HHS delays SHOP Web enrollment launch
Originally posted September 26, 2013 by Allison Bell on https://www.lifehealthpro.com
The U.S. Department of Health Human Services (HHS) is pushing the launch of the federal small-group public exchange Web enrollment system back to November.
The delay in the Small Business Health Options Program (SHOP) online enrollment system start affects only the states in which HHS will be running federally facilitated exchanges (FFEs).
States that are running their own state-based exchanges can still get their Web-based SHOP enrollment systems going Oct. 1, the official launch date for the new Patient Protection and Affordable Care Act (PPACA) public health insurance exchange system.
The delay will also have no direct effect on the FFE individual exchange program.
Reuters is reporting that Obama administration officials told it that small employers in FFE states will still be able to enroll in SHOP plans Oct. 1 by filling out paper forms or calling an FFE call center.
John Greene, a vice president at the National Association of Health Underwriters, said his group has learned that agents and brokers will be able to sell SHOP plans Oct. 1.
“It won’t be an electronic train,” Greene said. “It will be a little horse and buggy. But they can still get it done.”
Having the ability to start the SHOP enrollment process before the federal exchange Web enrollment system could help brokers get an edge over that system in the SHOP market.
The initial exchange enrollment rules call for employers to make payments by Dec. 15 to have coverage take effect Jan. 1.
The SHOP will be open to employers with 50 or fewer full-time employees. Some small employers that sign up for coverage through the SHOP and have relatively modestly paid employees can qualify for temporary small-group health insurance tax credits. The Congressional Budget Office has predicted that the SHOP program will be much smaller than the individual exchange program and may attract employers with only a few million employees.
The initial exchange enrollment rules call for employers to make payments by Dec. 15 to have coverage take effect Jan. 1.
The SHOP will be open to employers with 50 or fewer full-time employees. Some small employers that sign up for coverage through the SHOP and have relatively modestly paid employees can qualify for temporary small-group health insurance tax credits.
HHS is saying that it will open a call center aimed specifically at small employers Oct. 1. Employers can call the center at (800) 706-7893 from 9 a.m. to 7 p.m. EST.
HHS also is working with the Small Business Administration to organize SHOP webinars.
About 40,000 agents and brokers have been trained to sell SHOP coverage, HHS says.
How the Affordable Care Act affects your 2013 tax returns
Originally posted September 16, 2013 by Roger Prince on https://www.mainebiz.biz
As Affordable Care Act deadlines approach, most of the discussion heard on the street concerns the individual health insurance mandate and the expected opening of the state and federal insurance marketplaces this fall. Lost in the shuffle are the tax increases related to the ACA. Most of these changes impact high earners, but thresholds differ depending upon the tax provision in question. For anyone in the affected income categories — and there are many in Maine — the increases are significant.
Which taxpayers will be affected?
The accompanying chart outlines some of the important tax increases imposed as a result of the ACA and more recent legislation. The increases generally affect single filers with an adjusted gross income (AGI) above $200,000 and married couples filing jointly above $250,000. Some of the tax increases don't kick in until single AGI hits $400,000 and married filing jointly AGI hits $450,000.
How to mitigate the impact
As with any increase in marginal tax rates, a focus on income deferral and upfront tax planning can help soften the blow by reducing the amount of income that qualifies for the new tax rates. There are a number of strategies for income deferral, some of them employer-initiated and some handled by the individual. For example, employers might decide to redesign their 401(k) or 403(b) plans to provide for greater employer non-elective contributions (such as profit-sharing allocations) for certain types or groups of employees. A company might also decide to offer deferred compensation as part of an incentive program using so-called "synthetic" equity tools such as Phantom Stock or Stock Appreciation Rights. In these forms of compensation, the benefit is tied in various ways to the value of hypothetical shares of stock set to be paid out on a specified later date.
Individuals can defer or eliminate taxes in a higher-tax environment with various retirement savings strategies as well as tax-effective investment strategies. Individuals should get advice from both investment advisers and tax professionals to make sure their investment strategies coincide with a prudent tax strategy. The key is to be sure that the current income and investment structure maximizes the after-tax return.
Changes in the medical expense deduction
Regardless of income level, the unreimbursed medical expense deduction will now be available only for those medical expenses in excess of 10% of AGI, compared to 7.5% before. There is a temporary exemption from this requirement for individuals ages 65 and older and their spouses from 2013 through 2016. Individuals and their spouses who are 65 years or older are still allowed to deduct unreimbursed medical care expenses that exceed 7.5% of their AGI.
Other ACA steps
Employers have other compliance steps and opportunities under the ACA for this tax year. Among them:
- Employers that have employees who earn more than $200,000 will have to look at the potential for additional Medicare withholding.
- Employers that issued 250 or more W-2 forms in 2012 must report the cost of employer-sponsored health coverage for 2013 on the 2013 W-2 forms.
- Small employers (those with 25 or fewer full-time equivalent employees) that offer group health insurance might be eligible for the small business health care tax credit. The credit can be as much as 35% of employer premiums (25% for not-for-profits.) The maximum credit will increase to 50% in 2014 (35% for not-for-profits.) The credit is only available if the employer is paying at least 50% of the total premiums.
As always, everyone's particular tax situation is different. It is safe to say that tax planning for 2013 and thereafter will be more important than ever given the potential loss of tax adjustments and higher marginal tax rates imposed by the ACA and more recent legislation.
HHS releases federal exchange rates
Originally posted by Allison Bell on September 25, 2013 on https://www.benefitspro.com
With the public exchanges under the Patient Protection and Affordable Care Act preparing to open their phone lines and their Web enrollment sites Tuesday, the Obama administration is getting closer to revealing what federal exchange plans might actually cost.
A health policy office at the U.S. Department of Health and Human Services on Wednesday released a report showing what the average starting price for individual bronze, silver, gold and catastrophic exchange coverage will be for a 27-year-old in each state in which HHS will be running a "federally facilitated exchange."
The report also shows what the starting price for each level of individual coverage will be in the biggest city in each FFE state; what a 27-year-old individual coverage buyer with an annual income of $25,000 and access to exchange tax credits would pay for the lowest-cost coverage out of pocket; and what a family of four with an annual income of $50,000 would payout-of-pocket if it did or did not have access to the tax credits.
In Texas, for example, the average cost of the cheapest bronze coverage available to a 27-year-old would be $139 per month. The average cost of the cheapest gold coverage available would be $225 per month.
In Houston, the state's largest city, bronze coverage for the 27-year-old would start at $138 per month.
A look at medically underwritten 2013 rates available from eHealthInsurance.com for a 27-year-old who lives in Houston suggests that typical carriers there would now charge that consumer about $100 to $300 for coverage per month, with a majority charging $100 to $200 per month.
The family of four might have to pay $727 per month for silver coverage if it had no tax credits. Tax credits could cut the monthly cost of the coverage to $282.
Vermont posted preliminary exchange rates in April, and State Refor(u)m has posted a map showing that 27 states and the District of Columbia had at least posted preliminary rates for their state-based or federally facilitated exchanges as of Monday.
HHS — the parent of the Centers for Medicare & Medicaid Services, the agency running the exchanges — has repeatedly postponed the release date for FFE rate information without explaining why.
Some states have used state public records laws to justify releasing FFE exchange plan information on their own.
Other states, including Texas, have treated the FFE plan rates as confidential information.
HHS officials said the cost of the "second lowest cost silver plan" in the District of Columbia and 47 states is 16 percent lower than what HHS had expected, based on Congressional Budget Office projections.
HHS Secretary Kathleen Sebelius said in a statement that high prices have shut many consumers out of the health insurance market in the past.
"We excited to see that rates in the marketplace are even lower than originally projected," Sebelius said.
Proposed rules would ease employers' health plan reporting burden
Originally posted September 6, 2013 by Jerry Geisel on https://www.businessinsurance.com
Newly proposed Internal Revenue Service and Treasury Department health care reform regulations would ease the amount of employee plan coverage information employers would have to report to federal regulators.
Under the proposed rules, released Thursday, employers would not be required to report cost information related to family coverage.
In addition, employers would have to report how much of the premium employees will have to pay for single coverage only.
Limiting that reporting requirement to single coverage is appropriate, the IRS and the Treasury Department said because a health care reform law affordability test applies only to single coverage — not family coverage.
Under that test, if the premium paid by employees for single coverage exceeds 9.5% of household income, the employee is eligible for a federal premium subsidy to purchase coverage in a public insurance exchange. If the employee uses the subsidy, the employer may be liable for a $3,000 penalty.
No penalty is assessed regardless of how much the employer charges for family coverage, making the need to collect such information unnecessary, regulators said.
“Because only the lowest-cost option of self-only coverage offered under any of the enrollment categories for which the employee is eligible is relevant to the determination of whether coverage is affordable — and thus to the administration of the premium tax credit and employer shared responsibility provisions — that is the only cost information proposed to be requested,” according to the proposed regulation, which is scheduled to be published in the Sept. 9 Federal Register.
While regulators have reduced the amount of information to be reported, “it is only limited relief. There still will be a massive amount of work to meet the reporting requirements,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.
The proposed rules, though, could pose problems in other areas. For example, employers would be required to report tax identification numbers of employees' dependents.
Employers do not always have such information for every dependent, said Amy Bergner, managing director of human resources in Washington for PricewaterhouseCoopers L.L.P.
House-passed bill would bar IRS enforcement of health care reform law
Originally posted August 2, 2013 by Jerry Geisel by https://www.businessinsurance.com
The House of Representatives approved legislation Friday that would bar the U.S. Treasury Department and Internal Revenue Service from enforcing the health care reform law.
The Republican-backed measure cleared the House on a 232-185 vote.
Under the bill, H.R. 2009, regulators would be unable to enforce key health care reform law provisions such as the requirement — delayed last month by the Treasury Department to 2015 — that employers with at least 50 full-time employees offer coverage or pay a fee and a 2014 requirement that individuals enroll in a health plan or pay a fine.
The bill — as has been the case with other measures approved by the House to repeal all or part of the Patient Protection and Affordable Care Act — is unlikely to be taken up by the Senate, where Democrats hold the majority.
Even if the Senate were to pass the House measure, President Barack Obama would veto it.
The legislation “would raise health insurance premiums and increase the number of uninsured Americans and represents another attempt to repeal the Affordable Care Act, with no plan to replace it or policy to improve it,” the administration said in a statement by the Office of Management and Budget earlier this week.
Instead of attempting to repeal the reform law, lawmakers should work with the administration on an agenda to provide greater economic security to the middle class, the administration said in the statement.
Rep. Tom Price, R-Ga., who introduced the latest House measure to repeal the law, said earlier that “we ought to take this common sense step to take the IRS out of health care.”
NAHU: Employer mandate delay 'necessary' despite $12 billion cost
Originally posted July 30, 2013 by Alex Wayne (Bloomberg) and EBA staff on https://eba.benefitnews.com
A National Association of Health Underwriters spokeswoman says that while there are "short-term financial repercussions" to the employer mandate delay, "we believe this delay was necessary to continue the economic upturn we have seen in the past few months and ensure that American businesses will be able to provide their employees with the health insurance they want and need in the long term.”
President Barack Obama’s decision to give employers a year before they’re required to provide health insurance for workers will cost taxpayers $12 billion, the Congressional Budget Office says in a letter to members of Congress.
The health law will now cost $1.375 trillion through 2023, an increase of $12 billion since May, the CBO says. The government will lose $10 billion in penalties that companies would have paid next year for not providing employee health plans, and taxpayers will spend $3 billion more on subsidies for workers who instead will buy coverage on the exchanges.
The White House announced the delay on July 2, in response to a lobbying effort from business groups. The Affordable Care Act requires companies with 50 or more workers to offer health insurance to their workers or pay fines of as much as $3,000 per employee if they don’t. Now, companies don’t have to provide coverage until 2015.
“Some large employers that would have offered health insurance coverage to their employees in 2014 will no longer do so as a result of the one-year delay of penalties for those that do not offer affordable coverage,” Douglas Elmendorf, the director of the CBO, wrote in the letter.
The costs of the delay were offset by about $1 billion because of “small changes,” CBO said, including an increase in income tax collections from people who don’t get coverage at work. The value of employer-provided health insurance isn’t taxed, while workers who get higher pay to buy insurance on their own would have to pay income tax on that compensation. CBO also reports that “one million fewer people are expected to be enrolled in employment-based coverage in 2014” than the group predicted in May, also due to the employer mandate delay.
Even with the mandate’s delay, the health law is projected to reduce the deficit, the CBO says, because of lower Medicare spending and other provisions that offset the cost of new coverage. The CBO said May 15 that repealing the law would cost the federal government $109 billion, a figure it didn’t update today.
Alternative Treatments Could See Wide Acceptance Thanks to Health Care Reform
by: KAISER HEALTH NEWS AND ANKITA RAO
The Affordable Care Act says that insurance companies "shall not discriminate" against any state-licensed health provider, which could lead to better coverage of chiropractic, homeopathic and naturopathic care. Photo by Joe Raedle/Getty Images.
Jane Guiltinan said the husbands are usually the stubborn ones.
When her regular patients, often married women, bring their spouses to the Bastyr Center for Natural Health to try her approach to care, the men are often skeptical of the treatment plan -- a mix of herbal remedies, lifestyle changes and sometimes, conventional medicine.
After 31 years of practice, Guiltinan, a naturopathic physician, said it is not uncommon for health providers without the usual nurse or doctor background to confront patients' doubts. "I think it's a matter of education and cultural change," she said.
As for the husbands -- they often come around, Guiltinan said, but only after they see that her treatments solve their problems.
Complementary and alternative medicine -- a term that encompasses meditation, acupuncture, chiropractic care and homeopathic treatment, among other things -- has become increasingly popular. About four in 10 adults (and one in nine children) in the U.S. are using some form of alternative medicine, according to the National Institutes of Health.
And with the implementation of the Affordable Care Act, the field could make even more headway in the mainstream health care system. That is, unless the fine print -- in state legislation and insurance plans -- falls short because of unclear language and insufficient oversight.
One clause of the health law in particular -- Section 2706 -- is widely discussed in the alternative medicine community because it requires that insurance companies "shall not discriminate" against any health provider with a state-recognized license. That means a licensed chiropractor treating a patient for back pain, for instance, must be reimbursed the same as medical doctors. In addition, nods to alternative medicine are threaded through other parts of the law in sections on wellness, prevention and research.
"It's time that our health care system takes an integrative approach ... whether conventional or alternative," said Sen. Tom Harkin, D-Iowa, who authored the anti-discrimination provision, in an e-mail. "Patients want good outcomes with good value, and complementary and alternative therapies can provide both."
The federal government has, in recent years, tapped providers like Guiltinan, who is also the dean at the Bastyr University College of Naturopathic Medicine, to help advise the federal government and implement legislation that could affect the way they are paid and their disciplines are incorporated into the health care continuum. In 2012, Guiltinan, based in Kenmore, Wash., was appointed to the advisory council of the National Center for Complementary and Alternative Medicine, part of the National Institutes of Health.
Proving that alternative medicine has real, measurable benefits has been key to increasing its role in the system, said John Weeks, editor of the Integrator Blog, an online publication for the alternative medicine community. The Patient-Centered Outcomes Research Institute, created by the health law, is funding studies on alternative medicine treatments to determine their effectiveness.
Weeks said both lawmakers and the general public will soon have access to that research, including the amount of money saved by integrating other forms of medicine into the current health system.
But the challenges of introducing alternative care don't stop with science.
Because under the health care law each state defines its essential benefits plan -- what is covered by insurance -- somewhat differently, the language concerning alternative medicine has to be very specific in terms of who gets paid and for what kinds of treatment, said Deborah Senn, the former insurance commissioner in Washington and an advocate for alternative medicine coverage.
She pointed out that California excluded coverage for chiropractic care in its essential benefits plan, requiring patients to pay out of pocket for their treatment. Senn thinks the move was most likely an oversight and an unfavorable one for the profession. Four other states -- Colorado, Hawaii, Oregon and Utah -- ruled the same way in the past year.
"That's just an outright violation of the law," she said, referring to the ACA clause.
Colorado and Oregon are in the process of changing that ruling to allow chiropractic care to be covered, according to researchers at Academic Consortium for Complementary and Alternative Health Care.
Some states, like Washington, are ahead of the rest of the country in embracing alternative practitioners. The Bastyr University system, where Guiltinan works, treats 35,000 patients a year with naturopathic medicine. Sixty percent of the patients billed insurance companies for coverage.
Guiltinan said a change in the system is not only a boon for alternative medicine doctors, but helps families of all income levels access care normally limited to out-of-pocket payment. That's why some alternative medicine aficianados like Rohit Kumar are hoping the law will increase the ability of his family -- and the larger community - to obtain this kind of care.
Kumar, a 26-year-old business owner in Los Angeles, said his parents and brothers have always used herbs and certain foods when they get sick, and regularly see a local naturopath and herbalist. He's only used antibiotics once, he says, when he caught dengue fever on a trip to India.
While the Kumar family pays for any treatments they need with cash -- the only payment both alternative providers accept -- they also pay for a high-deductible health plan every month to cover emergencies, like when his brother recently broke his arm falling off a bike.
Paying for a conventional health care plan and maintaining their philosophy of wellness is not cheap.
"We pay a ridiculous amount of money every month," Kumar said of the high-deductible insurance. "And none of it goes toward any type of medicine we believe in."
Even so, he said the family will continue to practice a lifestyle that values wellness achieved without a prescription -- a philosophy that Guiltinan also adopted in her practice.
As a young medical technician in a San Francisco hospital, she decided that the traditional medical system was geared more toward managing diseases and symptoms rather than prevention. Naturopathic medicine, on the other hand, seemed to fit her idea of how a doctor could address the root cause of illness.
"The body has an innate ability for healing, but we get in its way," Guiltinan said. "Health is more than the absence of disease."
How to Best Inform Employees About PPACA
Originally posted July 29, 2013 by Thom Mangan on https://eba.benefitnews.com
Benefit education has long been considered a key component of a successful employee benefit program. However, engaging employees and helping them recognize the value of their program is not easy. It takes ongoing efforts of HR Managers with support from senior management.
The Affordable Care Act creates another new wrinkle for HR managers. I caught up with UBA Partner, Greg Smith of R.W. Garrett Agency, to find out how best to get your employee’s attention — and why it’s so important.
Thom: In addition to the mandated communication material and benefit changes, how does PPACA affect an employer’s communication efforts?
Greg: With the new health insurance marketplaces and Medicaid expansion in most states, the government has a daunting task of educating and informing millions of the nation’s uninsured of the new coverage and subsidies available to them.
To get the word out, the government will spend hundreds of millions of dollars in a broad and expansive advertising campaign starting this month (July).
Employers are also participating in the campaign, as they are required to send out a Model Notice regarding coverage and options in the New Health Insurance Marketplaces.
The Marketplaces and corresponding advertising campaign are focused on the uninsured, who may be eligible for “free” coverage (through Medicaid) or subsidized, reduced premium coverage (in the New Insurance Marketplaces). However, if the employer’s plan provides adequate and affordable coverage, the employees eligible for the plan will not qualify for any subsidized coverage in the New Insurance Marketplace (unless eligible for Medicaid).
Thom: So where does the trouble come in?
Greg: The wrinkle comes from two sources – confusion and human nature:
1. Confusion – Unless explained adequately, the employee may be confused as to why his employer is sending him notice of a New Insurance Marketplace with subsidized coverage, when, in fact, he is not eligible for a subsidy.
2. Human Nature – Employees may misinterpret or misunderstand the message of the government’s advertising and think that by dropping coverage, they may get a better deal in the Marketplace or, worse, believe that their benefits are not as valuable as they are.
Thom: So what is an employer to do to get around these problems, or “wrinkles”?
Greg: I believe employers can get out ahead of the “wrinkle” by pre-empting the government’s advertising with communications of their own. They can lay out the facts of the advertising campaign and reinforce the quality of their own plan.
Just because the White House has delayed the implementation of the employer mandate part of the Affordable Care Act doesn’t mean employers don’t have to communicate options to employees. On the contrary, they would be wise to use the extra year to make sure they and their employees are adequately prepared for the pending changes of 2015.
How Much Are Consumers Saving from the ACA’s Medical Loss Ratio Provision?
Originally published Jun 06, 2013 by Cynthia Cox, Gary Claxton and Larry Levitt
Source: https://kff.org/
Most of the conversation around the Affordable Care Act’s Medical Loss Ratio (MLR) provision has centered on the requirement that insurers issue consumer rebates when they fall short of spending a certain portion of premium dollars on health care and quality improvement expenses. This makes sense as rebates are one of the more tangible ways consumers have benefited from the law so far, and it likely contributes to the MLR provision being among the more popular aspects of the health reform law.
However, as we've written before, rebates represent only a portion, albeit the most concrete portion, of the MLR rule’s savings to consumers. The primary role of an MLR threshold is to encourage insurers to spend a certain percentage of premium dollars on health care and quality improvement expenses (80 percent in the individual and small group market and 85 percent in the large group market). The MLR rebate requirement operates as a backstop if insurers do not set premiums at a level where they would be paying out the minimally acceptable share of premiums back as benefits. Only if those thresholds are not met are insurers required to provide rebates to consumers or businesses. (You can read more about the MLR rule here).
Consumers and businesses, therefore, can realize savings in two ways as a result of the MLR requirement: by paying lower premiums than they would have been charged otherwise (as a result of lower administrative costs and profits), or by receiving rebates after the fact. So while insurers paid out considerable amounts for rebates – last year’s rebates totaled $1.1 billion – this is not the whole story for consumers.
Of course, it is hard to know with certainty what premiums would have been if the MLR rules were not in place: we cannot know for sure how insurers would have priced their products or what rates regulators would have allowed (to the extent that they reviewed rates prior to the ACA). It is also difficult to separate out the direct effects of the MLR provision from other aspects of the health reform law, particularly rate review, which works to moderate unreasonable premium increases and thus increase loss ratios. There are also data limitations. For example, prior to new reporting requirements put in place to enforce the MLR provision, there were not good data sources that break out premiums and claims on a consistent basis for major medical coverage by all types of carriers. In the initial years this data became available (2010 and 2011), there were some issues with the quality of the data, particularly regarding expenses for quality improvement and other new categories of administrative expenses that are reported on the exhibit.
Within these limitations, we constructed an analysis that looks at the basic proportion of premiums that health plans paid out as claims for medical care over the three years since the ACA was passed, both before and after the MLR requirement went into effect for coverage in 2011. These proportions do not include adjustments for quality improvement expenses, taxes or other factors that are used when determining whether or not rebates need to be paid; they simply represent the total payments for medical care as a proportion of premiums. This is the traditional way medical loss ratios have been calculated. Generally, if the proportion is rising, that means insurers are paying out more of each dollar they receive on enrollee health care, which in most cases would mean that enrollees are getting better value for the premiums they pay. We then quantify what the change in the traditional MLR means to enrollees by estimating how much they would have paid in premium if the observed MLR for 2010 (before the MLR requirement went into effect) were held constant for 2011 and 2012.1 This approach addresses the following question: If insurers had targeted the same claims to premium ratio for 2011 and 2012 as they achieved in 2010, would premiums have been higher or lower, and by how much? In other words, it addresses how much consumers may have saved in lower premiums as a result of the MLR threshold in addition to receiving rebates.
Our analysis uses insurer data filed to state regulators and compiled by Mark Farrah Associates. These data (filed on the Supplemental Health Care Exhibit) suggest that the main beneficiaries of the MLR rule’s upfront premium savings are people who purchase insurance on their own. The majority of plans sold to small and large businesses were already in compliance with their respective MLR thresholds before the law went into effect, and our analysis shows that traditional MLRs (claims divided by premiums) for group plans have stayed relatively flat over the past three years. In the individual market, by contrast, fewer than half of plans were in compliance with the ACA’s MLR thresholds in 2010, and the average traditional MLRs in this market have been steadily increasing since the requirement went into effect. This means that individual market insurers are devoting a greater portion of premium dollars to health care claims and less to administrative costs and profits compared to before the ACA’s MLR rule went into effect.
This pattern is consistent with the idea that some insurers needed to improve their MLRs to comply with the new rebate requirements. We know that the individual market MLR requirements in the ACA are higher than those that were in effect in many states, and there have been numerous reports that insurers worked to reduce their commissions and other administrative expenses to become more efficient.
So how might these changes have affected premiums? As noted above, one way to address this question is to compute what these consumers would have paid in premiums in 2011 and 2012 had traditional individual market MLRs stayed at 2010 levels (the year before the provision went into effect). Looked at this way, premiums would have been $856 million higher in 2011, and premiums would have been $1.9 billion higher in 2012.
Adding to the premium savings the amount individual market consumers received in rebates yields a total savings of $1.2 billion for 2011. This year, individual market insurers are expecting to issue $241 million in rebates (based on our analysis of early estimates from insurers filed with state insurance departments), bringing the total estimated savings for 2012 to $2.1 billion. While this savings was not distributed evenly (with more going to people enrolled in plans that had low MLRs prior to the law), when averaged across all individual market enrollees, this amounts to a savings of $204 per person ($181 in premium savings and $23 in rebates) in 2012. Taking into account both premium savings and estimated rebates, people purchasing insurance on their own in 2012 spent 7.5% less on average on insurance than they might otherwise have in the absence of the law.
There are some potential limitations to this approach. While the pattern of increasing MLRs over the three years makes sense given the incentives under the ACA and reports of insurer behavior, we do not have comparable data from earlier years to tell us whether or not the 2010 MLR was typical for the pre-ACA period (though the available evidence suggests that it was).2 Also, MLRs in 2011 and 2012 might be overstated because insurers simply underestimated how much health care expenses would rise following the recession, though increasing MLRs still means that consumers have been getting better value for their premium dollars. Finally, rebate amounts for 2012 are based on preliminary estimates filed on the Supplemental Health Care Exhibit to state insurance departments, and actual rebate amounts will be based on insurer filings with the Department of Health and Human Services, which were due June 1.
If insurers’ preliminary estimates hold true, this year’s rebates (at a total of $571 million across all markets) are expected to be about half the amount of last year’s $1.1 billion in insurer rebates. Smaller rebates, however, are not an indication that consumers are now saving less money as a result of the MLR provision, but rather that insurers are coming closer to meeting the ACA’s MLR requirements and that this provision is having its intended effect of consumers getting more value for the money they spend on premiums. In fact, in the individual market, the $241 million consumers are expected to receive in rebates for 2012 represents roughly one tenth of our estimate of the overall savings from the provision in that year. Perhaps ironically, when the MLR provision is working as intended and insurers set premiums to meet the thresholds, consumers save money but are less likely to get a check in the mail as tangible demonstration of those savings.
Footnotes
- See methodology attached
- Based on our analysis of the Accident and Health Experience Exhibit submitted to state regulators, which has been required of all insurance entities since 2006 but is not directly comparable to newer and more precise data, the weighted average traditional loss ratio in 2010 was slightly higher (80%) than the average of previous years (79%). Our premium savings estimates for 2012 and 2011 are thus likely conservative compared with estimates that used MLRs in prior years.
How the ACA affects annual enrollment
Originally published July 25, 2013 by Andrew Molloy on https://ebn.benefitnews.com
Despite the one-year delay of the pay-or-play mandate, there are still several provisions employees need to know about.
With annual benefit enrollments on the horizon, employers need to be prepared now for the changes that health care reform is bringing. Hopefully, employees already know that as of Jan. 1, 2014, they must have health insurance coverage. Beyond this mandate, however, what are some of the other issues of which employers should be aware?
The Affordable Care Act requires employers to tell their employees in writing by Oct. 1 about the new public health care exchanges and how these relate to their workplace benefits. This requirement applies to all employers subject to the Fair Labor Standards Act.
Under the law, employees need to know that they may be eligible for a tax credit and cost-sharing reduction if their employer's plan does not meet certain coverage and affordability requirements and the employee purchases a qualified health plan through a public exchange. Employers must also inform workers that if they choose to purchase their coverage through an exchange, they may not receive any employer contribution toward their premium, nor any related tax advantage.
Employees may still be confused about the exchanges by the time of enrollment. For the most part, those who work for large employers will see little impact since the subsidies offered for a qualified employer-sponsored medical plan will make the choice moot. However, employees of small- to medium-sized companies where health insurance is not available, or isn't affordable, will have to make a decision about whether to go to a public exchange for their coverage. For these employers, it means telling their workers what their options are and are not.
Despite the recently announced one-year delay in the employer shared responsibility requirement, employers still have obligations for 2014 and they'll have to review their medical plans carefully to ensure they meet the essential health benefits mandated by the law. In addition, the plan cannot have any annual coverage limits; cannot exclude people with pre-existing health conditions; must extend coverage to children up to age 26; and must comply with limits on deductibles and out-of-pocket expenses, among other requirements. It is also important to note that the requirement for essential health benefits applies only to individual and small group plans; the requirement does not exist for self-insured plans.
With the pay-or-play delay, employers will not be penalized if their plans do not cover at least 60%, on average, of an employee's health care costs in a given year, or if an employee's premium costs exceed 9.5% of his or her income. Those employees may still be eligible for tax credits on the public exchange, but for 2014 employers will not be subject to penalties if employees receive those tax credits.
Financial responsibility
It's clear that shifts in financial responsibility will continue to affect today's benefits picture. As employers feel the pressure of rising costs and enrollments in their health plans, they are likely to further fuel the already rapid growth of consumer-directed health plans. In fact, 52% of employers surveyed recently anticipated introducing high deductible/consumer-driven health plans in the next three to five years.
Employers should be aware that employees will see any loss of medical coverage or increase in cost sharing as a reduction in compensation. Consequently, employers will need to pay more attention to their company's total benefits package and consider ways to preserve or increase its value.
Above all, during this transitional period of health care reform, employers must clearly communicate benefits options and their value to employees. Employees need to understand that in most cases, their health benefits will remain the same and they won't have to go to the public exchanges for their coverage. They should also be educated about the need for disability coverage and its value.
Using multiple enrollment methods and a variety of learning tools will help ensure a successful benefits enrollment. In fact, research shows that participation is highest when employees have at least three weeks to absorb their benefits-education information, with at least three different ways to learn about their choices.