Americans will have an extra six weeks to buy health coverage before facing penalty
Originally posted by Sandhya Somashekhar, Amy Goldstein and Juliet Eilperin on https://www.washingtonpost.com
The Obama administration said last Wednesday night that it will give Americans who buy health insurance through the new online marketplaces an extra six weeks to obtain coverage before they incur a penalty.
The announcement means that those who buy coverage through the exchange will have until March 31 to sign up for a plan, according to an official with the Department of Health and Human Services.
Administration officials said that the rejiggered deadline is unrelated to the many technical problems that have emerged with the Web site, HealthCare.gov, in its first three weeks. Instead, they said, it is designed to clear up a timing confusion about the 2010 law, which for the first time requires most Americans to buy health coverage or face a penalty.
Under the law, health plans available through the new federal or state marketplaces will start Jan. 1, but the open enrollment period runs through the end of March. The law also says that people will be fined only if they do not have coverage for three months in a row. The question has been this: Do people need to be covered by March 31, or merely to have signed up by then, given that insurance policies have a brief lag before they take effect?
The administration made clear Wednesday night that people who buy coverage at any point during the open enrollment period will not pay a penalty.
It is the latest sign that the health-care law remains a moving target, even after the launch of the federal insurance marketplace, which has faced myriad problems that have frustrated many people trying to sign up for coverage.
Contractors and others have begun assigning blame for the Web site troubles, and the fault-finding will get its first extensive public airing Thursday, when four of the contractors involved in the project will testify before the House Energy and Commerce Committee.
In the written testimony submitted to the panel in advance, CGI Federal, the main contractor on the project, takes partial blame for the site’s shortcomings. But it also notes that the Centers for Medicare and Medicaid Services (CMS), an agency within HHS, was the “ultimate responsible party for the end-to-end performance” of the site. And it blames a piece created by another contractor, Quality Software Services (QSSI), for creating the initial bottleneck.
QSSI built part of the online registration system that crashed shortly after the Oct. 1 launch and locked out many people for days. In a statement, the company counters that it was not the only one responsible for the registration system, which is now working.
“There are a number of other components to the registration system, all of which must work together seamlessly to ensure registration,” said Matt Stearns, a spokesman for UnitedHealth Group, the parent company for QSSI. “The [QSSI-built] tool has been working well for weeks.”
But both contractors are likely to be taken to task by Republican and Democratic committee members. They were among the vendors who testified at a Sept. 10 Energy and Commerce Committee hearing that their parts of the project were moving along well, and that the Web site would be ready Oct. 1. Those assurances are likely to be questioned Thursday.
The hearing is the first of many planned by Republicans, who are expected not only to question the contractors but also to examine the administration’s management of the project. Some Republicans have called for the ouster of HHS Secretary Kathleen Sebelius, who is scheduled to appear before the panel next Wednesday.
President Obama and his deputies have given no indication that they are considering replacing Sebelius. White House press secretary Jay Carney has consistently defended her, and officials have been focusing on fixing the site rather than assessing blame for its defects.
The administration, however, has sought to assure jittery business leaders and insurers that can fix the enrollment system. On Tuesday, Vice President Biden told business supporters in a conference call that the nation’s best technology minds were working on the site and urged them to “stick with us.” And on Wednesday, top Obama advisers met with insurance executives to discuss system repairs.
CMS had enormous responsibility, and was charged with ensuring that there would be a mechanism for millions of Americans to easily sign up for coverage in time for some of the law’s main benefits to begin Jan. 1. Officials have said ease of signing up is critical to the administration meeting its goal of getting 7 million uninsured people — many of them young and healthy — to sign up.
But the agency assumed an outsize role in the management of the project, coordinating the activities of 55 contractors rather than hiring a separate firm to serve as a systems integrator. That is likely to be a key issue during Thursday’s hearing.
People familiar with the project have said the time frame was too tight for adequate testing, which one source said would have highlighted the problems.
There also have been inconsistencies about how and when the decision was made to scrap a key feature of the Web site, with QSSI telling congressional investigators that it did not know about the major change until the site’s launch. But in the written testimony the company plans to deliver Thursday, it says it found out shortly before the rollout date.
Republicans have been eager to learn more about how and when the decision was made to end that feature. The feature would have allowed people to browse plans and rates before signing up for an account. Technology experts have said the last-minute decision to stop it put too much pressure on a different tool that was set up to handle a small number of simultaneous users, crashing the site.
People familiar with the project give conflicting accounts of the reason for the move. The decision was made at a two-day meeting in late September to which CMS invited all its major contractors. According to one person familiar with the project, CGI gave a presentation that convinced CMS officials that the shopping feature was not ready.
Another person close to the project had a slightly different account, saying that CGI believed that the feature was, in fact, ready.
Republican lawmakers have alleged that the administration made the change to hide the cost of insurance plans from consumers.
“Evidence is mounting that political considerations motivated the decision,” said a letter sent to two administration officials Tuesday from members of the House Oversight and Government Reform Committee, including Chairman Darrell Issa (R-Calif.).
Lena H. Sun, Ed O’Keefe and Tom Hamburger contributed to this report.
Can Obamacare Beat Your Employer's Insurance?
Originally posted October 14, 2013 by Susan Ladika on https://finance.yahoo.com
If you already have health insurance through your job, you're probably wondering whether Obamacare will give you some new options. Will you be able to comparison-shop for a plan on the new online exchanges that might be better than your employer health insurance? The answer is a big, resounding "maybe."
Like almost everything else having to do with health care reform, there are plenty of nuances and caveats. Trying to decipher them and choose the best health insurance plan for your situation "makes homeowners insurance seem really simple," says Brian Haile, senior vice president for health policy at the tax services company Jackson Hewitt.
Exchanges will be open to all, but ...
The exchanges are online health insurance marketplaces set up under the Affordable Care Act. In 34 states, the marketplaces operate through the federal government's HealthCare.gov website, while 16 states and the District of Columbia are running their own exchanges.
Even if your employer already offers health insurance, there's nothing to prevent you from shopping on your state's exchange. However, if you decide to leave your work-based plan and purchase coverage on the exchange, you "may not qualify for some of the benefits that the uninsured have," notes E. Denise Smith, a professor of health care management at Gardner-Webb University in Boiling Springs, N.C.
Here's the big hiccup: Unless your employer's coverage for an individual is considered unaffordable under the law (that is, if your share of the premiums costs more than 9.5 percent of your household income) or inadequate (picking up less than 60 percent of the cost of covered benefits), you aren't eligible for a government subsidy to help pay for your insurance. Subsidies are one of the things that can make plans on the new state exchanges appealing.
Subsidies in the form of tax credits are available even if you earn up to 400 percent of the federal poverty level, currently about $46,000 for an individual and $94,000 for a family of four. The subsidies vary based on income and the size of your family.
Trade in your employer plan?
And that brings us back to the central question: If you have employer health insurance, should you check out the Obamacare exchanges anyway? There are differing opinions.
"It would generally not benefit an employee to leave their employer-sponsored plan," Smith concludes, adding that your employer would be under no obligation to help pay for an exchange plan.
Haile says you may not be able to do better than your work-based coverage. "Look at how robust your employer plan is" and the benefits it provides, such as whether it includes dental and vision care, which are not part of the essential health benefits that must be offered with plans sold in the Obamacare exchanges, he says.
Still, if your employer-sponsored health insurance seems to eat up a big chunk of your budget, you might want to explore your options on the state exchange, Haile says.
Few workers have 'unaffordable' plans
Again, one of the key criteria of whether you'd qualify for subsidized insurance through your state's exchange is if your share of the premium for an individual health plan where you work would amount to more than 9.5 percent of your household income. Whether you take more expensive family coverage doesn't matter; the benchmark is what an individual policy would cost.
The rule means that someone earning $40,000 a year and paying $3,775 for individual coverage would not be eligible for a subsidy, says Brian Poger, CEO of Benefitter, a software company that's helping employers navigate their way through health care reform. That same worker paying even more for family coverage would still not be eligible because, again, the premium for an individual is less than $3,800 (or 9.5 percent of $40,000).
The 9.5 percent-of-income threshold is one that few workers would meet, according to one recent study. The ADP Research Institute found that only 8.6 percent of employees are required to pay premium contributions that would meet the Affordable Care Act's definition of "unaffordable."
How will you know whether your premiums and income put you in that group and make you a good candidate for an exchange plan? Right now, it's a little unclear.
"The answer is sort of a mish-mash," Haile says. Many of Obamacare's employer requirements were delayed until 2015, though companies were still supposed to provide notices by Oct. 1 telling workers whether their current coverage would be considered affordable. But the U.S. Labor Department says there's no fine or penalty for failing to provide the notices.
Exchange coverage for family members
Under those same delayed "employer mandate" provisions, companies with at least 50 full-time workers will be required to offer health insurance to their workers and the workers' dependent children in 2015. But coverage for workers' spouses will not be mandatory, notes Christine Barber, senior policy analyst at Community Catalyst, a health care advocacy group.
"If your spouse isn't covered by your employer's insurance and doesn't have insurance through his or her own employer, your spouse could shop for insurance on the exchange and potentially qualify for a subsidy," Barber says.
Others who might find it valuable to shop on the exchanges are working singles under the age of 30 who don't have health issues and would be able to purchase a catastrophic plan, Haile says.
Catastrophic plans available on the state exchanges will have low monthly premiums but high deductibles. According to Haile, they're not eligible for subsidies.
All workers at a particular company often pay the same rate for their employer health insurance, regardless of age or medical history, he says. Opting for an Obamacare catastrophic plan "could be cheaper if you're the young kid on the block," especially if your co-workers are decades older, which could drive up everybody's insurance costs.
Shutdown stalls remaining DOMA guidance
Originally posted October 10, 2013 by Andrea Davis on ebn.benefitnews.com
While much attention has been focused on the federal government shutdown and its effect on Affordable Care Act regulations, employers are still awaiting guidance on another key piece of legislation with benefits plan implications, the Defense of Marriage Act.
“The good news is the most critical guidance has already been issued,” says Todd Solomon, partner in the employee benefits practice of Will McDermott & Emery. “The IRS and DOL have already come out with their notices that explain the state of celebration rule for federal tax purposes so we know the way forward for plan administration.”
Plan sponsors, however, are still awaiting federal guidance on two key issues: retroactivity and the deadline for plan amendments.
“The retroactivity is a bigger issue because plans can and probably will be getting claims with or without the IRS guidance,” says Solomon. “The theory was that the IRS was going to address what employers had to do with retroactivity, and employers were going to hold their breath and hope nothing came with respect to retroactive claims until the IRS guidance came out.”
A delay in the guidance will only affect employers if they get claims for retroactive benefits, says Solomon, with the most likely scenario being a claim for a survivor annuity within a pension plan.
“If a same-sex employee died six months ago, for example, and the plan didn’t pay a survivor benefit to the same-sex spouse, the spouse can make a claim. The plan has to decide whether it’s going to pay that benefit and there’s no clear answer right now on whether the plan is required to,” he says.
“Plans without guidance are in a bit of a box — on the one hand, you could say ‘just pay,’ because that makes the issue go away but, of course, just paying costs money to the trust and if it’s not something that’s required under the terms of the plan, money should never leave a retirement plan trust.”
The IRS also needs to issue guidance about a deadline for when plans need to revise their definition of the term ‘spouse.’
“Absent guidance, it would need to be done by the end of the year,” says Solomon. “If they [federal agencies] want to extend that, they’d need to do that fairly quickly. … it’s not hard guidance to issue so I would guess the shutdown should not impact that too much as long things don’t go on too long.”
Following the Supreme Court’s decision striking DOMA down last June, the Internal Revenue Service and Department of Labor issued regulations adopting a state-of-marriage approach — anyone who is legally married in a state or country recognizing same-sex marriage is now treated exactly the same as an opposite-sex spouse for all qualified plan purposes, including the taxation of medical, dental and vision benefits.
PPACA hasn’t killed COBRA – yet
Originally posted by Gina Binole on https://www.benefitspro.com
With full implementation of the Affordable Care Act looming – delays in the employer mandate aside – many in the HR world have been wondering whether health care reform will render COBRA obsolete.
The short answer: yes – and no.
While the new law has no direct impact to the Consolidated Omnibus Budget Reconciliation Act, the indirect effects of the Patient Protection and Affordable Care Act could eventually render COBRA meaningless.
COBRA was designed to bridge coverage for employees who lose their job, or lose health coverage through their job. This was deemed necessary because individual policies can be expensive and quite often imposed pre-existing condition exclusions.
The PPACA, however, seeks to sever the link between employment and health care. It does this by prohibiting pre-existing condition exclusions and creating state exchanges where individual coverage is supposed to be available at affordable rates.
Beginning Jan. 1, individuals who lose employer-provided coverage will have the choice of either purchasing COBRA coverage, or purchasing coverage through the exchanges. While COBRA only allows people to elect the coverage in which they were enrolled on the date they lost their job, the exchanges are meant to offer a range of options and coverage levels.
The premium subsidies that will be available to individuals with household incomes up to 400 percent of the federal poverty level also are expected to make purchasing coverage through an exchange more attractive than paying for insurance through COBRA.
But COBRA isn’t going to disappear overnight, if ever.
“Heath care reform is being marketed as a mechanism for enhancing choice in health care options. (Once Obamacare goes into full effect), the option to remain on an employer’s plan is likely to remain a choice, in addition to plans available through the exchanges,” said Iris Tilley, an Oregon-based benefits attorney. “In addition, while COBRA coverage is typically expensive, for some individuals it may remain less expensive than exchange coverage because the cost of exchange coverage correlates directly to an individual’s age, while employer coverage (and in turn COBRA coverage) reflects a broader range of ages.”
Tilley said individuals who suffer a loss of coverage are likely to weigh the plans available through the exchanges against their employer’s plan. For some, COBRA will make sense.
Moreover, employers with a qualified health plan still will be required to provide the opportunity for a person to elect COBRA coverage. Its rules will remain in force. Tilley also noted that the PPACA does not cover dental, vision, Medical Flexible Spending Accounts, Health Reimbursement Accounts or Employee Assistance Plans, which are subject to COBRA regulations.
“There is certainly a perception that the health care exchanges eliminate the need for COBRA since with the health exchanges, individuals will have access to insurance in ways they don’t today. But employers subject to COBRA today will remain subject to COBRA until such time as Congress decided to potentially do away with COBRA,” Mary Jo Davis, Ceridian’s vice president of product management said during a recent podcast.
Davis sought to clear up what she described as a few myths surrounding COBRA and PPACA. First, she said individuals assume health exchanges will be consistent across every state. But the reality is that states will have latitude to design their own coverage. Secondly, she said people are counting on the exchange premiums to be much cheaper than employer-sponsored health care coverage.
“We don’t know that. It could be more expensive,” she said.
Finally, she said people also assume that health care exchanges will be an option for all employees and consumers in 2014. But that is true only for small employers. Depending on the state, that means those with 100 employees or fewer or 50 and fewer.
Individuals also might have met their out-of-pocket deductible costs with their employer, and it would be costly for them to switch to an exchange. Another reason for COBRA to stay relevant might be that people want to stick with existing health care providers.
Other points to consider:
- One of the qualified events that trigger the need for a COBRA notice is a dependent losing eligibility under the health plan. Now that the age for dependents to lose coverage has been extended to age 26 under PPACA, it is possible that an adult dependent can continue for an additional 36 months under COBRA or until age 29 on the employer’s health plan.
- Under PPACA, waiting periods for coverage will be no more than 90 days. This means former employees may not need COBRA coverage for as long as in the past. However, depending on the viability and quality of health plans offered through the state exchanges, it might make more sense for a former employee to elect COBRA coverage if it looks like they will have more than a three-month gap in coverage during the year that could result in a penalty under the individual mandate.
State exchanges not viable choice for active employees
Originally posted October 03, 2013 by Andrea Davis on https://ebn.benefitnews.com
The state and federally facilitated health care exchanges are not a realistic option for active employees, according to one expert. Bryce Williams, managing director of exchange solutions for Towers Watson maintains that while the public exchanges offer a good solution for early retirees and COBRA-eligible participants, “it’s not yet a viable alternative to move [active employees] to state or public exchanges.”
Employers showed little confidence in public exchanges, according to a recent survey from Towers Watson that was released prior to the public exchange launch earlier this week. Eighty-eight percent of employers said they were not confident that the public health insurance exchanges would provide a viable alternative to employer-sponsored coverage for active full-time employees in 2014.
“They were prescient in terms of what would happen given the complexity of the launch,” says Williams.
Employers expressed skepticism even heading into 2015, with 71% saying they were not confident the public exchanges would provide a viable alternative to employer-sponsored coverage for active full-time employees.
“We believe later this fall public exchanges will right themselves and be in good shape, but certainly they’ve gotten off to a bumpy start,” says Williams, adding he continues to see employers not making any big changes this year. “They want to see results.”
Still, “public exchanges continue to be a great alternative to early retiree coverage, to any of the mini-meds they’re providing to seasonal and part-time workers – this [public exchange] is a vastly better ecosystem and [offers] better coverage,” he says.
Towers Watson runs three private exchanges: OneExchange Retiree, a Medicare exchange for retirees; OneExchange Active, a self-insured exchange for active employees; and OneExchange Access, a concierge service that connects part-time employees, early retirees, dependents and others who aren’t eligible for employer-sponsored coverage, to the state exchanges.
Regs Limit Use of HRAs for Exchange-Purchased Coverage
Original content from https://www.shrm.org
On Sept 13, 2013, federal agencies issued further guidance via IRS Notice 2013-54 and DOL Technical Release 2013-03, reiterating that health reimbursement arrangements (HRAs), premium reimbursement arrangements (PRAs) and other employer payment plans cannot be used to pay for individual policy premiums on a pre-tax basis, such as when indivdiual coverage is purchased by employees through a public health insurance exchange or on the individual market.
For a true “retiree-only plan” under the tax code and ERISA, employers can still sponsor an HRA or PRA and reimburse individual policy premiums on a pre-tax basis.
Also, employers can provide their active employees with a defined dollar amount, on a pre-tax basis, to purchase group coverage through a private exchange, as explained in the SHRM Online articles "On Private Health Exchange, Choice Drives Satisfaction" and "Time for Defined Contribution Health Benefits?"
A set of frequently asked questions and answers (FAQs) issued by federal regulators on Jan. 24, 2013, will limit the use of employer-provided health reimbursement arrangements (HRAs) to fund employee purchases of individual (nongroup) coverage on government-run health care exchanges, scheduled to launch in 2014.
HRAs are employer-funded notional accounts that are often, but not always, linked to high-deductible group health plans. They typically consist of an employers' promise to reimburse an employee's out-of-pocket medical expenses through a dollar amount contributed annually to the employee's HRA, with unused amounts carried over to help reimburse medical expenses in future years. When the employment relationship ends, the HRA reverts back to the employer since, unlike a health savings account (HSA), an HRA is not employee owned and not portable. (To learn about HRAs and how they operate, see the SHRM Online article "Consumer-Driven Decision: Weighing HSAs vs. HRAs.")
The new guidance, jointly issued by the U.S. Departments of Health and Human Services, Labor and Treasury, distinguished between HRAs that are "integrated" with other coverage as part of a group health plan and HRAs that are not integrated ("stand-alone" HRAs).
The FAQs clarify that an HRA that is not integrated with group health plan coverage but provided as a stand-alone benefit is subject to the Patient Protection and Affordable Care Act (PPACA) prohibition on limiting the amount of an employee's annual health care spending subject to insurance coverage. Beginning in 2014, for employers with more than one employee, restricted annual dollar limits are not permitted.
Because of the prohibition on annual dollar limits, an employer-sponsored, stand-alone HRA cannot be used to fund the purchase of individual market coverage, or an employer plan that provides coverage through individually purchased policies, including those that might be purchased on a government-run exchange.
Public Exchanges and HRAs Don't Mix
"Some employers had hoped that with the advent of the [government-run] exchanges in 2014, they would be able to offer their employees a fixed-dollar contribution through an HRA, which would permit the employee to take advantage of the tax subsidies currently available through HRA coverage but get the employer out of the health insurance business," explained Timothy Jost, a professor at the Washington and Lee University School of Law in Virginia, in a commentary about the new FAQs posted on the journal Health Affairs' blog.
In addition, "some consumer advocates had hoped that employees would be able to couple funds offered by employers through HRAs with advance premium tax credits available through the exchanges to make individual health policies truly affordable," Jost wrote.
However, he noted, the FAQs clarify that this approach will not be permitted. "The agencies intend to issue further guidance on the issue but have concluded that stand-alone HRAs used to purchase individual coverage will not be considered to be integrated coverage that complies with the annual dollar limit requirement" under the PPACA.
Moreover, if employees are offered an HRA and group coverage but decline the latter, they still may not use the HRA to purchase individual policies, Jost said.
Not a Blanket Prohibition?
However, according to Peter Antoine, a compliance communications specialist at Middleton, Wisc.-based Employee Benefits Corporation, the fact that under the FAQ guidance a stand-alone HRA is subject to the no-limit provision does not mean that it can’t be used to reimburse the cost of an individual plan, even one purchased on an exchange. Rather, “the non-integrated HRA would have to have an unlimited benefit available, unless certain exemptions apply that weren’t spelled out in the FAQs,” he told SHRM Online.
Moreover, Antoine explained that “we believe that non-integrated HRAs that operate as health flexible spending accounts (FSAs), as described in IRS Notice 2002-45 and Internal Revenue Code Section 106, are not subject to the no-limit provision. Consequently, a stand-alone HRA that satisfies the health FSA definition could have a limited benefit, reimburse individual plan premiums and comply with health care reform.”
However, an analysis by law firm McKenna Long & Aldridge LLP concludes:
"Note that some experts have challenged whether the annual dollar limit prohibition even applies to an HRA used to fund individual premiums, since the law only prohibits annual dollar limits on EHBs [essential health benefits]. ... Other experts argue that the HRA premium reimbursement arrangements for individual market coverage should be exempt from the annual dollar limit prohibition as health flexible spending accounts meeting the definition of Code Section 106(c)(2) (i.e. the maximum amount available for reimbursement under the plan may not exceed 500% of the value of the coverage). However, the Departments apparently take a different view given the clear statement in the FAQ that HRAs reimbursing employees for individual market insurance premiums will violate the annual dollar limit prohibition."
Private Exchanges: Employer's Subsidy and Employee's Contributions Remain Pre-Tax
In Aon Hewitt's private Corporate Health Exchange, which launched in fall 2012 for plan year 2013, "the contracts between insurers and employers are traditional group contracts" covered under the Employee Retirement Income Security Act (ERISA), Ken Sperling, Aon Hewitt national health exchange strategy leader, explained to SHRM Online. "The employee contributions are still covered under Section 125, so the employer subsidy is deductible and the employee contributions are pre-tax, just like today. Nothing changes from a tax perspective."
Private exchanges are not eligible for government-subsidized coverage, and thus differ from the new public exchanges (to learn more, see the SHRM Online article "On Private Heatlh Exchange, Choice Drives Satisfaction.")
Small-group employers skip SHOP, move to individual exchanges
Originally posted October 03, 2013 by Elizabeth Galentine, additional reporting by Brian Kalish on https://ebn.benefitnews.com
While President Barack Obama has frequently told Americans, “if you like your plan, you can keep it,” that is not ringing true for some small groups across the country. A number of small-group employers are already planning to send their employees to the Affordable Care Act’s exchanges. It’s an outcome predicted by many in the industry, but one surprise to some is the choice of exchange.
Rather than utilize the Small Business Health Options Program (SHOP exchanges) that the ACA has set up for employer groups of 50 or fewer full-time employees, some brokers are finding their clients are more interested in sending their employees to the individual exchanges instead.
Kelly Fristoe, owner of Financial Partners in Wichita Falls, Texas, is wary of the fact that his state’s SHOP exchange only has one insurance company participating at this point. Rather than deal with potential consequences of that, he is steering his small-group clients interested in the exchange market toward the individual plans. “We’ve had some small-group customers — not a lot — telling us that they’re going to dump their plan and send their employees to the individual market,” says Fristoe, president of the Texas Association of Health Underwriters.
“So we’ve made some arrangements with those employers to be able to be the agent that sits with those employees. They’re going to let us have time with their employees to educate them on purchasing insurance through the marketplace and qualifying for a subsidy.”
Because he wants to keep those individuals as clients no matter what, Fristoe was particularly “frustrated” Tuesday when technical glitches kept him from checking out the plans on healthcare.gov. “I’m needing to salvage that business and I need to know what those individual rates are so that I can go back to those people and show them how to qualify for a subsidy, if they qualify, and get them enrolled,” he says. “… We’re going to be the agent that’s going to try to salvage that business instead of it going to one of our competitors.”
David Smith, vice president at Ebenconcepts in Morrisville, N.C., agrees that accessing the information on exchange rates is of the utmost importance right now. “You have to recognize that we’re going to have some percentage of very small groups that have already decided they’re not going to offer a group health insurance plan next year,” he says. “So if you have four or five employees a lot of them have made a business decision to not do it, and they just want to get a feel for what it’s going to cost their employees when they make that decision.”
As an administrator for the testing process for agents to be certified with Covered California, Neil Crosby, director of sales at Warner Pacific Insurance Services in Westlake Village, Calif., is surprised that the majority of people attending his classes so far have been serving the individual market. “I’m shocked at how many … are coming to primarily do it individually. There’s so many of them,” he says. “Some of the ones that do individual they also do small group, of course, but a lot of them are representing the individual. I’d say maybe 65% of people in the room.”
A lot of agency owners “want to get a feel for” for the individual market exchanges, says Ebenconcepts’ Smith, because it is very appealing for micro groups, those with nine, 10 employees, to “go to the marketplace for subsidized coverage and maybe pay less for that than they would for their group insurance today.” An employer who is looking at saving $3,500 to $5,000 in premiums by making the switch, “they’re not walking that border, they’re running to that border,” says Smith.
A common sentiment among several brokerages contacted by EBA, EBN’ssister publication, in the days following the opening of the exchanges was that they have yet to take a look at the individual or SHOP exchanges. While online enrollment in SHOP exchanges run by the federal government is delayed until Nov. 1, applicants still have the option of submitting over the phone or through the mail.
Some are using the delay as a reason not to take a look at SHOP exchanges yet, but Michael Wolff, chief operations and financial officer at Dickerson Employee Benefits in Los Angeles, cautions against such an approach. “I don’t think that’s a good idea. … I think you want to have all the tools in your tool box. In California at least they have been successful in negotiating with the carriers to come to the table and give their best offers … there’s a chance they are giving a very good rate,” he says.
Wolff references the SHOP exchange tax credit for small businesses with low-wage earners that is available for 2014. “Of course we don’t know how long that will be upheld, but it’s a real tax advantage for next year at least,” he says. “… Why not have it in your portfolio to show? Everybody’s talking about it. You don’t want to say, ‘Well, I don’t know about it, but it’s probably bad because [it’s] the government [offering it].’ Well, maybe some clients will believe you, but it’s a better story if you say, ‘Yeah, I have that, and this is what they offer.’ Why would you not?
“Our model is … to bring a representation of the market to the agent and to the client,” adds Wolff, whose agency is one of only four in the state of California authorized to be a wholesaler for Covered California’s SHOP exchange, which did open on time Oct. 1. “This is a market phenomenon right now that we want to offer and explain. That is our role. We are ready.”
Meanwhile, like millions of others in the last few days, Don Garlitz, executive director of exchange technology provider bswift Exchange Solutions, logged on to a couple of SHOP exchanges to do a little window shopping. However, he could not get past the registration screen. If people are going to purchase such plans, the window shopping experience needs to improve, he says.
“People will look until they [get] what they want. [On Tuesday] I wasn’t able to find any kind of window shopping experience, which will be important for consumers,” he said. “They will not want to go through a 35-45 minute application process just to look at a rate. The call center I spoke with was not sure if there would be window shopping available. That will be an important thing for the federal government to consider.”
Shutdown places ACA guidance in jeopardy
Originally posted October 03, 2013 by Andrea Davis on https://ebn.benefitnews.com
The federal government shutdown could delay much-anticipated guidance on a number of provisions of the Affordable Care Act.
“If the shutdown lasts a week or two, that could really throw a monkey wrench into the timing of guidance,” says Paul M. Hamburger, co-chair of Proskauer’s employee benefits, executive compensation and ERISA litigation practice center. “The biggest problem with the shutdown, vis-a-vis guidance on the ACA, is the ability to get all of this updated guidance from the DOL, HHS and IRS out there quickly before the end of this year.”
At issue is the need for updated guidance on the employer mandate. While the mandate has been delayed until 2015, employers need to start preparing for it now by figuring out how they’re going to accurately measure and report to the IRS on which employees qualify as full time workers.
Hamburger says update guidance was expected in November but the shutdown may delay it. Employers are “just going to have to sit and wait and hope that when the shutdown is over, the guidance will come out,” he says.
Also at stake, he says, is regulatory guidance related to certain coverage mandates coming into effect in 2014. The requirement that waiting periods cannot exceed 90 days, the elimination of pre-existing conditions exclusions and other coverage-related mandates “all need some additional guidance, presumably before 2014,” says Hamburger. “The shutdown is going to dramatically reduce the extent to which that guidance can come out.”
The end result could be more of a reliance on FAQ-type guidance, rather than the preferred way of issuing proposed regulations for review and comment followed by the publication of final rules.
What employers should be doing now, says Hamburger, is looking at those 2014 coverage mandates and figuring out how they’re going to comply, even in the absence of official guidance. In the case of waiting periods, for example, “there are proposed regulations out there and I think employers need to look at that carefully and decide how they’re going to exercise reasonably good faith in interpreting those rules based on their particular waiting period,” he says.
Health Q&A: ‘Obamacare’ Exchanges Start as Questions Abound
Originally posted September 30, 2013 by Alex Nussbaum on https://eba.benefitnews.com
Just don’t expect the usual ending to an election: a clear winner at the end of the day.
While the exchanges are expected to open on time, that milestone is unlikely to settle the 3 1/2-year grudge match over the Affordable Care Act. A long enrollment season, complicated by a threatened U.S. government shutdown and a growing list of technical glitches, means it may be as late as April before it’s known how many uninsured Americans sign up under the law.
While the shutdown won’t stop the roll-out, which is largely funded through mandatory appropriations that can’t be curtailed by congressional inaction, it’s an open question whether it will lessen public enthusiasm to enroll. In the meantime, technical glitches are beginning to surface.
People in Oregon, for example, won’t be able to enroll in a plan for the first few weeks unless they go through a broker or designated nonprofit groups, and the exchange in the nation’s capital won’t include premium prices until mid-November.
The Obama administration says other glitches are inevitable as the system starts up. The question is how serious and how long it takes the exchange to fix any issues. An extended crash or a problem calculating subsidies could be an embarrassment for the White House -- and sour consumers just as the administration tries to convince them to enroll.
‘In Between’
“Is it going to be a train wreck, a complete failure? The answer is no,” said Dan Schuyler, a director at Leavitt Partners, a Salt Lake City-based health care consultant. “Is it going to be completely seamless and instantaneous? No. It is going to be somewhere in between.”
The exchanges are at the heart of the law’s efforts to cover more of the 48 million uninsured Americans. About 7 million people will use the system to buy subsidized insurance by the end of the first open enrollment period on March 31, according to congressional projections.
Republicans will spotlight any problem as proof the law is a disaster. Democrats say they’ll overcome technical glitches and the law will sell itself as the uninsured gain benefits. Polls show most Americans side with the skeptics.
“The lights will go on Oct. 1, but they may flicker,” said Jocelyn Guyer, a director at the Washington-based consultant Manatt Health Solutions. “I worry the most about people making premature judgments on the first couple of weeks.”
The Breakdown
Here’s a primer on what to look for, based on interviews with consultants, insurers, analysts and state and federal officials:
Q: Who runs the exchanges?
A: Fourteen states have their own on-line exchanges, with the rest run in whole or part by the U.S. government.
Q: Who will use them?
A: The exchanges are open to people who buy coverage on their own and employees of businesses with 50 or fewer workers, as well as those currently shut out of insurance because of cost or a medical condition.
Subsidies are available, on a sliding scale, to those making as much as four times the poverty level, which is $11,500 for a single person and $24,000 for a family of four. Those making less than 138% of poverty will be eligible for Medicaid if they live in one of the 26 states set to expand the program.
Sign-Up Numbers
Q: How many people will sign up early on?
A: Call it lowering expectations or a realistic assessment: either way, supporters say they don’t expect a flood of enrollees this week.
Insurance buyers have to pay their first month’s premium within 30 days of choosing a plan and the policies don’t take effect until Jan. 1. As a result, the Obama administration says most people will wait until late November or December. Another surge may come in March as the end of the enrollment period nears.
A: The exchanges will march on. That’s because the 2010 law relies primarily on mandatory spending, which congressional inaction can’t stop. It’s the budget category used for benefits such as Medicare, the U.S. health plan for the elderly and disabled, and Social Security.
The U.S. Health and Human Services Department said in a Sept. 27 memo it “would continue large portions of ACA activities, including coordination between Medicaid and the marketplace” in the event of a temporary shutdown.
Core Unaffected
“Many of the core parts of the health-care law are funded through mandatory appropriations and wouldn’t be affected,” Gary Cohen, the director of the Center for Consumer Information and Insurance Oversight at HHS, told reporters on Sept. 24.
Q: Okay, so most of the exchanges will be up and running on time. How do you access them?
A: If all goes as planned, those not covered through work will be able to go on line or dial a call-in center, learn if they’re eligible for tax credits and choose from a menu of private plans. The exchanges can be found atwww.healthcare.gov.
Q: Who won’t use them?
A: Most of us. People who have insurance through their jobs, about 55% of Americans, aren’t directly affected by the law and are automatically in compliance with its mandate that everyone be insured. So are older Americans covered through Medicare.
Individual Mandate
Q: Do I have to buy insurance?
A: Yes, or pay a fine. The law requires that most Americans be insured starting Jan. 1. That can be through work, a government program like Medicare or Medicaid, or by buying on the exchanges. Those who opt out face a penalty starting next year at $95 or 1% of household income, whichever is higher. By 2016, it rises to $695 per individual or 2.5% of household income, whichever is greater.
Q: Is the technology for the exchanges in place?
A: Building the exchanges has been a massive technical lift, requiring computer systems with real-time links to dozens of state and U.S. agencies and private carriers. The administration says the system is ready to go, albeit with delays and reduced capabilities in places like Oregon and Washington.
Company Mandate
Q: Has anything else been delayed?
A: The law requires that large companies offer benefits to anyone working more than 30 hours a week. In July, that rule was postponed until 2015 to ease the burden of compliance.
Last week, officials said a Spanish-language version of the federal website won’t be ready until mid-October and an exchange for small business workers won’t take enrollments until November. Nevada and California also won’t transmit names of new customers to insurers for about a month, Schuyler said.
Q: Will the coverage be affordable?
A: It depends on who you are and where you live. Six in 10 uninsured people will find insurance for less than $100 a month because of subsidies and expansions to Medicaid, the administration said last week. Those who make too much for assistance may be in for sticker shock: the same report said even bare-bones coverage, known as a bronze plan, will average almost $3,000 a year for individuals.
For families, the cost of mid-level coverage, a silver plan, ranges from $559 a month to $1,216 a month in 36 states where the federal government controls the exchanges. Tax credits will reduce the cost for many: a family earning $50,000 a year may find the price of a bronze plan cut to zero in some states.
Young and Healthy
Q: How will insurers cover the costs for all those added sick people?
A: By signing up the young and healthy. The administration said it needs about 40% of new enrollees to be in this group to help balance costs from older, sicker customers and keep premiums stable.
A: No. The polls indicate consistent confusion. Three in five say the law will raise medical costs, and more say they’ll be worse off under it than better, according to a Bloomberg National Poll conducted Sept. 20-23. Half also said Republicans should back off on demands to defund the law, a schizophrenic view that’s persisted for months.
Q: So does anybody like this law?
A: Yes. Sixty-one percent of Hispanics and 91% of blacks, according to a September poll by the Pew Research Center and USA Today. That could make the sales pitch easier because those two groups comprise the bulk of the uninsured in the U.S. – 47% of the total, according to an analysis by the Kaiser Family Foundation. The law also is designed to benefit people with pre-existing medical conditions: insurers will no longer be able to deny them coverage.
Big States
Q: What’s happening in the big states?
A: Supporters have focused on states such as Texas, Florida, Ohio and New Jersey, where many uninsured live and Republican governors refuse to help in enrollment. California, which has the most uninsured, is spending $100 million to promote its exchange while New York plans to spend $27 million to train community groups and brokers to assist consumers.
Q: How much help do consumers get?
A: The administration is spending $67 million to train health workers, hospitals and other groups, called navigators, to help people enroll. Grants didn’t arrive until August, though, and many began a two-week training course this month. If they’re not up to the task, enrollment may suffer.
“You’re going to have tens of thousands if not hundreds of thousands of individuals who have never been exposed to health insurance before -- don’t know what a premium is, what a deductible is,” said Schuyler, the Leavitt Partners consultant.
Changes Needed
Q: Do Democrats think the law needs to change?
A: Some have called for changes: Families of workers whose company plan doesn’t include dependents can’t get subsidies. A tax credit for small businesses has been criticized as ineffective. And there are bipartisan bills in Congress to change a provision that may encourage businesses to cut workers’ hours to avoid insuring them. A quick fix seems unlikely: Republicans say they won’t tinker with a law they consider fundamentally flawed.
Q: What’s happening with Medicaid?
A: While the government health program for low-income Americans is expanding under the law, about half the states have opted out. The Obama administration last week agreed to let Arkansas use the money to help poor citizens buy private insurance on its exchange. The deal could entice other states where Republicans have opposed the expansion.
Expense Rising
Q: Is Obamacare making health-care more expensive?
A: Time will tell.
Medical costs have moderated in the U.S. the past three years, offering some relief to the public and private sectors alike. Prices for medical care rose 1% in July compared with a year earlier, the lowest growth rate since the 1960s, according to U.S. Commerce Department data.
There’s a debate among economists about how much credit to give the health law compared with a weak economy and employer moves to curtail benefits. Obamacare supporters say at least some of the slowdown is thanks to regulations and pilot programs in the act aimed at reducing waste in the medical system.
13 things employers must do to be PPACA-ready
Originally posted September 25, 2013 by Dan Cook on https://www.benefitspro.com
Uncertainty over the impact of health care reform on their businesses has created plenty of anxiety among HR managers and those in the C-Suite.
A recent survey by ADP found almost half of large-company finance managers aren’t fully confident that they understand their responsibilities under the Patient Protection and Affordable Care Act. At small companies, the study found, just 28 percent of those surveyed have developed any sort of plan for controlling their health benefits costs in the wake of health care reform. At large companies, that percent rose to 40 percent — still not very confidence-inspiring.
Executives know reform is going to rock their boat. When asked by ADP whether they thought the public insurance exchanges would have an impact on their company, half of small company respondents thought it would, while nearly 70 percent of large companies responded affirmatively.
To help employers get a better handle on the act’s requirements, ADP has come up with following recommendations for coping with health care reform.
EVALUATE
1. Know the requirements and deadlines:Don’t wallow in fears that are groundless with respect to your company. ADP says you should “invest the time and resources needed to clearly comprehend the act’s legal requirements and time frames in order to accommodate its tax implications and avoid penalties for non-compliance.” Establish a timeline with key milestones to help guide your process.
2. Determine administrative impact on your company: How will oversight of changes mandated by the PPACA increase administrative burden? “A prime example of an ACA provision with potentially large administrative impact is Shared Responsibility. Beginning in 2015, it requires tracking each employee’s full-time or part-time status every month, and maintaining that information as part of employee tax records.” Those kinds of requirements will clearly add to HR’s tasks, and may require additional manpower, at least while systems are being set up.
3. Calculate financial implications: There are myriad ways the mandated healthcare changes, reporting requirements, additional taxes, etc., will affect your cost of doing business. Coverage mandates for your benefits plan design, as well as reform-related taxes and fees, must all be taken into consideration. Over-budget for the short term at least.
EDUCATE
4. Create a written summary of benefits and coverage for employees: This is a four-page (or less) summary of your plan you must provide your employees with. It must be clearly written. Make sure you obtain acknowledgement of receipt of the SBC from employees.
5. Notify your employees of public exchanges: This is the notification of insurance options due Oct. 1. Is this required? Yes. Will you be fined if you don’t do it? Maybe not. Do it anyway. It’s a great way to communicate with your workers.
ENROLL
Sign ’em up: If you have at least 50 full-time employees, you have to offer them affordable health coverage. Make sure you offer the opportunity to enroll to all eligibles. Then develop a system to track, update and report on employee eligibility and enrollment to maintain ongoing compliance.
7. Enroll employees’ dependents: The law requires employers to offer coverage to qualifying dependent children of full-time employees up to age 26. You may also want to consider conducting a dependent eligibility audit, which typically show as many as 15 percent of dependents claimed by employees are not qualified for benefits.
8. Prepare for automatic enrollment: Employers with 200+ full-time employees will soon face new rules for enrolling new employees in the company’s group health plan. If you haven’t already, you’ll need to start thinking about solutions to address this requirement.
9. Assess your exchange/coverage options: Employers will generally choose from three different plan approaches for covering their employees – employer-sponsored plans, private exchanges and the new public exchanges created under the act. You’ll need to determine which works best for you, from both a financial and employee recruiting/retention standpoint.
EXECUTE
10 Get ready to define and track full-time and part-time employees: The act requires this tracking — it’s the basis for many calculations that are coming down the pike. Start tracking now so you won’t have to go back and try to recreate the data later.
11. Offer an employee wellness program: An earlier ADP study showed wellness programs are an increasingly popular strategy for offsetting the expense of healthcare – without passing on additional costs to employees.
12. Get a grip on your medical loss ratio rebates: These are sent to employers from their insurance carrier whenever health insurers do not spend at least a certain percentage of the prior year’s health insurance premiums on healthcare services. If you receive MLR rebate dollars, the plan must make a fiduciary decision about using the dough. A best practice is to communicate to your employees your intention as to how the MLR rebate will be used.
13. Limit employee flexible spending accounts (FSAs): Prior to the enactment of the act, the IRS permitted employers to determine the maximum amount an employee could set aside tax-free in a Flexible Spending Account. Going forward, you will need to enforce a $2,500 annual limit on all employee healthcare FSA contributions.