NAHU: Employer mandate delay 'necessary' despite $12 billion cost
Originally posted July 30, 2013 by Alex Wayne (Bloomberg) and EBA staff on https://eba.benefitnews.com
A National Association of Health Underwriters spokeswoman says that while there are "short-term financial repercussions" to the employer mandate delay, "we believe this delay was necessary to continue the economic upturn we have seen in the past few months and ensure that American businesses will be able to provide their employees with the health insurance they want and need in the long term.”
President Barack Obama’s decision to give employers a year before they’re required to provide health insurance for workers will cost taxpayers $12 billion, the Congressional Budget Office says in a letter to members of Congress.
The health law will now cost $1.375 trillion through 2023, an increase of $12 billion since May, the CBO says. The government will lose $10 billion in penalties that companies would have paid next year for not providing employee health plans, and taxpayers will spend $3 billion more on subsidies for workers who instead will buy coverage on the exchanges.
The White House announced the delay on July 2, in response to a lobbying effort from business groups. The Affordable Care Act requires companies with 50 or more workers to offer health insurance to their workers or pay fines of as much as $3,000 per employee if they don’t. Now, companies don’t have to provide coverage until 2015.
“Some large employers that would have offered health insurance coverage to their employees in 2014 will no longer do so as a result of the one-year delay of penalties for those that do not offer affordable coverage,” Douglas Elmendorf, the director of the CBO, wrote in the letter.
The costs of the delay were offset by about $1 billion because of “small changes,” CBO said, including an increase in income tax collections from people who don’t get coverage at work. The value of employer-provided health insurance isn’t taxed, while workers who get higher pay to buy insurance on their own would have to pay income tax on that compensation. CBO also reports that “one million fewer people are expected to be enrolled in employment-based coverage in 2014” than the group predicted in May, also due to the employer mandate delay.
Even with the mandate’s delay, the health law is projected to reduce the deficit, the CBO says, because of lower Medicare spending and other provisions that offset the cost of new coverage. The CBO said May 15 that repealing the law would cost the federal government $109 billion, a figure it didn’t update today.
Alternative Treatments Could See Wide Acceptance Thanks to Health Care Reform
by: KAISER HEALTH NEWS AND ANKITA RAO
The Affordable Care Act says that insurance companies "shall not discriminate" against any state-licensed health provider, which could lead to better coverage of chiropractic, homeopathic and naturopathic care. Photo by Joe Raedle/Getty Images.
Jane Guiltinan said the husbands are usually the stubborn ones.
When her regular patients, often married women, bring their spouses to the Bastyr Center for Natural Health to try her approach to care, the men are often skeptical of the treatment plan -- a mix of herbal remedies, lifestyle changes and sometimes, conventional medicine.
After 31 years of practice, Guiltinan, a naturopathic physician, said it is not uncommon for health providers without the usual nurse or doctor background to confront patients' doubts. "I think it's a matter of education and cultural change," she said.
As for the husbands -- they often come around, Guiltinan said, but only after they see that her treatments solve their problems.
Complementary and alternative medicine -- a term that encompasses meditation, acupuncture, chiropractic care and homeopathic treatment, among other things -- has become increasingly popular. About four in 10 adults (and one in nine children) in the U.S. are using some form of alternative medicine, according to the National Institutes of Health.
And with the implementation of the Affordable Care Act, the field could make even more headway in the mainstream health care system. That is, unless the fine print -- in state legislation and insurance plans -- falls short because of unclear language and insufficient oversight.
One clause of the health law in particular -- Section 2706 -- is widely discussed in the alternative medicine community because it requires that insurance companies "shall not discriminate" against any health provider with a state-recognized license. That means a licensed chiropractor treating a patient for back pain, for instance, must be reimbursed the same as medical doctors. In addition, nods to alternative medicine are threaded through other parts of the law in sections on wellness, prevention and research.
"It's time that our health care system takes an integrative approach ... whether conventional or alternative," said Sen. Tom Harkin, D-Iowa, who authored the anti-discrimination provision, in an e-mail. "Patients want good outcomes with good value, and complementary and alternative therapies can provide both."
The federal government has, in recent years, tapped providers like Guiltinan, who is also the dean at the Bastyr University College of Naturopathic Medicine, to help advise the federal government and implement legislation that could affect the way they are paid and their disciplines are incorporated into the health care continuum. In 2012, Guiltinan, based in Kenmore, Wash., was appointed to the advisory council of the National Center for Complementary and Alternative Medicine, part of the National Institutes of Health.
Proving that alternative medicine has real, measurable benefits has been key to increasing its role in the system, said John Weeks, editor of the Integrator Blog, an online publication for the alternative medicine community. The Patient-Centered Outcomes Research Institute, created by the health law, is funding studies on alternative medicine treatments to determine their effectiveness.
Weeks said both lawmakers and the general public will soon have access to that research, including the amount of money saved by integrating other forms of medicine into the current health system.
But the challenges of introducing alternative care don't stop with science.
Because under the health care law each state defines its essential benefits plan -- what is covered by insurance -- somewhat differently, the language concerning alternative medicine has to be very specific in terms of who gets paid and for what kinds of treatment, said Deborah Senn, the former insurance commissioner in Washington and an advocate for alternative medicine coverage.
She pointed out that California excluded coverage for chiropractic care in its essential benefits plan, requiring patients to pay out of pocket for their treatment. Senn thinks the move was most likely an oversight and an unfavorable one for the profession. Four other states -- Colorado, Hawaii, Oregon and Utah -- ruled the same way in the past year.
"That's just an outright violation of the law," she said, referring to the ACA clause.
Colorado and Oregon are in the process of changing that ruling to allow chiropractic care to be covered, according to researchers at Academic Consortium for Complementary and Alternative Health Care.
Some states, like Washington, are ahead of the rest of the country in embracing alternative practitioners. The Bastyr University system, where Guiltinan works, treats 35,000 patients a year with naturopathic medicine. Sixty percent of the patients billed insurance companies for coverage.
Guiltinan said a change in the system is not only a boon for alternative medicine doctors, but helps families of all income levels access care normally limited to out-of-pocket payment. That's why some alternative medicine aficianados like Rohit Kumar are hoping the law will increase the ability of his family -- and the larger community - to obtain this kind of care.
Kumar, a 26-year-old business owner in Los Angeles, said his parents and brothers have always used herbs and certain foods when they get sick, and regularly see a local naturopath and herbalist. He's only used antibiotics once, he says, when he caught dengue fever on a trip to India.
While the Kumar family pays for any treatments they need with cash -- the only payment both alternative providers accept -- they also pay for a high-deductible health plan every month to cover emergencies, like when his brother recently broke his arm falling off a bike.
Paying for a conventional health care plan and maintaining their philosophy of wellness is not cheap.
"We pay a ridiculous amount of money every month," Kumar said of the high-deductible insurance. "And none of it goes toward any type of medicine we believe in."
Even so, he said the family will continue to practice a lifestyle that values wellness achieved without a prescription -- a philosophy that Guiltinan also adopted in her practice.
As a young medical technician in a San Francisco hospital, she decided that the traditional medical system was geared more toward managing diseases and symptoms rather than prevention. Naturopathic medicine, on the other hand, seemed to fit her idea of how a doctor could address the root cause of illness.
"The body has an innate ability for healing, but we get in its way," Guiltinan said. "Health is more than the absence of disease."
How to Best Inform Employees About PPACA
Originally posted July 29, 2013 by Thom Mangan on https://eba.benefitnews.com
Benefit education has long been considered a key component of a successful employee benefit program. However, engaging employees and helping them recognize the value of their program is not easy. It takes ongoing efforts of HR Managers with support from senior management.
The Affordable Care Act creates another new wrinkle for HR managers. I caught up with UBA Partner, Greg Smith of R.W. Garrett Agency, to find out how best to get your employee’s attention — and why it’s so important.
Thom: In addition to the mandated communication material and benefit changes, how does PPACA affect an employer’s communication efforts?
Greg: With the new health insurance marketplaces and Medicaid expansion in most states, the government has a daunting task of educating and informing millions of the nation’s uninsured of the new coverage and subsidies available to them.
To get the word out, the government will spend hundreds of millions of dollars in a broad and expansive advertising campaign starting this month (July).
Employers are also participating in the campaign, as they are required to send out a Model Notice regarding coverage and options in the New Health Insurance Marketplaces.
The Marketplaces and corresponding advertising campaign are focused on the uninsured, who may be eligible for “free” coverage (through Medicaid) or subsidized, reduced premium coverage (in the New Insurance Marketplaces). However, if the employer’s plan provides adequate and affordable coverage, the employees eligible for the plan will not qualify for any subsidized coverage in the New Insurance Marketplace (unless eligible for Medicaid).
Thom: So where does the trouble come in?
Greg: The wrinkle comes from two sources – confusion and human nature:
1. Confusion – Unless explained adequately, the employee may be confused as to why his employer is sending him notice of a New Insurance Marketplace with subsidized coverage, when, in fact, he is not eligible for a subsidy.
2. Human Nature – Employees may misinterpret or misunderstand the message of the government’s advertising and think that by dropping coverage, they may get a better deal in the Marketplace or, worse, believe that their benefits are not as valuable as they are.
Thom: So what is an employer to do to get around these problems, or “wrinkles”?
Greg: I believe employers can get out ahead of the “wrinkle” by pre-empting the government’s advertising with communications of their own. They can lay out the facts of the advertising campaign and reinforce the quality of their own plan.
Just because the White House has delayed the implementation of the employer mandate part of the Affordable Care Act doesn’t mean employers don’t have to communicate options to employees. On the contrary, they would be wise to use the extra year to make sure they and their employees are adequately prepared for the pending changes of 2015.
How Much Are Consumers Saving from the ACA’s Medical Loss Ratio Provision?
Originally published Jun 06, 2013 by Cynthia Cox, Gary Claxton and Larry Levitt
Source: https://kff.org/
Most of the conversation around the Affordable Care Act’s Medical Loss Ratio (MLR) provision has centered on the requirement that insurers issue consumer rebates when they fall short of spending a certain portion of premium dollars on health care and quality improvement expenses. This makes sense as rebates are one of the more tangible ways consumers have benefited from the law so far, and it likely contributes to the MLR provision being among the more popular aspects of the health reform law.
However, as we've written before, rebates represent only a portion, albeit the most concrete portion, of the MLR rule’s savings to consumers. The primary role of an MLR threshold is to encourage insurers to spend a certain percentage of premium dollars on health care and quality improvement expenses (80 percent in the individual and small group market and 85 percent in the large group market). The MLR rebate requirement operates as a backstop if insurers do not set premiums at a level where they would be paying out the minimally acceptable share of premiums back as benefits. Only if those thresholds are not met are insurers required to provide rebates to consumers or businesses. (You can read more about the MLR rule here).
Consumers and businesses, therefore, can realize savings in two ways as a result of the MLR requirement: by paying lower premiums than they would have been charged otherwise (as a result of lower administrative costs and profits), or by receiving rebates after the fact. So while insurers paid out considerable amounts for rebates – last year’s rebates totaled $1.1 billion – this is not the whole story for consumers.
Of course, it is hard to know with certainty what premiums would have been if the MLR rules were not in place: we cannot know for sure how insurers would have priced their products or what rates regulators would have allowed (to the extent that they reviewed rates prior to the ACA). It is also difficult to separate out the direct effects of the MLR provision from other aspects of the health reform law, particularly rate review, which works to moderate unreasonable premium increases and thus increase loss ratios. There are also data limitations. For example, prior to new reporting requirements put in place to enforce the MLR provision, there were not good data sources that break out premiums and claims on a consistent basis for major medical coverage by all types of carriers. In the initial years this data became available (2010 and 2011), there were some issues with the quality of the data, particularly regarding expenses for quality improvement and other new categories of administrative expenses that are reported on the exhibit.
Within these limitations, we constructed an analysis that looks at the basic proportion of premiums that health plans paid out as claims for medical care over the three years since the ACA was passed, both before and after the MLR requirement went into effect for coverage in 2011. These proportions do not include adjustments for quality improvement expenses, taxes or other factors that are used when determining whether or not rebates need to be paid; they simply represent the total payments for medical care as a proportion of premiums. This is the traditional way medical loss ratios have been calculated. Generally, if the proportion is rising, that means insurers are paying out more of each dollar they receive on enrollee health care, which in most cases would mean that enrollees are getting better value for the premiums they pay. We then quantify what the change in the traditional MLR means to enrollees by estimating how much they would have paid in premium if the observed MLR for 2010 (before the MLR requirement went into effect) were held constant for 2011 and 2012.1 This approach addresses the following question: If insurers had targeted the same claims to premium ratio for 2011 and 2012 as they achieved in 2010, would premiums have been higher or lower, and by how much? In other words, it addresses how much consumers may have saved in lower premiums as a result of the MLR threshold in addition to receiving rebates.
Our analysis uses insurer data filed to state regulators and compiled by Mark Farrah Associates. These data (filed on the Supplemental Health Care Exhibit) suggest that the main beneficiaries of the MLR rule’s upfront premium savings are people who purchase insurance on their own. The majority of plans sold to small and large businesses were already in compliance with their respective MLR thresholds before the law went into effect, and our analysis shows that traditional MLRs (claims divided by premiums) for group plans have stayed relatively flat over the past three years. In the individual market, by contrast, fewer than half of plans were in compliance with the ACA’s MLR thresholds in 2010, and the average traditional MLRs in this market have been steadily increasing since the requirement went into effect. This means that individual market insurers are devoting a greater portion of premium dollars to health care claims and less to administrative costs and profits compared to before the ACA’s MLR rule went into effect.
This pattern is consistent with the idea that some insurers needed to improve their MLRs to comply with the new rebate requirements. We know that the individual market MLR requirements in the ACA are higher than those that were in effect in many states, and there have been numerous reports that insurers worked to reduce their commissions and other administrative expenses to become more efficient.
So how might these changes have affected premiums? As noted above, one way to address this question is to compute what these consumers would have paid in premiums in 2011 and 2012 had traditional individual market MLRs stayed at 2010 levels (the year before the provision went into effect). Looked at this way, premiums would have been $856 million higher in 2011, and premiums would have been $1.9 billion higher in 2012.
Adding to the premium savings the amount individual market consumers received in rebates yields a total savings of $1.2 billion for 2011. This year, individual market insurers are expecting to issue $241 million in rebates (based on our analysis of early estimates from insurers filed with state insurance departments), bringing the total estimated savings for 2012 to $2.1 billion. While this savings was not distributed evenly (with more going to people enrolled in plans that had low MLRs prior to the law), when averaged across all individual market enrollees, this amounts to a savings of $204 per person ($181 in premium savings and $23 in rebates) in 2012. Taking into account both premium savings and estimated rebates, people purchasing insurance on their own in 2012 spent 7.5% less on average on insurance than they might otherwise have in the absence of the law.
There are some potential limitations to this approach. While the pattern of increasing MLRs over the three years makes sense given the incentives under the ACA and reports of insurer behavior, we do not have comparable data from earlier years to tell us whether or not the 2010 MLR was typical for the pre-ACA period (though the available evidence suggests that it was).2 Also, MLRs in 2011 and 2012 might be overstated because insurers simply underestimated how much health care expenses would rise following the recession, though increasing MLRs still means that consumers have been getting better value for their premium dollars. Finally, rebate amounts for 2012 are based on preliminary estimates filed on the Supplemental Health Care Exhibit to state insurance departments, and actual rebate amounts will be based on insurer filings with the Department of Health and Human Services, which were due June 1.
If insurers’ preliminary estimates hold true, this year’s rebates (at a total of $571 million across all markets) are expected to be about half the amount of last year’s $1.1 billion in insurer rebates. Smaller rebates, however, are not an indication that consumers are now saving less money as a result of the MLR provision, but rather that insurers are coming closer to meeting the ACA’s MLR requirements and that this provision is having its intended effect of consumers getting more value for the money they spend on premiums. In fact, in the individual market, the $241 million consumers are expected to receive in rebates for 2012 represents roughly one tenth of our estimate of the overall savings from the provision in that year. Perhaps ironically, when the MLR provision is working as intended and insurers set premiums to meet the thresholds, consumers save money but are less likely to get a check in the mail as tangible demonstration of those savings.
Footnotes
- See methodology attached
- Based on our analysis of the Accident and Health Experience Exhibit submitted to state regulators, which has been required of all insurance entities since 2006 but is not directly comparable to newer and more precise data, the weighted average traditional loss ratio in 2010 was slightly higher (80%) than the average of previous years (79%). Our premium savings estimates for 2012 and 2011 are thus likely conservative compared with estimates that used MLRs in prior years.
How the ACA affects annual enrollment
Originally published July 25, 2013 by Andrew Molloy on https://ebn.benefitnews.com
Despite the one-year delay of the pay-or-play mandate, there are still several provisions employees need to know about.
With annual benefit enrollments on the horizon, employers need to be prepared now for the changes that health care reform is bringing. Hopefully, employees already know that as of Jan. 1, 2014, they must have health insurance coverage. Beyond this mandate, however, what are some of the other issues of which employers should be aware?
The Affordable Care Act requires employers to tell their employees in writing by Oct. 1 about the new public health care exchanges and how these relate to their workplace benefits. This requirement applies to all employers subject to the Fair Labor Standards Act.
Under the law, employees need to know that they may be eligible for a tax credit and cost-sharing reduction if their employer's plan does not meet certain coverage and affordability requirements and the employee purchases a qualified health plan through a public exchange. Employers must also inform workers that if they choose to purchase their coverage through an exchange, they may not receive any employer contribution toward their premium, nor any related tax advantage.
Employees may still be confused about the exchanges by the time of enrollment. For the most part, those who work for large employers will see little impact since the subsidies offered for a qualified employer-sponsored medical plan will make the choice moot. However, employees of small- to medium-sized companies where health insurance is not available, or isn't affordable, will have to make a decision about whether to go to a public exchange for their coverage. For these employers, it means telling their workers what their options are and are not.
Despite the recently announced one-year delay in the employer shared responsibility requirement, employers still have obligations for 2014 and they'll have to review their medical plans carefully to ensure they meet the essential health benefits mandated by the law. In addition, the plan cannot have any annual coverage limits; cannot exclude people with pre-existing health conditions; must extend coverage to children up to age 26; and must comply with limits on deductibles and out-of-pocket expenses, among other requirements. It is also important to note that the requirement for essential health benefits applies only to individual and small group plans; the requirement does not exist for self-insured plans.
With the pay-or-play delay, employers will not be penalized if their plans do not cover at least 60%, on average, of an employee's health care costs in a given year, or if an employee's premium costs exceed 9.5% of his or her income. Those employees may still be eligible for tax credits on the public exchange, but for 2014 employers will not be subject to penalties if employees receive those tax credits.
Financial responsibility
It's clear that shifts in financial responsibility will continue to affect today's benefits picture. As employers feel the pressure of rising costs and enrollments in their health plans, they are likely to further fuel the already rapid growth of consumer-directed health plans. In fact, 52% of employers surveyed recently anticipated introducing high deductible/consumer-driven health plans in the next three to five years.
Employers should be aware that employees will see any loss of medical coverage or increase in cost sharing as a reduction in compensation. Consequently, employers will need to pay more attention to their company's total benefits package and consider ways to preserve or increase its value.
Above all, during this transitional period of health care reform, employers must clearly communicate benefits options and their value to employees. Employees need to understand that in most cases, their health benefits will remain the same and they won't have to go to the public exchanges for their coverage. They should also be educated about the need for disability coverage and its value.
Using multiple enrollment methods and a variety of learning tools will help ensure a successful benefits enrollment. In fact, research shows that participation is highest when employees have at least three weeks to absorb their benefits-education information, with at least three different ways to learn about their choices.
Delay of health reform mandate has employers making hard benefit choices
Originally posted July 14, 2013 by Jerry Geisel on https://www.businessinsurance.com
Some employers may offer health insurance despite mandate delay.
Affected employers face some tough decisions on what approach they will take in the wake of the Obama administration's unexpected decision to delay a key health care reform law provision.
Administration officials this month delayed by one year to 2015 the Patient Protection and Affordable Care Act requirement that employers with 50 or more employees offer qualified coverage to at least 95% of their full-time employees or pay a $2,000 penalty for each full-time employee.
U.S. Treasury Department officials said the delay was necessary to give the agency more time to simplify how employers are to file health care plan enrollment information with the government.
That delay is being welcomed by employers, especially those who have not decided whether they will offer coverage to those not currently eligible; or, if they have decided, the generosity of the coverage they will provide.
“This is a rare opportunity where an employer can make a smart and thoughtful decision,” said John McGowan, a partner with the law firm Baker & Hostetler L.L.P. in Cleveland.
Some employers, especially those that already have told affected employees that they will expand coverage, are less likely to reverse course and hold off that expansion for another year.
“If you already have figured out your strategy, you probably will implement it,” said J.D. Piro, a senior vice president with Aon Hewitt in Norwalk, Conn.
For example, Cumberland Gulf Group in June announced that, effective Oct. 1, employees working as few as 32 hours a week will be eligible for group coverage, down from the current 40-hour-a-week requirement.
Employees working 30 or 31 hours a week will be given the option of working 32 hours to become eligible for coverage in the company's self-insured plans. For employees who work less than 30 hours, the company will assist them in finding coverage through public insurance ex-changes.
Through that expansion of coverage, which will affect about 1,500 employees, Cumberland Gulf, a $15 billion Framingham, Mass.-based company that owns convenience stores and the Gulf Oil brand, will be shielded from the health care reform law's $2,000 per-employee penalty, which is triggered when coverage is not offered to full-time employees — those working at least 30 hours per week.
That expansion of coverage will remain on track, said John McMahon, Cumberland Gulf's senior vice president and chief of human resources.
“We are going to continue on the path we have laid out. Our strategy is to create a great place to work and to be an employer of choice,” Mr. McMahon said, adding that the company is getting very positive feedback from current and prospective employees.
Other employers who also have announced plans to expand coverage eligibility, though, may find themselves between a “rock and a hard place,” said Ed Fensholt, senior vice president and director of compliance services for Lockton Benefit Group in Kansas City, Mo.
Those employers “will have to weigh the cost savings by pulling the plug for a year with the confusion and damage to employee relations that would occur,” Mr. Fensholt said.
Employers that do not offer coverage to all eligible employees and have not made final decisions on whether they will expand coverage also face issues.
For example, if they wait until 2015 to offer coverage, they could be at a disadvantage if their competitors decide to extend coverage next year, said Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington.
There are other issues for employers not currently offering coverage to consider. By not offering coverage, their lower- and middle-income employees will be eligible for premium subsidies to purchase policies from insurers offering coverage in public insurance exchanges.
Then, in 2015, when the coverage mandate kicks in, the employer could offer a plan that is just rich enough to pass the law's minimum value test, denying employees the government subsidies for exchange coverage they received in 2014.
“Then, you have an employee relations issue,” Mr. Fensholt said.
That issue will be less likely to develop, experts say, if the employees received employer coverage beginning in 2014 and never enrolled in exchanges.
“Some employees will be disappointed. It could be an awkward situation,” said Frank McArdle, an independent benefits consultant in Bethesda, Md.
Still, there are plenty of employers not providing coverage who will decide against offering coverage in 2014.
Employers “may not want to move forward until the dust settles. Some are wondering if the regulations and requirements will actually change during this interim period,” said Michael Thompson, a principal with PricewaterhouseCoopers L.L.P. in New York.
In addition, by waiting, employers will have a better sense of whether Congress will act in the coming months to change the employer mandate, experts say.
For example, prior to the Treasury Department delay, bills were introduced that would change the definition of a full-time employee to those working 40 hours a week — compared with the law's 30-hour threshold — while other measures would exempt more small employers from the requirement to either offer coverage or pay the $2,000 per-employee fine.
While it is difficult to imagine Congress reaching a bipartisan consensus, “anything is possible,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.
8 reasons for employers to keep their PPACA guard up
Originally published July 17, 2013 by Dan Cook on https://www.benefitspro.com
Now that the celebrations have died down over the one-year delay of penalties for employers who don’t meet the PPACA coverage requirements, it’s time to take a close look at what does remain in effect.
The very short answer to the question is that there’s still quite a bit on the books, and that, really, only the teeth have been (temporarily) removed.
Here’s what the national law firm Bryan Cave had to say about which PPACA provisions remain in effect for employers in the year ahead.
1. Summaries of Benefits and Coverage must be distributed during open enrollment for the 2014 coverage period and must indicate whether the plan provides minimum value, as defined under the PPACA.
2. Exchange Notices: Employers must distribute PPACA exchange notices to employees by Oct. 1, 2013, and thereafter to new employees upon hire.
3. Application for Advance Premium Credits: Employers are required to complete a 12-page form entitled, “Application for Health Coverage and Help Paying Costs” when requested by employees who are applying for PPACA advance premium tax credits when purchasing coverage via an exchange.
4. PPACA fees: Patient-Centered Outcome Research Institute Fees (“PCORI Fees”) must be paid in July 2013 (that’s now!). The first Transitional Reinsurance Fee must be paid on or before Jan. 15, 2015. PCORI is a private non-profit corporation that gathers research-based information to assist patients, practitioners and policy makers in making informed health care decision.
5. W-2 reporting: Employers must continue to report the aggregate value of health coverage on Forms W-2.
6. Counting Period for Employer Mandate: Employers that need to determine whether they will be subject to the employer mandate in 2015 (50 or more full-time or full-time equivalent employees in 2014) will need to record employee hours in 2014. It is not yet clear whether a short counting period will be available, which means that employers may be smartest to begin to track hours on a per-employee, monthly basis on Jan. 1.
7. Benefit Mandates For All Plans: Plan design requirements for all plans continue to apply (e.g., maximum 90-day waiting period, no limits on pre-existing conditions or essential health benefits, expansion of wellness incentives, dependent coverage to age 26).
8. Benefit Mandates for Non-Grandfathered Plans Only: Plan design requirements for non-grandfathered plans only continue to apply (e.g., preventive care coverage requirements, limits on out-of-pocket maximums, coverage for clinical trial-related services, and provider nondiscrimination, and for small group health plans, limits on annual deductibles).
First round of employers’ ‘PCORI fees’ due July 31
Originally published July 19, 2013 by Garrett Fenton and Fred Oliphant on https://ebn.benefitnews.com
Most employers that sponsor self-funded group health plans, and insurers of fully-insured group health plans, will need to file and pay by July 31 their first round of federal comparative effectiveness research fees imposed under the Affordable Care Act. ACA established the annual fee -- which is known as the “PCORI fee” -- in order to fund comparative clinical effectiveness research to be conducted by the newly-established, non-profit Patient-Centered Outcomes Research Institute.
The amount of the fee is $1 for each individual covered under the group health plan, for the first plan year ending on or after October 1, 2012 (i.e., 2012, for a calendar-year plan), and must be reported on IRS Form 720 and paid by no later than July 31 of the calendar year following the end of the relevant plan year (i.e., by July 31, 2013, for a calendar-year plan). The amount of the fee will increase to $2 per covered individual for the following plan year, and will be increased further for inflation in subsequent years.
The fee is scheduled to expire with the last plan year ending before October 1, 2019, meaning the last fee for a calendar-year plan will need to be filed and paid (for the 2018 plan year) by July 31, 2019. The IRS Office of Chief Counsel recently confirmed that PCORI fees paid by an employer or insurer are tax-deductible, as ordinary and necessary business expenses, under section 162 of the Internal Revenue Code.
The IRS issued final regulations implementing the PCORI fee last December. The regulations include detailed rules regarding the methods by which an employer or insurer may count enrollees under a group health plan for each year, and provide exemptions for certain types of plans and special rules for employers that sponsor multiple plan options. We understand that there has been some confusion among employers regarding the application of the PCORI fee to health flexible spending arrangements and health reimbursement arrangements.
As an initial matter, most employer-sponsored health FSAs (but not necessarily HRAs) qualify as “HIPAA-excepted,” and are therefore exempt from the PCORI fee. But in some instances -- generally, where the employer makes additional, substantial “non-elective” or “matching” contributions to its employees' health FSAs (or does not offer its employees a primary, major medical plan option in addition to the health FSA) -- the HIPAA-excepted exemption does not apply, meaning the fee will be imposed on the health FSA (perhaps subject to additional, special rules set forth below).
Where an employer offers a fully-insured primary group health plan along with an “integrated” HRA (or non-HIPAA-excepted health FSA), two separate PCORI fees will be imposed: the employer/plan sponsor will owe one fee for the HRA or health FSA, and the health insurer will owe a separate fee for the fully-insured primary plan. By contrast, where an employer offers a self-insured group health plan along with an integrated HRA (or non-HIPAA-excepted health FSA), a single fee will generally be imposed on the employer, for each employee covered under both the primary plan and the HRA (or health FSA), provided that the primary plan and HRA (or health FSA) have the same plan year.
The IRS recently updated the Form 720 (and related instructions) -- which some employers already file, on a quarterly basis, to report certain federal excise taxes -- to reflect the PCORI fee. Third party service providers, such as third party administrators, will not be allowed to file the Form 720 on behalf of a responsible entity. Therefore, employers sponsoring calendar year, self-funded group health plans (and insurers of calendar-year, fully-insured plans) must be prepared to complete and file the Form 720, and pay their first round of PCORI fees, by July 31.
What hasn't changed for employers in 2014?
Originally posted by Keith R. McMurdy on https://ebn.benefitnews.com
In a move that was generally applauded by employers, the Obama administration announced last week that it would delay implementation of the employer health coverage mandate under the Affordable Care Act until January 1, 2015. The good news is that this gives employers another year to prepare for the so-called pay-or-play mandate that requires employers with at least 50 full-time-equivalent employees to offer affordable health coverage to those who work at least 30 hours a week. The bad news is that it remains unclear what compliance still means for employers.
While the employer mandate is suspended, a variety of key provisions that go into effect on January 1, 2014 remain in play. Subject to any future adjustments, plans are still obligated to comply with a number of specific changes. These include:
- Waiting periods cannot exceed 90 days
- Caps on annual out-of-pocket maximums and elimination of lifetime and annual limits
- Revised Summary of Benefits and Coverage notices and a required notice of availability of exchanges
- Excise taxes and fees, such as the PCORI fee and the reinsurance program fee
While we are awaiting further guidance, and any additional changes, plan sponsors should continue to take the necessary steps to make sure their plans are in compliance. Even though the pay-or-play mandate is suspended, plan sponsors could still be found to have non-compliant plans and face penalties around the ACA. So while you might be able to postpone changes relating to eligibility and affordability, you still have to revise your plan to make sure it complies. This delay only effects who you might have to offer coverage to, not the nature of the coverage that will ultimately be offered.
So employers as plan sponsors should take this delay as an opportunity to focus on making their plans 100% compliant. Consider 2014 a “measurement” year where you can implement those employment structures you might have already discussed to make sure your part-time and full-time employees are clearly defined. Consider this a brief reprieve and not an excuse to ignore ACA completely. Employers might have been given some breathing room on the final due date, but the project still has to be completed.
Used with permission from Fox Rothschild LLP. Keith R. McMurdy is an employee benefits attorney at the firm’s New York City office. To contact the author: kmcmurdy@foxrothschild.com. This Legal Alert is not intended to be, and should not be construed as, legal advice for any particular fact situation.
Majority of employers already PPACA-compliant
Originally posted by Dan Cook on https://www.benefitspro.com
More than half of private companies surveyed about their readiness for the Patient Protection and Affordable Care Act said they were already in compliance with the law.
Moreover, three-quarters of them considered themselves prepared to meet the law’s requirements when they become the law of the land.
That’s the conclusion from a PwC (aka PriceWaterhouseCoopers) survey of 210 large private employers, nearly all of which offer their employees health coverage.
While the survey revealed a modest level of uncertainty among companies about just how they will comply, overall, private employers expressed confidence in their ability to offer employees a health plan that meets the letter of the law.
The PwC survey was conducted prior to the administration’s announcement that it would postpone for a year the penalty portions of the PPACA that apply to large employers.
Highlights from the survey include:
- 56 percent of companies already comply with the PPACA.
- 72 percent say they are prepared to comply.
- 35 percent believe they are well prepared.
- 74 percent say the cost of coverage to employees already meets the 9.5 percent-or-less of household income standard the law will require.
- 70 percent don’t think the act will help them reduce the cost of coverage.
- 58 percent say paying for employee health coverage hasn’t slowed their growth.
The survey revealed that many companies (70 percent) plan to take their own measures to try to control health care coverage costs, including shifting more of the cost to employees. That could lead them to run afoul of the 9.5-percent standard, warned PwC’s Ken Esch, a partner with PwC’s Private Company Services practice.
“Companies that plan to shift more healthcare costs to employees should be careful to calculate whether such cost-shifting could cause the company to fail the PPACA’s affordability test,” cautions Esch. “Companies that offer wellness incentives also should remember to take those incentives into account when calculating the minimum value of their healthcare coverage plans.”