Workers wildly unprepared for health care changes
Original article https://ebn.benefitnews.com
By Tristan Lejeune
The third annual Aflac WorkForces Report, released last week, reveals a sobering gap in employee readiness to handle and take on the shift toward consumer-driven health plans and defined contribution health. A majority of workers (54%) would prefer not to have more control over their insurance options, citing a lack of time and information to manage it effectively, and 72% have never even heard the phrase “consumer-driven health care.”
Aflac and Research Now surveyed 1,884 benefits leaders and 5,229 wage-earners and found arresting disconnects in their expectations, plans and views of the future. For example, 62% of employees think their medical costs will increase, but only 23% are saving money for those hikes. A full three-quarters of the workforce think their employer will educate them about changes to their health care coverage as a result of reform, but only 13% of employers say educating employees about health care reform is important to their organization.
“It may be referred to as ‘consumer-driven health care,’ but in actuality, consumers aren’t the ones driving these changes, so it’s no surprise that many feel unprepared,” says Audrey Boone Tillman, executive vice president of corporate services at Aflac. “The bottom line is if consumers aren’t educated about the full scope of their options, they risk making costly mistakes without a financial back-up plan.”
Aflac reports what many benefits leaders instinctively know: Consumersalready find health insurance decisions intimidating and don’t welcome increased responsibility. Fifty-three percent fear they might mismanage their coverage, leaving their families less protected than they are now. And significant ignorance remains: Plan participants are not very or not at all knowledgeable about flex spending accounts (25%), health savings accounts (32%), health reimbursement accounts (49%) or federal or state health care exchanges (76%).
According to Aflac, 53% of employers have introduced a high-deductible health plan over the past three years, and that trend shows no sign of slowing. Yet more than half of workers have done nothing to prepare for changes from HDHPs, the Affordable Care Act or other system shifts.
“It’s time for consumers to face reality,” Tillman says. “Ready or not, they are being put in control of their health insurance decisions – and that means having to make choices that could have a big impact on personal finances. If employers aren’t offering guidance to workers on how to make crucial benefits decisions, the responsibility lies in the hands of consumers to educate themselves.”
Wellness programs dealt setback under proposed IRS rules
Original article https://www.benefitspro.com
By Allen Greenberg
The IRS, in what would be a blow to employers, is proposing companies shouldn’t be allowed to count the cost of wellness programs in their health care plans under the Patient Protection and Affordable Care Act.
Should it be affirmed, the rule would force employers to spend more to meet the law’s minimum value provisions.
Wellness programs are a key part of the PPACA.
The law was written with the idea that more employers would put wellness programs in place or expand existing such programs to help improve the health of Americans and help control health care spending.
Specifically, the hope is that more employers might reimburse workers for the cost of fitness center membership, reward employees for attending a monthly, no-cost health education seminar; or that they reward employees who complete health risk assessments.
The proposed rules from the IRS, however, wouldn’t allow employers to consider the costs of wellness programs in establishing whether they’ve reached the government’s definition of “minimum coverage” under the ACA.
Only wellness programs designed to prevent smoking will qualify, the IRS said.
Under PPACA, a large employer must pay an excise tax penalty if it fails to provide minimum coverage for even one full-time employee, forcing that employee to get a tax credit to buy health insurance through one of the new insurance exchanges, or marketplaces.
Labor unions that worried some employers might try to skirt minimum health care coverage by including wellness programs welcomed the news.
"We are very happy with the rules," Dania Palanker, senior counsel for the National Women's Law Center, told reporters.
But employer advocates were disappointed, calling it a setback.
The public has until July 2 to submit comments to the IRS for changes.
Click here to read the IRS’s proposed ruling.
Compliance Alert – Exchange Notice
Two versions of a model exchange notice have been issued by the Department Of Labor which also include basic directions on the requirements of distributing this notice. The first notice pertains to employers who provide coverage, whereas the other notice is for employers who do not offer coverage. The deadline for administering these notices is October 1st, 2013.
Basic employer information is required for both notices. This information will provide data necessary for the employee if they decide to receive exchange coverage. However, the notice does not need to include state-specific information pertaining to the exchange. For your convenience, the links below offer instructions and information on the model notices; and we will keep you updated with more information next week or as this is updated.
Model Exchange Notice for Employers who provide coverage
Model Exchange Notice for Employers who do Not provide coverage
More Americans Spending Rather than Saving Tax Refund
Original article https://ebn.benefitnews.com
By Margarida Correia
Most Americans (85%) will receive a federal tax refund averaging $2,803. What will spendthrift Americans do with the money? More than twice as many will spend rather than save it, according to Capital One Bank’s annual taxes and savings survey.
More than a third (35%) plan to spend all or part of the refund, while only 16% will save it. Nearly a quarter (22%) will use the refund to pay down debt and 4% will invest their returns.
Of those who plan to spend all or part of their refund this year, 23% will spend it on vacation. One in three will spend it on everyday expenses and necessities with the rest spending it on various items, including clothing and accessories (16%), iPads, smartphones and other electronics (15%), and major purchases (16%).
Less than half (42%) were aware that that their take-home pay would decline this year due to the recent elimination of the payroll tax holiday by Congress. The awareness was greater among men, with 47% saying they were very aware of the decline in take-home pay, compared with 38% for women.
“At a time when people are seeing smaller paychecks, now more than ever they should take a step back, evaluate their financial goals and consider saving their tax refund,” says Mickey Konson, managing vice president for Retail Banking at Capital One Bank.
The telephone survey polled 1,006 U.S. adults age 18 and over.
Margarida Correia is Associate Editor for Bank Investment Consultant, a SourceMedia publication.
How should insurers pay their PPACA fees?
Original article https://www.benefitspro.com
By Allison Bell
A team at the National Association of Insurance Commissioners is trying to figure out how health insurers should get the cash to pay billions of dollars in Patient Protection and Affordable Care Act fees.
The team -- the Health Care Reform Regulatory Alternatives Working Group -- has come up with five ways insurers could handle the fact that the new PPACA fees are supposed to kick in on Jan. 1.
The working group has described the options in a rough draft of a discussion paper posted on the Health Actuarial Task Force section of the NAIC's website. The NAIC created the group to give regulators from states that are skeptical about PPACA a way to share ideas about how to cope with the law. The discussion paper drafters used estimates from the American Action Forum, a group that opposes PPACA, in the paper draft.
The new PPACA fees could cost health insurers $20 billion in 2014 -- an amount equal to about 3 percent of their revenue, the drafters said, citing the American Action Forum figures.
The drafters talked only about the mechanics of how insurers should handle the fees, not their views about whether insurers should have to pay the fees.
Because the PPACA fees resemble excise taxes, "it seems legitimate for an insurer to include such fees in the premium," the drafters wrote in the paper. "Then the question is when an insurer should reflect the fees in the premium.
The drafters list the following options:
- Have insurers file rates that extend for the entire 12-month policy year. An insurer could include a portion of the PPACA fees payable in 2014 starting on the policy anniversary in 2013.
- Have insurers file rates that extend for the entire 12-month policy year, with no inclusion of PPACA fees in 2013. Let the insurers bill for PPACA fees separately starting Jan. 1, 2014.
- Have insurers file rates that extend for the entire 12-month policy year. Don't let insurers include PPACA fees in the 2013 premium rates but let the insurers have their rates change to reflect the new fees on Jan. 1, 2014.
- Have insurers file rates that extend only until Dec. 31, 2013, with no inclusion of PPACA fees. Require the insurers to submit new filings for rates effective on Jan. 1, 2014.
- Prohibit insurers from including PPACA fees in their rates until the first policy anniversary that occurs on or after Jan. 1, 2014.
IRS Issues Higher Limits for HSA Contributions for 2014
Original article https://www.shrm.org
By Stephen Miller
The Internal Revenue Service announced higher limits for 2014 on contributions to health savings accounts (HSAs) and for out-of-pocket spending under high-deductible health plans (HDHPs) linked to them.
In Revenue Procedure 2013-25, issued May 2, 2013, the IRS provided the inflation-adjusted HSA contribution and HDHP minimum deductible and out-of-pocket limits, effective for calendar year 2014. The higher rates reflect a cost-of-living adjustment and rounding rules under Internal Revenue Code Section 223.
A comparison of the 2014 and 2013 limits is shown below:
|
|
Calendar Year 2013 |
Calendar Year 2014 |
||
|
Self-only |
Family |
Self-only |
Family |
|
|
Annual Contribution Limit |
$3,250 |
$6,450 |
$3,300 |
$6,550 |
|
HDHP Minimum Deductible |
$1,250 |
$2,500 |
$1,250 (no change) |
$2,500 (no change) |
|
HDHP Out-of-Pocket Limit |
$6,250 |
$12,500 |
$6,350 |
$12,700 |
The increases in contribution limits and out-of-pocket maximums from 2013 to 2014 were somewhat lower than the increases a year earlier, reflecting the government's calculation of a more modest inflation rate. From 2012 to 2013 the contribution limit rose $150 for individual coverage and $200 for family plans, while maximum out-of-pocket amounts rose $200 for individuals and $400 for families, and HDHP minimum deductible amounts rose $50 for individuals and $100 for families.
Penalties for Nonqualified Expenses
Those under age 65 (unless totally and permanently disabled) who use HSA funds for nonqualified medical expenses face a penalty of 20 percent of the funds used for such expenses. Funds spent for nonqualified purposes are also subject to income tax.
Coverage of Adult Children
While the Patient Protection and Affordable Care Act allows parents to add their adult children (up to age 26) to their health plans, the IRS has not changed its definition of a dependent for health savings accounts. This means that an employee whose 24-year-old child is covered on his HSA-qualified high-deductible health plan is not eligible to use HSA funds to pay that child’s medical bills.
If account holders can't claim a child as a dependent on their tax returns, then they can't spend HSA dollars on services provided to that child. According to the IRS definition, a dependent is a qualifying child (daughter, son, stepchild, sibling or stepsibling, or any descendant of these) who:
- Has the same principal place of abode as the covered employee for more than one-half of the taxable year.
- Has not provided more than one-half of his or her own support during the taxable year.
- Is not yet 19 (or, if a student, not yet 24) at the end of the tax year or is permanently and totally disabled.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Most States Fail Transparency Scorecard
Original article https://ebn.benefitnews.com
Thirty-six of the nation's 50 states received either a "D" or an "F" in a report card, issued by two nonprofit organizations, measuring the strength of health care price transparency laws.
"We know from studies that the price for an identical health care procedure performed in the same city can vary by as much as 700%, with no difference in quality," said Francois de Brantes, executive director of Health Care Incentives Improvement Initiative, or HCI3. "When consumers shop for value, they can help rein in health care costs; but to do this, they first need timely and actionable price information."
Burden placed on consumer
The report card, developed by Catalyst for Payment Reform and HCI3, examined multiple factors in arriving at a 100-point scale.
Those factors include levels of price transparency such as:
* Pricing information reported to the state only.
* Pricing information available upon request by an individual consumer.
* Pricing information available in a public report.
* Pricing information available via a public website.
The report card also measured scoring criteria by scope, including:
* Scope of price, including charges, average charge, amount paid by the insurer and amount paid by the consumer (allowed amount).
* Scope of services covered under the law, including all medical services, inpatient services only, outpatient services only, or the most common inpatient and outpatient services.
* Scope of providers affected by the law, including hospitals, physicians and surgical centers.
The groups calculated a score for each level separately and then factored a sum for a total score out of 100 possible points. Every state received a cumulative additive score, taking into account all relevant laws passed in that state. Thus, grades do not reflect individual statutes or bills, but rather each state's overall legislative effort toward price transparency for health care.
The sponsors of the report say the majority of states have very basic laws requiring average charges to be made public, but charges do not reflect what consumers, employers and health plans actually end up paying for care. In many cases, the information is only available upon request, placing a considerable burden on the consumer.
States have duty to protect
"It should be concerning to every lawmaker in the country that 18% of the U.S. economy is shrouded in mystery," de Brantes said. "Without price information, how can we possibly expect consumers to act in a value-conscious way? It is a duty of every state to protect its residents from unfair trade practices, and healthcare consumers are, for the most part, completely left to fend for themselves."
This story originally appeared in Health Data Management, a SourceMedia publication.
States Fear Loss of Health Care Aid
Original article https://www.benefitspro.com
By Ricardo Alonso-Zaldivar
Thousands of people with serious medical problems are in danger of losing coverage under President Barack Obama's health care overhaul because of cost overruns, state officials say.
At risk is the Pre-Existing Condition Insurance Plan, a transition program that's become a lifeline for the so-called "uninsurables" — people with serious medical conditions who can't get coverage elsewhere. The program helps bridge the gap for those people until next year, when under the new law insurance companies will be required to accept people regardless of their medical problems.
In a letter this week to Health and Human Services Secretary Kathleen Sebelius, state officials said they were "blindsided" and "very disappointed" by a federal proposal they contend would shift the risk for cost overruns to states in the waning days of the program. About 100,000 people are currently covered.
"We are concerned about what will become of our high risk members' access to this decent and affordable coverage," wrote Michael Keough, chairman of the National Association of State Comprehensive Health Insurance Plans. States and local nonprofits administer the program in 21 states, and the federal government runs the remaining plans.
"Enrollees also appear to be at risk of increases in both premiums and out-of-pocket costs that may make continued enrollment cost prohibitive," added Keough, who runs North Carolina's program. He warned of "large-scale enrollee terminations at this critical transition time."
The crisis is surfacing at a politically awkward time for the Obama administration, which is trying to persuade states to embrace a major expansion of Medicaid under the health care law. It may undercut one of the main arguments proponents of the expansion are making: that Washington is a reliable financial partner.
The root of the problem is that the federal health care law capped spending on the program at $5 billion, and the money is running out because the beneficiaries turned out to be costlier to care for than expected. Advanced heart disease and cancer are common diagnoses for the group.
Obama did not ask for any additional funding for the program in his latest budget, and a Republican bid to keep the program going by tapping other funds in the health care law failed to win support in the House last week.
There was no immediate response from HHS, which has given the state-based program until next Wednesday to respond to proposed contract terms for the program's remaining seven months.
Delivered last Friday, the new contract stipulated that states will be reimbursed "up to a ceiling."
"The 'ceiling' part is the issue for us," Keough said in an interview. "They are shifting the risk from the federal government, for a program that has experienced huge cost overruns on a per-member basis, to states. And that's a tall order."
At his news conference this week, Obama acknowledged the rollout of his health care law wouldn't be perfect. There will be "glitches and bumps" he said, and his team is committed to working through them. However, it's unclear how the program could get more money without the cooperation of Republicans in Congress.
The pre-existing conditions plan was intended only as a stopgap. The law's main push to cover the uninsured starts next year, with subsidized private insurance available through new state-based markets, as well as an expanded version of Medicaid for low-income people. At the same time, virtually all Americans will be required to carry a policy, or pay a fine.
States are free to accept or reject the Medicaid expansion, and the new problems with the stopgap insurance plan could well have a bearing on their decisions.
Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Saxon Financial Consulting Advisor Invited to Participate in Cambridge Leaders Club
Cincinnati, OH – May 6, 2013 – Garry W. Rutledge, Jr. of Saxon Financial Consulting has been selected by his broker-dealer, Cambridge Investment Research, Inc. (Cambridge) to participate in an exclusive Leaders Club workshop. Cambridge rep-advisors were asked to participate based on their outstanding service and exceptional levels of production.
“We are committed to supporting our advisors by offering events where they can network and learn from one another because we believe that the insight shared between thought leaders during these valuable sessions is invaluable,” said Eric Schwartz, CEO and founder. “We plan to add even more events for our advisors in the near future.”
The Leaders Club workshop will be held in conjunction with Cambridge’s annual Ignite conference, September 25-28 in Scottsdale, Arizona.
About Saxon Financial Consulting
Saxon provides comprehensive employee benefit and wealth management services to our clients. Whether you are a CEO, Small Business Owner or head of household, we utilize a team approach in analyzing and planning a client’s investment portfolio, cash flow, retirement and benefit/insurance needs. Our recommendations are based solely on your specific needs, circumstances and goals. We consistently monitor your goals and offer education to ensure your plan stays on course to meet your needs. The partners have over thirty years of investing and benefit experience and are active members of the community.
Our mission is to partner with clients to establish and achieve financial goals through objective planning and management of assets and/or employee benefits.
Our purpose is to help build, manage and preserve your financial and physical wealth. We put our client’s interest first, act with integrity and honesty, and strive for excellence in every facet of our practice.
Our success is not measured by performance statistics but rather by our clients’ success in achieving their goals.
Our philosophy is to provide our clients with the highest level of service and technical expertise in the management of employee benefits and/or preservation of wealth. The entire staff of Saxon Financial Consulting is firmly committed to this philosophy.
Contact: Garry W. Rutledge, Jr @ 800-847-1733.
Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member of FINRA/SIPC. Investment Advisor
Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Saxon Financial Consulting and Cambridge are not affiliated. Check the background of this investment professional on FINRA’s BrokerCheck.
About Cambridge
Cambridge Investment Research, Inc. (Cambridge), member FINRA/SIPC, is an independent, privately-owned broker-dealer with over 2,200 independent registered representatives and $48.5 billion assets under management.
Cambridge was recognized as one of the Best of Iowa Businesses1 and has been named among the Top Workplaces in Iowa the last two years2. Cambridge also provides innovative fee programs and a full menu of commission offerings to advisors across the nation. Recognized in the industry as The Fee Experts®3, Cambridge has been ranked a fee leader among independent broker-dealers for 12 consecutive years4.
Connect with Cambridge
www.linkedin.com/company/cambridge-investment-research
Insight on Cambridge
1 IA Biz magazine, “Best of Iowa Businesses,” 2010
2 Des Moines Register, “Top Workplaces in Iowa” 2011, 2012
3 THE FEE EXPERTS® is a registered trade mark of Cambridge Investment Research, Inc. for its investment advisory service for investment managers.
4 Financial Planning magazine, June “FP50”, Top 50 Independent Broker-Dealer Issue, 2001-2012.
Securities offered through Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, and investment advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Both are wholly-owned subsidiaries of Cambridge Investment Group, Inc.
###
Counting to 90: ACA and the waiting period
Original article https://ebn.benefitnews.com
By Keith McMurdy
Under the Affordable Care Act, once we decide who we have to offer coverage to, then we have to decide when they get the coverage. Generally the new rule is that a waiting period for coverage cannot exceed 90 days. More recently, the IRS has given us proposed rules on the 90 day waiting period. As with all proposed rules, they are not final until they are final, but these do give employers some additional guidance on how to maintain the correct waiting period.
The proposed regulations define a waiting period as “the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective.” What this means is that once eligibility requirements are met (meaning that an employee is "full time"), coverage must begin 90 calendar days after eligibility is obtained. This includes weekends and holidays. If day 91 falls on a weekend or holiday, the plan sponsor may elect to have coverage be effective earlier than the 90th day, for administrative convenience, but may not delay coverage past the 91st day. So plan sponsors should eliminate any plan provisions that provide that coverage begins at some time after the 90th day (like the first day of the month after the expiration of the 90 day period.)
The proposed rule also provides that a plan may impose eligibility criteria such as completion of a period of days of service (which may not exceed 90 days), attainment of a specific job category, or other criteria, so long as they have not been designed to avoid compliance with the 90 day waiting period. For example, a plan provides coverage only to employees with the title of manager. John is hired on September 1, 2014 as an associate. On April 1, 2015, he is promoted to manager. John must be offered coverage no later than July 1, 2015. This does not mean that John might not have otherwise been offered coverage as a full-time employee. So be wary of reading too much into this job classification option. We still have to measure how many hours John works even as an associate.
Also, there had been some question about certificates of creditable coverage being required after January 1, 2014. The proposed rules provided that these certificates will be phased out by 2015 because ACA's prohibition on exclusions from coverage due to pre-existing health conditions renders them obsolete. Since pre-existing condition exclusions have to be eliminated for plan years beginning on or after January 1, 2014, these certificates are no longer necessary. But they still have to be provided throughout the 2014 plan year.
There are other specifics in the proposed rules that will have to be fleshed out and, again, these rules are proposed and subject to change. But they serve as an ongoing reminder that plan sponsors have to be watchful of how they administer their plans and must make sure that their stated eligibility rules satisfy the requirements of both ERISA and ACA.