Wellness Study Touts CFPs

Original post benefitspro.com

Only 22 percent of employees tracked in Financial Finesse’s 2015 year in review report being on track for retirement.

The provider of workplace financial wellness programs says that is a slight improvement from 2014. Of those that are not prepared, 81 percent have never used a financial calculator to estimate their retirement preparedness.

While the number of retirement-ready workers remains bleak, those participants who have repeated engagements with planning tools, and financial planners, are showing marked improvement in retirement readiness.

Enhancements in retirement workplace plan design, like auto-enrollment and auto-escalation, and technology that addresses asset allocation are vital tools for addressing workers’ retirement preparedness.

Enrollment in 401(k) plans is up, there's more interest in HSAs, and participants are keen on using technology to interact...

But the Financial Finesse’s data suggests those tools alone are not enough.

A good portion of the review is committed to comparing retirement readiness of those savers who engage in live interactions with financial planners.

About half of participants that had five or more interactions with a certified financial planner report being on track for retirement.

Levels of confidence drop in lock step with the number of interactions with financial planners: 32 percent of those with three to four interactions say they are on track to retire with adequate savings; 31 percent with one to two interactions believe as much; and only 21 participants who only interact with online planning tools say they are on track to retire with enough savings.

Interacting with CFPs also translates to higher confidence with investments and how they are allocated, as 64 percent of participants with five or more interactions say they are invested appropriately, compared to only 42 percent who use an online planning tool but don’t seek live financial advice.

Overall, retirement readiness is lacking across generations. Last year, only 30 percent of baby boomers say they are on track to reach their retirement goal, which was unchanged from the previous year.

Only 22 percent of Gen Xers and 16 percent of millennials said they are on track to retire well.

Debt is a major obstacle for boomers’ retirement readiness, the report says, as 42 percent of financially distressed boomers have no plan in place to pay off their debt, and increase from the previous year.

Participation rates in workplace retirement plans was high across all age groups, as even 73 percent of workers under age 30 report being enrolled in a plan; 91 percent of pre-retirees participate in their workplace plan.

Despite high rates of enrollment, financial planners and participants sited insufficient retirement savings as the top financial vulnerability for all age groups.


5 Trends Driving Change in Health Care

Original post benefitspro.com

All around the country, brokers ask where the industry is going.

They want to know if other states are seeing the same changes they are; and, of course, they want to know about the great solutions that are popping up elsewhere. We feel the sands shifting, and are looking for solid footing.

Here are five trends that I believe will drive much of the industry change in the future:

1. No end in sight for medical cost increases

Is this worthy of being prediction number one? Well, it's the driver of most of the other trends, so it's appropriate. While the good news is that the percentage increase is less than it was 10 years ago, it's still many times the rate of inflation. And the “compounding interest” plays out every week with American families

  • 2016 individual rate increases averaged 10 percent over 2015.
  • 81 percent of employers will raise out-of-pocket costs within the next couple of years.

2. Carriers consolidate

The power is concentrating into fewer places. While we’ve seen some hospital plans develop or merge with regional health plans, the real news is the shrinkage.

  • The five largest health insurance companies are reducing to three. Aetna (#3) buys Humana (#5), and Anthem (#2) absorbs Cigna (#4).
  • Assurant sold off their medical insurance business last year.
  • 22 of 23 PPACA-created co-ops lost money, and half closed. So that didn't create real alternatives.

3. Less plan options

As plan costs rise, increased mandates and compliance rules push off opportunities for innovative approaches to plan design. We keep hoping to find them as we scout around the U.S., but too often, we see signs of less medical plan options. For example:

  • In Texas, a state that doesn't exactly embrace HMOs, BCBS of TX dropped all individual PPOs and moved everyone to their HMO.
  • In Alaska, Moda Health's retreat from the market leaves only one individual medical plan serving the whole state.
  • In a kind-of-related turn, many carriers (such as UnitedHealthcare, Humana, Cigna, and Oscar) now limit which plans they will pay brokers to sell. This is another way to drive members into specific plan designs.

4. Shrinking access to physicians

Driven by rate increases, a common carrier response is to reduce the size of the physician network. By driving the same number of members to a much smaller number of physicians and hospitals, the carrier can negotiate much better rates. Back in the 1990s, this was common. Now, we see this is a growing trend in about half the states. Another side of the access issue is that there just won't be enough doctors:

  • The Association of American Medical Colleges latest survey reveals that by 2025, the U.S. will be short 46,000-90,000 physicians. And nothing is being done to increase the number of medical school graduates.

5. Pharmacy cost increases skyrocket — again

Prior to 2010, the pharmaceutical industry was the whipping-boy for trend increases. Have you noticed the silence on this topic for the past few years? Driven by major drugs moving to generics, Rx spending increases were low in recent years.

However, there are no more good trends in drugs turning generic on the horizon. And all we see on the horizon are amazingly expensive “specialty drugs.” It's what has driven prices to rise in the past year or so. And there's no end in sight for this trend. One VP of pharmacy for a major carrier predicted, “By 2025, up to 40 percent of the medical plan cost will be drugs.”

So where does this leave us as an industry? If these are the trends, then how should we respond? What solutions should carriers develop? What strategies can be used to best round out future plan designs?


5 things to know about the DOL fiduciary rule

Original post benefitspro.com

Tomorrow marks the last day the White House’s Office of Management and Budget will accept meetings with industry stakeholders hoping to influence the finalization of the Department of Labor’s fiduciary rule.

1. When will the DOL fiduciary rule be finalized?

That means a final rule could emerge as early as next week, but more likely by the end of the month, according to Brad Campbell, an ERISA attorney with Drinker Biddle.

Campbell and Fred Reish, who chairs Drinker Biddle’s ERISA team, addressed a conference call on the DOL rule’s potential impact.

Nearly 1,000 stakeholders participated, testament to the wide-ranging impact the rule is expected to have on advisors and service providers to workplace retirement plans and individual retirement accounts.

2. Will the DOL rule be stopped?

Several legislative efforts that would delay or defund the rule’s implementation, as well as strategies to address the rule through the appropriations process or the Congressional Review Act, are “real and substantive,” said Campbell, but stand little chance of blocking implementation of the rule.

“The likelihood that Congress can stop DOL is low,” said Campbell.

He expects more Democrats to find the rule to be problematic once it is finalized, but not enough to create the two-thirds majority needed to override a veto from President Obama, which would be all but guaranteed of any legislation Congress passes.

3. When would compliance be expected?

Campbell also said he expects the Obama Administration to waste little time making industry comply with the new rule. An end-of-year compliance date should be expected, he said.

“Obama is going to want to have a deadline in place before he leaves. That will make it much harder for the next administration to undue” the rule, said Bradford.

4. Will others try to block the rule?

While Congressional efforts to block the rule will likely prove impotent, Campbell said private lawsuits seeking to block the rule’s implementation are “a very real possibility.”

“DOL has done some things I think they lack the authority to do,” explained Campbell, who referenced a recent majority report from the Senate Committee on Homeland Security and Governmental Affairs.

That report alleged the Obama Administration was “predetermined to regulate the industry” and sought economic evidence to “justify its preferred action” in directing the DOL to write a rule that would expand the definition of fiduciary to include nearly all advisors to 401(k) plans and IRAs.

The report also claims DOL willfully ignored recommendations from the Securities and Exchange Commission, the Treasury Department and the OMB as it crafted its proposed rule.

Campbell called those arguments and others enumerated in the Committee’s report “legitimate.”

If lawsuits from stakeholders do emerge, courts may delay implementation of the rule as claims are litigated, but Campbell seemed to dissuade stakeholders from holding out too much hope for that possibility.

“No one can predict where the courts will go,” he said.

5. What will the fiduciary rule’s impact be?

Fully preparing for the rule’s impact is of course impossible before it is finalized.

Nonetheless, Campbell and Reish itemized the ways a final rule is likely to impact industry. They are hoping regulators address several vague areas of the proposal in the final weeks of the rulemaking process.

Still unknown is whether the rule will provide a grandfather provision for tens of millions of IRA accounts already in existence.

Also at question is the proposal’s education carve-out, which could greatly impact how service providers’ call centers interact with plan participants, and whether including specific funds in asset allocation models would rise to the level of fiduciary advice.

Campbell said he expects the DOL to finalize an education carve-out that is a bit more forgiving than what was initially proposed. He expects a final rule will allow specific investments to be mentioned, so long as a range of comparable options are offered as well.

There also is the question of whether or not 401(k) and IRA platform providers will be allowed to offer access to 3(21) and 3(38) fiduciaries, and whether or not doing so would be a fiduciary action.

But the biggest questions impacting a final rule’s ultimate impact relates to the proposal’s Best Interest Contract Exemption, said both Campbell and Reish.

How those exemptions are ultimately finalized will shape the IRA market and how providers and advisors recommend rollovers from 401(k) plans.

The attorneys said they expect a final rule to consider rollover recommendations a fiduciary act.

One concern for advisors will be when they need an exemption to advise on a rollover.

If general education on rollovers is offered, without advice, one natural consequence is that investors will ask advisors what they should do, said the attorneys.

“Is no advice better than so-called conflicted advice?” asked Reish rhetorically. “Prudent advice can still be prohibited” under the rule’s proposal, he said.

That fundamental question is likely to make whatever rule that emerges “extraordinarily disruptive” to the IRA market, the attorneys said.


CMS Issues 2017 Benefit and Payment Parameters Rule, Letter to Issuers and FAQ

compliance_alert_logo

Original post healthaffairs.org

On February 29, 2016, the Department of Health and Human Services released its final 2017 Benefit and Payment Parameters Rule (with fact sheet) and final 2017 Letter to Issuers in the Federally Facilitated Marketplaces (FFMs). It also released a bulletin on rate filings for individual and small group non-grandfathered plans during 2016, a frequently asked questions documenton the 2017 moratorium on the health insurance provider fee recently adopted by Congress, and a bulletin announcing that CMS intends to allow transitional (grandmothered) policies to continue (if states permit it) through December 31, 2017, rather than requiring them to terminate by October 1, 2017, as earlier announced.

The final payment rule and letter include most of the provisions proposed earlier, but differ in important respects.Here are a few headlines, focusing on issues of particular interest to health insurance consumers.

Standardized Plans

To begin, the final rule and letter adopt with a few changes proposals regarding standardized plans. Beginning in 2017, qualified health plan insurers would have the option of offering six standardized plans: a bronze, a gold, and a standard silver, as well as three silver plan options, at the 73 percent, 87 percent, and 94 percent actuarial-value levels, for individuals eligible for cost sharing reduction payments. The plans would have

  • standard deductibles (ranging from $6,650 for the bronze plan to $3,500 for the standard silver to $250 for the 94 percent silver cost-sharing variation),
  • four-tier drug formularies,
  • only one in-network provider tier,
  • deductible-free services (for the silver level plan including urgent care, primary care visits, specialist visits, and drugs),
  • and a preference for copayments over coinsurance.

Insurers will not be required to offer standardized plans and could offer non-standardized plans (as long as they met meaningful difference standards), but standardized plans will be displayed in the marketplaces a manner that will make them easy for consumers to find.

Network Adequacy Requirements

The final rule and letter adopt some, but not all of the network adequacy requirements that were proposed, and delay some until 2018. The NPRM payment rule would have required states to adopt time and distance network adequacy standards for 2017 and imposed a federal default time and distance standard in states that failed to do so. The final rule backs off this requirement but provides that the FFM will itself generally apply quantitative time and distance standards in determining network adequacy for qualified health plans.

Provider Termination Notice

The final rule requires that health plans give patients 30 days notice when terminating a provider and continue to offer coverage for up to 90 days for a patient in active treatment by a provider who is terminated without cause. The insurer would only have to pay network rates to a provider for continuation coverage and the provider could balance bill. CMS is proceeding with its proposal to label health plans as to their relative network breadth on HealthCare.gov.

Out-Of-Network Bills At In-Network Facilities

CMS is not finalizing until 2018 a requirement the insurers apply to the in-network cost sharing limit the cost of services provided by out-of-network providers at an in-network facility; the agency is also weakening this already weak requirement. As finalized, the requirement only applies to ancillary providers, such as anesthesiologists or radiologists; can be avoided by giving notice (including form notice) 48 hours ahead of time or at the time of prior authorization that treatment might be received from out-of-network providers; and does not apply to balance bills as such where the provider bills for the difference between its charge and the network payment rate.

Open Enrollment Period And Procedures

Open enrollment for 2017 and 2018 will last from November 1 until January 31, as was true this year, but in future years, open enrollment will run from November 1 to December 15, to align enrollment with the calendar year. CMS is not finalizing until 2018 a proposal to allow applicants to remain on a web broker’s or insurer’s non-FFM website to complete a Marketplace applicant and enroll in coverage. Until then, web brokers and insurers will have to use the current direct enrollment process.

The rule changes the reenrollment hierarchy, requiring marketplaces to prioritize reenrollment in silver plans and allowing marketplaces to enroll consumers into plans offered by other insurers if their insurer does not have a plan available for reenrollment through the marketplace.  Other proposals to change the reenrollment process were not adopted.

FFM User Fees In State Marketplaces

The final rule and letter finalize the status of state-based marketplaces using the federal enrollment platform, which this year included Hawaii, Oregon, Nevada, and New Mexico. In future years insurers in these states will pay a FFM user fee of 3 percent, but for 2017 the user fee will be 1.5 percent. The standard user fee for other FFM states will be 3.5 percent again for 2017.

Navigators In The FFMs

The final rule requires navigators in FFMs as of 2018 to provide consumers with post-enrollment assistance, including assistance with filing eligibility appeals (though not representing the consumer in the appeal), filing for shared responsibility exemptions, providing basic information regarding the reconciliation of premium tax credits, and understanding basic concepts related to using health coverage. Navigators will also be required to provide targeted assistance to vulnerable or underserved populations.

“Vertical Choice” In The FF-SHOPs

The final rule allows FF-SHOPs to offer a “vertical choice” option, under which employers could allow their employees to choose any plan at any actuarial level offered by a single carrier. This is in addition to the options currently available where employers can offer a single plan or any plans offered by an insurer at a single level. States could recommend against the FF-SHOP offering vertical choice in their states and states with state-based marketplaces using the FFM could opt out of making vertical choice available.

Fraud Prevention In The Medical Loss Ratio Calculation

CMS decided not to allow insurers to count fraud prevention expenses in the numerator in calculating their medical loss ratios, as it had suggested it might in the NPRM.

Other Topics

The insurer fee FAQ clarifies that insurers will not be charged the insurer fee for the 2017 fee year (which would have based the fee on 2016 data). Insurers are expected to adjust their premiums downward to account for the fact that they will not owe the fee.

CMS is allowing states to extend transitional plans, which antedate 2014 and do not have to comply with the 2014 ACA insurance reforms through the end of 2017. Earlier guidance had allowed insurers to renew transitional plans ending before October 1, 2017. CMS concluded that it would be better to allow people in transitional plans to transition into ACA compliant plans during the 2018 open enrollment period rather than having them start a new ACA compliant plan in October 2017 that would only last for three months, and then have to restart a new deductible on January 1, 2018.

There is much more in the rule and letter. The rule is well over 500 pages long, the letter almost 100. Watch for further installments over the next couple of days.


The Dish with Leigh Rathje

The March edition of The Dish is serving up Saxon's own Leigh Rathje's favorite foods.

When she's cooking for friends and family she enjoys making Dorothy’s Chicken Divan “Hot Dish." "It’s my Grandmother’s recipe, so I only make this when close friends and family are over," she shared. In Minnesota casseroles are called Hot Dishes, "so I like to share this funny fact with new friends," Rathje says. According to Leigh this Chicken Divan is best enjoyed around the dinner table, because you’re going to want a second serving!

chick divine

Recipe: Dorothy’s Chicken Divan “Hot Dish”
3-4 Boneless Skinless Chicken breasts
2 Packages of 10oz Frozen broccoli spears
1 can of Cream of Chicken soup
2/3 cup Mayonnaise
1/3 cup evaporated milk
1 cup grated cheddar cheese
2 teaspoons of white wine
½ or 1 cup of fine bread crumbs
2 tablespoons of butter

Directions: Cook chicken and cube. Cook broccoli. Spray 9x13 pan and line with broccoli. Place chicken on top. Combine the next 5 ingredients and pour over top. Sprinkle bread crumbs and melt butter and pour over top. Bake at 350 for 1 hour.

On a night out, you can find her at Oak Tavern in Cincinatti, Ohio. She enjoys the unassuming digs of this typical, dive sports bar. "Nothing about the inside is special or even remotely looks like they serve food," she says. You come there to watch sports and eat chicken wings. And CHICKEN WINGS INDEED!  At the Oak Tavern they smoke their large chicken wings all day, so you can smell them from the streets. The wings come smoked and lightly seasoned, then handed to you with an assortment of 6 different flavored sauces

She prefers the Carolina Gold, but everyone knows their secret spicy berry sauce is where it’s at!

Oak Wings

Oak Tavern is @ 3089 Madison Rd. Cincinnati, OH 45209


Cybersecurity Should Be on Plan Sponsors’ Radar

Original post benefitspro.com

Cyber threats and attacks are so widespread that retirement plan sponsors are being warned to develop a cyber risk management strategy rather than a cyber risk elimination strategy.

That’s according to law firm Pillsbury Winthrop Shaw Pittman LLP, which said in an advisory that among other concerns, sponsors should be prepared to evaluate their third-party service providers’ cybersecurity programs and ensuring that the plans themselves have mitigated risks from losses in case of a cyberattack.

It shouldn’t come as a big surprise to anyone, considering that there’s a $5 trillion 401(k) market just sitting there waiting to be ravaged by hackers.

Considering that account holders often don’t check their accounts often enough to catch hacking attempts, and that the advisors and plan providers hold another wealth of information (pun intended) on those account holders, the retirement plan market is ripe for the plucking.

The trillions of dollars in 401(k) accounts are becoming particularly appealing to cyber criminals.

In its first of a series of advisories on cybersecurity issues regarding retirement plans, the law firm said that an effective cyber risk management strategy would include thorough due diligence by sponsors of TPAs and vendors; periodic implementation and review of contractual protections and insurance requirements in arrangements with TPAs; periodic monitoring of TPAs’ cybersecurity compliance and related risks; and consideration of whether to utilize the SAFETY Act, a liability management statute managed by the Department of Homeland Security, and purchase cyber and privacy insurance.

According to the brief, “Retirement plan sponsors and administrators could utilize the SAFETY Act in one of two ways: (1) by having their internal cybersecurity plans and policies SAFETY Act approved, thereby significantly limiting the possible scope of litigation claims they would face after a cyberattack; or (2) by requiring TPAs to hold SAFETY Act protections, as that would allow retirement plan sponsors and administrators to be dismissed from a broad array of claims alleging negligence or poor performance attributed to the third-party security products and services.”


Trending: Virtual Healthcare Gains Broader Acceptance

Original post benefitsnews.com

The Cadillac tax may have been postponed until 2020 but that doesn’t mean employers have put healthcare cost containment measures on the backburner. In fact, new research shows 90% of employers are planning myriad measures to control rising healthcare costs.

The 2016 Medical Plan Trends and Observations Report, released today by DirectPath and CEB, highlights top trends in employers’ 2016 healthcare strategies. Overwhelmingly, employers are continuing to shift a larger share of healthcare costs to employees, often through high-deductible health plans, according to the report.

The use of telemedicine, meanwhile, continues to grow, with almost two-thirds of organizations offering or planning to offer such a service by 2018 – a 50% increase from the previous year.

“Employees often say that they go to the emergency room because it's hard to get a doctor's appointment. With telemedicine, you've got 24/7 access and you don't necessarily need an appointment,” notes Kim Buckey, vice president of compliance communications at DirectPath. “That's certainly a huge driver of avoiding those visits to the emergency room or even the urgent care clinic because telemedicine is typically less expensive than an urgent care visit, as well.”

Buckey says it “makes sense” for employers to investigate telemedicine – the remote diagnosis and treatment of patients via phone calls, email and/or video chat – because employees are increasingly accepting of virtual access to just about everything.

“How many employees now are just grabbing their phones, iPads, or computers when they need information? That's something that people are comfortable with using and they don't have to leave their house to get quality care,” she says.

Spousal and tobacco surcharges are also expected to grow, according to the CEB data. Twelve percent of employers surveyed already have spousal surcharges in place, while 29% expect to introduce them in the next three years. Twenty-one percent of employers already have tobacco surcharges in place, while 26% expect to implement them in the next three years.

“I think we're going to see more and more of those, particularly as employers focus more on wellness initiatives,” says Buckey, adding that a robust communications plan is needed before implementing tobacco or spousal surcharges.

“People don't understand basic concepts like deductibles, co-pays, co-insurance, let alone how to make a decision about what plan to choose, or frankly, what's the best way of receiving care,” she says. “As more and more of these provisions are added to plans, they have the potential of being even more confusing and off-putting to employees, so having a robust communications plan in place that addresses all of these issues [is important]. ... There certainly will be cases where these surcharges aren't going to apply to a large percentage of the population. You just want to make sure that the folks who are affected, understand how they're affected and why.”


Using Compliance Reviews to Prepare Employers for Audit

Original post benefitsnews.com

A retirement plan sponsor has a fiduciary duty to ensure that the plan complies with all federal and state rules and regulations. Plan sponsors must follow the plan’s provisions without deviating from them unless the plan has been amended accordingly. Failure to follow the provisions can lead to plan disqualification. For the 2015 fiscal year, the Employee Benefits Security Administration reported that 67.2% of employee benefit plans investigated resulted in financial penalties or other corrective actions.

An operational compliance review can help. It’s different from a financial audit. An audit reviews the plan as it relates to the presentation of financial data; it is not designed to ensure compliance with all of ERISA’s provisions or other requirements applicable under the Internal Revenue Code. Operational compliance reviews, on the other hand, are concerned with validating the process being reviewed, with no restriction on whether it impacts the financials. An operational compliance reviewer wants to know that the process works, whether it is replicable, and consistent with the plan document.

Where to Begin

First, employers need to define the scope of the plan. To help define the scope, advisers and employers consider the following questions:

  • Does the plan sponsor have a prototype, volume submitter, or individually designed plan document?
  • Have there been any recent changes to the plan document?
  • Have there been any changes to any of the service providers, including payroll and record keepers, over the past few years?
  • Has the plan sponsor had to perform any corrections recently, perhaps without fully understanding how the errors occurred?
  • Have there been any data changes or file changes as they are provided to the record keeper?
  • Is there money in the budget to cover the review?

With the scope defined, a thorough operational compliance review should involve the following key steps:

  • Review of the plan document and amendments, along with summary plan descriptions and a summary of material modifications;
  • Review of required notices sent to participants, such as quarterly statements, initial and annual 404(a)(5) participant fee disclosures, Qualified Default Investment Alternative notices, safe harbor notices, etc.;
  • Review of service provider contracts, such as record keepers and trustees/custodians;
  • Discussions with the people who administer the plan, which may include the record keeper, trustee/custodian, payroll and benefits administration personnel;
  • Review of plan administrative manuals, record keeper operational manuals, procedural documents and policy statements; and
  • Review of sample participant transactions and data for each of the areas being reviewed.

Reviewing and comparing a record keeper’s administrative or operational manual with the plan document is an essential step in the review process. There tends to be a higher propensity for errors to occur when a record keeper is administering a plan that has an individually designed document versus its own prototype document. Lack of documented procedures can be cause for concern in ensuring the consistency and integrity of administering the plan, especially when there are any changes to the record keeping infrastructure, such as changes to plan provisions, modifications or upgrades to the record keeping system, or even personnel turnover.

While this process may lead to the discovery of errors you don’t necessarily want to find, you do want to gain perspective and overall confidence on your plan’s operations. Aside from finding errors, here are some things you should capture from an operational compliance review:

Areas of improvement for operational efficiency, including opportunities to maximize record keeper’s outsourcing capabilities;

  • Answers to questions on whether the plan’s provisions and administration would be considered “typical”, and how they compare to industry best practices;
  • An overall rating or report card of how a record keeper or service provider compares to industry peers; and
  • Confidence that if your client’s plan is approached by the DOL or IRS, it’s ready for an investigation that will conclude with a letter saying “no further action is contemplated at this time”.

Embarking on an operational review may seem intimidating but, with a well-thought-out plan, process, and the right resources, a successful review will uncover potential issues that can be resolved the IRS or DOL arrive at your client’s door. The rewards for your efforts may include perspective on industry best practices and how you can operate the plan more efficiently.


Health Care Reform Added 20 Million Adults to Coverage Rolls

Original post businessinsurance.com

More than 20 million adult Americans have gained health insurance coverage due to the health care reform law, the U.S. Department of Health and Human Services said in a report released Thursday.

“Thanks to the Affordable Care Act, 20 million Americans have gained health care coverage. We have seen progress in the last six years that the country has sought for generations,” HHS Secretary Sylvia Burwell said in a statement.

The HHS report noted that coverage gains varied widely by race and ethnicity. For example, among white non-Hispanic adults, the uninsured rate as of Feb. 22 was 7%, down from 14.3% as of Oct. 1, 2013, while during the same period the uninsured rate among black non-Hispanic adults declined to 10.6% from 22.4%, and among Hispanic adults to 30.5% from 41.8%.

Several health care reform law provisions are credited with the gains in coverage, including those that authorized federal premium subsidies to lower-income individuals obtaining coverage in ACA-authorized exchanges and others that expanded Medicaid eligibility and required group health care plans to extend coverage to employees' adult children until they turn 26.

Prior to that last change, employers typically ended coverage for employees' children at age 18 or 19, or 23 or 24 if a full-time college student.


Bill Would Allow Medicare-Eligible Retirees to Keep HSA Contributions

Original post businessinsurance.com

Health savings accounts are surging in popularity — and that can lead to some complications for older workers who enroll in Medicare.

Health Savings Accounts (HSAs) are offered to workers enrolled in high-deductible health insurance plans. The accounts are used primarily to meet deductible costs; employers often contribute and workers can make pretax contributions up to $3,350 for individuals, and $5,640 for families; the dollars can be invested and later spent tax-free to meet healthcare expenses.

Twenty-four percent of U.S. workers were enrolled in high-deductible health plans last year, according to the Kaiser Family Foundation - and 15% of them were in plans coupled with an HSA. That compares with 6% using HSA-linked plans as recently as 2010. Assets in HSA accounts rose 25% last year, and the number of accounts rose 22%, according to a report by Devenir, an HSA investment adviser and consulting firm.

But as more employees work past traditional retirement age, some sticky issues arise for HSA account holders tied to enrollment in Medicare. The key issue: HSAs can only be used alongside qualified high-deductible health insurance plans. The minimum deductible allowed for HSA-qualified accounts this year is $1,300 for individual coverage ($2,600 for family coverage). Medicare is not considered a high-deductible plan, although the Part A deductible this year is $1,288 (for Part B, it is $166).

That means that if a worker - or a spouse covered on the employer's plan - signs up for Medicare coverage, the worker must stop contributing to the HSA, although withdrawals can continue.

The normal enrollment age for Medicare is 65, but people who are still working at that point often stay on the health plans of their employers (more on that below). In certain situations, the worker or a retired spouse might enroll for some Medicare benefits. Moreover, if the worker or spouse claims Social Security, that can trigger an automatic enrollment in Medicare Part A and B.

That would require the worker to stop contributing to the HSA - and the contributions actually would need to stop six months before that Social Security claim occurs. That is because Medicare Part A is retroactive for up to six months, assuming the enrollee was eligible for coverage during those months. Failing to do that can lead to a tax penalty.

"The Medicare problem is a basic flaw in the way HSAs are designed," said Jody Dietel, chief compliance officer of WageWorks Inc, a provider of HSA and other consumer-directed benefit plans to employers.

Recognizing the problem, U.S. Senator Orrin Hatch and Representative Erik Paulsen proposed legislation last month that would allow HSA-eligible seniors enrolled in Medicare Part A (only) to continue to contribute to their HSAs.

The HSA complication is bound to arise more often as the huge baby boom generation retires, and as high-deductible insurance linked to HSA accounts continues to gain popularity among employers. High-deductible plans come with lower premiums - the average premium for individual coverage in a high-deductible health plan coupled with a savings option last year was $5,567 (the employee share was $868), KFF reports. By contrast, the comparable average premium for a preferred provider organization was $6,575 (with workers contributing $1,145).

Some experts also pitch HSAs as a tax-advantaged way to save to meet healthcare costs in retirement - although the HSA's main purpose is to help people meet current-year deductible costs, and employers often make an annual contribution for that purpose.

So far, there is not much evidence that large accumulations are building in the accounts. The average account total balance last year was $14,035, according to Devenir. The limits on contributions are one reason for that.

Deciding to delay a Medicare enrollment depends on your individual circumstances.

If you work for an employer with fewer than 20 workers, Medicare usually is the primary insurer at age 65, so failing to sign up would mean losing much of your coverage - hardly worth the tax advantage of continued HSA contributions. If you work for a larger employer, Medicare coverage is secondary, so a delayed Medicare filing is more feasible - so long as you or a spouse are not enrolled in Social Security. (Also make sure that the account in question is an HSA and not a Health Reimbursement Account - the latter is not a savings account and does not bring the Medicare enrollment problem into play.)

"We usually advise people to talk it over with a tax expert - it's more of a tax issue than a health insurance question," said Casey Schwarz, senior counsel for education and federal policy at the Medicare Rights Center, a nonprofit advocacy and consumer rights group.