Survey: Employees don't want control over health care
Report reveals a sobering gap in employee readiness to handle and take on the shift toward consumer-driven health plans
Original article from https://ebn.benefitnews.com
By Tristan Lejeune
As more and more employers look at defined contribution health care and other insurance shifts, will employees be ready? Last year, J.D. Power and Associates reported that 47% of employers "definitely" or "probably" will switch to a defined contribution health plan in the coming years.
The third annual Aflac WorkForces Report reveals a sobering gap in employee readiness to handle and take on the shift toward consumer-driven health plans and defined contribution health. A majority of workers (54%) would prefer not to have more control over their insurance options, citing a lack of time and information to manage it effectively, while 72% have never even heard the phrase "consumer-driven health care."
Aflac and Research Now surveyed 1,884 benefits leaders and 5,229 wage-earners and found arresting disconnects in their expectations, plans and views of the future. For example, 62% of employees think their medical costs will increase, but only 23% are saving money for those hikes. A full three-quarters of the workforce think their employer will educate them about changes to their health care coverage as a result of reform, but only 13% of employers say educating their employees about health care reform is important to their organization.
"It may be referred to as 'consumer-driven health care,' but in actuality, consumers aren't the ones driving these changes, so it's no surprise that many feel unprepared," says Audrey Boone Tillman, executive vice president of corporate services at Aflac. "The bottom line is if consumers aren't educated about the full scope of their options, they risk making costly mistakes without a financial backup plan."
Aflac reports what many benefits leaders instinctively know: Consumers already find health insurance decisions intimidating and don't welcome increased responsibility. Fifty-three percent fear they might mismanage their coverage, leaving their families less protected than they are now. And significant ignorance remains: Plan participants are "not very" or "not at all" knowledgeable about flex spending accounts (25%), health savings accounts (32%), health reimbursement accounts (49%), or federal or state health care exchanges (76%).
According to the report, 53% of employers have introduced a high-deductible health plan over the past three years, and that trend shows no sign of slowing. Yet more than half of workers have done nothing to prepare for changes from HDHPs, the Affordable Care Act or other system shifts.
"It's time for consumers to face reality," Tillman says. "Ready or not, they are being put in control of their health insurance decisions - and that means having to make choices that could have a big impact on personal finances. If employers aren't offering guidance to workers on how to make crucial benefits decisions, the responsibility lies in the hands of consumers to educate themselves."
The U.S. government estimates that by 2014, household out-of-pocket health care expenses will reach an annual average of $3,301. More than half (55%) of workers have done nothing to prepare for possible changes to the health care system, Aflac reports, and their savings reflect that: 46% have less than $1,000 put aside for unexpected, serious illness or injury. Twenty-five percent have less than $500.
Tillman says that what surprised her most about the data is how people seem to be ignoring such a large, tectonic shift in the landscape. It's not exactly like health care reform has been subtle and creeping.
"There's no greater awareness, no greater education, and it's a sea of change that's taking place," Tillman says. "It's all over the news; it's everywhere. But people aren't any more moved to action and education."
What happens with health care, she says, "seems to be evolving," and there may be a reluctance on the part of consumers to jump in because "hey, it may change." The shift to CDHPs, however, seems to be building in momentum, and employees would do well to wake up. The entire point of that shift, after all, is that they will be on their own, but employers do need to make sure they know that.
Benefits "are a great expense to your organization, and to have your workers and the people that you're charged with protecting not aware, not informed of how the benefits offering could impact their lives, to me that's not really safeguarding a very expensive and important benefit," Tillman says. "It benefits the employee, obviously, to know: What are my benefits, what is my employer thinking about doing, what do I need to be studying. But at the same time, it's very important to employers ... because otherwise they're not getting a very good return on their investment."
Tillman says "frequent communication is paramount" for instituting changes like this - don't send out the message once a year and then forget about it. And never underestimate the value of a personal example as a teaching method.
"A lot of times employers and HR get into a communicate-only-at-open-enrollment mode," she says. "And, even if health care reform weren't about to happen, I'd still say as an HR professional, communicate throughout the year. Communicate via every method that you can - to be sure, at open enrollment, but also on your intranet. If you've got a portal, including things in mailers, the paper tables in the cafeteria. ... the more we can highlight a benefit by showing how other employees have utilized it, that's a really impactful case."
ACA prep: Now, this year and in 2014
Original article from https://ebn.benefitnews.com
By Robert J. Lowe
The Patient Protection and Affordable Care Act includes many requirements applicable to employer group health plans. Some of these requirements are already effective but some of the most significant requirements will become effective in 2014. Employers should now be considering what they need to do to comply with ACA requirements that will become effective in 2014.
ACA provisions that are already effective
Employer group health plan should already be complying with the following requirements that are already effective:
- Coverage for young adults to age 26
- Deletion of lifetime and annual dollar limits
- Limits on pre-existing condition exclusions and rescission of coverage
- Medical loss ratio rebates paid by insurance companies
- Summary of benefits and coverage provided to participants explaining the terms of the plan
- W-2 reporting of cost of coverage
- $2,500 limit on health care flexible spending accounts
In addition, plans that do not have “grandfathered” status under ACA, as a result of changes to the plans adopted since enactment of the Act, are already subject to the following rules:
- Modified claims and appeals rules including external review requirements
- No cost preventative care
- Non-discrimination rules for insured plans (although these rules are not being enforced currently pending release of regulations)
What happens in 2014
Effective in 2014, employers that are treated as “applicable large employers” under ACA will have to comply with one of the central requirements of the Act, the requirement to offer employees health plan coverage that complies with ACA requirements or otherwise become subject to penalties under the Internal Revenue Code, referred to as “assessable payments.”
Assessable payment rules
There are two types of assessable payment under ACA.
Under one type of assessable payment, if an “applicable large employer” offers health coverage to all employees who work 30 or more hours a week and their dependents but the coverage does not qualify as “minimum essential coverage” or the employer offers coverage that is not “affordable” or does not provide “minimum value” and at least one employee enrolls in a plan offered through a state health insurance exchange for which a premium tax credit or cost sharing reduction is allowed, then the employer subject to “assessable payment” of up to $3,000 for each affected employee per year.
Compliance is determined on a monthly basis with a $250 assessable payment (one-twelfth of $3,000) due for each month for which the affected employee is entitled to a premium tax credit or cost sharing reduction as a result of the purchase of coverage on the exchange. Not all employees will be eligible for the premium tax credit or cost sharing for purchase of this insurance. Only employees earning less than four times the federal poverty limit will be entitled to these benefits. However, employers will not have to make this determination. If the IRS determines that the employee is entitled to these benefits, it will issue the assessment to the employer. This assessable payment is determined only with respect to those employees who purchase the insurance on the exchange and are eligible for the premium tax assistance or cost sharing.
Another type of assessable payment applies if the applicable large employer fails to offer minimum essential coverage at all to 95 percent of its employees who work 30 or more hours per week and their dependents, regardless of whether it is “affordable” or provides “minimum value” and at least one employee purchases coverage through a state health insurance exchange for which a premium tax credit or cost sharing reduction is allowed. Under these rules, the employer can be assessed a penalty equal to $2,000 per year, but multiplied by the number of full time employees employed by the employer reduced by 30.
Who is an “applicable large employer”
As in initial matter, it will be very important for each employer to determine if it is an “applicable large employer.” For this purpose, an employer is an “applicable large employer” if the employer employed an average of at least 50 full-time employees on business days during the preceding calendar year. The parent-subsidiary and brother-sister controlled group rules of the Internal Revenue Code apply in making this determination. Thus, for example, in determining whether the 50-employee test has been met, all subsidiaries that are at least 80 percent owned directly or indirectly, by the parent corporation will be treated as a single employer with the parent corporation. Also, two part-time employees who work an average of at least 15 hours a week are considered a single full time employee for purposes of making this determination.
There is an exception to the definition of “applicable large employer” for employers whose work force exceeded 50 full time employees only because of “seasonal workers” employed for 120 or fewer days during calendar year.
The determination for a particular calendar year is based on the employer’s average number of employees during the prior calendar year using the entire prior year for that purpose. However, for 2014 only there is a special transitional rule that allows an employer to determine if it is an applicable large employer using any period of six consecutive calendar months during calendar year 2013 rather than using the entire year.
What is affordable coverage
If the employer determines that it is an applicable large employer, it will also be necessary to determine if the coverage it is offering is “affordable.” If the coverage is not affordable, and an employee obtains coverage on an exchange for which it obtains a premium tax credit or cost sharing benefit, the employer will be liable for an assessable payment for that employee.
Coverage is affordable if the employee’s required contribution does not exceed 9.5 percent of the employee’s household income for the year. The coverage to which this rule applies is the employee portion of the self-only premium for the employer’s lowest cost coverage that provides minimum value. Thus, the employer can charge higher amounts for spouse or dependent coverage without having the coverage cease to be treated as affordable for this purpose.
The IRS regulations offer a variety of methods for determining the employee’s household income. However, most employers will find it easiest to make this determination using the safe harbor method based on Form W-2 wages as set forth in box 1 of the W-2.
Determining if an employee is full-time
In most cases it will be clear if an employee is a full time employee or not. However, in some cases, it will be difficult for an employer to make this determination.
The basic definition is that a full time employee for this purpose is an employee who is employed on average at least 30 hours of service per week. However, in some cases, the employer will not know in advance if an employee will satisfy that requirement. For this purpose, the IRS proposed regulations provide special rules for “variable hour employees” if it cannot be determined when the employee begins work if the employee is reasonably expected to work 30 hours per week.
Also, under a special transitional rule for calendar year 2014 only, a new employee who is expected to work initially at least 30 hours per week may also be a variable hour employee if, based on the facts and circumstances at the start date, the employee is expected to work 30 or more hours per week but the period of employment at more than 30 hours per week is reasonably expected to be of limited duration and it cannot be determined that the employee is reasonably expected to work on average at least 30 hours per week during the entire initial measurement period. However, effective January 1, 2015, such a limited duration employee will have to be treated as a full time employee.
To determine whether coverage is required for these variable hours employees, the IRS provided the option to use a “look back/stability period” safe harbor. Under this approach, the employer “looks back” at a period of three to twelve months to determine if during the measurement period the employee averaged at least 30 hours per week.
If the employee is determined to be full-time during the measurement period, the employee is treated as full-time during a subsequent stability period of six to twelve months, regardless of the number of hours worked during the stability period.
There can also be an “administrative period” of up to 90 days under certain circumstances between the end of the measurement period and the beginning of the stability period.
Variable hour employee examples
These rules can be illustrated by the following example of use of the look-back/stability period rules for ongoing employees:
Assumptions:
- Employer uses a look-back period of 12 months ending October 15 and a stability period of the calendar year.
- During the period from October 16, 2012 through October 15, 2013, an employee is tested to determine if he or she satisfies the full-time employee requirements.
If the employee works an average of 30 hours per week during the look back period, the employee would be entitled to coverage effective with the stability period beginning January 1, 2014. Coverage would be available for all of 2014 regardless of hours worked in 2014 as long as the employee remains employed. If, however, the employee does not work an average of 30 hours per week during the look back period, then the employer does not have to treat the employee as a full time employee for the entire stability period of 2014 regardless of the number of hours worked in 2014 and no assessable payment could be due with respect to the employee for that period.
Similar rules are applicable with respect to new employees as illustrated by the following example applicable to use of the look-back/stability period rules for new employees:
Assumptions:
- Employer uses a 12-month initial measurement period from date of hire and 12-month stability period.
- Administrative period from end of measurement period to end of first calendar month beginning after the measurement period.
If an employee has a date of hire of February 10, 2013, the measurement period would end twelve months later on February 9, 2014.
If the employee worked an average of 30 hours per week during this measurement period, the employee would be treated as full-time and would be entitled to coverage for the stability period from April 1, 2014 through March 30, 2015. If the employee did not work an average of 30 hours per week during that measurement period, the employee would not be treated as a full time employee during the stability period.
In addition, the employee would have to be tested as an ongoing employee as well. Therefore, using the look-back/stability period rules discussed above for ongoing employees and using the same assumptions as set forth above, then the employee would also have to be tested for the measurement period from October 16, 2013 through October 15, 2014 (applicable to ongoing employees) to determine calendar 2015 coverage. If the employee was treated as a full time employee during the look back period beginning on the date of hire, but not during the look back period beginning October 16, 2013, the employee would be entitled to coverage for the period from April 1, 2014 through March 30, 2015, but would not be treated as a full time employee for the balance of 2015.
Conclusion
Employers who wish to avoid liability under the assessable payment rules that become effective in 2014 should be analyzing their health plans and employee populations to determine if they already comply with the new rules and, if not, what changes they will have to make before January 1, 2014.
New PPACA wellness rules include fat rewards
Original article from https://www.benefitspro.com
By Allen Greenberg
May 29th, 2014
Workers who lose weight or quit smoking while enrolled in a workplace wellness programs could see their health care premiums drop under new rules issued Wednesday as part of the Patient Protection and Affordable Care Act.
Beyond lowering premiums, the Health and Human Services Department said the rules — released by HHS along with the Labor and Treasury departments — also are aimed at protecting individuals from unfair underwriting practices that could reduce their health benefits.
Wellness programs typically tie financial incentives to weight loss or reducing blood sugar.
As the mounting cost of health insurance continues to strain budgets, both employers and policy makers are increasingly turning to wellness programs as a way to help bring those costs under control.
Proponents say wellness programs can save employers as much as $7 for every $1 spent, as well as deliver higher employee morale, reduced absenteeism and increased productivity and retention.
The rules support “participatory wellness programs” that, for example, reimburse employees for the cost of membership in a fitness center, or provide some kind of reward to employees for attending a monthly, no-cost health education seminar.
The rules also outline standards to reward individuals who meet a specific outcome related to their health, say losing weight or cutting smoking.
Some Democrats in Congress worried that the outcome-based programs could allow insurers to discriminate against unhealthy people.
Businesses, meanwhile, expressed concerns about overly burdensome regulations, requiring them to provide tests to determine whether employees met wellness program benchmarks. Helen Darling, president of the National Business Group on Health, in a letter said she worried that "certain provision[s] of the proposed regulations will impede innovation and increase administrative and cost burdens for wellness programs, with little to no benefit to participants."
But HHS said it had "clarified" some "confusion" about how the new incentives would work, though it left intact the size of the incentive employees can receive for meeting wellness goals. Some had wanted the incentives reduced.
Under the rules, employers can bump up the maximum permissible dollar amount of the rewards offered to employees to 30 percent — it had been 20 percent — of the total cost of their health care coverage, and can raise incentives tied to smoking prevention or reduction programs to up to 50 percent of total coverage costs.
"Today’s final rules ensure flexibility for employers by increasing the maximum reward that may be offered under appropriately designed wellness programs, including outcome-based programs," HHS said in a statement.
"The final rules also protect consumers by requiring that health-contingent wellness programs be reasonably designed, be uniformly available to all similarly situated individuals, and accommodate recommendations made at any time by an individual’s physician based on medical appropriateness."
The intent, HHS said, is that, regardless of the type of wellness program, anyone taking part in the program should be able to receive the full amount of any reward or incentive, “regardless of any health factor.”
Above all, HHS said, it has tried to be reasonable.
"These final regulations state that a wellness program is reasonably designed if it has a reasonable chance of improving the health of, or preventing disease in, participating individuals, and is not overly burdensome, is not a subterfuge for discrimination based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease," agency officials said.
The rules will go into effect Jan. 1.
Employers test mix of strategies to avoid PPACA
Original article from https://www.benefitspro.com
By Allen Greenberg
Employers that have pruned the hours of part-timers in response to PPACA have generated plenty of headlines, mostly negative. But it’s not the only strategy they’re testing in hopes of sparing themselves the expense of buying health insurance for everyone.
Around the country, companies are beginning to share employees.
They’re also increasingly turning to temporary staffing agencies.
When and where possible, they’re using independent contractors.
And, in some instances, they’re turning to professional employer organizations.
Often, none of these options are ideal but are viewed as the best way forward, especially for businesses subject to the law because they employ 50 or more people.
Concerns have been running high about how PPACA will impact business. A recent Gallup survey found that 48 percent of small-business owners say the law is going to be bad for business, compared with 9 percent who say it’s going to be good, and 39 percent who expect no impact at all.
The headline-grabbing response from business has, in part, included trimming of the part-time workforce. The law requires large employers offering health insurance to include part-time employees working 30 hours a week or more. The Federal Reserve Bank of Minneapolis found that 11 percent of employers are shifting to more part-time employees or planning to do so in response to the new healthcare requirements.
But HR managers, small-business interest organizations and others say many companies also are doing what they can to preserve jobs.
It isn’t altruism alone; these business owners also are motived by a desire to keep their companies growing, if not thriving.
Kevin Kuhlman, the Washington, D.C.-based manager of legislative affairs for the National Federation of Independent Businesses, said few of his organization’s members like the idea of “shrinking their businesses.”
That’s why, he said, “we’re seeing a lot of creative strategies” when it comes to addressing the employer mandates of the Patient Protection and Affordable Care Act of 2010.
“Folks are concerned about the sustainability of their business,” Kuhlman said. “Some might try to survive by atrophy, which isn’t a great approach, or try to find ways to be more productive with fewer employees.”
But rather than “resisting growth” or overwork employees, many companies are trying out new ways of getting the job done.
Sharing, for example.
Some businesses, especially those in the food-service world, are increasingly banding together to split an employee’s workweek between themselves and competitors. In other words, a cook might work 15 hours at one restaurant, put in another 15 at another eatery and wrap up with 10 hours at a third.
Labor interests might object that this approach amounts to exploitation, but advocates say it helps keep people fully employed, if not insured by an employer.
Employers also are turning to temporary staffing agencies as a possible solution.
Many temporary staffing firms are going to be considered large employers under Obamacare, meaning they’ll be compelled to provide health benefits or pay the penalties. But employers who turn to staffing agencies can save money because the cost of the benefits will be lower for a large employer.
How well this strategy will work is unclear. “The issue, of course, is what will the temp agency charge?” asked Dwight D. Menke, the owner of an eponymous brokerage in Topeka, Kansas.
The same goes for professional employer organizations, or PEOs.
ESCO Communications, an Indianapolis-based audio/visual equipment installer, turned to a PEO, WorkSmart Systems, after it faced a 40 percent hike in the company’s health plan last year.
"Health insurance was the real driver" for making the switch, CEO Chip Roth told Entrepreneur magazine. "By joining a larger pool and spreading the risk around, we were able to keep our rates the same as they were."
PEOs also handle an array of administrative HR tasks, so it’s no wonder Matt Thomas, founder and president of WorkSmart, says his company is seeing solid growth. "A lot of that has to do with the Affordable Care Act," he said. "Even larger companies that wouldn't normally look at PEOs are looking now, so they can avoid some of the ramifications of (the law)."
The biggest loser when a company goes the PEO route? The in-house HR staff.
Meanwhile, employers also are turning increasingly to independent contractors to get work done.
Companies that use these “freelancers” generally don’t have to withhold or pay any taxes on payments they make to them and are not required to provide them with health insurance. The IRS, however, has been cracking down on the abuse by companies of the independent contractor classification and many employers have been fined.
Still, it’s a risk more employers are reportedly taking so long as they feel comfortable they can prove that the contractor’s services are not an integral part of their principal business.
Compliance, as the NFIB’s Kuhlman points out, is a big concern for most employers, and whether some of these strategies are ultimately seen as legitimate by the government remains to be seen.
In the end, many employers may decide they don’t like giving up the control they have over employees who suddenly are working for a temp agency, or a PEO or have become independent contractors.
Kuhlman expressed concerns that “some folks are throwing good money at bad advice.”
“They’re sick of waiting so they’re doing things like splitting up their businesses” into smaller units with fewer employees, he said. “But that’s not going to work, because they (the regulators) are aggregating business owners with multiple entities into one entity.”
In other words, those companies will still be subject to the law.
John Duczak, senior VP at The American Worker, a Hoffman Estates, Ill., benefits company, points out the law itself might offer relief to at least some employers, even those with thousands of workers on their payroll.
The legislation’s “variable hour accommodation” allows employers to determine whether someone is a fulltime or part-time employee by the average number of hours that person puts in over a 12-month period. “Some companies are going to become very skilled in their management of that position” as a way of avoiding Obamacare’s coverage mandate, he said.
Turnover in the ranks also will help a lot of companies, especially those in the retail and hospitality industries.
Duczak noted that one of his clients hires 18,000 people a year, 11,000 of whom have moved onto new jobs or situations after six months.
The problem, he said, “takes care of itself,” at least for those employers.
Are You Ready for PPACA? Employers Count the Days
Original article from forbes.com
As the full enactment of PPACA approaches, there are many factors that business owners know to look out for.
- Do I need to provide health insurance to my employees?
- Should I go to an exchange?
- How will the mandate impact my business and profitability?
- How much are my health insurance premiums going to go up?
These are all questions that many business owners are starting to look. Below are some points that you may not have thought of that should go into your business planning.
We all know that health insurance premiums are expected to go up, but do you know how much? Small groups (2-99 employees) can expect to see price increases between 20% and 50% upon the full enactment of reform. When factoring in medical trend, taxes and fees, carrier and product changes and the introduction of community rating, your premiums will jump significantly. As a small business owner, asking your existing broker for a quote is not going to solve this problem as it will require a new method behind providing employees with health insurance. The objective of a health insurance plan should not be to carry you over to the next year with as little pain as possible, but to address your company’s healthcare expenses for the long term. You need a road map that will allow you to offer affordable coverage to employees while keeping costs in line.
Some employers are looking to drop plans in order to remain profitable. Unfortunately, this is not the answer either and can cause more pain than gain. With the Supreme Court upholding the individual mandate, all Americans will be required to obtain health insurance or pay a penalty. The cost of obtaining coverage for individuals is expected to jump 100% – 200% with an average increase of 116%. This is going to push many employees who either have individual plans or would ordinarily look at obtaining individual plans to go to their employer to obtain coverage. By not obtaining small group coverage, you risk losing your talent to other companies who are willing to absorb the cost. This can result in the loss of business and inevitably impact the bottom line more then not offering coverage at all.
The federal funding for health care reform is already facing challenges that will impact all small business owners. In the deal that was reached in the fiscal cliff debate, an agreement was made to cut the remaining $1.9 billion dollars that was set to fund Consumer Oriented Operated Plans (CO-OP’s) through the Affordable Care Act. $1.9 billion was already spent to fund the creation of CO-OP’s. These will remain in place; however no more federal money will be used to create any additional CO-OP’s at this time. This is another example of where PPACA has been modified in order to maintain its functionality. This will lead to higher costs in term of premium and taxes for small business owners and individuals seeking health insurance in the short term, to cover the high costs of implementing the systems and covering up all other budget shortfalls that would have ordinarily paid for these costs.
Putting off PPACA with early plan renewals
Original article from benefitspro.com
By Allen Greenberg
Why wait?
That’s the attitude a growing number of employers are expected to adopt this year when it comes to renewing their health plans and, as a result, putting off the day when they have to deal with the many provisions of the Patient Protection and Affordable Care Act.
“It’s actually not anything new,” said Cheryl Randolph, a spokeswoman for United HealthCare Group. “Employers have always had this option.”
Of course, that’s true. But this year’s different.
With the PPACA going into full effect Jan. 1, a number of employers are expected to pull the trigger on renewals in November and December. Just how many, no one knows right now.
But UnitedHealth, Humana and Aetna, among others, are all expected to offer early renewals, health insurance brokers say.
There’s plenty of incentive for employers to renew early.
Health insurance premiums on average could rise by 40 percent under the Patient Protection and Affordable Care Act, according to a study by Milliman, the consulting firm. The study was done on behalf of Center Forward, a bipartisan organization. It focused on premiums for individual and group comprehensive medical insurance plans in Arizona, Florida, Illinois, New Jersey, Ohio and Wisconsin.
Individual premiums, on average, will increase 25 percent to 40 percent due to PPACA, the firm said, while small market group premiums could increase by 6 percent to 12 percent.
Karen Harrison, a broker with Lakewood, Colo.-based Braddock Harrison Agency, said she expected to receive renewal packages from carriers in late August and was letting her clients know now they should consider early renewals this year.
“There are pros and cons to doing this,” Harrison said.
One con? Any employer renewing early this year would not be able to move their renewal date again.
The big pro? For companies with younger, healthier employees, renewing early could limit their rate increase to 15 percent or less, according to an estimated projection Humana shared with brokers.
Whether renewing early will work as a strategy is unclear.
The Illinois Department of Insurance recently warned health insurers it wouldn't approve policies with "arbitrary" renewal dates meant to "delay compliance with the reforms." Also, Rhode Island said it wouldn't approve early renewals of health plans for small businesses.
Harrison, for one, said she didn’t think regulators would have much choice.
“So long as everyone follows the rules, I think it would be very hard” to fight this, she said.
Final ACA wellness rules issued
Original article from eba.benefitnews.com
By Amy Gordon and Jamie Weyeneth
On May 29, the U.S. Departments of the Treasury, Labor (DOL) and Health and Human Services issued final regulations amending the 2006 HIPAA nondiscrimination wellness regulations to implement the employer wellness program provisions of the Affordable Care Act. The final rules retain the two categories of wellness programs – “participatory wellness programs” and “health-contingent wellness programs.” The final rules do not deviate extensively from the proposed regulations issued in November 2012, although the content has been reorganized to more clearly set forth the requirements for each type of wellness program. The participatory wellness program rules are basically unchanged from the current 2006 regulations – participatory wellness programs comply with the HIPAA nondiscrimination requirements as long as the participant does not have to satisfy any additional standards and participation in the program is made available to all similarly situated individuals, regardless of health status. However, the final rules update and expand on the requirements for health-contingent wellness programs, which condition a reward on a participant’s satisfaction of a standard related to a health factor.
Under the final rules, there are two types of health-contingent wellness programs – “activity-only” programs and “outcome-based” programs. An activity-based wellness program provides a reward if an individual performs or completes an activity related to a health factor, but it does not require the individual to satisfy any specific health outcome. Examples include walking or exercise programs in which a reward is provided just for participation, or rewards for taking a health risk assessment without requiring any further action. An outcome-based wellness program requires an individual to either attain or maintain a specific health outcome – for example, not smoking or achieving certain results in biometric screenings – in order to obtain a reward.
All health-contingent wellness programs must meet five requirements:
1. Eligible individuals must be given an opportunity to qualify for the reward at least once per year.
2. Generally, the reward may not exceed 30% of the total cost of employee-only coverage (including both the employee and employer portion of the cost of coverage). If dependents are permitted to participate, the reward can be calculated on the basis of 30% of the cost of coverage in which the employee and any dependents are enrolled. In the case of a program designed to reduce or prevent tobacco use, the maximum reward amount is 50% of the total cost of coverage. The reward limit is cumulative for all health-contingent wellness programs.
3. The program must be reasonably designed to promote health or prevent disease.
4. For an activity-based wellness program, the full reward must be available to all similarly situated individuals by offering a reasonable alternative standard for obtaining a reward if it is either unreasonably difficult due to a medical condition to satisfy or medically inadvisable to attempt to satisfy the otherwise applicable standard. A wellness program can require verification from a physician that an individual’s health factor makes it unreasonably difficult or medically inadvisable to attempt to satisfy the regular standard.
For an outcome-based wellness program, the full reward must be available to anyone who does not meet the standard based on the initial measurement, test, or screening. The alternative standard cannot be a requirement to meet a different level of the same standard without additional time to comply – for example, if the initial standard is to achieve a body mass index of less than 30, the reasonable alternative standard cannot be to achieve a BMI of less than 31 on that same date, but it might be reasonable to require the individual to reduce his or her BMI by a smaller amount over the course of a year or other realistic period of time. If the individual’s physician joins in the individual’s request for an alternative standard, the physician can be involved in setting (and adjusting) a second alternative standard, consistent with medical appropriateness.
An alternative standard is not reasonable under either type of program unless the time commitment required to satisfy the standard is reasonable. If the alternative standard requires completion of an educational or diet program, the employer must assist the individual in finding the program, and the individual cannot be required to pay for the cost of the program. The alternative standard must accommodate the recommendations of an individual’s personal physician as to medical appropriateness.
5. The availability of a reasonable alternative standard to qualify for the reward must be disclosed in all materials describing the terms of the wellness program. For an outcome-based wellness program, a similar statement must be included in a notice that the individual did not satisfy the initial outcome-based standard. Sample language is provided in the final rule.
The final rules apply to both grandfathered and non-grandfathered group health plans in both the insured and self-insured markets and are effective for plan years beginning on or after January 1, 2014. Plan sponsors and issuers should review their current wellness programs and health plan communications in light of these final rules.
Employers Gear Up For Health Care Changes
Original article from insurancenewsnet.com
By Cyril Tuohy
With the enrollment period for health care coverage under the Affordable Care Act (ACA) little more than four months away, employers are gearing up to inform their workers of the big changes ahead.
For employers who have not yet decided whether to continue offering health coverage or pay the fine for dropping coverage, “now is the time to think about that,” Andrew Molloy, assistant vice president of health management and insurance programs at Unum, said in an interview with InsuranceNewsNet.
So far, it appears the vast majority of employers will keep their coverage for full-time workers, according to a recent poll by the Foundation of Employee Benefit Plans. The survey found that 69 percent of employers will “definitely” continue to provide employer-sponsored health care when the exchanges go live Jan. 1, 2014.
Proponents of health reform, including President Barack Obama, said workers who receive good coverage under their employer-sponsored plan are likely to maintain that coverage, either with existing plans or something very similar.
Employees have an advantage under employer-sponsored coverage models, thanks to the power of group health pricing. Employers benefit as well because of the tax advantages associated with offering workplace-based coverage.
Corporate human resources departments, therefore, are working overtime to inform employees of the big changes. Everyone from insurance carriers to benefits brokers to payroll administrators are racing to inform clients of the changes through brochures, podcasts, blog postings, webinars and dedicated webpages.
“We know that everybody needs to comply with the Affordable Care Act and they are going to try as hard as they can to reduce cost under their respective health care plan and certainly you need a health care compliance strategy to achieve that,” Dave Sanders, health and benefits legal practice with AonHewitt, said in a recent webcast.
For now, companies can focus on the compliance strategy. But, in the long term, they also will need a health care strategy, he said.
Government websites also are full of information about what employers and employees need to know before employees make an enrollment decision. Earlier this month, for instance, the Department of Labor issued guidance to companies on notification procedures of coverage options to employees under Section 18(B) of the Fair Labor Standards Act.
Unum, which offers, life, disability and voluntary benefits coverage, believes a more informed employer makes life easier for employees and insurance carriers.
“It’s important in our role that we educate our clients, and we mean it so that requires us to help our clients, or in some cases brokers, to understand what their implications are on their total benefit of decision making,” Molloy said. “We recognize that medical is the biggest driver of the benefit decision.”
The majority of employer-sponsored health plans begin coverage Jan. 1, 2014, following the three-month enrollment period from Oct. 1 to Dec. 31.
“Some employees will qualify for subsidies and qualify for the exchanges, and employees will be asking questions,” he said. If employees are not asking lots and lots of questions they really should be, Molloy said.
Unum clients and brokers, who play a key role in advising clients, have snapped up the company’s 50-page pamphlet outlining key steps and strategies companies should think about for 2014 and beyond, Molloy also said.
Big-picture questions many employers will want answers to include:
- whether to “pay or play,” meaning to pay the fine or play in the employer-sponsored health benefits marketplace
- whether they meet the 50 full-time-equivalent threshold under which they don’t have to offer coverage
- which states have a state-run exchange or have elected to default to the federal exchange (Fewer than half the states are establishing an exchange.)
The finer points of the law -- such as compliance with deductible limits and out-of-pocket expenses, the contributions to the Transitional Reinsurance Program by sponsors of self-insured group health plans, new limitations on Flexible Spending Accounts, who qualifies for subsidies and levies on medical device manufacturers -- are better left to benefits brokers and advisors.
Still, employers need to be informed in upcoming discussions with their brokers, and with Memorial Day weekend around the corner, many advisors and corporate benefits experts can expect this to be, if not a hot summer, then at least a long one.
“If you are a company that’s going to play and you haven’t thought about it, it’s time,” Molloy said.
© Entire contents copyright 2013 by InsuranceNewsNet.com, Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.
Employers’ confidence in health plans rising
Original article from ebn.benefitnews.com
By Tristan Lejeune
The vast majority of employers are actively developing tactics to work within the Affordable Care Act and companies’ confidence in employer-sponsored health care is up. These are among the results of the International Foundation of Employee Benefit Plans’ 2013 survey, released ahead of the group’s Washington Legislative Update conference, held today and tomorrow.
Only 10% of employers are still in a “wait-and-see mode” regarding health care reform regulations, according to the survey 2013 Employer-Sponsored Health Care: ACA’s Impact; the rest are busy taking steps to deal with reform’s rules and regulations.
Sixty-nine percent of employers tell the IFEBP that they definitely plan to provide employer-sponsored health care when exchanges begin in 2014; in 2012, only 46% of companies were willing to commit to that. An additional 25% say they are very likely to continue the offering.
Changes, however, are coming. Eighteen percent of employers have increased plan participants’ share of premiums, and a quarter plans to do so over the next year. Of those making changes, 25% are upping their emphasis on high-deductible health plans and health savings accounts, and 14% are assessing the feasibility of adding one.
“Employers across the country have to deal with the impact of implementing the ACA while still being able to provide competitive benefits for their employees,” says Julie Stich, research director for the IFEBP. “Employees across the board can expect to see changes in how their employer-sponsored health care plans operate.”
Benefits leaders are also doing more to spur healthy behavior: 19% are either developing an organized wellness program, or expanding an existing one. Fourteen percent of respondents are either adopting or expanding healthy-lifestyle financial incentives, and another 25% plan to do so in the next year.
“We are seeing trends that indicate more changes may be on the horizon. More and more organizations are losing their grandfathered status, dropping from 45% in 2011 to 27% in 2013,” says Stich. “Also many organizations are redesigning their plans to avoid the 2018 excise tax on high-cost or so called ‘Cadillac plans.’ In 2011, only one-in-ten indicated they were redesigning their plan to avoid the additional tax, but we’ve seen a steady increase over the past two years that shows the number will soon double.”
CBO lowers health reform 'Cadillac' tax, employer penalty estimates
Original article from businessinsurance.com
By Matt Dunning
The Congressional Budget Office has nearly halved the revenue it expects the federal government to collect from employers through the health care reform law's so-called “Cadillac tax.”
Excise taxes on employers' high-premium insurance plans are expected to generate about $80 billion over the next 10 years, the CBO said Tuesday in a report updating its federal budget projections for fiscal years 2013-2023.
The revised estimate is a nearly 42% decrease from the $137 billion in excise tax revenue that the CBO projected in February.
Beginning in 2018 under the Patient Protection and Affordable Care Act, the Internal Revenue Service will impose a 40% excise tax on employer-sponsored health benefits that cost more than $10,200 for individual coverage and $27,500 for family coverage.
In its report, the CBO said it reduced its estimate on excise tax revenue after examining recent cost trends in employer-sponsored health benefits.
“As a result, we now expect fewer employment-based plans to be subject to the excise tax on high-premium insurance plans and, consequently, have reduced our estimate of revenues from that tax by $58 billion over the 10-year period,” according to the agency's report.
Employer mandate
The CBO also lowered its projections for revenue collected through penalties included in the health care reform law's employer mandate. Under the law, employers with more than 50 full-time workers — defined as employees working 30 hours or more per week — will be required to offer qualified, affordable group health benefit plans to their employees beginning in 2014.
Failure to meet those requirements will result in a $2,000-per-employee tax penalty if an employer's health care plans are not offered to at least 95% of full-time employees and just one full-time employee uses a premium subsidy to purchase coverage offered through a state- or federally-facilitated health insurance exchange.
The CBO projects the federal government will collect about $140 billion from the employer mandate penalties for the 10-year period, down from the $150 billion it projected in February.
The agency said the revision is due mainly to refinements in the IRS' calculation of households' estimated marginal tax rates, which led to a slight increase in the number of the individuals predicted to be enrolled in an employment-based health plan.
However, the CBO also said the projected net decline in the number of lives enrolled in employer-sponsored plans largely offset those gains.
“That slight increase in projected employment-based coverage increases the estimated loss of government revenues from the exclusion from taxation of employers' payments of health insurance premiums for their employees,” the CBO said in the report.