Will Your Plan Cover Spouses?
Originally posted by Keith R. McMurdy on https://www.mondaq.com
I happened upon two interesting articles today about spousal coverage under employer sponsored benefit plans. The first was an article about UPS eliminating spousal coverage and blaming PPACA. The second was a study conducted by the Employee Benefits research Institute that concluded that, on average, spouses cost more to insure than employees, but elimination of spousal coverage may not save money in the long run. Without opining on whether or not the elimination of spousal coverage makes financial sense, there is an issue here about how to eliminate spouses from eligibility under a health plan which bears some consideration.
Generally, PPACA defines affordable coverage based on the single "employee only" rate. Employers are required to offer dependent coverage, but that requirement excludes an obligation to offer coverage for a spouse. So, like UPS, an employer can eliminate coverage for souses, keep coverage for children and still satisfy PPACA's requirements. But UPS did not eliminate all spouses from eligibility, only those with coverage available from their own employer. So if the decision is made to eliminate spousal coverage that is not necessarily the end of the process.
Will the coverage be offered to spouses who don't have other options or will all spouses be excluded? What are the definitions of dependent in the plan? Do you offer family coverage and not "single plus children" or "single plus spouse'? It comes down to the ongoing requirement to make your PPACA compliance plan meet the ERISA requirements. Remember that eligibility is dictated by plan terms and if your plan does not define terms like "spouse," "dependent" and "family," you could be creating a problem with ERISA by having conflicting interpretations of those terms. Then, assuming your definitions are complete, you have to make sure the eligibility rules you outlined not only use those definitions but also clearly explain the eligibility requirements. In the case of UPS, what does it mean to have "other available coverage"?
If you decide to offer coverage to spouses who don't have other coverage, how will you verify eligibility? What are your rules for confirming eligibility? How are these rules communicated? There are no absolute answers to these questions and employers have a variety of options for plan administration if they decided to go this route. But they have to think these things through in advance. Never lose sight of the fact that when an employer provides health insurance to employees, it is a plan sponsor under ERISA. Make sure that if you decide to restrict spousal coverage because of PPACA, you follow ERISA rules in the process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
3 takeaways for employee benefits industry from Obama’s State of the Union address
Originally posted January 29, 2014 by Julie Stich on https://ebn.benefitnews.com
Following President Obama’s fifth State of the Union address, the International Foundation of Employee Benefit Plans closely examined the key takeaways that will affect the employee benefits industry.
No. 1: The Affordable Care Act is here to stay and opponents will face a difficult, if not impossible, task to repeal it legislatively. However, the door is still open to make changes and improvements to the existing law.
No. 2: The ACA still needs many more “young invincibles” to sign up in order to keep costs low for others.
No. 3: Apprenticeship and other job training programs are going to be a major focus for the administration in 2014. Led by Vice President Biden, these efforts will work to mobilize business leaders, community colleges, mayors and governors, and labor leaders to increase funding and the number of innovative apprenticeships in America.
Without a doubt, the Affordable Care Act has had the most significant impact on the employee benefits industry in decades and even though the president’s address maintained a light focus on the issue, it will continue to affect our industry and raise questions with the public and employers for the foreseeable future. In addition, the president’s announcement of a major initiative to support apprenticeship and other job training programs has the opportunity to provide our industry with many benefits and needed resources.
DOL issues FAQs on ACA's implementation
Originally posted January 23, 2014 by Ilyse Wolens Schuman on https://ebn.benefitnews.com
The Department of Labor’s Employee Benefits Security Administration (EBSA) has issued the latest in its series of Frequently Asked Questions (FAQs) on the Affordable Care Act’s (ACA) implementation. The latest guidance (Part XVIII) addresses questions on coverage of preventive services and limitation on cost-sharing requirements under the ACA. The FAQs also provide guidance on expatriate plans, wellness programs, fixed indemnity insurance and the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).
Preventive Services
With respect to preventive services, the ACA requires non-grandfathered group health plans and health insurance coverage offered in the individual or group market to provide benefits for, and prohibit the imposition of cost-sharing requirements with respect to, the following:
Evidenced-based items or services that have in effect a rating of "A" or "B" in the current recommendations of the United States Preventive Services Task Force (USPSTF) with respect to the individual involved, except for the recommendations of the USPSTF regarding breast cancer screening, mammography, and prevention issued on or around November 2009, which are not considered current;
Immunizations for routine use in children, adolescents, and adults that have in effect a recommendation from the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention (CDC) with respect to the individual involved;
With respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration (HRSA); and
With respect to women, evidence-informed preventive care and screening provided for in comprehensive guidelines supported by HRSA, to the extent not already included in the current recommendations of the USPSTF.
On September 24, 2013, the USPSTF issued new recommendations with respect to breast cancer. Accordingly, the FAQ explains that for plan or policy years beginning one year after September 24, 2014, non-grandfathered group health plans and non-grandfathered health insurance coverage offered in the individual or group market will be required to cover such medications for applicable women without cost sharing subject to reasonable medical management.
Cost-Sharing Limitations
The FAQs include a number of questions about the application of the ACA’s cost-sharing limitation. For plan years beginning in 2014, the annual limitation on out-of-pocket costs applicable to non-grandfathered group health plans and group health insurance coverage is $6,350 for self-only coverage and $12,700 for coverage other than self-only coverage. For subsequent plan years, the annual limitation on out-of-pocket costs will increase by the premium adjustment percentage described in the ACA. A previous FAQ provided guidance on out-of-pocket maximums for the first year of applicability where a group health plan or group health insurance issuer utilizes more than one service provider to administer benefits that are subject to the annual limitation on out-of-pocket costs. This latest guidance explains that for plan years beginning on or after January 1, 2015, non-grandfathered group health plans and group health insurance coverage must have an out-of-pocket maximum that limits overall out-of-pocket costs on all essential health benefits (EHB). In addition, plans and issuers are permitted to structure a benefit design using separate out-of-pocket limits, provided that the combined amount of any separate out-of-pocket limits applicable to all EHBs under the plan does not exceed the annual limitation on out-of-pocket maximums for that year. The FAQs clarify that a plan that includes a network of providers is not required to count an individual's out-of-pocket expenses for out-of-network items and services toward the plan's annual maximum out-of-pocket limit. A plan is not required to count an individual's out-of-pocket costs for non-covered items or services (such as cosmetic services) toward the plan's annual maximum out-of-pocket limit either.
Expatriate Plans
The FAQs include clarification of the temporary transitional relief exempting expatriate health coverage from certain ACA provision. For purposes of the transitional relief, an insured expatriate health plan is an insured group health plan for which enrollment is limited to primary insureds for whom there is a good faith expectation that such individuals will reside outside of their home country or outside of the United States for at least six months of a 12-month period and any covered dependents, and also with respect to group health insurance coverage offered in conjunction with the expatriate group health plan.
Wellness Programs
Final regulations regarding nondiscriminatory wellness programs in group health increased the maximum permissible reward under a health-contingent wellness program from 20% to 30% of the cost of coverage, and further increased the maximum permissible reward to 50% for wellness programs designed to prevent or reduce tobacco use. The DOL explains that the FAQs address several issues that have been raised since the publication of the final regulations.
If a participant is provided a reasonable opportunity to enroll in the tobacco cessation program at the beginning of the plan year and qualify for the reward (i.e., avoiding the tobacco premium surcharge) under the program, the plan is not required (but is permitted) to provide another opportunity to avoid the tobacco premium surcharge until renewal or reenrollment for coverage for the next plan year.
The FAQs describe a scenario in which a plan participant's doctor advises that an outcome-based wellness program's standard for obtaining a reward is medically inappropriate for the plan participant and the doctor suggests a weight reduction program (an activity-only program) instead. The FAQs explain that the plan does have a say with respect to how a weight reduction program is selected. The plan must provide a reasonable alternative standard that accommodates the recommendations of the individual's personal physician with regard to medical appropriateness. Many different weight reduction programs may be reasonable for this purpose, and a participant should discuss different options with the plan.
The final wellness regulations provided sample language that may be used to satisfy the requirement to provide notice of the availability of a reasonable alternative standard. The FAQs state that plans and issuers are permitted to modify this sample language to reflect the details of their wellness programs, provided that the notice includes all of the required content.
Mental Health Parity
With respect to mental health parity requirements, the guidance states that the ACA builds on the MHPAEA and provides that mental health and substance use disorder services are one of 10 EHB categories. Under the EHB rule, non-grandfathered health plans in the individual and small group markets are required to comply with the requirements of the parity regulations to satisfy the requirement to provide EHB.
CFOs say they’ll increase health plan cost-sharing, blame PPACA
Originally posted January 09,2014 by Dan Cook on https://www.benefitspro.com
The old employee health care cost pass-along is going to heat up considerably this year. And guess who’s getting the blame for it? Yep, the Patient Protection and Affordable Care Act.
At least that’s the consensus from an in-depth survey of 96 corporate CFOs executed by Deloitte Consulting. Respondents told Deloitte they’ll be asking employees to kick in more for company coverage and, when asked why they have to, they’re going to point to Obamacare as the cause.
Health insurance trends were just part of this much broader survey. In general, the companies sampled are optimistic about 2014 and seem to feel their employers have done a good job of getting the ship in shape for this year. While they are forecasting relatively low sales increases in 2014 vs. 2013, earnings expectations actually increased slightly, and 54 percent expressed “rising optimism” about quarterly returned compared to 42 percent last quarter.
When it comes to health insurance costs, containment is the key word. These CFOs have been told to rein in health costs and they’re going to do so by shifting costs to those covered.
That this is the preferred option over reducing coverage was made clear when just 10 percent said they would offer employees less robust coverage packages. Instead, 60 percent have raised or will raise the employee portion of cost, keeping benefits where they’re at. (Only 10 percent said they’d beef up the health benefits package.) Another 28 percent are considering doing so.
When asked about health care cost controls, Deloitte said nearly two-thirds of companies have taken at least one major cost-control step, usually either implementing wellness programs or raising employees’ financial responsibility. About 45 percent plan to take a second cost-control step in the next 12 months. For cost pass-along employers, most choose higher premium contributions and deductibles.
Perhaps fearing a slump in morale or an increase in negative gossip, these CFOs weren’t about to let the company take the blame for higher employee cost sharing.
Deloitte said “42 percent of (U.S.) chief financial officers who have shifted additional healthcare costs to workers cited the Affordable Care Act as their impetus. The number blaming the healthcare law rose to 63 percent for CFOs planning to shift costs in the next year. The statistics suggest that Obamacare is aggravating the trend of employers charging staff higher healthcare costs in order to contain spending, and came as most CFOs expressed rising optimism about their companies’ prospects.”
The PPACA served as whipping boy on other fronts. The survey said:
- About 13 percent blamed reduced their earnings forecasts on the act;
- 8 percent cited the act for constrained hiring;
- 4 percent said the act forced them to shift toward part-time staffing.
Second wave of health-insurance disruption affects small businesses
Originally posted January 11, 2014 by Ariana Eunjung Cha on https://www.washingtonpost.com
When millions of health-insurance plans were canceled last fall, the Obama administration tried to be reassuring, saying the terminations affected only the small minority of Americans who bought individual policies.
But according to industry analysts, insurers and state regulators, the disruption will be far greater, potentially affecting millions of people who receive insurance through small employers by the end of 2014.
While some cancellation notices already have gone out, insurers say the bulk of the letters will be sent in October, shortly before the next open-enrollment period begins. The timing — right before the midterm elections — could be difficult for Democrats who are already fending off Republican attacks about the Affordable Care Act and its troubled rollout.
Some of the small-business cancellations are occurring because the policies don’t meet the law’s basic coverage requirements. But many are related only indirectly to the law; insurers are trying to move customers to new plans designed to offset the financial and administrative risks associated with the health-care overhaul. As part of that, they are consolidating their plan offerings to maximize profits and streamline how they manage them.
“If they do it one way, the word canceled gets attached to it. If they do it another way, they say they are amending the policy. It sounds more gentle but it’s the same thing,” said Gary Claxton, an expert in private insurance at the Kaiser Family Foundation. “The basic point is, for many people in the small-group market at some point soon their coverage is going to change.”
The transformation of the small-group market is just one of the many ripple effects of the Affordable Care Act that will reshape the insurance industry in coming years. With millions of previously uninsured people getting coverage, the insurance industry’s business model is being upended, and that’s leading to changes involving all sorts of products, not just those sold through the online marketplaces to individuals.
The impact of cancellations in the small-group market is expected to be less dramatic than in the individual market, partly because a higher percentage of small-business policies provide more generous benefits. Still, the changes being made by the insurance industry are leaving some small-business owners confused and disillusioned about the law — whether it is directly to blame for the changes or not.
Stephen Lohman, owner of Allegheny Plant Services, a trucking company in Pittsburgh, said the Aetna PPO plan he offers his 38 employees will be discontinued at the end of this year. He said he has been offered a new Aetna policy with premiums that are 40 percent higher, and that other insurers’ rates are similar.
“We were very surprised,” he said, adding that it is “important to me personally” to offer insurance to his employees, but he is not sure he can afford the premium increase.
Now that insurers aren’t able to charge more to people with preexisting conditions, companies with sicker workers may see lower premiums, while those with a healthier workforce may see higher premiums. Many small businesses are also discovering that the new plans have more restrictions on access to specific doctors, hospitals and prescription drugs.
The reason, said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s main trade group, is that the law requires small businesses to purchase coverage that is more comprehensive than what some buy today, and that drives up costs.
Some small businesses are eligible for new tax credits to partially offset the cost of insurance. Also, firms no longer have to worry about the possibility of large premium increases if too many of their workers fall ill.
‘Ending discrimination’
An estimated 18 million to 24 million people in the United States have insurance through employers with fewer than 50 workers, and about 40 million have coverage through firms with fewer than 100 workers. The Department of Health and Human Services estimated in 2010 that up to 80 percent of small-group plans, defined as having fewer than 100 workers, could be discontinued by the end of 2013. But many small employers bought themselves extra time by renewing policies early through the end of 2014.
Jonathan Gruber, a key architect of the health law and a professor of economics at the Massachusetts Institute of Technology, said the number of people covered by small-group policies that will be discontinued is “not trivial.”
“We’re ending discrimination [against people who are sick, and as a result] the people who were previously benefiting may now suffer,” Gruber said. “That’s sad for them, but it does not mean we should continue discrimination.”
He said the change for most small businesses will simply be a “labeling issue,” with companies able to switch to similar plans at similar prices with the same carriers, although the plans themselves may have different names. A smaller group will have to pay more for a more generous plan. Gruber said the number of genuine “losers” under the health-care law — those who will have to pay more for the same or inferior coverage — is “very, very small.”
In November, President Obama, responding to criticism about widespread cancellation of individual policies, said insurers could extend policies that do not meet the law’s requirements for an additional year, if state regulators agreed. His announcement applied to small-group plans as well.
There is substantial turnover in individual and small-group policies every year, even without the health law. But insurers say the change that’s starting to occur is significantly larger than before.
In New Jersey, the state’s association of health plans says 650,000 people with small-group coverage have had their plans disrupted. In Colorado, regulators said small-group plans covering 143,000 people are being discontinued in 2014.
In New Hampshire, the state’s largest insurer, Anthem Blue Cross Blue Shield, is moving all of those in its small-group plan — 60,000 to 70, 000 people — to plans that are similar to those sold on the marketplace created by the health-care law. These plans have drawn fire from consumers because they include only 16 of the state’s 26 acute-care hospitals.
In Pennsylvania, Delaware and West Virginia, Highmark Blue Cross Blue Shield is discontinuing all its small-group plans for those who did not renew early, and offering new policies with different coverage and premiums. The company says 99.5 percent of the 5.3 million people it covers through its individual and small-group plans will be affected, but it declined to break out the number under small-group plans for competitive reasons.
Business for marketplaces
In Vermont and the District, regulators are making other changes in the small-group market. They are requiring small businesses and associations with fewer than 50 employees to purchase new policies through the government-run online marketplaces. The rules go into effect in 2014 in Vermont and 2015 in the District. About 39,300 people in Vermont are being affected, according to state regulators. The District requirement will be extended to employers with up to 100 employees in 2016; it could affect as many as 125,000 people.
Regulators took the step to try to ensure that the exchanges — the smallest in the country, by population served — would have enough young, healthy enrollees to offset the cost of older, sicker participants.
Judith Kennedy, president of the National Association of Affordable Housing Lenders, based in the District, recently received a notice informing her that the group’s small-group plan was being discontinued. She said she worries about the consequences as both an employer and as a parent.
“The notion that the plans on the exchanges may or may not limit providers scares a mom who has lived through chronic illness with her child,” she said.
Also facing disruption are people who purchase insurance through professional or trade associations and don’t have any employees. This includes some doctors, lawyers and accountants in solo practice. Under the health law, that type of association plan is not allowed; sole proprietors must purchase coverage on the individual market.
Cynthia Rutzick, 49, who has her own law practice in Oak Hill, Va., said that the policy she had been buying for years through the state bar association was already offering the benefits mandated by the health law.
But the policy, which cost $1,500 a month for herself, her husband and their two children and included 94 percent of the physicians in her area, was canceled. The new one, which costs $1,600 a month for her and her two children (her husband is going on Medicare next year) includes 82 percent of area physicians. Her broker said plans like her old one don’t exist anymore.
“So I had a blue car, but could not go out and buy another blue car,” she said. “I have to buy a red car, and it’s not as good and way more expensive.”
6 health care trends for 2014
Originally posted by EBA https://eba.benefitnews.com
2013 was a pinnacle year in health care with the opening of the Affordable Care Act’s health care exchanges. But what can we expect in 2014? EBA spoke with experts across the spectrum to find out.
1. Complying with the ACA
The Affordable Care Act will continue to have a lasting impact into 2014. With the employer mandate pushed off and the penalties delayed as well, brokers will spend most of 2014 making sure their clients are complaint for 2015, says Mark S. Gaunya, principal at Borislow Insurance.
2. Losing coverage
In addition to focusing on compliance in 2014, Gaunya believes that many people will be in for a big surprise on Jan. 1 when “millions wake up and can’t see their doctor.” Gaunya predicts that many people who had coverage will lose it — 110,000 alone in his home state of Massachusetts — and some won’t even realize it until they go to the doctor.
3. Health care eligibility issues
With the ACA and Windsor decision on DOMA, employment lawyer Keith R. McMurdy of Fox Rothschild LLP believes many plan sponsors in 2014 are going to have problems with plan eligibility definitions. “Lots of employers don't really remember that changing eligibility and participation requirements requires an update of plan documents, revisions to SPDs and summaries of material modification,” he says. “I think that as the year progresses between litigation and EBSA audits we are going to see a lot of plans that have conflicting language over how they are being administered. “Plan sponsors that don't do complete review of these eligibility rules are going to find themselves in a world of hurt,” he adds.
4. Uneven risk pool hurts carriers
Insurance carriers whose plans are sold through the exchanges will issue earnings reports much worse than average in 2014, predicts Thom Mangan, CEO of United Benefit Advisors, due to the failure to enroll the young and healthy. Mangan says that after that happens the federal government will offer “some financial assistance to insurance carriers but not enough to make them whole.”
5. A small rise in health care costs
In 2014, the medical cost trend is estimated to be 6.5% by PricewatehouseCoopers Health Research Institute — one full percentage point below 2013’s estimate. After accounting for benefit design changes, such as higher deductibles, the net growth rate will be 4.5% in 2014, pWc predicts.
6. A request to drop coverage
In 2014, individual employees will realize they can get individual health coverage for less than their employer's group health plan, says Rick Lindquist, president of Zane Benefits Inc. “As a result, employees will start asking their employers to drop coverage, which will cause the small businesses health insurance market to implode in favor of defined contribution health benefits,” he says.
What’s ahead in 2014 for PPACA
Originally posted December 18, 2013 by Nathan Solheim on https://www.benefitspro.com
Let’s be honest. In the history of American health care, the year 2013 won’t exactly go down as a time that went as smoothly as one of President Barack Obama’s campaign speeches.
At mid-year, most observers could see some of the downsides: rising premiums and dropped policies. Deadlines had to be pushed back, and some parts of the law demanded rewrite.
And by October — when the exchanges rolled out — there were (are) glitches with state websites and www.healthcare.gov, which prompted calls for Silicon Valley to rescue the $600 million mess. Tea Party Republicans partially closed the government in an attempt at political blackmail, while Democrats quickly distanced themselves from the program’s failures. It was difficult for any good news about PPACA — such as reduced premiums for some consumers and the ability for people with pre-existing conditions to buy coverage again — to cut through the media morass.
But even though PPACA implementation has been bumpy, it will continue — and 2014 will prove to be a pivotal year. Much of the law’s major provisions take effect next year, and yes, there are likely to be more delays or problems. Brokers can count on clients, employees and HR managers turning to them for advice on coming into compliance with the law and helping make decisions in the uncertain business environment ahead.
“In some respects, someone who’s new to insurance and is learning the new scheme — they’ll have an advantage because the stuff we used to know doesn’t apply anymore. It’s all new,” says Pamela Mitroff, director of state affairs for the National Association of Health Underwriters. “I answer the bulk of compliance questions from our members. I get 20–30 a day, and they’re not just one simple question. Many of them will have a page of questions.”
Here’s a look at what’s ahead in 2014 for PPACA:
The individual mandate
Beginning Jan. 1, 2014, Americans must buy health insurance from a private insurance provider or through a public program. While the glitch-marred exchange website debuted in October 2013, individuals must have insurance by Jan. 1 in order to comply with the new regulation. The penalty for failing to do so is either $95 or 1 percent of a person’s income — whichever is higher.
Market reforms
PPACA includes a bevy of market reforms — the most notable being that carriers will have to cover people with pre-existing conditions. Others include prohibiting lifetime limits, defining small employer groups as between 1–100 employees (some states can define as 50 employees until 2016), and limiting annual deductibles to $2,000. Brokers and agents point to PPACA’s edict on modified community ratings as a major factor in potential increases in the cost of plans. PPACA mandates a 3:1 community rating, while some states are as high as 8:1. Carriers also will not be able to charge more for women.
“You’ll see younger people with plans that go up in price, and the older folks, in all likelihood, stay where they were,” says Zach Zinser of Zinser Benefit Service in Louisville, Ky. “They’re going to raise the bottom up.”
Tax credits begin
Because of the individual mandate, Obamacare also includes tax subsidies for individuals to help them afford the cost of health insurance. However, the tax credits are dependent on annual income and access to private plans. Brokers have answered a lot of questions from employees about whether they qualify for a tax credit and will continue to do so.
“The No. 1 question I get is, ‘Am I eligible for a subsidy?’” says Trish Freeman of Trish Freeman Insurance Service in Gonzalez, La.
“When people hear Affordable Care Act or they hear comments from [The Department of] Health and Human Services or the president, they’re expecting something affordable,” says Darlene Tucker, owner of Darlene Tucker Insurance and Financial Planning in Scotts Hill, Tenn. “And they may or may not find it affordable. We’re going to see a lot of people where the premium is not affordable. And I think we’ll still see people who can’t afford the premium who aren’t eligible for the subsidy.”
New tax No. 1
To help pay for it, architects of the law built in several new taxes and fees on carriers. Perhaps the most expansive is called the Health Insurance Tax, which is expected to generate $8 billion in 2014 and more than $100 billion over 10 years, according to America’s Health Insurance Plans. Several groups — and unions that have negotiated top-shelf plans for their members — have started lobbying to repeal the tax.
New tax No. 2
Another tax comes in the form of the “transitional reinsurance fee.” A fee of $63 for each life covered on a health insurance plan will be collected yearly from carriers. The fee will be first be collected in 2014, and it will continue being collected through 2016. The fee is supposed to offset the extra cost of covering people with pre-existing conditions.
Brokers and agents credit these two new taxes and others as contributors to premium increases across the country.
“Those are all taxes that will be built into the price now,” Zinser says.
Medicaid expands
Medicaid — the state-federal program that provides health coverage for the poor — will expand to cover individuals whose incomes are 133 percent of the federal poverty level. Some states have opted not to take part in the Medicaid expansion.
Health care co-ops
Co-ops will be allowed to compete for consumers on the exchanges. An Oct. 22 story in theWashington Post, however, reported some co-ops are in trouble and might not have enough funding to adequately begin operations. In some states, though, co-ops have launched.
“Unfortunately, when everyone in Michigan had to submit their rates, it was a guessing game, and [the co-op’s] rates are higher,” says Denise Van Putten, an account executive with the Grand Rapids, Mich.-based Lighthouse Group. “I think a co-op is a good idea if we can get the rates to be competitive.”
Freeman pointed out the relative youth of the co-ops — many of which were created during the time since Obamacare’s passage — could affect consumers’ perception about their quality and affordability.
“In Baton Rouge, there are two companies on the exchange — we have Blue Cross and the Louisiana co-op,” Freeman says. “People are a little leery about companies they don’t know anything about.”
Minimum standards
All health insurance policies must adhere to standards set forth under PPACA. People who’ve lost policies in 2013 and those who will continue to lose coverage in 2014 will do so because their existing plans don’t meet 10 minimum standards mandated under PPACA.
Those standards include:
- ambulatory patient services
- emergency services
- hospitalization
- maternity and newborn care
- mental health and substance use disorder services, including behavioral health treatment
- prescription drugs
- rehabilitative and habilitative services and devices
- laboratory services
- preventive and wellness services and chronic disease management
- pediatric services, including oral and vision care
Waiting periods defined
Also starting Jan. 1, the waiting period for people to sign up for health insurance will be set by PPACA. Waiting periods of more than 90 days will be prohibited for all health plans. Brokers and agents say this provision mainly affects businesses and industries that experience high turnover.
Wellness worth more
PPACA also allows employer-sponsored wellness programs to increase the value of incentives. After Jan. 1, employers can increase the value of incentives to 30 percent of premiums. For reducing tobacco use, employers can increase the maximum reward up to 50 percent.
Factor in the new regulations with parts of the law that are already in effect, and brokers and agents agree that there has been a profound impact on the individual and small-group markets. Some warn that the market could disappear, while others say the market can withstand Obamacare’s regulations.
“For brokers that work in the small-group arena, the vast majority of groups with under 50 employees are going to look at dropping their coverage,” Tucker says. “That’s been my opinion since the law passed, and nothing has happened to change my mind.”
Van Putten says that among the more than 500 small groups he manages, less than 10 percent will drop their coverage.
“The rates out there for individuals are high,” she says, “so they’re completely different from the group plans.”
So as 2014 looms, brokers around the country are continuing to advise clients. But they’re also looking around for new opportunities and developing strategies to keep their own businesses afloat. Some have advised a wait-and-see approach, while others have been more aggressive.
Freeman says at the end of the day, it’s about helping clients.
“I can’t bail on them,” she says. “I can’t leave them with a navigator — someone who’s had 20 hours of training when I’ve had 20 years of training. I will get my clients through this, and as long as I don’t lose money in the future, I’ll be here.”
Be careful about what constitutes affordable care
Originally posted December 13, 2013 by Keith R. McMurdy on https://eba.benefitnews.com
When considering what constitutes affordable coverage under the Affordable Care Act, some employers have come to me and said “Well, I will just charge everybody 9.5 percent of employees’ pay.” And on its face, that seems to be what the rule permits. But, as with other components of the ACA, Congress may have overlooked that our old friend ERISA already has a little something to say about what employees can be charged as a contribution.
Generally, ERISA does not require plans to provide the same benefit coverage to all employees. But the plan’s offerings have to be made in a manner that is non-discriminatory. HIPAA makes it illegal to charge different contributions to employees based on health factors. Specifically, an employer cannot charge some employees more than any other similarly situated individuals based on medical conditions, claims experience, receipt of health care services, genetic information or disability. But HIPAA does allow an employer to make other distinctions in benefits that are offered in the cost to employees, provided the distinctions are not discriminatory.
In order to avoid discrimination, plans have to limit their distinctions between employees to “bona fide employment-based classifications.” The most common examples are things like full-time or part-time status, geographic locations and salaried versus hourly employees. In some instances, it may even be permissible to charge different rates based on time of service, but employers have to be wary of age discrimination rules. However, what is clear is that the plan has to define the rules and explain how the rules apply to each classification of employee.
What employers should be considering as they prepare their compliance program for 2015 is how they define these job classifications. For example, take two employees who do the exact same job, but one makes $10 per hour and the other makes $10.50 per hour simply because they have been employed a year longer. If the employer charges both of these employees 9.5% of their wages for health insurance contributions, there would be discrimination between them because they are similarly situated employees being charged two different rates for the same benefit coverage. Absent plan rules that explain the distinction, this difference in contributions would be discriminatory and arguably impermissible under ERISA.
So before assuming that everyone can be charged 9.5% of box 1 of their W-2s, consider what ERISA already has in place. It is not that it can’t be done this way, it is only that it has to be done properly, with the right plan language and with the correct limits in place. The ACA compliance is also ERISA compliance and employers should seek assistance for staying in line with both.
The information in this Legal Alert is for educational purposes only and should not be taken as specific legal advice.
Healthcare Reform Curbs Full-Time Hiring
Originally posted December 12, 2013 by Jon Jimison on https://medcitynews.com
Almost half of U.S. companies are wary of taking on full-time employees as a result of the Affordable Care Act.
And 20 percent are likely to hire fewer employees while 10 percent may actually lay off employees in response to what's been dubbed "Obamacare."
That's according to the findings from Duke University/CFO Magazine's Global Business Outlook Survey, which was concluded Dec. 5.
The survey found American chief financial officials indicated that because of the Affordable Care Act, they may reduce employment growth or even shift toward part-time employees. In fact, more than 40 percent of companies will consider targeting part-time workers for future employment, the survey found.
"These are some negative, perhaps, unintended consequences of the Affordable Care Act that companies are wrestling with right now that might dampen the hiring horizon a bit," said John Graham, Duke Fuqua School of Business finance professor and a director of the survey.
There was, however, a silver lining in the survey. It found that underlying economic conditions are expected to improve next year. Fifty-two percent of U.S. business leaders believe economic conditions for their firms will be better in 2014.
There will still be some expected employment growth, but health care reform has reduced that growth from what it could have been, Graham reported.
Capital spending among businesses might fare better, increasing up to 7 percent next year.
President Barack Obama's signature 2010 health care law requires many companies to provide insurance to all full-time workers, which the law defines as those who work 30 or more hours per week. Some businesses reportedly have given part-time schedules to their former full-time staffers to skirt insurance requirements.
Larger companies that employ 50 or more people are required to provide health insurance under the law. Smaller companies can opt out.
"The inadequacies of the ACA website have grabbed a lot of attention, even though many of those issues have been or can be fixed," Graham said. "Our survey points to a more detrimental and potentially long-lasting problem. An unintended consequence of the Affordable Care Act will be a reduction in full-time employment growth in the United States. Companies plan to increase full-time employment by 1.4 percent in 2014, a rate of growth which is down from last quarter and unlikely to put a dent in the unemployment rate. CFOs indicate that full-time employment growth would be stronger in the absence of the ACA."
"I doubt the advocates of this legislation would have foretold the negative impact on employment," said Campbell Harvey, finance professor at Fuqua and a director of the survey. "The impact on the real economy is startling. Nearly one-third of firms may either terminate employees or hire fewer people in the future as a direct result of ACA."
Health care in a top local concern as well, officials have said.
Changes to health insurance requirements top the list of concerns for local businesses, Christy Proctor, Wilson Chamber of Commerce chairwoman-elect, previously said.
Most Americans will be required to have health insurance in 2014 under the Affordable Care Act. The law requires coverage and includes fines for not getting insurance. There are subsidies for people who fall below certain income levels. Under the law, residents can't be refused coverage for a pre-existing condition.
The issue has become a heated political debate.
Republicans are quick to point out problems with the government-run website. They also point out Department of Health and Human Services enrollment data showing that fewer than 9,000 North Carolinians enrolled from Oct. 1 to Nov. 30.
Democratic Sen. Kay R. Hagan said she and others called for an investigation into the contracting process related to healthcare.gov">healthcare.gov. HHS Secretary Kathleen Sebelius on Wednesdsay announced that the inspector general of the agency will conduct such an investigation.
"I am pleased that the administration has agreed to investigate the contracting process related to healthcare.gov as I urged them to do last month," Hagan said in a statement. "There is no excuse for not having the website ready from day one, and we must learn whatever lessons we can to ensure we never again have an issue like the initial failures of healthcare.gov">healthcare.gov. I will continue to monitor the progress of this investigation to ensure it is completed in a timely and transparent manner."
Another PPACA deadline delayed
Originally posted December 12, 2013 by Allison Bell on https://www.benefitspro.com
The Obama administration has issued new regs that public exchanges – and participating carriers – can use to cope with startup problems. Most importantly, it pushes the selection and payment deadline for Jan.1 plan coverage to Dec. 23.
The Centers for Medicare & Medicaid Services has given the batch of “interim final regulations” the title “Maximizing January 1, 2014, Coverage Opportunities” and is preparing to publish the regs in the Federal Register next week.
The Dec. 23 deadline applies to all sorts of exchange plans, including Small Business Health Options Program QHPs, multi-state plans and standalone dental pans, officials said. The original deadline was Dec. 15.
Insurers selling commercial plans through the exchanges with coverage dates starting Jan. 1 now must accept premium payments as late as Dec. 31.
State-based exchanges can set later deadlines for either individual or SHOP coverage.
Managers of state-based exchanges who want to offer more flexibility can push the payment deadline for coverage that starts Jan. 1 back to Jan. 31, “if a QHP issuer is willing to accept such enrollments,” officials said.
Officials also included rules for provider directories.
If a QHP issuer has trouble keeping its provider directory up to date, it should add consumer safeguards, such as using the version of a provider directory available to consumers in a given month to determine whether care from a provider will be classified as in-network care, officials said.
It was the second PPACA-related delay a day after HHS Secretary Kathleen Sebelius testified before Congress.