How to Explain HSAs to Employees Who Don’t Understand Them
HSAs can be a very effective tool for employees looking to save for their healthcare and retirement. But many employees are not knowledgeable enough to fully utilize their HSAs. Here is an interesting column by Eric Brewer from Employee Benefit News on what you can do to help educate your employees on the impartance of HSAs.
High-deductible health plans with health savings accounts are becoming more popular as benefits consumerism increases throughout the country. Enrolling your employees in HDHPs is one way to educate them on the true cost of healthcare. And if they use an HSA correctly, it can help them better manage their healthcare costs, and yours.
But understanding how an HDHP works and ensuring your employees will get the most out of an HSA can be tricky. In fact, a recent survey by employee communication software company Jellyvision found that half of employees don’t understand their insurance benefits. And choosing a benefits plan is stressful for employees because it’s a decision that will impact them for a long time. This is further complicated by the trend toward rising employee contributions and the issue of escalating healthcare costs. Employees are taking on more cost share — and that means plan sponsors have a greater responsibility to do a better job of educating them to make the best decision at open enrollment.
HSAs benefit the employee in a number of ways:
· Just like a retirement plan, HSAs can be funded with pre-tax money.
· Employees can choose how much they want to contribute each pay period and it’s automatically deducted.
· Employers can contribute funds to an HSA until the limit is met.
These are important facts to tell employees. But there’s more to it than that. Here are some tips on how to best explain HSAs to your workforce.
The devil is in the details: discuss tax-time changes
Employees using HSAs will see an extra number or two on their W-2s and receive additional tax forms. Here’s what to know:
· The amount deposited into the HSA will appear in Box 12 of the W-2.
· Employees may also receive form 5498-SA if they deposited funds in addition to what has been deducted via payroll.
· Employees must submit form 8889 before deducting contributions to an HSA. On the form they’ll have to include their deductible contributions, calculate the deduction, note what you’ve spend on medical expenses, and figure the tax on non-medical expenses you may have also paid for using the HSA.
· Employees will receive a 1099SA that includes distributions from the HSA.
Importantly, most tax software walks employees through these steps.
Dispel myths
A lot of confusion surrounds HSAs because they’re yet another acronym that employees have to remember when dealing with their insurance (more on that later). Here are a few myths you should work to dispel.
· Funds are “use it or lose it.” Unlike a flexible spending account, funds in an HSA never go away. In fact, they belong to an employee. So even if they go to another job, they can still use the HSA to pay for medical expenses tax-free.
· HDHPs with HSAs are risky. There are benefits to choosing an HDHP with an HSA for both healthy people and those with chronic illnesses. Healthy people benefit from low HDHP premiums and can contribute to an HSA at a level they’re comfortable with. On the other hand, people with chronic illnesses will likely hit their deductible each year; after that time, medical expenses are covered in most cases.
Help employees understand they’re in control
High-deductible plans with an HSA might seem intimidating, but they put employees firmly in control of their healthcare. This is increasingly important in today’s insurance landscape. When employees choose an HSA, healthcare becomes more transparent. They can shop around for services and find the best deal for services before they make a decision.
HSAs also give you control and flexibility over how and when employees spend the funds. Users can cover medical costs as they happen or collect receipts and get reimbursed later. Finally, employees don’t have to worry about sending in receipts to be reviewed. This means they must be responsible for using the funds the right way, or face tax penalties.
Resist ‘insurance speak’
As an HR professional, you may not realize how much benefits jargon you use every day. After all, you deal with benefits all the time, so using industry terms is second nature. But jargon, especially the alphabet soup of insurance acronyms that I mentioned earlier, is confusing to employees.
One tip is to spell out acronyms on the first reference. Second, simplify the explanation by shortening sentences so that anyone can understand it.
Here’s an example of a way to introduce an HSA:
A health savings account, also called an HSA, is a tax-free savings account. An HSA helps you cover healthcare expenses. You can use the money in your HSA to pay medical, dental and vision costs for yourself, spouse and dependents who are covered by your health plan. You can use HSA funds to pay for non-medical expenses, but you will have to pay taxes on them…
You get the idea.
As responsibility continues to shift to employees, they may need more education in small chunks over time to reinforce their knowledge. As the employer, it’s in your best interest to help employees choose the best plan and use it the right way.
See the original article Here.
Source:
Brewer E. (2017 August 4). How to explain HSAs to employees who don't understand them [Web blog post]. Retrieved from address https://www.benefitnews.com/opinion/how-to-explain-hsas-to-employees-who-dont-understand-them?feed=00000152-18a5-d58e-ad5a-99fd665c0000
Kaiser Health Tracking Poll – August 2017: The Politics of ACA Repeal and Replace Efforts
With the Senate's plan for the repeal and replacement of the ACA failing more Americans are hoping for Congress to move on to more pressing matters. Find out how Americans really feel about the ACA and healthcare reform in this great study conducted by the Kaiser Family Foundation.
KEY FINDINGS:
- The August Kaiser Health Tracking Poll finds that the majority of the public (60 percent) say it is a “good thing” that the Senate did not pass the bill that would have repealed and replaced the ACA. Since then, President Trump has suggested Congress not take on other issues, like tax reform, until it passes a replacement plan for the ACA, but six in ten Americans (62 percent) disagree with this approach, while one-third (34 percent) agree with it.
- A majority of the public (57 percent) want to see Republicans in Congress work with Democrats to make improvements to the 2010 health care law, while smaller shares say they want to see Republicans in Congress continue working on their own plan to repeal and replace the ACA (21 percent) or move on from health care to work on other priorities (21 percent). However, about half of Republicans and Trump supporters would like to see Republicans in Congress keep working on a plan to repeal the ACA.
- A large share of Americans (78 percent) think President Trump and his administration should do what they can to make the current health care law work while few (17 percent) say they should do what they can to make the law fail so they can replace it later. About half of Republicans and supporters of President Trump say the Trump administration should do what they can to make the law work (52 percent and 51 percent, respectively) while about four in ten say they should do what they can to make the law fail (40 percent and 39 percent, respectively). Moving forward, a majority of the public (60 percent) says President Trump and Republicans in Congress are responsible for any problems with the ACA.
- Since Congress began debating repeal and replace legislation, there has been news about instability in the ACA marketplaces. The majority of the public are unaware that health insurance companies choosing not to sell insurance plans in certain marketplaces or health insurance companies charging higher premiums in certain marketplaces only affect those who purchase their own insurance on these marketplaces (67 percent and 80 percent, respectively). In fact, the majority of Americans think that health insurance companies charging higher premiums in certain marketplaces will have a negative impact on them and their family, while fewer (31 percent) say it will have no impact.
- A majority of the public disapprove of stopping outreach efforts for the ACA marketplaces so fewer people sign up for insurance (80 percent) and disapprove of the Trump administration no longer enforcing the individual mandate (65 percent). While most Republicans and Trump supporters disapprove of stopping outreach efforts, a majority of Republicans (66 percent) and Trump supporters (65 percent) approve of the Trump administration no longer enforcing the individual mandate.
- The majority of Americans (63 percent) do not think President Trump should use negotiating tactics that could disrupt insurance markets and cause people who buy their own insurance to lose health coverage, while three in ten (31 percent) support using whatever tactics necessary to encourage Democrats to start negotiating on a replacement plan. The majority of Republicans (58 percent) and President Trump supporters (59 percent) support these negotiating tactics while most Democrats, independents, and those who disapprove of President Trump do not (81 percent, 65 percent, 81 percent).
- This month’s survey continues to find that more of the public holds a favorable view of the ACA than an unfavorable one (52 percent vs. 39 percent). This marks an overall increase in favorability of nine percentage points since the 2016 presidential election as well as an increase of favorability among Democrats, independents, and Republicans.
Attitudes Towards Recent “Repeal and Replace” Efforts
In the early morning hours of July 28, 2017, the U.S. Senate voted on their latest version of a plan to repeal and replace the 2010 Affordable Care Act (ACA). Known as “skinny repeal,” this plan was unable to garner majority support– thus temporarily halting Congress’ ACA repeal efforts. The August Kaiser Health Tracking Poll, fielded the week following the failed Senate vote, finds that a majority of the public (60 percent) say it is a “good thing” that the U.S. Senate did not pass a bill aimed at repealing and replacing the ACA, while about one-third (35 percent) say this is a “bad thing.” However, views vary considerably by partisanship with a majority of Democrats (85 percent), independents (62 percent), and individuals who say they disapprove of President Trump (81 percent) saying it is a “good thing” that the Senate did not pass a bill compared to a majority of Republicans (64 percent) and individuals who say they approve of President Trump (65 percent) saying it is a “bad thing” that the Senate did not pass a bill.
The majority of those who view the Senate not passing an ACA replacement bill as a “good thing” say they feel this way because they do not want the 2010 health care law repealed (34 percent of the public overall) while a smaller share (23 percent of the public overall) say they feel this way because, while they support efforts to repeal and replace the ACA, they had specific concerns about the particular bill the Senate was debating.
And while most Republicans and supporters of President Trump say it is a “bad thing” that the Senate did not pass ACA repeal legislation, for those that say it is a “good thing” more Republicans say they had concerns about the Senate’s particular legislation (21 percent) than say they do not want the ACA repealed (6 percent). This is also true among supporters of President Trump (19 percent vs. 6 percent).
WHO DO PEOPLE BLAME OR CREDIT FOR THE SENATE BILL FAILING TO PASS?
Among those who say it is a “good thing” that the Senate was unable to pass ACA repeal and replace legislation, similar shares say the general public who voiced concerns about the bill (40 percent) and the Republicans in Congress who voted against the bill (35 percent) deserve most of the credit for the bill failing to pass. This is followed by a smaller share (14 percent) who say Democrats in Congress deserve the most credit.
On the other hand, among those who say it is a “bad thing” that the Senate did not pass a bill to repeal the ACA, over a third place the blame on Democrats in Congress (37 percent). About three in ten (29 percent) place the blame on Republicans in Congress while fewer (15 percent) say President Trump deserves most of the blame for the bill failing to pass.
HALF OF THE PUBLIC ARE “RELIEVED” OR “HAPPY” THE SENATE DID NOT REPEAL AND REPLACE THE ACA
More Americans say they are “relieved” (51 percent) or “happy” (47 percent) that the Senate did not pass a bill repealing and replacing the ACA, than say they are “disappointed” (38 percent) or “angry” (19 percent).
Although two-thirds of Republicans and Trump supporters say they feel “disappointed” about the Senate failing to pass a bill to repeal and replace the ACA, smaller shares (30 percent and 37 percent, respectively) report feeling “angry” about the failure to pass the health care bill.
MAJORITY SAY PRESIDENT TRUMP AND REPUBLICANS IN CONGRESS ARE RESPONSIBLE FOR THE ACA MOVING FORWARD
With the future of any other replacement plans uncertain, the majority (60 percent) of the public say that because President Trump and Republicans in Congress are now in control of the government, they are responsible for any problems with the ACA moving forward, compared to about three in ten Americans (28 percent) who say that because President Obama and Democrats in Congress passed the law, they are responsible for any problems with it. Partisan divisiveness continues with majorities of Republicans and supporters of President Trump who say President Obama and Democrats are responsible for any problems with it moving forward, while large shares of Democrats, independents, and those who do not approve of President Trump say President Trump and Republicans in Congress are responsible for the law moving forward.
Moving Past Repealing The Affordable Care Act
This month’s survey continues to find that more of the public holds a favorable view of the ACA than an unfavorable one (52 percent vs. 39 percent). This marks an overall increase in favorability since Congress began debating ACA replacement plans and a nine percentage point shift since the 2016 presidential election.
The shift in attitudes since the 2016 presidential election is found regardless of party identification. For example, the share of Republicans who have a favorable view of the ACA has increased from 12 percent in November 2016 to 21 percent in August 2017. This is similar to the increase in favorability among independents (11 percentage points) and Democrats (7 percentage points) over the same time period.
NEXT STEPS FOR THE ACA
The most recent Kaiser Health Tracking Poll finds that after the U.S. Senate was unable to pass a plan to repeal and replace the ACA, the majority of the public (57 percent) wants to see Republicans in Congress work with Democrats to make improvements to the 2010 health care law but not repeal it. Far fewer want to see Republicans in Congress continue working on their own plan to repeal and replace the ACA (21 percent) or move on from health care to work on other priorities (21 percent). About half of Republicans (49 percent) and Trump supporters (46 percent) want Republicans in Congress to continue working on their own plan to repeal and replace the ACA, but about a third of each say they would like to see Republicans work with Democrats on improvements to the ACA.
Six in ten Americans (62 percent) disagree with President Trump’s strategy of Congress not taking on other issues, like tax reform, until it passes a replacement plan for the ACA while one-third (34 percent) of the public agree with this approach. Republicans and Trump supporters are more divided in their opinion on this strategy with similar shares saying they agree and disagree with the approach.
MOST WANT TO SEE PRESIDENT TRUMP AND REPUBLICANS MAKE THE CURRENT HEALTH CARE LAW WORK
Regardless of their opinions of the ACA, the majority of the public want to see the 2010 health care law work. Eight in ten (78 percent) Americans think President Trump and his administration should do what they can to make the current health care law work while fewer (17 percent) say President Trump and his adminstration should do what they can to make the law fail so they can replace it later. About half of Republicans and supporters of President Trump say the Trump administration should do what they can to make the law work (52 percent and 51 percent, respectively) while about four in ten say they should do what they can to make the law fail (40 percent and 39 percent, respectively).
This month’s survey also includes questions about specific actions that the Trump administration can take to make the ACA fail and finds that the majority of the public disapproves of the Trump Administration stopping outreach efforts for the ACA marketplaces so fewer people sign up for insurance (80 percent) and no longer enforcing the individual mandate, the requirement that all individuals have insurance or pay a fine (65 percent). While most Republicans and Trump supporters disapprove of President Trump stopping outreach efforts so fewer people sign up for insurance, which experts say could weaken the marketplaces, a majority of Republicans (66 percent) and Trump supporters (65 percent) approve of the Trump administration no longer enforcing the individual mandate.
The Future of the ACA Marketplaces
About 10.3 million people have health insurance that they purchased through the ACA exchanges or marketplaces, where people who don’t get insurance through their employer can shop for insurance and compare prices and benefits.1 Seven in ten (69 percent) say it is more important for President Trump and Republicans’ next steps on health care to include fixing the remaining problems with the ACA in order to help the marketplaces work better, compared to three in ten (29 percent) who say it is more important for them to continue plans to repeal and replace the ACA.
The majority of Republicans (61 percent) and Trump supporters (63 percent) say it is more important for President Trump and Republicans to continue plans to repeal and replace the ACA, while the vast majority of Democrats (90 percent) and seven in ten independents (69 percent) want them to fix the ACA’s remaining problems to help the marketplaces work better.
UNCERTAINTY REMAINS ON WHO IS IMPACTED BY ISSUES IN THE ACA MARKETPLACES
Since Congress began debating repeal and replace legislation, there has been news about instability in the ACA marketplaces which has led some insurance companies to charge higher premiums in certain marketplaces. Six in ten Americans think that health insurance companies charging higher premiums in certain marketplaces will have a negative impact on them and their family, while fewer (31 percent) say it will have no impact.
There has also been news about insurance companies no longer selling coverage in the individual insurance marketplaces and currently, it’s estimated that 17 counties (9,595 enrollees) are currently at risk to have no insurer on the ACA marketplaces in 2018.2 The majority of the public (54 percent) say health insurance companies choosing not to sell insurance plans in certain marketplaces will have no impact on them and their family. Yet, despite the limited number of counties that may not have an insurer in their marketplaces as well as this not affecting those with employer sponsored insurance where most people obtain health insurance, about four in ten (38 percent) of the public believe that health insurance companies choosing to not sell insurance plans in certain marketplaces will have a negative impact on them and their families.
The majority of the public think both of these ACA marketplace issues will affect everyone who has health insurance and not just those who purchase their insurance on these marketplaces. Six in ten think health insurance companies choosing not to sell insurance plans in certain marketplaces will affect everyone who has health insurance while about one-fourth (26 percent) correctly say it only affects those who buy health insurance on their own. In addition, three-fourths (76 percent) of the public say that health insurance companies charging higher premiums in certain marketplaces will affect everyone who has health insurance while fewer (17 percent) correctly say it will affect only those who buy health insurance on their own.
MAJORITY SAY PRESIDENT TRUMP SHOULD NOT USE COST-SHARING REDUCTION PAYMENTS AS NEGOTIATING STRATEGY
Over the past several months President Trump has threatened to stop the payments to insurance companies that help cover the cost of health insurance for lower-income Americans (known commonly as CSR payments), in order to get Democrats to start working with Republicans on an ACA replacement plan.3 The majority of Americans (63 percent) do not think President Trump should use negotiating tactics that could disrupt insurance markets and cause people who buy their own insurance to lose health coverage, while three in ten (31 percent) support President Trump using whatever tactics necessary to encourage Democrats to start negotiating. The majority of Republicans (58 percent) and President Trump supporters (59 percent) support negotiating tactics while most Democrats, independents, and those who disapprove of President Trump do not (81 percent, 65 percent, 81 percent).
See the original article Here.
Source:
Kirzinger A., Dijulio B., Wu B., Brodie M. (2017 Aug 11). Kaiser health tracking poll-august 2017: the politics of ACA repeal and replace efforts [Web blog post]. Retrieved from address https://www.kff.org/health-reform/poll-finding/kaiser-health-tracking-poll-august-2017-the-politics-of-aca-repeal-and-replace-efforts/?utm_campaign=KFF-2017-August-Tracking-Poll&utm_medium=email&_hsenc=p2ANqtz-9GaFJKrO9G3bL05k_i4GzC04eMAaSCDlmcsiYsfzAn-SeJdK_JnFvab4GydMfe_9iGiiKy5LR0iKxm6f0gDZGbwqh-bQ&_hsmi=55195408&utm_content=55195408&utm_source=hs_email&hsCtaTracking=4463482c-5ae1-4dfa-b489-f54b5dd97156%7Cd5849489-f587-49ad-ae35-3bd735545b28
What Could Happen If The Administration Stops Cost-Sharing Reduction Payments To Insurers?
Has the President's recent threat to slash Cost-Sharing Reduction Payments for insurers left you worried about your healthcare costs? Find out how the loss of Cost-Sharing Reduction Payments will impact your health insurance in this informative column by Timothy Jost from Health Affairs.
August 4 Update: Voluntary Insurer Reporting Of Catastrophic Coverage Offered Through Exchange Continued
On August 3, 2017, the Internal Revenue Service released Notice 2017-41 informing insurers that for 2017, as for 2015 and 2016, they would be encouraged but not required to report coverage under catastrophic plans in which individuals were enrolled through an exchange. Insurers and employers are generally required to file 1095-B or 1095-C forms with the IRS, and to provide these forms to individuals whom they cover, documenting that the individuals have minimum essential coverage as required by the individual mandate.
Insurers are not, however, required to report qualified health plan coverage provided through the exchanges, because the exchanges themselves file 1095-A forms documenting QHP coverage and provide these forms to enrollees. But catastrophic health plans are not QHPs, so exchanges do not report catastrophic coverage either.
The IRS proposed regulations in 2016 to require insurers to report catastrophic coverage issued through the exchange and thus to fill this gap. These rules have not yet been finalized however. In the meantime, the IRS has encouraged insurers to report catastrophic coverage issued through an exchange voluntarily. The guidance extends this policy for another year. Insurers that voluntarily report catastrophic coverage will not be subject to penalties with respect to returns and statements reporting this coverage.
Original Post
Although the decision of the Court of Appeals for the District of Columbia Circuit to allow attorneys general from 17 states and the District of Columbia to join the House v. Price cost-sharing reduction (CSR) litigation as parties complicates President Trump’s ability to simply stop the CSR payments, rumors continue that he is preparing to do so. The CSR payments are made monthly; the next installment is due on August 21, 2017. If the administration intends not to make the August payment, it must announce its decision soon.
Changes to qualified health plan (QHP) applications in the federally facilitated exchange (FFE) are due on August 16, 2017, as are final rates for single risk pool plans including QHPs. Final contracts with insurers for providing QHP coverage through the FFE must be signed by September 27. If the Trump administration is going to defund the CSRs, now is the time it will do it.
The back story on the CSR issue can be found in my post on July 31, while the intervention decision is analyzed in my post on August 1. This post focuses on issues that will need to be resolved going forward if the Trump administration decides to defund the CSRs.
The Choices Insurers Would Face If CSR Payments Were Ended
First, insurers would have to decide whether to continue to participate in the exchanges. Those in the FFE have a contractual right to drop participation for the rest of 2017, but how exactly they would do this would depend on state law, and would probably require 90 days notice. Insurers would also not be able to terminate the policies of individuals covered through the exchange, although once the insurers left the exchange premium tax credits would cease and many policyholders would drop coverage. Insurers that tried to leave immediately would likely suffer reputational damage, and those that could financially would likely try to hold on until the end of the year.
Some insurers might well decide that the government is an unreliable partner and give up on the exchanges for 2018. Indeed, some would conclude that the individual market is too risky to play in at all. The individual market makes up a small part of the business of large insurers; even though it has become more profitable in the recent past, some insurers might conclude that the premium increases that would be needed to make up for the loss of the CSRs would drive healthy enrollees out of the individual market. Rather than deal with a deteriorating risk pool, they might leave the individual market entirely (although they would probably have to give 180 days notice to do so.)
Insurers that decide to stay would have to charge rates that would allow them to survive without the $10 billion dollars the CSR payments would provide. They would need to raise premiums significantly to accomplish this. How they did so would depend on guidance that they got from their state department of insurance or possibly from the Centers for Medicare and Medicaid Services.
The California Experience
On August 1, 2017, Covered California announced its 2018 rates. The California state-based marketplace is an example of how the Affordable Care Act can work in a state that fully supports it and has a big enough market to form a balanced risk pool. For 2018, the average weighted rate increase in California is 12.5 percent, of which 2.8 percent is attributable to the end of the moratorium on the federal health insurance tax. Consumers can switch to plans that will limit their rate change to 3.3 percent in the same metal tier. All 11 health insurers in California are returning to the market for 2018 (although one insurer, Anthem, is leaving 16 of the 19 regions in which it participated for 2017) and 82 percent of consumers will be able to choose between three or more insurers. About 83 percent of hospitals in California participate in at least one plan.
Covered California instructed its insurers to file alternate rates that would go into effect if the Trump administration abandons the CSR payments. The insurers were instructed to load the extra cost onto their silver (70 percent actuarial value) plans, since the CSRs only apply to silver plans. The alternative rates filed by the insurers project that if the CSRs are not funded, they would have to essentially double their premium increases, hiking premiums by an additional 12.4 percent.
Virtually all of this increase would be absorbed by increased federal premium tax credits for those with incomes below 400 percent of the federal poverty level. As the premium of the benchmark second-lowest cost silver plan increased, so would the tax credits. A Covered California study concluded that the premium tax credit subsidy in California would increase by about a third if the CSR subsidies are defunded.
Bronze, gold, and platinum plan premiums would not be affected by the silver plan load. As the premium tax credits increased, many more enrollees might be able to get bronze plans for free, and gold plans would become competitive with silver plans in price. More people would likely be eligible for premium tax credits as people higher up the income scale found that premiums cost a higher percentage of their household income.
Consumers who are not eligible for premium tax credits would have to pay the full premium increase themselves. Covered California has suggested, however, that insurers load the premium increase only onto silver plans in the exchange, since CSRs are only available in the exchange. Insurers would likely encourage their enrollees who are in silver plans in the exchange to move to similar products off the exchange that are much more affordable. Bronze, gold, and platinum plans would cost more or less the same on or off the exchange.
Other States Would Likely Make Different Choices Than California’s
It is likely that not all states would follow California’s lead. If state departments of insurance do not allow insurers to increase their premiums, more insurers would leave the individual market. If state departments require insurers to load the CSR surcharge onto all metal-level plans, both on and off the exchange, bronze, gold, and platinum plans would be more expensive and individual insurance would become much more costly for all consumers who are not eligible for premium tax credits. If insurers leave the market or consumers drop coverage, more consumers would end up using care they cannot afford, increasing medical debt and the uncompensated care burden of providers, and of hospitals in particular.
Some insurers in other states have likely already loaded a substantial surcharge onto their 2018 premiums in anticipation of CSR defunding and of other problems, such as uncertainty about the Trump administration enforcing the individual mandate. If insurers in fact profit from excessive rates, consumers might eventually receive medical loss ratio rebates, but 2018 rebates would not be paid out until late in 2019, if the requirement is still on the books by then.
Other Ramifications Of Ending CSR Payments To Insurers
CSR defunding could have other effects as well. Insurers have been reimbursed each month for CSRs based on an estimation of what they are paying out to actually reduce cost sharing. Each year the insurers must reconcile the payments they have received with those they were actually due. Insurers were supposed to have filed their reconciliation data for 2016 by June 2, 2017, and were supposed to be paid any funds due them, or to refund overpayments, in August. Reconciliation payments may also be due in some situations for 2015. If the administration cuts off CSR payments, it could conceivably cut off reconciliation payments as well.
Finally, defunding of CSRs would likely have an effect on risk adjustment payments as well. The risk adjustment methodology has been set for 2018 in the 2018 payment rule. It would likely not be amended for 2018 in light of the CSR defunding. Defunding would increase the statewide average premium on which risk adjustment payments are based. This would generally exaggerate the effects that risk adjustment would otherwise have. In particular, insurers with heavy bronze plan enrollment would end up paying more in, while insurers with more gold or platinum plans might receive higher payments.
Looking Forward
President Trump claims to see the CSR payments as a “bailout” to insurers, which surely they are not. They are a payment for services rendered, much like a Medicare payment to a Medicare Advantage plan. The effects of defunding would reverberate throughout out health care system, likely causing problems far beyond those identified in this post.
Fortunately, Senators Alexander (R-TN) and Murray (D-WA), the chair and ranking member of the Health, Education, Labor, and Pensions Committee, have announced that they will begin hearings on a bipartisan approach to health reform when the Senate returns in September, and funding of the CSR payments for at least a year seems to be at the top of their list. A bipartisan group of House members has also called for funding the CSRs. And pressure to fund the CSRs continues from the outside, with the National Association of Insurance Commissioners calling for it again last week. It is to be hoped that President Trump will not take steps that would sabotage the individual market and that a solution can quickly be found to the CSR issue that will bring stability to the market going forward.
See the original article Here.
Source:
Jost T. (2017 August 2). What could happen if the administration stops cost-sharing reduction payments to insurers? [Web blog post]. Retrieved from address https://healthaffairs.org/blog/2017/08/02/what-could-happen-if-the-administration-stops-cost-sharing-reduction-payments-to-insurers/
How Rising Healthcare Costs are Changing the Retirement Landscape
Has rising the rising cost of healthcare impacted your plans for retirement? Here is a great article by Paula Aven Gladych from Employee Benefit News on how healthcare is reshaping the way people are planning their retirement.
It’s hard enough getting employees to save for their retirement. It’s even harder to get them to think about how much they need to save for medical expenses in retirement.
“Most Americans don’t think about what the medical component will be for them,” says Robert Grubka, president of employee benefits at New York-based Voya Financial. “They often think that Medicare and government-provided healthcare is enough and what people quickly find out is, it is helpful but it doesn’t mean it’s enough.” When people think about their retirement plan, the medical piece is “one of the most surprising aspects of it,” he says.
But talking about managing healthcare costs during post-work years is now a vital element of retirement planning. And it’s one employers need to consider, especially as new statistics shed light on the seriousness of the issue.
As a person’s retirement savings shrinks in retirement, their medical expenses continue to increase, according to Voya Financial’s report “Playing the long game – Understanding how healthcare costs can impact your retirement readiness.” Healthcare costs rose 6.5% in 2017, but inflation only went up 2.4%, Voya found.
“The rapid rise of healthcare costs could have a large impact on quality of life in retirement,” according to the report. Forty-two percent of pre- and post-retirees say that healthcare is their biggest concern, especially since nearly half of retirees or their spouses experience a serious or chronic health problem.
Meanwhile, Medicare data finds that those in their 70s spend about $7,566 per person in healthcare costs annually. That figure more than doubles to $16,145 by the time a person reaches age 96. According to Voya, Medicare will only cover about 60% of all retirement healthcare costs, which means people need to figure out a way to cover that other 40%.
The Employee Benefit Research Institute estimates that the average couple will need $259,000 to cover their out-of-pocket medical expenses in retirement. That figure includes premiums and costs related to all Medicare plans and the cost of supplemental insurance. When asked how much they should stock away for medical expenses, 69% of baby boomers and 66% of retirees thought they needed less than $100,000.
As the retirement industry has shifted away from defined benefit pension plans to defined contribution plans, employers have tried to compensate for some of the missing perks of having a pension plan. That includes offering options like life insurance, disability insurance, accident insurance, critical illness insurance or a hospital confinement indemnity.
A 2014 report by the Council for Disability Awareness found that more than 214,000 employers were offering long-term disability insurance plans to their employees in 2013, a slight increase from the previous year.
The other component that is relatively new is the high-deductible health plan that usually comes with a health savings account. The money saved in an HSA can be used for medical expenses in retirement if a person doesn’t use up their balance every year. Any extra funds are invested, just like they would be in a typical retirement plan.
High-deductible health plans make the plan participant more responsible for how those health care dollars are spent. It also has “sped up the recognition of the healthcare issue,” Grubka says.
According to the 2016 Employer Health Benefits Survey by the Kaiser Family Foundation, 29% of covered workers are enrolled in a high-deductible plan with a savings option. Over the past two years, enrollment in these high-deductible plans increased 8 percentage points as enrollment in PPOs dropped 10 percentage points, the report found.
Many times, individuals must pay out most or all of their deductible at once, which could be $2,500 for an individual or $5,000 for a family. That’s when people start taking loans from their retirement plan to help cover costs.
That’s why some of these ancillary products, like critical illness or disability insurance, are so important.
“It is so people can get through the chunky expenses and not get to the point where they have to tap their savings or their retirement plan,” Grubka says.
It’s critical that employees try and determine what all of their expenses will be in retirement. Individuals must try and determine how long they will live, by looking at their family history and making an educated guess. Then they should calculate their projected monthly Social Security payment by setting up an account with the Social Security Administration. They should then add up their expected monthly living expenses like rent/mortgage, groceries and utilities and any healthcare expenses that are not covered by Medicare to come up with a target number.
They should base how much they set aside for retirement on that figure.
See the original article Here.
Source:
Gladyech P. (2017 July 4). How rising healthcare costs are changing the retirement landscape [Web blog post]. Retrieved from address https://www.benefitnews.com/news/how-rising-healthcare-costs-are-impacting-retirement-planning
BREAKING: Health Care Bill Moves to Debate on Senate Floor with 51-50 vote
In case you haven't heard, the motion to debate a version of the Health Care Bill after multiple renditions that has been dragging it's way through congress and stalled in the Senate has just been successfully passed with a narrow vote of 51-50 in favor with Vice President Pence casting the tie-breaking vote. The bill has a long road ahead and likely a vast number of revisions.
You can keep an eye on relevant news from our Navigator page right here on our own website. We know it is overwhelming to try to keep up with all of the news from all of the disparate sources. Our Navigator resource simply works to curate content from a variety of trusted, non-partisan sites across the internet and bring them to a central location to provide you a trusted place to stay-up-to-date on Health Care news at a glance.
Source: Wall Street Journal, Daniel Nasaw,Michelle Hackman
Access Live Updates on the Motion Here: https://www.wsj.com/livecoverage/senate-obamacare-repeal-and-replace-vote
Moments ago:
Vice President Mike Pence just broke the 50-50 tie. The motion to proceed passes and the Senate will now begin debate on a bill to repeal and replace the Affordable Care Act.
With the motion passed, Senators will now proceed to 20 hours of debate on several proposals repealing parts of the 2010 Affordable Care Act, including their replacement package and a separate bill repealing the law with a two-year delay.
They are expected to debate numerous amendments – not counted toward the 20 hours – including proposals put forward by Democrats....
Revised GOP Healthcare Bill Still Good for Employers
Has the uncertainty surrounding the BCRA left you worried about your company's healthcare plan? Here is an interesting article by Victoria Finkle from Employee Benefit News illustrating all the positives the BCRA will bring to employers and their company's healthcare program.
The latest version of the Senate Republican healthcare bill contains some significant changes, but provisions impacting employer-sponsored plans remained largely untouched.
The plan, unveiled on Thursday, retains a number of important changes for employers that were included in an earlier draft of the legislation made public last month. GOP lawmakers have been working for months on an effort to undo large swaths of the Affordable Care Act.
“Generally, the changes that were applied didn’t significantly change the dynamics of the Senate bill as it relates to large employers,” says Michael Thompson, president and chief executive of the National Alliance of Healthcare Purchaser Coalitions, a nonprofit network of business health coalitions.
Employer groups have been supportive of several major provisions highlighted in the earlier version of the Better Care Reconciliation Act that remain in the new proposal. Those include measures to remove the penalties associated with the employer mandate and a delay to the Cadillac tax for high-cost plans.
The latest Senate bill also retains important changes to health savings accounts that, for example, allow employees to allocate more funds into the accounts and that permit the money to be used on over-the-counter medications. It also reduces the penalty associated with redrawing funds from the account for non-qualified medical spending.
Providing more flexibility around the use of HSAs — tax-advantaged accounts that accompany high-deductible health plans — benefits employers and employees alike, says Chatrane Birbal, senior adviser for government relations at the Society for Human Resource Management.
“As healthcare costs arise, more employers are embracing high-deductible plans and this is a good way for employees to plan ahead for their medical expenses,” she says.
There is one small fix related to health savings accounts that made it into the revised draft, explains James Gelfand, senior vice president of health policy for the ERISA Industry Committee.
The updated language now permits out-of-pocket medical expenses for adult children up to 26-years-old who remain on a parent’s health plan to be paid for out of the primary account holder’s HSA. There were previously limitations on use of those funds for those over 18 who remained on a parent’s plan, based on Internal Revenue Service guidelines.
“One of the little tweaks they’ve put in to improve the bill is changing the IRS code to say, actually, yes, an adult dependent still counts and can use an HSA to help save on their healthcare costs,” he says.
Experts note, however, that a key change in the new bill related to HSAs — the ability to use the pre-tax money to pay insurance premiums — does not appear to apply to employer-based plans.
There are several other provisions in the revised legislation that are likely to be debated by the Senate in coming weeks, but that do not directly impact employers.
One controversial measure, developed by Republican Sens. Ted Cruz of Texas and Mike Lee of Utah, would allow insurers to offer lower priced, non-ACA-qualified plans in the individual market in addition to plans that meet Obamacare requirements. The latest bill also would provide more funding for the opioid epidemic.
Sen. Lindsey Graham, R-S.C. and Sen. Bill Cassidy, R-La., meanwhile, announced this week that they are developing an alternative proposal to the one unveiled by Republican leaders. Initial details for the alternative proposal were released on Thursday. The legislation is centered on a strategy to send more federal funding directly to the states through block grants.
“Instead of having a one-size-fits-all solution from Washington, we should return dollars back to the states to address each individual state’s healthcare needs,” Graham said in a statement on Thursday.
Those representing employer-based plans said they have reservations about the Graham and Cassidy proposal.
Gelfand notes that the alternative plan is expected to keep in place many of the taxes stemming from the ACA, such as the Cadillac tax and a tax on branded prescription drugs, and is unlikely to contain some of the BCRA revisions around the use of HSAs.
“It basically provides none of the relief that the BCRA would provide,” he says.
See the original article Here.
Source:
Finkle V. (2017 July 16). Revised GOP healthcare bill still good for employers [Web blog post]. Retrieved from address https://www.benefitnews.com/news/revised-gop-healthcare-bill-still-good-for-employers?tag=00000151-16d0-def7-a1db-97f024b50000
Senate’s Revised Obamacare Repeal Bill: What’s Different and is it Enough?
Do you know how the Senate's health care bill differs from Congress' bill? Check out this great article by Jared Bilski from HR Morning and find out the 6 key differences that separate the BCRA from the AHCA.
After failing to garner enough support for a vote before the July 4th recess for the Better Care Reconciliation Act of 2017 — aka the ACA repeal bill — the Senate went back to the lab and made some changes. Now the revised bill is out, and HR pros are anxiously waiting to see what happens next.
Although the Senate did leave many of provisions in the original bill intact, it did make some notable changes geared toward appeasing right-leaning Senators who didn’t feel the bill went far enough to repeal and replace the current health reform law.
6 key differences
Those changes:
1. Pared-down benefit requirements
Where the ACA requires insurers to meet minimum requirements that include coverage for 10 essential health benefits, the revised bill would allow insurers to offer cheaper, slimmed-down coverage if the insurers offer at least one plan which meets the ACA standards.
)Note: Healthcare experts warn this change would severely threaten access to coverage for sick patients.)
2. Opioid-crisis funding
The revised bill would provide $45 billion to states to help combat the national opioid crisis. While this is well short of what experts say is needed to address the issue, it’s still more than the $2 billion the original Senate bill had earmarked for opioid-crisis funding.
3. Controversial tax cuts removed
Although the new Senate bill would keep some of the ACA taxes, it would kill two tax cuts that benefited the wealthy and do away with a tax break for high-earning health insurance execs. Both the cuts and the tax breaks were highly criticized aspects of the original Senate bill.
4. Catastrophic health plans
Under the Senate bill revision, people eligible for subsidies to receive tax credits would be able to purchase catastrophic health plans. Plus, anyone would be allowed to buy catastrophic coverage.
The ACA does allow young adult and some additional individuals to buy high-deductible, catastrophic plans featuring low premiums. But federal subsidies aren’t available for these plans — an attractive incentive for healthy individuals with fewer healthcare needs.
5. HSA-premium payments
The bill would allow individuals to use HSA funds to pay for healthcare insurance premiums.
6. Market stabilization
In an effort to help states reduce premiums in order to stabilize their insurance marketplaces, the revised Senate bill provides $182 billion in funding, an $112 billion increase from the $70 billion set aside in the first draft of the bill.
See the original article Here.
Source:
Bilski J. (2017 July 14). Senate's revised obamacare repeal bill: what's different and is it enough [Web blog post]. Retrieved from address https://www.hrmorning.com/senates-revised-obamacare-repeal-bill-whats-different-and-is-it-enough/
4 Ways Employers can Prepare for Healthcare Changes
With all the proposed changes coming to healthcare. Take a look at this article by Mark Johnson from Employee Benefit News and see what you can do to prepare yourself and your employees for that call the changes coming to healthcare.
The new healthcare bill, revealed by U.S. Senate Republicans Thursday, could bring significant changes to organizations and their employees. Granted, there’s a long way to go before any Obamacare replacement legislation is signed. But health insurance is a complex component of running any business, and it’s important that employers start preparing for what might come.
Here are four actions items employers should be addressing now.
1. Create a roadmap. A compliance calendar is a helpful tool in identifying major deadlines. Employers are legally obligated to share health insurance and benefits updates with their employees by certain dates. Employees must be given reasonable notice — typically 30 days prior — of a major change in policy. There will likely be a set date for compliance and specific instructions around notice requirements that accompany the new legislation.
One step to compliance is adhering to benefit notice requirements. Benefit notices (i.e., HIPAA, COBRA, Summary Plan Descriptions, Special Health Care Notices, Health Care Reform, Form 5500 and others) vary by the size of the organization. Other steps can be more involved, such as required changes to plan design (e.g., copays, deductibles and coinsurance), types of services covered and annual and lifetime maximums, among others. Create a compliance calendar that reflects old and new healthcare benefit requirements so you can stay on track.
2. Rally the troops. Managing healthcare compliance spans several departments. Assemble key external and internal stakeholders by department, including HR, finance, payroll and IT.
Update the team on potential changes as healthcare legislation makes its way through Congress so they can prepare and be ready to execute should a new bill be signed. HR is responsible for communicating changes to employees and providing them with information on their plan and benefits. Finance needs to evaluate how changes in the plan will affect the company’s bottom line. Payroll must be aware of how much of an employee’s check to allocate to health insurance each month. In addition, payroll and Human Resources Information Systems (HRIS) are used to track and monitor changes in employee population, which helps employers determine benefit notice and compliance requirements. All departments need to be informed of the modified health insurance plan as soon as possible and on the same page.
3. Get connected. It’s essential to verify information as it’s released, via newsletters, seminars, healthcare carriers, payroll vendors and consultants. These resources can help employers navigate the evolving healthcare landscape. Knowledge of changes will empower an organization to handle them effectively.
4. Evaluate partnerships. There’s no better time for employers to examine their current partners, from an insurance consultant or broker to the accounting firm and legal counsel. An employer’s insurance consultant should be a trusted adviser in working on budgeting and benchmarking the company plan, administering benefits, evaluating plan performance and reporting outcomes. Finding an insurance solution that meets a company’s business goals, as well as its employee’s needs, can be accomplished with a knowledgeable, experienced insurance partner.
Staying ahead of healthcare changes is essential for organizations to have a smooth transition to an updated healthcare plan. Strategic planning, communication among departments and establishing the right partnerships are key. Employers must be proactive in addressing healthcare changes so they are ready when the time comes.
See the original article Here.
Source:
Johnson M. (2017 June 23). 4 ways employers can prepare for healthcare changes [Web blog post]. Retrieved from address https://www.benefitnews.com/opinion/5-ways-employers-can-prepare-for-healthcare-changes
Rising Healthcare Costs Hurting Retirement Contributions
The rising costs of healthcare are starting to have a negative impact on employees. Find out how employees are having trouble saving for their retirement thanks to the rise of healthcare costs in the interesting article by Paula Aven Gladych from Employee Benefit News.
Rising healthcare costs have had a dramatic impact on the ability of workers to save for retirement and other financial goals.
The latest Bank of America Merrill Lynch Workplace Benefits Report finds that of the workers who have experienced rising healthcare costs, more than half say they are contributing less to their financial goals as a result, including more than six in 10 who say they are saving less for retirement.
What’s more, financial stress also is playing a big role in employee physical health with nearly six in 10 employees saying it has had a negative impact on their physical well-being. This stress weighs most heavily on millennials at 68%, compared with baby boomers at 51%, according to the research.
Because of these dire statistics, more and more employees are looking to their employer to help them through financial challenges.
“We spend a lot of our waking time working and a lot of our finances are made up of the compensation and benefits our employer provides,” says Sylvie Feast, director of financial guidance services for Bank of America Merrill Lynch. “[Employer’s] healthcare and 401(k) plans are really valued by employees. I don’t think it’s surprising that they are looking to their employer that provides essential benefits to help provide access to ways to better manage their finances.”
And because employers offer healthcare and retirement benefits, it isn’t a stretch for workers to expect their employers to offer financial wellness as a benefit as well, Feast says.
“There’s no silver bullet, but a continuing evolution of trying new things to see what works and has an impact with the workforce,” Feast says. “Culture has something to do with it.”
Online tools, educational content, professional seminars in the workplace and personal consultations can be especially effective offerings, Feast says, adding that those options can help employees get more comfortable talking about their finances at work and at home with their family.
“People are pretty private about their finances,” Feast says. “I think there’s this access the employer needs to provide, but there also needs to be an arms-length distance so it is not the employer delivering it.”
Retirement savings is the area most workers want help with, according to Bank of America Merrill Lynch’s survey. More than half of baby boomers (54% ), 53% of Generation X and 43% of millennials say they need help saving for retirement, with 50% of all respondents ranking it as their No. 1 financial issue.
For millennials, good general savings habits and paying down debt were their next most important financial priorities. For Generation X, paying down debt, good general savings habits and budgeting all tied for second, and for baby boomers, planning for healthcare costs and paying down debt were their next biggest financial priorities.
Eighty-six percent of employees surveyed say they would participate in a financial education program provided by their employer, according to Bank of America Merrill Lynch.
Financial education is a slow, but worthy process, Feast says.
“People don’t just automatically start to show an immediate impact to their behavior,” she says. But, “if [employees] take steps, [they] will start to gain control and get more confidence.”
See the original article Here.
Source:
Gladych P. (2017 June 7). Rising healthcare costs hurting retirement contributions [Web blog post]. Retrieved from address https://www.benefitnews.com/news/rising-healthcare-costs-hurting-retirement-contributions
How the Senate Better Care Reconciliation Act (BCRA) Could Affect Coverage and Premiums for Older Adults
The Senate is on the verge of voting for the Better Care Reconciliation Act (BCRA) a new replacement to the ACA. Find out how the passing of the BCRA will impact older Americans and their healthcare in this informative article by Kaiser Family Foundation.
Prior to the Affordable Care Act (ACA), adults in their 50s and early 60s were arguably most at risk in the private health insurance market. They were more likely than younger adults to be diagnosed with certain conditions, like cancer and diabetes, for which insurers denied coverage. They were also more likely to face unaffordable premiums because insurers had broad latitude (in nearly all states) to set high premiums for older and sicker enrollees.
The ACA included several provisions that aimed to address problems older adults faced in finding more affordable health insurance coverage, including guaranteed access to insurance, limits on age rating, and a prohibition on premium surcharges for people with pre-existing conditions. Following passage of a bill to repeal and replace the ACA in the House of Representatives on May 4, 2017, the Senate has released a discussion draft of its proposal, called the Better Care Reconciliation Act of 2017 (BCRA) on June 26, 2017, that follows a somewhat different approach.
The Senate BCRA discussion draft would make a number of changes to current law that would result in an increase of four million 50-64-year-olds without health insurance in 2026, according to CBO’s analysis.
The Senate proposal would disproportionately affect low-income older adults with incomes below 200% of the federal poverty level (FPL): three of the four million 50-64-year-olds projected to lose health insurance in 2026 would be low-income. CBO projects the uninsured rate for low-income older adults would rise from 11% under current law to 26% under the BCRA by 2026.
The increase in the number and share of uninsured older adults would be due to several changes made by the BCRA to private health insurance market rules and subsidies, as well as changes to the Medicaid program.
CHANGES AFFECTING PRIVATE HEALTH INSURANCE
Age Bands. Under current law, insurers are prohibited from charging older adults more than 3-times the premium amount for younger adults. The Senate bill would allow insurers to charge older adults five-times more than younger adults, beginning in 2019. States would have flexibility to establish different age bands (broader or narrower). CBO estimates that age rating would increase premiums significantly for plans at all metal levels for older adults. The impact of age rating would be such that, for a 64-year-old, the national average premium for an unsubsidized bronze plan in 2026 would increase from $12,900 (current law) to $16,000 (BCRA). The wider age bands permitted under the BCRA would result in higher premiums for an unsubsidized bronze plan than the premium for an unsubsidized silver plan under the current law age-rating standard.
Tax Credits. The Senate’s BCRA makes three key changes affecting premium tax credits for people in the non-group insurance market. First, it changes the income eligibility for tax credits, extending eligibility to people with income below the FPL but capping eligibility at income of 350% FPL. Under current law, income eligibility for tax credits is 100%-400% FPL. This change has the effect of reducing premiums for people with incomes below poverty in the marketplace who are not otherwise eligible for Medicaid (discussed further below) while increasing premiums for people with incomes between 350%-400% FPL.
Second, BCRA changes the level of subsidy for people based on age. Under both current law and the BCRA, individuals must pay a required contribution amount, based on income, toward the cost of a benchmark plan; the premium tax credit equals the difference between the cost of the benchmark plan and the required individual contribution. Under current law, the required contribution rate is the same for all people at the same income level regardless of age. However, under the BCRA, the required contribution amount would increase with age for people with an income above 150% FPL. For example, under current law, at 350% FPL, individuals are required to contribute the same percentage of income toward the benchmark plan, regardless of age (9.69% in 2017). Under the BCRA, starting in 2020, a 24-year-old would contribute about 6.4% of income, while a 60-year-old would have to contribute 16.2% of income.1
Third, the Senate proposal reduces the value of the benchmark plan used to determine premium tax credits from a more generous silver-level plan (under current law) to the equivalent of a bronze plan (under BCRA). Deductibles under bronze plans are much higher than under silver plans (in 2017, on average, $6,105 for bronze plans vs. $3,609 for silver plans). Under current law, silver plan deductibles are further reduced by cost-sharing subsidies for eligible individuals with incomes below 250% FPL (on average to $255, $809, or $2,904, depending on income). The BCRA eliminates cost-sharing subsidies starting in 2020. As a result, people using tax credits to buy a “benchmark” bronze plan would face significantly higher deductibles under the Senate proposal than under current law.
For older adults with income above the poverty level, the combined impact of these changes would be to increase the out-of-pocket cost for premiums at all income levels. For example, a 64-year old with an income of $26,500 would see premiums increase by $4,800 on average for a silver plan in 2026; a 64-year old with an income of $56,800 could see premiums increase of $13,700 in 2026, according to CBO.
Premium tax credits under the BCRA would continue to be based on the cost of a local benchmark policy, so results would vary geographically. Older adults living in higher cost areas could see greater dollar increases, while people living in lower cost areas could see lower increases.
For a bronze plan, the national average premium expense for a 64-year old could increase by $2,000 for an individual with an income of $26,500 in 2026 and by as much as $11,600 for an older adult with $56,800 in income.
Under current law, people with income below 100% FPL generally are not eligible for premium tax credits. The ACA extended Medicaid eligibility to adults below 138% FPL, but the Supreme Court subsequently ruled the expansion is a state option. To date 19 states have not elected the Medicaid expansion, leaving 2.6 millionuninsured low-income adults in this coverage gap.
For older adults with income below 100% FPL who are not eligible for Medicaid, CBO estimates the extension of premium tax credit eligibility will significantly reduce the net premium expense for a 64-year-old in 2026 relative to current law (e.g., by more than $12,000 for an individual at 75% FPL).
However, CBO estimates that few low-income people would purchase any plan. Even with relatively low premiums, older adults with very low incomes may choose to go without coverage due to relatively high, unaffordable deductibles. For example, an individual with an income of $11,400 (75% FPL) who is not eligible for Medicaid, would pay $300 in premiums in 2026 under BCRA but face a deductible in excess of $6,000 – which amounts to more than half of his or her income that year.
On average, 55-64 year-olds would pay 115% higher premiums for a silver plan in 2020 under the BCRA after taking tax credits into account. Low-income 55-64-year-olds would pay 294% higher premiums relative to current law.
CHANGES TO MEDICAID
Changes to Medicaid proposed in the Senate bill also contribute to the increase in the projected increase in the number of uninsured older adults nationwide. The BCRA would limit federal funds for states that have elected to expand coverage under Medicaid for low-income adults, phasing down the higher federal match for these expansion states over three years (2021-2023). This provision, coupled with a new cap on the growth in federal Medicaid funding over time on a per capita basis, would result in an estimated 15 million people losing Medicaid coverage by 2026 according to CBO, some of whom are counted among the four million older adults projected to lose health insurance under the BCRA, shown in Figure 1. In 2013, about 6.5 million 50-64-year-olds relied on Medicaid for their health insurance coverage, a number that has likely increased due to the Medicaid expansion.2 Since 2013, Medicaid enrollment overall has grown by nearly 30%.
IMPACT ON OLDER ADULTS ON MEDICARE
The loss of coverage for adults in their 50s and early 60s could have ripple effects for Medicare, a possibility that has received little attention. If the BCRA results in a loss of health insurance for a meaningful number of people in their late 50s and early 60s, as CBO projects, there is good reason to believe that people who lose insurance will delay care, if they can, until they turn 65 and become eligible for Medicare, and then use more services once on Medicare. This could cause Medicare spending to increase, which would lead to increases in Medicare premiums and cost-sharing requirements.3
The proposed BCRA changes to Medicaid are also expected to affect benefits and coverage for older, low-income adults on Medicare. Today, 11 million low-income people on Medicare have supplemental coverage under Medicaid that helps cover the cost of Medicare’s premiums and cost-sharing requirements, and the cost of services not covered by Medicare, such as nursing home and home- and community-based long-term services and supports. The BCRA reduces the trajectory of Medicaid spending, with new caps on the growth of benefit spending per person; these constraints are expected to put new fiscal pressure on states to control costs that could ultimately affect coverage and benefits available to low-income people on Medicare. Under the BCRA, the growth in Medicaid per capita spending for elderly and disabled beneficiaries is dialed down to a slower growth rate, from CPI-M+1 to CPI-U beginning in 2025, below currently projected growth rates, just as the first of the Boomer generation reaches their 80s and is more likely to need Medicaid-funded long-term services and supports.
DISCUSSION
The Senate bill to repeal and replace the ACA, known as the Better Care Reconciliation Act of 2017 (BCRA), if enacted, would be expected to result in an increase of four million uninsured 50-64-year olds in 2026, relative to current law. The increase is due to a number of factors, including higher premiums at virtually all income levels for older adults, potentially unaffordable deductibles for older adults with very low incomes, , and reductions in coverage under Medicaid. Reductions in coverage could have unanticipated spillover effects for Medicare in the form of higher premiums and cost sharing, if pre-65 adults need more services when they age on to Medicare as a result of being uninsured beforehand. The BCRA would also impose new, permanent caps on Medicaid spending which could affect coverage and costs for low-income people on Medicare.
Other changes in BCRA will affect Medicare directly. The BCRA would repeal the Medicare payroll tax imposed on high earners included in the ACA. This provision, according to CMS, will accelerate the insolvency of the Medicare Hospital Insurance Trust Fund and put the financing of future Medicare benefits at greater risk for current and future generations of older adults – another factor to consider as this debate moves forward.
See the original article Here.
Source:
Nueman T., Pollitz K., Levitt L. (2017 June 29). How the senate better care reconciliation act (BCRA) could affect coverage and premiums for older adults [Web blog post]. Retrieved from address https://www.kff.org/health-reform/issue-brief/how-the-senate-better-care-reconciliation-act-bcra-could-affect-coverage-and-premiums-for-older-adults/