value plans are offered by employers, when will the wiggle room be gone?
Employers with a strategic viewpoint are working with their trusted advisor to review the possibilities. They are strategizing on options now so that they are prepared for what lies ahead. There might be changes to the “Cadillac Tax,” but this is only one of several taxes under PPACA. Additionally, there are employer reporting requirements going into effect. Employers have more to manage than ever before. It is more important than ever to partner with an advisor that understands these new responsibilities, and is able to work with an employer to meet their goals. Always review the scope of work from an advisor to make sure it can align with the strategic goals of the organization. With or without PPACA, this is how an employer can make a difference in how it provides benefits.
Thom: Yes, although challenging, it’s an exciting time to be a benefits advisor. Thank you, Peter, for sharing this information.
Kaiser Health Tracking Poll for January 2014
Originally posted January 30, 2014 on https://kff.org
January 1st may have been a monumental date for those working on and closely following the Affordable Care Act (ACA), but the latest Kaiser Health Tracking Poll finds little change in the public’s knowledge and views of the law. With enrollment in new coverage options underway, a majority of the public believes that only “some” of the ACA’s provisions have been put into place, while just about one in five think “most” or “all” of the law has been implemented. Awareness of the law’s individual mandate and health insurance exchanges has increased slightly since last year, but about four in ten of the public overall and half the uninsured remain unaware of other major provisions. For the third month in a row, overall views of the law remain at their post-rollout more negative levels (50 percent unfavorable, 34 percent favorable), though over half the public – including three in ten of those who view the law unfavorably – say opponents should work on improving the law rather than keeping up efforts to repeal it.
Among the uninsured – a key group for outreach under the law – unfavorable views now outnumber favorable views by roughly a 2-to-1 margin (47 percent versus 24 percent). This is a change from last month when 43 percent of the uninsured had an unfavorable view and 36 percent were favorable. More of those without coverage say the law has made the uninsured as a group worse off (39 percent) than better off (26 percent). Despite these views, large shares of the uninsured see health insurance as “very important” and say they need it, while four in ten say they’ve tried to get coverage in the past 6 months, and half expect to get it this year.
January 1st Didn’t Register With The Public
The latest Kaiser Health Tracking Poll finds that even after most of the ACA’s major provisions took effect on January 1, a large majority of the public (62 percent) continues to believe that only “some” provisions of the ACA have been put into place thus far. Only about one in five (19 percent) say “most” or “all” provisions have been implemented, up somewhat from 9 percent last March.
When it comes to the individual elements of the law, awareness has increased slightly for two of the big ones: the individual mandate (81 percent now say it is part of the law, up from 74 percent last March) and the health insurance exchanges (68 percent, up from 58 percent). Still, large shares of the public – and even higher shares of the uninsured – remain unaware of some other major provisions of the law. For example, roughly four in ten adults overall, and about half of the uninsured, are not aware that the law provides financial help to low- and moderate-income Americans to help them purchase coverage, gives states the options of expanding their Medicaid programs, and prohibits insurance companies from denying coverage based on pre-existing conditions.
| FIGURE 2: Many Uninsured Remain Unaware Of Some Major ACA Provisions | ||||
| Total public | Uninsured, age<65 | |||
| To the best of your knowledge, would you say the health reform law does or does not…? | Yes, law does this | No/Don’t know | Yes, law does this | No/Don’t know |
| Require nearly all Americans to have health insurance or else pay a fine | 81 | 19 | 79 | 22 |
| Create health insurance exchanges or marketplaces where people who don’t get coverage through their employers can shop for insurance and compare prices and benefits | 68 | 31 | 62 | 38 |
| Provide financial help to low and moderate income Americans who don’t get insurance through their jobs to help them purchase coverage | 63 | 38 | 54 | 46 |
| Give states the option of expanding their existing Medicaid program to cover more low-income, uninsured adults | 58 | 42 | 49 | 51 |
| Prohibit insurance companies from denying coverage because of a person’s medical history | 54 | 46 | 48 | 53 |
On a more personal level, 44 percent of the public overall – including 66 percent of the uninsured –continue to say they don’t have enough information to understand how the law will impact their families.
Overall Views Remain Negative, But Public Wants Opponents To Work On Fixes Rather Than Repeal
Views of the law overall remain more negative than positive this month, with 50 percent saying they have an unfavorable view and 34 percent favorable, almost identical to the split in opinion since November. Still, more than half the public overall, including three in ten of those who view the law unfavorably, say opponents should accept that it’s the law of the land and work to improve it, while fewer than four in ten want opponents to keep up the repeal fight.
Most Continue To Say They Haven’t Felt An Impact From The ACA, But More Feel They’ve Been Affected Negatively Than Positively
At the same time, most Americans continue to report no personal experience with the law to date. Roughly six in ten say they haven’t been directly impacted by the law in a positive or negative way, though the share who perceive that they’ve been negatively impacted continues to be larger than the share who feel they’ve benefited (27 percent versus 15 percent). Those who feel they’ve been negatively impacted by the law are most likely to point to high costs of health care and insurance as the reason. With official data showing that only a very small share of the public overall have enrolled in the ACA’s coverage arrangements so far, these shares likely reflect people’s perceptions of being helped or harmed by the law, rather than actual experiences with new insurance options under the ACA.
Among The Uninsured, Unfavorable Views Outnumber Favorable By 2-to-1, And More Believe They’re Worse Off Under The Law Than Better
Among the uninsured – a key group targeted by the ACA – views of the law shifted negative this month. A quarter (24 percent) of those who currently lack coverage now say they have a favorable view of the law, while nearly twice as many (47 percent) have an unfavorable view and about three in ten (28 percent) decline to offer an opinion. In December, views among the uninsured were more evenly split (36 percent favorable, 43 percent unfavorable).
More than half of the uninsured (54 percent) say the law hasn’t made much difference for their families, and the share who feel they’re worse off as a result of the law is more than twice the share who feel they’re better off (30 percent versus 13 percent). When asked about the uninsured as a group, those without coverage are more likely to say the law has left this group worse off than better (39 percent versus 26 percent). We will continue to track these perceptions as more of the uninsured gain coverage.
Most Uninsured Say They Need Coverage; Four In Ten Have Tried To Get It In The Last 6 Months; Half Expect To Get It This Year
The survey also finds that most of the uninsured see health insurance coverage as very important (70 percent) and something they need (73 percent). Among those who currently lack coverage, four in ten say they have tried to get it in the past 6 months, including about one in five each who tried to get coverage from Medicaid (19 percent), directly from a private insurance company (19 percent), and through a state or federal health insurance exchange (18 percent).1
When told or reminded of the law’s requirement that most Americans obtain insurance or pay a fine, half the uninsured say they expect to get coverage, including about one in five (18 percent) who expect to purchase it themselves (either from a private insurance company or through an exchange), 8 percent who expect to get it from Medicaid, and 6 percent who expect to get coverage from an employer. A sizable share (17 percent of the uninsured overall) say they expect to get coverage but are unsure where.
Four in ten of those without coverage say they expect to remain uninsured, with most of these saying they don’t think they’ll be able to find an affordable plan. As noted above, many of the uninsured remain unaware of the additional options available to them under the ACA, including the insurance exchanges, subsidies, and expanded Medicaid in some states.
A Quarter Of The Public Overall Report A Change In Their Insurance Situation In The Past 6 months, Including One In Ten Who Attribute It To The ACA
As we pointed out in this Data Note [hyperlink], national public opinion polls aren’t the best vehicle for measuring the experiences of the small group of people who’ve actually gained coverage through the ACA so far. One thing we can do on the Kaiser Health Tracking Poll is to measure people’s perceptions about changes in their insurance situation and what role they think the law has played in those changes. This month’s poll finds a quarter (24 percent) of the public reports that they’ve had a change in their health insurance situation in the past 6 months, and four in ten of these (10 percent of the public overall) believe this change was a result of the health care law.
Among the 10 percent who perceive that their insurance status has changed as a result of the ACA, twice as many believe it was a change for the worse rather than for the better. However, about half this group currently has coverage through an employer, and most report that the change in their coverage was a change from one plan to another, suggesting that many of them may be attributing regular changes in insurance coverage to the law.
| FIGURE 11: Perceptions And Demographics Of Those Who Believe They Had A Change In Insurance Status As A Result Of The ACA | |
| Among the 10% who had a change in insurance status and believe it was a result of the ACA | |
| Would you say the change in your health insurance situation was a change for the better or a change for the worse? | |
| Better | 29% |
| Worse | 61 |
| No difference/Don’t know/Refused | 10 |
| Which best describes the change in your health insurance situation? | |
| Changed plans | 45 |
| Lost or dropped coverage | 14 |
| Got health insurance after being uninsured | 15 |
| Costs went up (vol.) | 12 |
| Some other change | 10 |
| Current health insurance status/type | |
| Insured (NET) | 92 |
| Employer | 50 |
| Self-purchase | 19 |
| Medicare | 6 |
| Medicaid | 13 |
| Other coverage | 3 |
| Uninsured | 6 |
| Don’t know/Refused | 2 |
More Report Seeing News Stories About Negative Rather Than Positive Impacts On People
This month’s poll also examined views of the media environment surrounding the ACA, and finds the majority say coverage of the law is focused more on politics and controversies (56 percent) rather than on how the law might impact people (6 percent), shares that have held steady since last fall. When it comes to personal stories in the news, about half the public (47 percent) reports hearing at least one story in the last month about an individual or family who was impacted by the law, with about twice as many saying they saw more stories about people being harmed (27 percent) as saying they saw more stories about people being helped (13 percent).
1. Multiple responses were allowed, since people may have tried to get coverage from more than one source in the past 6 months
Committee approves full-time worker bill
Originally posted February 04, 2014 by Allison Bell on https://www.benefitspro.com
Members of the House Ways and Means Committee today voted 23-14 to pass H.R. 2575, the Save American Workers Act bill.
For purposes of applying the Patient Protection and Affordable Care Act employer “shared responsibility” coverage mandate, the bill would define a full-time worker as an employee who works 40 hours or more per week.
PPACA now defines a full-time employee as an employee who works 30 or more hours per week.
PPACA requires employers that have the equivalent of 50 or more full-time employees to provide a minimum level of health coverage if one or more workers apply for coverage from a PPACA health insurance exchange.
Part-time workers count when employers are calculating the number of full-time equivalents they have, but employers subject to the PPACA “play or pay” mandate penalties tied to the number of actual full-time workers they have. When employers are calculating the actual penalty payment amounts, they can exclude part-time workers.
Rep. Todd Young, R-Ind., the sponsor, said the 30-hour limit is encouraging many employers to limit hours to avoid penalties.
“An employee seeing their hours cut from 39 hours to 29 hours will lose an entire week’s paycheck over the course of a month,” Young said.
Democrats on the committee said the bill would gut the coverage mandate by letting employers classify workers who work as many as 39 hours per week as part-time workers.
Rep. Xavier Becerra, D-Calif., noted that Ways and Means leaders gave the bipartisan Joint Committee on Taxation only a week to analyze the bill.
Budget analysts have not yet estimated how the bill might affect federal spending, taxes or the federal budget deficit, Becerra said.
“We’re essentially voting in the blind,” Becerra said.
Public Exchanges Competitive with Employer-Sponsored Plan
Originally posted January 30, 2014 by Michael Giardina on https://eba.benefitnews.com
Premiums for health plans on new state exchanges under the Affordable Care Act are comparable to – and in some cases lower than – those being offered by employers with similar levels of coverage, according to a study released Thursday by PricewaterhouseCooper’s Health Research Institute.
HRI analyzed the average premium costs for a working population nationally in the public exchanges, and calculated that the median 2014 premium for a plan with coverage similar to that of the average employer-sponsored plan was $5,844. By comparison, the average employer premium for a single worker was $6,119, a difference of 4%. The premiums do not include subsidies.
The ACA allows for consumers to shop on its 51 new state exchanges within four plan levels; these include bronze, which pays 60% of healthcare costs; silver, which covers 70%; gold, which covers 80%; and platinum, which covers 90% of the bill.
Currently, employer-sponsored health plans cover about 85% of healthcare costs, with the remaining costs being charged to employees, the PwC study states.
Across the board, at every level, average exchange premiums are lower than this year’s average premiums for employer-sponsored coverage, according to the data.
“Employers may be surprised that exchange premiums in 2014 are comparable to employer premiums and in some states significantly lower than employer-based premiums,” says the report. “Employers contemplating future limits to their health care spending could face less resistance if employees are given a wider range of options at different price points via an exchange.”
The report cautions, however, that future fluctuations in public exchange rates are possible because health plans are competing under a new set of underwriting rules which provide some protections against financial risk. “As a result of this uncertainty, the first-year exchange rates vary significantly. It may take several years for this new market to reach equilibrium,” it says.
HRI’s analysis is based data of employer-sponsored premiums of 156 million people in 2013. The analysis compares the premiums paid by employers for single worker coverage to premiums paid for similar coverage in the state exchanges.