The Hundred Years’ War for Healthcare Reform
Original article from https://inthesetimes.com
By A.W. Gaffney
The story of healthcare reform in the United states begins not with Obama, Clinton or even Johnson, but almost a century ago, in the years leading up to World War I. Although the Socialist Party of America had called for insurance for workers “against accident, sickness and lack of employment” as early as 1904, it wasn’t until 1912, when the platform of Theodore Roosevelt’s Progressive Party called for a system of health insurance, that it emerged as a major political issue. Roosevelt lost the election, but progressives were nonetheless optimistic that healthcare legislation could be passed at the state level, and in 1916, progressive state legislators submitted “compulsory” health insurance bills to the legislatures of New York, Massachusetts and New Jersey. Much like the “employer mandate” of the Affordable Care Act, these plans would have required industrial employers to contribute to medical coverage and sick pay for workers and their families.
These were bold ideas, but they met with unfortunate timing, as two developments in Europe furnished powerful ideological weapons to those who opposed the legislation: in April 1917, the United states entered the war against Germany, and the following October, the Bolsheviks seized power in Moscow.
These global events proved politically useful to physicians in the American Medical Association (AMA), who had come to see health insurance legislation as a threat to both their independence and income. The AMA could now paint state-based health insurance as both pro-German (given its roots in Otto von Bismarck’s 19th-century social insurance) and pro-Bolshevik. Though the former claim had far more basis in fact, the latter smear was to prove the more enduring—throughout the healthcare reform debate of 2009-2010, even the most moderate of reform proposals were lambasted as communist by the Right. The effect in 1918 was a turning of the tide against the promising state plans that ended in their total defeat and decades of inaction.
For the next 90-odd years, efforts at sweeping healthcare reform in the United States were a series of failures. New Dealers picked up healthcare reform again in the 1930s, seeking to weave it into the new social safety net. However, fear of the physician lobby—which had flexed its newfound political muscle so effectively in the state-based campaigns of 1916-1918—encouraged Franklin D. Roosevelt to leave health insurance out of his landmark Social Security Act. Still, over time, Roosevelt leaned toward a system of universal healthcare, arguing in his famous 1944 “Second Bill of Rights” State of the Union Address for the “right to adequate medical care and the opportunity to achieve and enjoy good health.”
Though Roosevelt died the following year, the New Deal conception of universal healthcare lived on in the series of “Wagner-Murray-Dingell” (WMD) health bills of the Truman years. In its 1945 version, the WMD bill would have established universal national health insurance based on the European model. The AMA, still opposed to reform, again won the old-fashioned way, by red-baiting WMD to its grave.
Branding the bill with the hammer and sickle turned the fight over universal healthcare into yet another front of the developing Cold War, so much so that when the Johnson administration again sought to remake American healthcare in the 1960s, it strategically pursued reforms only for those individuals who were the least able to afford medical care and therefore the most politically inoffensive: the poor and the elderly. Thus Medicare and Medicaid were born.
Subsequent decades saw a number of universal healthcare proposals crash and burn: Ted Kennedy’s “health security” plan in 1970, Nixon’s plan in 1974, and Clinton’s in 1993.
This series of missteps and lost opportunities gives a sense of the stakes when the healthcare debate again took center stage after the election of Obama in 2008. But Obama also had to contend with a corporate healthcare industry that had grown enormously in power and influence in the hundred years between the WWI-era campaigns and his first term. Indeed, the relatively crude public relations campaign of the AMA in the 1910s was nothing compared to the massive lobbying machines of the insurance and pharmaceutical industries in the 21st century. These corporate “stakeholders” were to critically influence the terms of the healthcare reform debate of 2009-2010.
For instance, the health insurance lobby agreed to support the elimination of “pre-existing” conditions in exchange for a number of industry-favorable provisions, such as an individual mandate. Similarly, the pharmaceutical lobby agreed to support reform legislation so long as it did not allow Medicare to negotiate directly with pharmaceutical companies over drug prices, areform that by one estimate could have saved the government between $230 billion and $541 billion over ten years. And there’s no doubt that industry influences limited reform in other, less obvious ways, whether it was the early exclusion a single-payer system or the elimination of a “public option” from the final bill.
But clearly, these various, intertwined historical dynamics—stretching back 100 years—contributed crucially to the final form of the landmark legislation that lay upon Obama’s desk on March 23, 2010.
With a $2,000 deductible Is the Affordable Care Act 'affordable'?
Original article from https://money.cnn.com
By Tami Luhby
Until now, much of the debate swirling around the Affordable Care Act has focused on the cost of premiums in the state-based health insurance exchanges. But what will enrollees actually get for that monthly charge?
States are starting to roll out details about the exchanges, providing a look at just how affordable coverage under the Affordable Care Act will be. Some potential participants may be surprised at the figures: $2,000 deductibles, $45 primary care visit co-pays, and $250 emergency room tabs.
Those are just some of the charges enrollees will incur in a silver-level plan in California, which recently unveiled an overview of the benefits and charges associated with its exchange. That's on top of the $321 average monthly premium.
For some, this will be great news since it will allow them to see the doctor without breaking the bank. But others may not want to shell out a few thousand bucks in addition to a monthly premium.
"The hardest question is will it be a good deal and will consumers be able to afford it," said Marian Mulkey, director of the health reform initiative at the California Healthcare Foundation. "The jury is still out. It depends on their circumstances."
A quick refresher on Obamacare: People who don't have affordable health insurance through their employers will be able to sign up for coverage through state-based exchanges. Enrollment is set to begin in October, with coverage taking effect in January. You must have some form of coverage next year, or you will face annual penalties of $95 or 1% of family income (whichever is greater) initially and more in subsequent years.
Each state will offer four levels of coverage: platinum, gold, silver and bronze. Platinum plans come with the highest premiums, but lowest out-of-pocket expenses, while bronze plans carry lower monthly charges but require more cost-sharing. Gold and silver fall in the middle.
The federal government will offer premium subsidies to those with incomes of up to four times the federal poverty level. This year, that's $45,960 for an individual or $94,200 for a family of four. There will be additional help to cover out-of-pocket expenses for those earning less than 250% of the poverty line: $28,725 for a single person and $58,875 for a family of four. The subsidies are tied to the cost of the state's silver level plans.
Related: I'm signing up for Obamacare
California offers insight into how much participants will actually have to pay under Obamacare. The state, unlike most others, is requiring insurers to offer a standard set of benefits and charges in each plan level. The only variables are monthly premiums, doctor networks and carriers in your area.
For those in need of frequent medical care, the platinum or gold plans would reduce out-of-pocket costs for treatment. These plans have no deductible, and doctors' visits and medication are cheaper. But the trade-off is that they have higher monthly premiums. California has not yet released the premium range for these tiers.
On the flip side, a young man who never visits the doctor and wants to minimize his monthly charge could opt for a bronze plan. A 40-year-old enrolling in this plan could pay as little as $219 a month. But, if he did get sick, he'd get socked with a $5,000 deductible, $60 co-pays for primary care visits and a $300 emergency room charge.
The Patient Protection and Affordable Care Act provides protection for those who need a lot of care by placing a cap on out-of-pocket expenses. The maximum a person in an individual platinum plan will spend a year is $4,000, while those in the other tiers will shell out no more than $6,400.
"Insurance is expensive. It's hard for anyone who isn't well off to afford it," said Gary Claxton, director of the health care marketplace project at the Kaiser Family Foundation. "But it is good enough that you can afford to get sick without bankrupting yourself."
Whether potential enrollees find these plans affordable will depend on how healthy they are and whether they are currently insured.
Many individual insurance offerings currently available come with much higher deductibles, cover fewer expenses and limits on how much they'll pay out in a year. Plans on the exchange, on the other hand, are required to cover a variety of "essential benefits," including maternity care, mental health services and medication.
"In many cases, depending on the plan, the coverage will be more comprehensive than what the enrollee currently has," said Anne Gonzalez, a spokeswoman with Covered California, which is running the state's exchange.
Ways to improve employee benefits communications
Original article from https://www.businessinsurance.com
Benefit management experts' recommendations for improving employee benefit communications
DO
• Make it relevant: “Instead of one version of the information that contains everything an employee could ever want to know, regardless of their situation, why not create multiple versions of that information tailored to the specifics of your business units or demographic groups,” said Ruth Hunt, a Minneapolis-based principal at Buck Consultants L.L.C.
• Scale down, if necessary: Where larger employers may roll out robust Web platforms loaded with plan information and decision-support tools, smaller employers could distill their content down to a few pages of key information alongside a blog or online newsletter. “It doesn't have to be flashy,” said Jennifer Benz, founder and CEO of San Francisco-based Benz Communications. “People want really simple, actionable information, and that's certainly within the realm of what most small and midsize employers can support.”
DON'T
• Flood them with jargon: “Keep things simple, and in as plain a language as possible,” Ms. Benz said. “Benefit managers usually assume a much higher level of understanding among employees in terms of how health care works. Additionally, your corporate counsel is going to want to be very cautious and make doubly sure that the communications are legally compliant, even at the expense of basic understandability.”
• Wait for annual enrollment: “One of the biggest missteps we see, especially among mid-market employers, is treating annual enrollment like it's the Super Bowl,” said Joann Hall Swenson, health engagement best practice leader at Aon Hewitt in Minneapolis. “It might be compliant with the law and it might get people enrolled in your benefit plan, but it's not going to drive any of your employees to get healthier. Instead, what if you spread some of that money and effort over the course of the full year, and focus your communications on actually helping people use the benefit plans?”
• Tell them what they already know: “What we've found is that consumers already know what to do to be healthier,” Ms. Swenson said. “About 90% of employees can recite to you that they should eat right, exercise, not smoke, etc.”
Large employers won't cut worker hours due to PPACA
Original article from https://www.businessinsurance.com
By Jerry Geisel
Nearly all large employers are not considering reducing the number of hours employees work in response to the health care reform law, according to a survey released Thursday.
Ninety-eight percent of employers surveyed by Towers Watson & Co. said they have not and are not considering asking full-time employees to move to part-time status due to the Patient Protection and Affordable Care Act.
Under the health care reform law, employers must extend coverage to employees working at least 30 hours a week starting next year or pay a $2,000 penalty for each full-time employee.
The threat of the penalty has led to numerous predictions that some employers would reduce hours of employees now working at least 30 hours per week who are not offered health care plan coverage to avoid the penalty in the future.
But few employers appear willing to take such action.
“It's clear that most employers are hesitant to rush and implement changes that will negatively affect workers,” Laura Sejen, New York-based global head of rewards for Towers Watson, said in a statement.
In fact, some employers are easing health care plan eligibility requirements. Earlier this week, for example, Cumberland Gulf Group of Framingham, Mass., said employees working as few as 32 hours a week will be eligible for group coverage effective Oct. 1, down from the current 40-hour-a-week requirement.
The Towers Watson survey is based on the responses of 113 employers, all of which have at least 1,000 employees.
IRS Issues Final Rule on Comparative Evidence PCORI Fees
This content was originally published by Stephen Miller on the SHRM website.
Fees, due by July 31, will be charged to health care insurers, and to sponsors of self-insured health plans, to fund the new Patient-Centered Outcomes Research Institute (PCORI)
Revised Form 720 Issued
For sponsors of self-insured health plans, the IRS posted an updated Form 720 and accompanying instructions on its website. The new Form 720 (with a revision date of April 2013), along with related payment voucher Form 720-V, should be used to report and remit the "PCORI fee" to the IRS. Although the Form 720 is designed for quarterly payments of certain excise taxes, the PCORI fee is paid only annually.
The fee, as described below, is required to be reported annually on the second quarter Form 720 and paid by its due date, July 31, with the first fee payment due July 31, 2013.
PCORI Fee Is Deductible
In another development, the PCORI fee is an “ordinary and necessary business expense paid or incurred in carrying on a trade or business” and as result is tax-deductible, the IRS said in a May 31, 2013, memorandum.
The U.S. Internal Revenue Service issued a final rule on Fees on Health Insurance Policies and Self-Insured Plans for the Patient-Centered Outcomes Research Trust Fund, published in the Federal Register on Dec. 6, 2012.
The Patient Protection and Affordable Care Act (PPACA) establishes the nonprofit Patient-Centered Outcomes Research Institute (PCORI) to promote the use of evidence-based medicine by disseminating comparative clinical effectiveness research findings.
To fund the PCORI, the PPACA imposes a fee on health insurers and employer who sponsor self-insured health plans, for each policy or plan year ending on or after Oct. 1, 2012, and before Oct. 1, 2019, with the first fee payment due July 31, 2013. Subsequently, the PCORI fee will be due no later than July 31 following the last day of the plan year.
The fee will be $1 per plan participant for the first plan year ending after Sept. 30, 2012, and $2 per participant in succeeding years. For policy or plan years ending on or after Oct. 1, 2014, the fee will be increased based on increases in the projected per capita amount of national health expenditures.
Scope of Fees Clarified
Among other points, the final rule clarifies that the fee imposed on an employer sponsoring a self-insured health plan is based on the average number of lives covered under the plan during the plan year.
If an employer sponsors more than one self-insured arrangement, those arrangements may be treated as a single plan for purposes of calculating the PCORI fee, but only if the plans have the same plan year.
Several commentators had requested that the final regulations provide that PCORI fees do not apply multiple times if accident and health coverage is provided to one individual through more than one policy or self-insured arrangement (for example, where an individual is covered by a fully insured major medical insurance policy and a self-insured prescription arrangement).
The final rule does not adopt the requested change. For example, for an employee covered by both a group insurance policy and a health reimbursement arrangement (HRA), the group insurance policy falls within the definition of a specified health insurance policy and the fee applies to the insurer, while the HRA falls within the definition of an applicable self-insured health plan, so that the fee applies to the plan sponsor.
The final rule also applies PCORI fees to policies and plans that provide accident and health coverage to retirees, including retiree-only policies and plans. And it states explicitly that COBRA and other types of continuation coverage must be taken into account in determining PCORI fees, unless the arrangement is otherwise excluded.
However, in response to comments, the final rule permits a self-insured health plan that provides accident and health coverage through fully insured options and self-insured options to determine the fee imposed by disregarding the lives that are covered solely under the fully insured options.
What Plans Are Subject to the Comparative Evidence "PCORI" Fee?
Plans subject to the fee:
• Medical plans.
• Prescription drug plans.
• Self-insured dental or vision plans, if provided without a separate election or premium charge.
• Health reimbursement arrangements (HRAs).
• Retiree-only health plans (even though some are exempt from other PPACA mandates).
Plans exempt from the fee:
• Separately insured dental or vision plans.
• Self-insured dental or vision plans, if subject to separate coverage elections and employee contributions.
• Expatriate coverage provided primarily for employees who work and reside outside of the U.S.
• Health savings accounts (HSAs).
• Most flexible spending accounts (FSAs).
• Employee assistance programs (EAPs), wellness programs and disease management programs that do not provide "significant benefits in the nature of medical care or treatment."
Source: Pinnacle Financial Group, Patient-Centered Outcomes Research Fee Overview
Reconsidering Plan Designs
According to an alert from law firm Leonard, Street and Deinard, employers who sponsor multiple self-funded plans with the same plan year ends can aggregate those plans and pay the fee once on overlapping lives. However, because the fee is imposed on the plan sponsor and not on the plan itself, the employer must pay the fee outside the plan, meaning that plan assets cannot be used to pay the fee.
The law firm's alert also notes that:
Employers with self-funded high deductible health plans that are paired with self-funded HRAs can aggregate those plans and pay the fee once with respect to an individual covered by both the high deductible health plan and the HRA. In contrast, an employer that sponsors a fully insured high deductible health plan paired with a self-funded HRA will essentially be required to pay the fee twice on the same lives. The IRS concluded that because separate statutes impose the fee on plan sponsors of self-funded plans and insurance companies issuing fully insured policies, the IRS is unable to permit employers with both types of plans to combine them for purposes of determining the number of covered lives that they have.
Employers who sponsor self-funded HRAs with fully insured medical plans may wish to consider other plan designs to avoid this fee, such as self-funding the high deductible health plan or moving to a plan design that uses HSAs instead of HRAs. Alternatively, if there are relatively few people covered under the HRA and if the HRA has been an effective plan design, employers may simply decide to continue offering the plan and pay the additional fee.
ACA prep: Now, this year and in 2014
Original article from https://ebn.benefitnews.com
By Robert J. Lowe
The Patient Protection and Affordable Care Act includes many requirements applicable to employer group health plans. Some of these requirements are already effective but some of the most significant requirements will become effective in 2014. Employers should now be considering what they need to do to comply with ACA requirements that will become effective in 2014.
ACA provisions that are already effective
Employer group health plan should already be complying with the following requirements that are already effective:
- Coverage for young adults to age 26
- Deletion of lifetime and annual dollar limits
- Limits on pre-existing condition exclusions and rescission of coverage
- Medical loss ratio rebates paid by insurance companies
- Summary of benefits and coverage provided to participants explaining the terms of the plan
- W-2 reporting of cost of coverage
- $2,500 limit on health care flexible spending accounts
In addition, plans that do not have “grandfathered” status under ACA, as a result of changes to the plans adopted since enactment of the Act, are already subject to the following rules:
- Modified claims and appeals rules including external review requirements
- No cost preventative care
- Non-discrimination rules for insured plans (although these rules are not being enforced currently pending release of regulations)
What happens in 2014
Effective in 2014, employers that are treated as “applicable large employers” under ACA will have to comply with one of the central requirements of the Act, the requirement to offer employees health plan coverage that complies with ACA requirements or otherwise become subject to penalties under the Internal Revenue Code, referred to as “assessable payments.”
Assessable payment rules
There are two types of assessable payment under ACA.
Under one type of assessable payment, if an “applicable large employer” offers health coverage to all employees who work 30 or more hours a week and their dependents but the coverage does not qualify as “minimum essential coverage” or the employer offers coverage that is not “affordable” or does not provide “minimum value” and at least one employee enrolls in a plan offered through a state health insurance exchange for which a premium tax credit or cost sharing reduction is allowed, then the employer subject to “assessable payment” of up to $3,000 for each affected employee per year.
Compliance is determined on a monthly basis with a $250 assessable payment (one-twelfth of $3,000) due for each month for which the affected employee is entitled to a premium tax credit or cost sharing reduction as a result of the purchase of coverage on the exchange. Not all employees will be eligible for the premium tax credit or cost sharing for purchase of this insurance. Only employees earning less than four times the federal poverty limit will be entitled to these benefits. However, employers will not have to make this determination. If the IRS determines that the employee is entitled to these benefits, it will issue the assessment to the employer. This assessable payment is determined only with respect to those employees who purchase the insurance on the exchange and are eligible for the premium tax assistance or cost sharing.
Another type of assessable payment applies if the applicable large employer fails to offer minimum essential coverage at all to 95 percent of its employees who work 30 or more hours per week and their dependents, regardless of whether it is “affordable” or provides “minimum value” and at least one employee purchases coverage through a state health insurance exchange for which a premium tax credit or cost sharing reduction is allowed. Under these rules, the employer can be assessed a penalty equal to $2,000 per year, but multiplied by the number of full time employees employed by the employer reduced by 30.
Who is an “applicable large employer”
As in initial matter, it will be very important for each employer to determine if it is an “applicable large employer.” For this purpose, an employer is an “applicable large employer” if the employer employed an average of at least 50 full-time employees on business days during the preceding calendar year. The parent-subsidiary and brother-sister controlled group rules of the Internal Revenue Code apply in making this determination. Thus, for example, in determining whether the 50-employee test has been met, all subsidiaries that are at least 80 percent owned directly or indirectly, by the parent corporation will be treated as a single employer with the parent corporation. Also, two part-time employees who work an average of at least 15 hours a week are considered a single full time employee for purposes of making this determination.
There is an exception to the definition of “applicable large employer” for employers whose work force exceeded 50 full time employees only because of “seasonal workers” employed for 120 or fewer days during calendar year.
The determination for a particular calendar year is based on the employer’s average number of employees during the prior calendar year using the entire prior year for that purpose. However, for 2014 only there is a special transitional rule that allows an employer to determine if it is an applicable large employer using any period of six consecutive calendar months during calendar year 2013 rather than using the entire year.
What is affordable coverage
If the employer determines that it is an applicable large employer, it will also be necessary to determine if the coverage it is offering is “affordable.” If the coverage is not affordable, and an employee obtains coverage on an exchange for which it obtains a premium tax credit or cost sharing benefit, the employer will be liable for an assessable payment for that employee.
Coverage is affordable if the employee’s required contribution does not exceed 9.5 percent of the employee’s household income for the year. The coverage to which this rule applies is the employee portion of the self-only premium for the employer’s lowest cost coverage that provides minimum value. Thus, the employer can charge higher amounts for spouse or dependent coverage without having the coverage cease to be treated as affordable for this purpose.
The IRS regulations offer a variety of methods for determining the employee’s household income. However, most employers will find it easiest to make this determination using the safe harbor method based on Form W-2 wages as set forth in box 1 of the W-2.
Determining if an employee is full-time
In most cases it will be clear if an employee is a full time employee or not. However, in some cases, it will be difficult for an employer to make this determination.
The basic definition is that a full time employee for this purpose is an employee who is employed on average at least 30 hours of service per week. However, in some cases, the employer will not know in advance if an employee will satisfy that requirement. For this purpose, the IRS proposed regulations provide special rules for “variable hour employees” if it cannot be determined when the employee begins work if the employee is reasonably expected to work 30 hours per week.
Also, under a special transitional rule for calendar year 2014 only, a new employee who is expected to work initially at least 30 hours per week may also be a variable hour employee if, based on the facts and circumstances at the start date, the employee is expected to work 30 or more hours per week but the period of employment at more than 30 hours per week is reasonably expected to be of limited duration and it cannot be determined that the employee is reasonably expected to work on average at least 30 hours per week during the entire initial measurement period. However, effective January 1, 2015, such a limited duration employee will have to be treated as a full time employee.
To determine whether coverage is required for these variable hours employees, the IRS provided the option to use a “look back/stability period” safe harbor. Under this approach, the employer “looks back” at a period of three to twelve months to determine if during the measurement period the employee averaged at least 30 hours per week.
If the employee is determined to be full-time during the measurement period, the employee is treated as full-time during a subsequent stability period of six to twelve months, regardless of the number of hours worked during the stability period.
There can also be an “administrative period” of up to 90 days under certain circumstances between the end of the measurement period and the beginning of the stability period.
Variable hour employee examples
These rules can be illustrated by the following example of use of the look-back/stability period rules for ongoing employees:
Assumptions:
- Employer uses a look-back period of 12 months ending October 15 and a stability period of the calendar year.
- During the period from October 16, 2012 through October 15, 2013, an employee is tested to determine if he or she satisfies the full-time employee requirements.
If the employee works an average of 30 hours per week during the look back period, the employee would be entitled to coverage effective with the stability period beginning January 1, 2014. Coverage would be available for all of 2014 regardless of hours worked in 2014 as long as the employee remains employed. If, however, the employee does not work an average of 30 hours per week during the look back period, then the employer does not have to treat the employee as a full time employee for the entire stability period of 2014 regardless of the number of hours worked in 2014 and no assessable payment could be due with respect to the employee for that period.
Similar rules are applicable with respect to new employees as illustrated by the following example applicable to use of the look-back/stability period rules for new employees:
Assumptions:
- Employer uses a 12-month initial measurement period from date of hire and 12-month stability period.
- Administrative period from end of measurement period to end of first calendar month beginning after the measurement period.
If an employee has a date of hire of February 10, 2013, the measurement period would end twelve months later on February 9, 2014.
If the employee worked an average of 30 hours per week during this measurement period, the employee would be treated as full-time and would be entitled to coverage for the stability period from April 1, 2014 through March 30, 2015. If the employee did not work an average of 30 hours per week during that measurement period, the employee would not be treated as a full time employee during the stability period.
In addition, the employee would have to be tested as an ongoing employee as well. Therefore, using the look-back/stability period rules discussed above for ongoing employees and using the same assumptions as set forth above, then the employee would also have to be tested for the measurement period from October 16, 2013 through October 15, 2014 (applicable to ongoing employees) to determine calendar 2015 coverage. If the employee was treated as a full time employee during the look back period beginning on the date of hire, but not during the look back period beginning October 16, 2013, the employee would be entitled to coverage for the period from April 1, 2014 through March 30, 2015, but would not be treated as a full time employee for the balance of 2015.
Conclusion
Employers who wish to avoid liability under the assessable payment rules that become effective in 2014 should be analyzing their health plans and employee populations to determine if they already comply with the new rules and, if not, what changes they will have to make before January 1, 2014.
New PPACA wellness rules include fat rewards
Original article from https://www.benefitspro.com
By Allen Greenberg
May 29th, 2014
Workers who lose weight or quit smoking while enrolled in a workplace wellness programs could see their health care premiums drop under new rules issued Wednesday as part of the Patient Protection and Affordable Care Act.
Beyond lowering premiums, the Health and Human Services Department said the rules — released by HHS along with the Labor and Treasury departments — also are aimed at protecting individuals from unfair underwriting practices that could reduce their health benefits.
Wellness programs typically tie financial incentives to weight loss or reducing blood sugar.
As the mounting cost of health insurance continues to strain budgets, both employers and policy makers are increasingly turning to wellness programs as a way to help bring those costs under control.
Proponents say wellness programs can save employers as much as $7 for every $1 spent, as well as deliver higher employee morale, reduced absenteeism and increased productivity and retention.
The rules support “participatory wellness programs” that, for example, reimburse employees for the cost of membership in a fitness center, or provide some kind of reward to employees for attending a monthly, no-cost health education seminar.
The rules also outline standards to reward individuals who meet a specific outcome related to their health, say losing weight or cutting smoking.
Some Democrats in Congress worried that the outcome-based programs could allow insurers to discriminate against unhealthy people.
Businesses, meanwhile, expressed concerns about overly burdensome regulations, requiring them to provide tests to determine whether employees met wellness program benchmarks. Helen Darling, president of the National Business Group on Health, in a letter said she worried that "certain provision[s] of the proposed regulations will impede innovation and increase administrative and cost burdens for wellness programs, with little to no benefit to participants."
But HHS said it had "clarified" some "confusion" about how the new incentives would work, though it left intact the size of the incentive employees can receive for meeting wellness goals. Some had wanted the incentives reduced.
Under the rules, employers can bump up the maximum permissible dollar amount of the rewards offered to employees to 30 percent — it had been 20 percent — of the total cost of their health care coverage, and can raise incentives tied to smoking prevention or reduction programs to up to 50 percent of total coverage costs.
"Today’s final rules ensure flexibility for employers by increasing the maximum reward that may be offered under appropriately designed wellness programs, including outcome-based programs," HHS said in a statement.
"The final rules also protect consumers by requiring that health-contingent wellness programs be reasonably designed, be uniformly available to all similarly situated individuals, and accommodate recommendations made at any time by an individual’s physician based on medical appropriateness."
The intent, HHS said, is that, regardless of the type of wellness program, anyone taking part in the program should be able to receive the full amount of any reward or incentive, “regardless of any health factor.”
Above all, HHS said, it has tried to be reasonable.
"These final regulations state that a wellness program is reasonably designed if it has a reasonable chance of improving the health of, or preventing disease in, participating individuals, and is not overly burdensome, is not a subterfuge for discrimination based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease," agency officials said.
The rules will go into effect Jan. 1.
Employers test mix of strategies to avoid PPACA
Original article from https://www.benefitspro.com
By Allen Greenberg
Employers that have pruned the hours of part-timers in response to PPACA have generated plenty of headlines, mostly negative. But it’s not the only strategy they’re testing in hopes of sparing themselves the expense of buying health insurance for everyone.
Around the country, companies are beginning to share employees.
They’re also increasingly turning to temporary staffing agencies.
When and where possible, they’re using independent contractors.
And, in some instances, they’re turning to professional employer organizations.
Often, none of these options are ideal but are viewed as the best way forward, especially for businesses subject to the law because they employ 50 or more people.
Concerns have been running high about how PPACA will impact business. A recent Gallup survey found that 48 percent of small-business owners say the law is going to be bad for business, compared with 9 percent who say it’s going to be good, and 39 percent who expect no impact at all.
The headline-grabbing response from business has, in part, included trimming of the part-time workforce. The law requires large employers offering health insurance to include part-time employees working 30 hours a week or more. The Federal Reserve Bank of Minneapolis found that 11 percent of employers are shifting to more part-time employees or planning to do so in response to the new healthcare requirements.
But HR managers, small-business interest organizations and others say many companies also are doing what they can to preserve jobs.
It isn’t altruism alone; these business owners also are motived by a desire to keep their companies growing, if not thriving.
Kevin Kuhlman, the Washington, D.C.-based manager of legislative affairs for the National Federation of Independent Businesses, said few of his organization’s members like the idea of “shrinking their businesses.”
That’s why, he said, “we’re seeing a lot of creative strategies” when it comes to addressing the employer mandates of the Patient Protection and Affordable Care Act of 2010.
“Folks are concerned about the sustainability of their business,” Kuhlman said. “Some might try to survive by atrophy, which isn’t a great approach, or try to find ways to be more productive with fewer employees.”
But rather than “resisting growth” or overwork employees, many companies are trying out new ways of getting the job done.
Sharing, for example.
Some businesses, especially those in the food-service world, are increasingly banding together to split an employee’s workweek between themselves and competitors. In other words, a cook might work 15 hours at one restaurant, put in another 15 at another eatery and wrap up with 10 hours at a third.
Labor interests might object that this approach amounts to exploitation, but advocates say it helps keep people fully employed, if not insured by an employer.
Employers also are turning to temporary staffing agencies as a possible solution.
Many temporary staffing firms are going to be considered large employers under Obamacare, meaning they’ll be compelled to provide health benefits or pay the penalties. But employers who turn to staffing agencies can save money because the cost of the benefits will be lower for a large employer.
How well this strategy will work is unclear. “The issue, of course, is what will the temp agency charge?” asked Dwight D. Menke, the owner of an eponymous brokerage in Topeka, Kansas.
The same goes for professional employer organizations, or PEOs.
ESCO Communications, an Indianapolis-based audio/visual equipment installer, turned to a PEO, WorkSmart Systems, after it faced a 40 percent hike in the company’s health plan last year.
"Health insurance was the real driver" for making the switch, CEO Chip Roth told Entrepreneur magazine. "By joining a larger pool and spreading the risk around, we were able to keep our rates the same as they were."
PEOs also handle an array of administrative HR tasks, so it’s no wonder Matt Thomas, founder and president of WorkSmart, says his company is seeing solid growth. "A lot of that has to do with the Affordable Care Act," he said. "Even larger companies that wouldn't normally look at PEOs are looking now, so they can avoid some of the ramifications of (the law)."
The biggest loser when a company goes the PEO route? The in-house HR staff.
Meanwhile, employers also are turning increasingly to independent contractors to get work done.
Companies that use these “freelancers” generally don’t have to withhold or pay any taxes on payments they make to them and are not required to provide them with health insurance. The IRS, however, has been cracking down on the abuse by companies of the independent contractor classification and many employers have been fined.
Still, it’s a risk more employers are reportedly taking so long as they feel comfortable they can prove that the contractor’s services are not an integral part of their principal business.
Compliance, as the NFIB’s Kuhlman points out, is a big concern for most employers, and whether some of these strategies are ultimately seen as legitimate by the government remains to be seen.
In the end, many employers may decide they don’t like giving up the control they have over employees who suddenly are working for a temp agency, or a PEO or have become independent contractors.
Kuhlman expressed concerns that “some folks are throwing good money at bad advice.”
“They’re sick of waiting so they’re doing things like splitting up their businesses” into smaller units with fewer employees, he said. “But that’s not going to work, because they (the regulators) are aggregating business owners with multiple entities into one entity.”
In other words, those companies will still be subject to the law.
John Duczak, senior VP at The American Worker, a Hoffman Estates, Ill., benefits company, points out the law itself might offer relief to at least some employers, even those with thousands of workers on their payroll.
The legislation’s “variable hour accommodation” allows employers to determine whether someone is a fulltime or part-time employee by the average number of hours that person puts in over a 12-month period. “Some companies are going to become very skilled in their management of that position” as a way of avoiding Obamacare’s coverage mandate, he said.
Turnover in the ranks also will help a lot of companies, especially those in the retail and hospitality industries.
Duczak noted that one of his clients hires 18,000 people a year, 11,000 of whom have moved onto new jobs or situations after six months.
The problem, he said, “takes care of itself,” at least for those employers.
Companies can tie worker health premium cost to wellness
Original article from eba.benefitnews.com
By Alex Nussbaum
Businesses in the U.S. won more freedom to charge higher insurance premiums to workers who don’t meet health goals, or reward those who shape up, under rules released by the Obama administration.
Three years in the making, the regulations also require employers to offer a “reasonable alternative” for workers who can’t meet standards on weight, cholesterol or other measures, the U.S. Department of Health and Human Services said yesterday in a statement. That’s meant to protect employees from discrimination, although the agency rejected calls by consumer groups that companies provide medical evidence for claims that wellness programs improve health.
“The final rules support workplace health promotion and prevention,” the department said, “while ensuring that individuals are protected from unfair underwriting.”
Conditions such as obesity and diabetes account for three-quarters of U.S. health spending, and wellness programs have been gaining in popularity as businesses grapple with rising costs. The regulations, mandated by the Affordable Care Act, let employers charge workers as much as 30% of their medical-plan premiums if they fail to meet goals, an increase from the current 20%. The rules take effect Jan. 1.
Incentive programs
Almost half of U.S. companies with more than 200 employees now have wellness programs, according to the Kaiser Family Foundation, a nonprofit health research group based in Menlo Park, California. The incentives can be tied to activities such as joining a gym or getting a blood-pressure test or specific targets such as body-mass index.
While the administration eased some proposals, the regulations will still complicate wellness efforts, says Helen Darling, president of the National Business Group on Health. The Washington-based nonprofit represents large employers including Dell Inc., American Express Co. and PepsiCo Inc.
The rules give workers more leeway to seek changes in wellness targets they can’t meet due to health conditions and to have their doctors suggest alternative measures. There’s a danger that could tie up employers in protracted negotiations over health goals, Darling says.
“The more you put in terms of requirements and the more risk you make for employers, the more likely they are to say, ‘we don’t need this hassle,’” she says. “It’s making a lot more work for employers, and therefore, more expense.”
Consumer protections
Families USA, a Washington-based consumer group, welcomed the consumer protections.
“These rules will help ensure that wellness programs are designed to actually promote wellness, and that they are not just used as a backdoor way to shift health care costs to those struggling with health problems,” says Ron Pollack, the group’s executive director.
The health agency today also released a study of workplace wellness efforts, also mandated by the health care law. The report by the Rand Corp. found small yet promising changes in worker behavior and costs from programs at 600 businesses.
The measures “can reduce risk factors, such as smoking and increase healthy behaviors, such as exercise,” the Santa Monica, California-based research institute said in the report. Its analysis “confirms that workplace wellness programs can help contain the current epidemic of lifestyle-related diseases.”
The move to tie workers’ costs to their health is being examined by the U.S. Equal Employment Opportunity Commission to see whether such programs violate anti-discrimination laws. And California’s legislature is considering a bill that would bar linking financial rewards to a worker’s health status.
While some studies suggest $3 or more is saved for every $1 spent on wellness programs, the gains may come from shifting costs to less-healthy employees rather than changing behavior, according to a March analysis in Health Affairs.
Are You Ready for PPACA? Employers Count the Days
Original article from forbes.com
As the full enactment of PPACA approaches, there are many factors that business owners know to look out for.
- Do I need to provide health insurance to my employees?
- Should I go to an exchange?
- How will the mandate impact my business and profitability?
- How much are my health insurance premiums going to go up?
These are all questions that many business owners are starting to look. Below are some points that you may not have thought of that should go into your business planning.
We all know that health insurance premiums are expected to go up, but do you know how much? Small groups (2-99 employees) can expect to see price increases between 20% and 50% upon the full enactment of reform. When factoring in medical trend, taxes and fees, carrier and product changes and the introduction of community rating, your premiums will jump significantly. As a small business owner, asking your existing broker for a quote is not going to solve this problem as it will require a new method behind providing employees with health insurance. The objective of a health insurance plan should not be to carry you over to the next year with as little pain as possible, but to address your company’s healthcare expenses for the long term. You need a road map that will allow you to offer affordable coverage to employees while keeping costs in line.
Some employers are looking to drop plans in order to remain profitable. Unfortunately, this is not the answer either and can cause more pain than gain. With the Supreme Court upholding the individual mandate, all Americans will be required to obtain health insurance or pay a penalty. The cost of obtaining coverage for individuals is expected to jump 100% – 200% with an average increase of 116%. This is going to push many employees who either have individual plans or would ordinarily look at obtaining individual plans to go to their employer to obtain coverage. By not obtaining small group coverage, you risk losing your talent to other companies who are willing to absorb the cost. This can result in the loss of business and inevitably impact the bottom line more then not offering coverage at all.
The federal funding for health care reform is already facing challenges that will impact all small business owners. In the deal that was reached in the fiscal cliff debate, an agreement was made to cut the remaining $1.9 billion dollars that was set to fund Consumer Oriented Operated Plans (CO-OP’s) through the Affordable Care Act. $1.9 billion was already spent to fund the creation of CO-OP’s. These will remain in place; however no more federal money will be used to create any additional CO-OP’s at this time. This is another example of where PPACA has been modified in order to maintain its functionality. This will lead to higher costs in term of premium and taxes for small business owners and individuals seeking health insurance in the short term, to cover the high costs of implementing the systems and covering up all other budget shortfalls that would have ordinarily paid for these costs.