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.
Putting off PPACA with early plan renewals
Original article from benefitspro.com
By Allen Greenberg
Why wait?
That’s the attitude a growing number of employers are expected to adopt this year when it comes to renewing their health plans and, as a result, putting off the day when they have to deal with the many provisions of the Patient Protection and Affordable Care Act.
“It’s actually not anything new,” said Cheryl Randolph, a spokeswoman for United HealthCare Group. “Employers have always had this option.”
Of course, that’s true. But this year’s different.
With the PPACA going into full effect Jan. 1, a number of employers are expected to pull the trigger on renewals in November and December. Just how many, no one knows right now.
But UnitedHealth, Humana and Aetna, among others, are all expected to offer early renewals, health insurance brokers say.
There’s plenty of incentive for employers to renew early.
Health insurance premiums on average could rise by 40 percent under the Patient Protection and Affordable Care Act, according to a study by Milliman, the consulting firm. The study was done on behalf of Center Forward, a bipartisan organization. It focused on premiums for individual and group comprehensive medical insurance plans in Arizona, Florida, Illinois, New Jersey, Ohio and Wisconsin.
Individual premiums, on average, will increase 25 percent to 40 percent due to PPACA, the firm said, while small market group premiums could increase by 6 percent to 12 percent.
Karen Harrison, a broker with Lakewood, Colo.-based Braddock Harrison Agency, said she expected to receive renewal packages from carriers in late August and was letting her clients know now they should consider early renewals this year.
“There are pros and cons to doing this,” Harrison said.
One con? Any employer renewing early this year would not be able to move their renewal date again.
The big pro? For companies with younger, healthier employees, renewing early could limit their rate increase to 15 percent or less, according to an estimated projection Humana shared with brokers.
Whether renewing early will work as a strategy is unclear.
The Illinois Department of Insurance recently warned health insurers it wouldn't approve policies with "arbitrary" renewal dates meant to "delay compliance with the reforms." Also, Rhode Island said it wouldn't approve early renewals of health plans for small businesses.
Harrison, for one, said she didn’t think regulators would have much choice.
“So long as everyone follows the rules, I think it would be very hard” to fight this, she said.
Employers’ confidence in health plans rising
Original article from ebn.benefitnews.com
By Tristan Lejeune
The vast majority of employers are actively developing tactics to work within the Affordable Care Act and companies’ confidence in employer-sponsored health care is up. These are among the results of the International Foundation of Employee Benefit Plans’ 2013 survey, released ahead of the group’s Washington Legislative Update conference, held today and tomorrow.
Only 10% of employers are still in a “wait-and-see mode” regarding health care reform regulations, according to the survey 2013 Employer-Sponsored Health Care: ACA’s Impact; the rest are busy taking steps to deal with reform’s rules and regulations.
Sixty-nine percent of employers tell the IFEBP that they definitely plan to provide employer-sponsored health care when exchanges begin in 2014; in 2012, only 46% of companies were willing to commit to that. An additional 25% say they are very likely to continue the offering.
Changes, however, are coming. Eighteen percent of employers have increased plan participants’ share of premiums, and a quarter plans to do so over the next year. Of those making changes, 25% are upping their emphasis on high-deductible health plans and health savings accounts, and 14% are assessing the feasibility of adding one.
“Employers across the country have to deal with the impact of implementing the ACA while still being able to provide competitive benefits for their employees,” says Julie Stich, research director for the IFEBP. “Employees across the board can expect to see changes in how their employer-sponsored health care plans operate.”
Benefits leaders are also doing more to spur healthy behavior: 19% are either developing an organized wellness program, or expanding an existing one. Fourteen percent of respondents are either adopting or expanding healthy-lifestyle financial incentives, and another 25% plan to do so in the next year.
“We are seeing trends that indicate more changes may be on the horizon. More and more organizations are losing their grandfathered status, dropping from 45% in 2011 to 27% in 2013,” says Stich. “Also many organizations are redesigning their plans to avoid the 2018 excise tax on high-cost or so called ‘Cadillac plans.’ In 2011, only one-in-ten indicated they were redesigning their plan to avoid the additional tax, but we’ve seen a steady increase over the past two years that shows the number will soon double.”
The Affordable Care Act Three Years Post-Enactment
Source: https://www.kff.org
Three years ago, on March 23, 2010, the Affordable Care Act (ACA) was signed into law. Although the date for full implementation of most provisions of the law is January 1, 2014, the ACA has already had an impact on the goals of expanded coverage of the uninsured, improved access and better care delivery models, broader access to community-based long-term care, and more integrated care and financing for beneficiaries who are dually eligible for Medicare and Medicaid. Although the ACA remains controversial, with many debates about its future as well as provisions already implemented, implementation is proceeding.
Much remains to be put in place leading up to 2014. This brief summarizes ACA-related activities to date in terms of tangible benefits and policy changes on the ground with respect to private insurance and Exchanges, Medicaid coverage, access to primary care, preventive care, Medicare, and Medicare and Medicaid dual eligible beneficiaries.
Private Insurance and Exchanges
- Young adults up to age 26 can stay on their parents’ insurance policies. Young adults can qualify for this coverage even if they are no longer living with a parent, are not a dependent on a parent’s tax return, or are no longer a student. Census data show that over two million young adults have gained coverage, contributing to the decline of 1.3 million in the number of uninsured Americans in 2011.
- Many states are moving forward with building new health insurance marketplaces. To date, 17 states and the District of Columbia are establishing state-based health insurance exchanges while another seven states will partner with the federal government to run their exchanges. These states are making critical decisions about how insurers will participate in the exchanges, what types and how many plans will be offered, and what types of consumer assistance will be available to help people enroll in coverage. States are also building the IT infrastructure for the exchanges to be ready when open enrollment begins on October 1. In the remaining 26 states, the federal government will operate a federally-facilitated exchange, and residents will get the same benefits and tax subsidies as in states operating their own Exchanges.
- Coverage exclusions for children with pre-existing conditions were prohibited as of September 23, 2010. Insurers are no longer permitted to deny coverage to children due to their health status, or exclude coverage for pre-existing conditions. Protections for adults will take effect in 2014. In addition, lifetime limits on coverage in private insurance have been eliminated and annual limits are being phased out.
- Medical loss ratio and rate review requirements are improving value and lowering premium growth for consumers. Medical loss ratio standards require insurers to spend 80-85% of premium dollars on direct medical care instead of on administrative costs, marketing, or profits, or pay rebates back to consumers. Failure to meet these standards has resulted in insurer payments of over $1 billion in rebates to consumers. In addition, expanded review of insurance premium increases by states and the federal government has led to some rate increases requested by insurers being denied, withdrawn, or lowered, which has slowed overall premium growth.
- All health plans must provide a standardized, easy-to-read Summary of benefits and Coverage (SBC). The SBC gives consumers consistent information about what health plans cover and what limits, exclusions, and cost-sharing apply. It includes illustrations of how coverage works by estimating what a plan would pay and what consumers would be left to pay for common health care needs such as an uncomplicated pregnancy or management of diabetes. Kaiser Family Foundation tracking polls indicate the SBC is one of the most popular provisions in the ACA.
Medicaid coverage
- More than half the Governors have announced support for the Medicaid expansion. Twenty-seven Governors intend to implement the Medicaid expansion. Another seven are still weighing their options. Seventeen Governors have stated their opposition to the expansion.
- Seven states have expanded Medicaid to adults since the enactment of the ACA, helping to build on the very limited base of coverage available to low-income adults today. While the enhanced federal funding for the ACA Medicaid expansion to low-income adults does not take effect until January 1, 2014, seven states – CA, CO, CT, DC, MN, NJ, and WA – have used the ACA option to expand Medicaid earlier at their regular match rate, or used Section 1115 waiver authority to do so. Nearly all these states previously covered low-income adults using state-only dollars, but transitioning that coverage to Medicaid enabled them to preserve and, in some cases, expand adult coverage by securing federal matching funds.
- Medicaid and CHIP have remained primary sources of coverage for low-income children and pregnant women. To help preserve the existing base of coverage in the period leading up to the coverage expansions in 2014, the ACA required states to maintain the Medicaid and CHIP eligibility, enrollment, and renewal policies they had in place when the ACA was enacted. Notwithstanding the recent recession and state budget pressures, eligibility for these programs has remained largely stable, and the programs have remained primary sources of coverage for low-income children and pregnant women. The preservation of Medicaid and CHIP coverage has been important to progress in reducing the number of uninsured Americans – which declined by 1.3 million in 2011.
- Nearly all states are modernizing and streamlining their Medicaid enrollment systems. Taking advantage of a time-limited 90% federal match rate available for systems development, almost all states are already moving forward with major improvements to their information technology (IT) infrastructure to prepare for the ACA’s new streamlined, coordinated enrollment system. In addition, an increasing number of states – now totaling 37 – have implemented an electronic online application in Medicaid or CHIP, and the number of states with an online renewal process rose from 20 in 2011 to 28 in 2012. Over two-thirds of states now provide online accounts.
- Ten states have adopted the ACA’s new Medicaid option to provide health homes for those with chronic conditions or serious mental illness. Another five states plan to implement health homes. Health homes are among the ACA’s broader set of initiatives to improve care and better manage spending for people with complex and high-cost needs. Building on patient-centered medical homes, health homes incorporate comprehensive care management, health promotion, transitional care, and other services and supports to provide more integrated, “whole person” care for Medicaid beneficiaries with multiple chronic conditions or a serious and persistent mental illness.
- States are taking advantage of new and expanded opportunities to provide home and community-based long-term services. Many people with long-term care needs prefer to receive services at home or in the community rather than in institutional settings, and home and community-based services (HCBS) are often less expensive. The ACA expands states’ opportunities to rebalance their long-term care programs toward community-based care and provides new federal funding for this purpose. A total of 46 states, including DC, have received federal grant money to transition Medicaid beneficiaries from institutions back to their homes or community-based settings through the “Money Follows the Person” demonstration program, which the ACA extended. Sixteen of these states first undertook a demonstration this past year. A growing number of states – 25 currently – are responding to other new flexibility and federal financial incentives the ACA provided to increase access to HCBS.
Access to Primary care
- Primary care providers get increased Medicare and Medicaid payment rates under the ACA. The ACA provides for a 10% bonus payment on top of the regular Medicare fee schedule amount for many primary care services provided by primary care physicians (and other practitioners) from 2011 through 2015. The law also requires states to raise their Medicaid payment rates in 2013 and 2014 to Medicare payment levels for many primary care physician services. As a result, Medicaid primary care fees will increase by 73%, on average, in 2013 although the size of the increase will vary by state. The Medicaid increase is fully federally funded up to the difference between states’ July 1, 2009 fees and Medicare fees in 2013 and 2014.
- Because of new ACA investments in the health center program, health centers’ patient capacity has expanded. The ACA created a five-year $11 billion Health Center Trust Fund to support health center growth in preparation for the coverage expansion beginning in 2014. Drawing on this fund, health centers are serving an additional 1.5 million patients, and they have been able to maintain their capacity to serve another 2.2 million patients whom they were earlier able to reach only because of a (now-expired) temporary increase in federal funding when the recession was at its deepest. In addition, over 700 health centers received grants for capital improvements from funds provided by the ACA for this purpose.
- Thousands of new primary care providers have been added to the ranks of the national health Service Corps (nhSC), bolstering the health care workforce in medically under served communities. The ACA provided increased funding of $1.5 billion for the NHSC, which provides loan repayment to medical students and others in exchange for service in low-income under served communities. Health centers, which serve millions of people in these communities, rely heavily on the NHSC to recruit their physicians, dentists, and other health care professionals. As a result of the ACA investment and earlier investments by the American Reinvestment and Recovery Act of 2009, the number of NHSC clinicians is at an all-time high – triple the number in 2008.Today nearly 10,000 NHSC providers are providing primary care to approximately 10.4 million people at nearly 14,000 health care sites in urban, rural, and frontier areas.
- Additional efforts to expand the primary care workforce are also underway. New training and retention programs have also been created to develop and strengthen the primary care workforce. The ACA has increased the number of graduate medical education residency programs, including establishing 11 Teaching Health Centers to support primary care training in ambulatory care settings. Other efforts include investments in training for nurses and physician assistants, and financial support for nurse-managed clinics.
- KFF resource:
Access to Preventive Services
- Preventive benefits with no patient cost-sharing are now required in Medicare and private insurance (except for grandfathered plans). The benefits that must be covered include services found to be effective by the USPSTF, immunizations for adults and children endorsed by the CDC Advisory Committee on Immunization Practices, and pediatric services recommend by HRSA’s Bright Futures for Children. Private plans must cover additional preventive services for women without cost-sharing, including all FDA-approved contraceptive methods (non-profit, religious employers that object to that requirement are exempt) and at least one annual well-woman visit. HHS estimates that, as a result of the ACA, 71 million children and adults with private insurance, and 34 million Medicare beneficiaries have received no-cost preventive care. Enhanced federal matching funds in Medicaid are available to states providing all USPSTF-recommended preventive benefits without cost-sharing, but, to date, few states have made the changes required to gain the higher match rate.
- The ACA supports population-based prevention activities through a new Prevention and Public health fund. This Fund has been used to make over $1 billion in critical investments in programs aimed at reducing the burden of chronic disease and improving the overall health of communities. Funding has supported Community Transformation Grants in 36 states to reduce the incidence of heart attacks, strokes, cancer, and other diseases; rebuilding the immunization infrastructure; tobacco cessation programs; and substance abuse and suicide prevention activities.
- KFF resource:
Medicare
- Medicare beneficiaries enrolled in Part d drug plans are receiving additional help with their “doughnut hole” prescription drug costs. The ACA required drug manufacturers to offer a 50% discount on brand-name drugs in the coverage gap phase of the Medicare drug benefit, known as the “doughnut hole,” beginning in 2011. It also required Part D plans to offer additional coverage for brand-name and generic drugs for enrollees who reach the coverage gap, and phases out the gap by 2020. In 2013, plans pay for 21% of the cost of generic drugs and 2.5% of the cost of brands, on top of the 50% manufacturer discount. According to HHS, as of March 2013, 6.3 million Medicare beneficiaries have saved over $6.1 billion on prescription drugs in the Medicare Part D doughnut hole since the ACA was enacted.
- New initiatives testing delivery system and payment reforms are being developed and implemented rapidly around the country, including Accountable Care organizations (ACos) and bundled payments. The ACA established a new Center on Medicare and Medicaid Innovation charged with reducing costs in Medicare, Medicaid, and CHIP while preserving or enhancing quality of care. The Innovation Center develops, tests, and supports new delivery models to increase coordination of care and improve quality, along with new payment systems to encourage more value-based care and move away from fee-for-service payment. For example, the Innovation Center has approved more than 250 ACOs to participate in the Medicare Shared Savings Program in 47 states and territories; these ACOs cover more than four million beneficiaries in traditional Medicare.
- Medicare savings in the ACA have helped extend the solvency of the Medicare Part A trust fund. The ACA included Medicare savings measures that were projected to reduce growth in Medicare spending over time. The measures included reduced payments to Medicare Advantage plans, smaller updates in payment levels to hospitals and other providers, and increased premiums for higher-income beneficiaries. These changes, along with a payroll tax increase for higher-income taxpayers, contributed to the extended solvency of the Medicare Part A trust fund. Medicare spending per beneficiary is projected to grow more slowly than private health insurance spending per capita over the next decade, and premiums and cost-sharing for many Medicare-covered services are lower than what they would be without the ACA.
Medicare and Medicaid Dual Eligible Beneficiaries
- Many states have responded to the ACA initiative to develop and test models that align Medicare and Medicaid financing for dually eligible beneficiaries. About 9 million seniors and younger people with significant disabilities are dually eligible for Medicare and Medicaid. Many have complex medical and long term care needs and they account for a disproportionate share of spending in both programs. A total of 26 states responded to a CMS solicitation for proposals to test models that align Medicare and Medicaid financing for this population; four of these states now have memoranda of understanding approved to implement demonstrations in 2013, and another 21 proposals are pending CMS’s approval.
What Does the Election Mean for Employers and PPACA
Maintenance of the status quo in Washington, D.C. (the re-election of Barack Obama, with a Republican majority in the House of Representatives and a Democratic majority in the Senate) means that implementation of the Patient Protection and Affordable Care Act (PPACA) will move forward largely as the law was passed in 2010.
The law left the task of working out many of the details to the regulatory agencies (the Department of Labor, the IRS and the Department of Health and Human Services), and with many questions remaining unanswered, employers can expect that an enormous number of regulations and other types of guidance will be issued between now and the end of 2013.
Of greatest interest to many employers is the employer shared-responsibility ("play or pay") requirement. As of Jan. 1, 2014, employers who have 50 or more full-time or full-time equivalent employees must offer "minimum essential" (basic) medical coverage for their full-time (30 or more hours per week) employees or pay a penalty of $2,000 per full-time employee, excluding the first 30 employees. Employers who offer some coverage but whose coverage is either not "affordable" or fails to provide "minimum value" must pay a penalty of $3,000 for each employee who receives a premium tax credit. (Coverage is not "affordable" if the employee's cost of single coverage is more than 9.5 percent of income. Coverage does not provide minimum value if it is expected to pay less than 60 percent of anticipated claims. Regulations are still needed to provide details on how the penalty will be determined and collected for employers who do not provide health coverage to their full-time employees, what exactly is the "minimum value" coverage that must be provided to avoid the penalties, and when dependent coverage is "affordable.")
The health insurance exchanges are also scheduled to begin operation in January 2014. (While PPACA is a federal law, the health insurance exchanges were designed to be operated by the states.) A number of states have delayed work on the exchanges pending the outcome of this election, while a few have affirmatively decided not to create a state exchange. If a state is unable or chooses not to create an exchange, the federal government will run the exchange on the state's behalf.
According to the Kaiser Family Foundation, as of Sept. 27, 2012, the following have established exchanges: California, Colorado, Connecticut, District of Columbia, Hawaii, Kentucky, Maryland, Massachusetts, Nevada, New York, Oregon, Rhode Island, Utah, Vermont, Washington and West Virginia. Arkansas, Delaware and Illinois were planning for a partnership exchange with the federal government. Alaska, Florida, Louisiana, Maine, New Hampshire, South Carolina and South Dakota have stated that they will not create an exchange (meaning the federal government will run the exchange on the state's behalf). The remaining states are studying their options but could well end up with a federally run exchange at least for 2014 as the deadline to submit the state's plan for implementing an exchange is next week (Nov. 16).
It remains to be seen whether the federal government will be able implement so many exchanges on behalf of the states by the 2014 target date. It also remains to be seen whether a change of governor, insurance commissioner or control of a state legislature or political realities, will change a state's stance on the exchanges. Because employees may choose to obtain coverage through the exchange even if they have access to coverage through their employer and because the exchanges likely will request information from employers when determining eligibility for premium tax credits, all employers will want to have an understanding of the status of their state's exchange.
In addition to deciding whether to "play" (provide health coverage) or "pay" (the penalties), employers (including those with fewer than 50 employees) have a number of compliance obligations between now and 2014, including:
- Expanding first-dollar preventive care to include a number of women's services, including contraception, unless the plan is grandfathered
- Distributing medical loss ratio rebates if any were received from the insurer
- Issuance of summaries of benefits and coverage (SBCs) to all enrollees
- Reducing the maximum employee contribution to $2,500, if the employer sponsors a health flexible spending account (FSA), beginning with the 2013 plan year
- Withholding an extra 0.9 percent FICA on those earning more than $200,000 beginning in 2013
- Providing information on the cost of coverage on each employee's 2012 W-2 if the employer issued 250 or more W-2s in 2011
- Providing a notice about the upcoming exchanges to all eligible employees in March 2013
- Calculating and paying the Patient Centered Outcomes Fee in July 2013 if the plan is self-funded (insurers are responsible for calculating and paying the fee for insured plans but will likely pass the cost on)
- Working with the exchanges to identify those employees eligible for premium tax credits
- Removing annual limits on essential health benefits and pre-existing condition limitations for all individuals, beginning with the 2014 plan year
- Limiting eligibility waiting periods to 90 days, beginning with the 2014 plan year
- Reporting to the IRS on coverage offered and available (the first reports are actually due in 2015 based on 2014 benefits)
If you have questions or would like additional information about your options and obligations under PPACA, please contact us.
Small business owners have poor grasp of health reform
Source: https://eba.benefitnews.com
By Health Data Management
A survey by online health benefits seller eHealthInsurance of 439 small business clients finds most do not understand applicable provisions of the Affordable Care Act.
The act requires employers with 50 or more full-time employees to provide coverage. Only two of the surveyed clients were large enough to fall under the requirement, yet 34% believed they had to provide coverage, and another 35% didn’t know. Thirty-one percent correctly knew that they were not required to pay a tax if they did not offer insurance because of the size of their business.
More than three-quarters of surveyed small businesses were not familiar with reform-mandated insurance exchanges, designed to be one-stop shopping sites for health benefits for employees and those who don’t have work-related benefits.
Sixty-eight percent of surveyed employers have no plans to drop coverage for employees in 2014, 29% would consider dropping coverage and 3% expect to drop it.
More than three-quarters of respondents are not doing long-term planning on how health reform, including insurance exchanges, may affect their business. In addition, 51% would consider increasing employees’ share of premium costs and 39% would consider increasing the deductible. More results are available here.
Rise of medical costs tops projections
Source: Bloomberg News Service
Medical prices accelerated faster than some projections last year and the number of uninsured is rising, according to data that show the U.S. goal of expanding health care is veering onto a more difficult road.
Costs for people with employer-sponsored insurance plans jumped 4.6% in 2011, more than the government’s 3.9% estimate for the entire health system, the Health Care Cost Institute, which analyzed claims from UnitedHealth Group Inc., Aetna Inc. and Humana Inc., said Tuesday. A study by the U.S. Centers for Disease Control and Prevention found the number of people without insurance climbed 1.7% in the first quarter of 2012.
The data pose a challenge for the Obama administration as it carries out the 2010 Patient Protection and Affordable Care Act, which promises to expand coverage to 30 million Americans starting in 2014 and trim health costs. The CDC reported that 47.3 million people lacked insurance, and the health institute said hospitals and doctors raised prices at a clip that outstripped demand.
“If you don’t bend the cost curve, ultimately insurance gets more expensive,” said Douglas Holtz-Eakin, the president of the American Action Forum, a Washington-based advocacy group that opposes the health law. “It’s a big problem for the Affordable Care Act.”
The overhaul law may be contributing to higher costs, said Martin Gaynor, an economics professor at Carnegie Mellon University and chairman of the Washington-based Health Care Cost Institute. The act tries to limit insurers’ administrative expenses and profits by requiring companies to spend at least 80% of their premium revenue on medical services. To meet that threshold, they may be letting prices rise, he said.
‘Unintended consequences’
“Like anything else, sometimes these things can have unintended consequences,” Gaynor said in a telephone interview.
Health care costs for 40 million workers covered by UnitedHealth, Aetna and Humana – three of the four largest U.S. health insurers by revenue – increased to $4,547 a person, from $4,349 a year earlier, according to the institute. The group, created last year to analyze claims data from major insurers, found that charges for hospital emergency rooms rose 9.1% in 2011, after adjusting for a reduction in the intensity of care they delivered.
That means emergency rooms “did less for more money,” said David Newman, executive director of the institute.
The law also has encouraged consolidation among hospitals and doctors, which may lead to greater pricing power, said Holtz-Eakin, who once who ran the nonpartisan Congressional Budget Office after leaving the Bush administration in 2003.
A White House spokesman, Nick Papas, referred questions to the Department of Health and Human Services.
Incomplete picture
Erin Shields, a spokeswoman for the department, said the institute’s report looked at a segment of the health care system. “In recent years, overall health care cost growth has reached record lows and the health care law drives costs down,” she said in an e-mail.
Rising costs in 2011 may have been a one-time phenomenon, said Charles Roehrig, director of the Altarum Institute’s Center for Sustainable Health Spending in Ann Arbor, Mich. His group calculates that spending for the health system increased 5.2% in 2011, and this year will rise about 4%, similar to the rates in 2010 and 2009.
“I might be dismayed if the data for 2012 showed it was going up even faster still,” Roehrig said by telephone.
More uninsured
The report from the Atlanta-based CDC showed the number of people without health insurance rose to 47.3 million in the first quarter, from 46.5 million a year earlier. The finding contrasts with a Sept. 12 Census Bureau report that said the number of uninsured Americans declined by more than 1 million in 2011 from 2010.
The CDC data, collected from a survey of about 35,000 households conducted throughout the year, is considered “preliminary” and the first-quarter sample has “larger variances” than full-year data, Karen Hunter, a CDC spokeswoman, said in an e-mail.
While the two federal agencies use different methodology to gather their data, both documented a decrease in the number of people ages 19 to 25 who lack insurance. The CDC said that 27.5% of people in that age group were uninsured in the first quarter.
Employer-Provided Health Coverage Informational Reporting Requirements: Questions and Answers
Source: https://www.irs.gov
The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. To allow employers more time to update their payroll systems, Notice 2010-69, issued in fall 2010, made this requirement optional for all employers in 2011. IRS Notice 2011-28 provided further relief by making this requirement optional for certain smaller employers for2012 Forms W-2 (meaning the Forms W-2 for calendar year 2012 generally furnished to employees in 2013). Notice 2012-9, issued in January 2012, restates and clarifies guidance in Notice 2011-28. It provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012.
The following questions and answers provide information for employers on reporting the cost of the health insurance coverage, including information on transition relief for 2012, how to report, which coverage to include, and how to determine the cost of the coverage. There are many more questions and answers included in Notice 2012-9 that cover a variety of issues.
Q1. Does the cost of an employee’s health care benefits shown on the Form W-2 mean that the benefits are taxable to the employee?
A. No. There is nothing about the reporting requirement that causes or will cause excludable employer-provided health coverage to become taxable. The purpose of the reporting requirement is to provide employees useful and comparable consumer information on the cost of their health care coverage.
Q2. When will employers have to start reporting the cost of health care coverage on the Form W‑2?
A. Reporting for the 2011 calendar year (meaning the Form W-2 generally required to be furnished to employees in January 2012) was optional. For years after 2011, employers generally are required to report the cost of health benefits provided on the Form W-2. Transition relief is available for certain employers and with respect to certain types of coverage, as explained in Q&A-4, below. Reporting for the employers covered by the transition relief, and with respect to the types of coverage covered by the transition relief, is not required until future guidance is provided, and in no event will reporting by these employers and with respect to these types of coverage be required on any 2012 Forms W-2 (generally required to be furnished to employees in January 2013).
Q3. Which employers are subject to this reporting requirement?
A. Except as provided in the transition relief described in the next Q&A, all employers that provide "applicable employer-sponsored coverage" (see Q&A-5 below) under a group health plan are subject to the reporting requirement. This includes federal, state and local government entities (except with respect to plans maintained primarily for members of the military and their families), churches and other religious organizations, and employers that are not subject to the COBRA continuation coverage requirements, but does not include federally recognized Indian tribal governments or, until further guidance, any tribally chartered corporation wholly owned by a federally recognized Indian tribal government.
Third-party sick-pay providers that provide the Forms W-2 to the employees of the employers with which they have contracted do not have to report the cost of coverage. However, a Form W-2 provided by the employer to the employee must report the cost of coverage regardless of whether that Form W-2 includes sick pay or whether a third-party sick pay provider is furnishing a separate Form W-2 reporting the sick pay.
Q4. What transition relief is being provided by Notice 2012-9? To which employers and types of coverage does it apply and how long does it last?
A. For certain employers and with respect to certain types of coverage listed below, the requirement to report the cost of coverage will not apply for the 2012 Forms W-2 (the forms required for the calendar year 2012 that employers generally are required to provide employees in January 2013) and will not apply for future calendar years until the IRS publishes guidance giving at least six months of advance notice of any change to the transition relief. However, reporting by these employers and for these types of coverages may be made on a voluntary basis.
The transition relief applies to the following:
- employers filing fewer than 250 Forms W-2 for the previous calendar year (for example, employers filing fewer than 250 2011 Forms W-2 (meaning Forms W-2 for the calendar year 2011, which generally are filed with the SSA in early 2012) will not be required to report the cost of coverage on the 2012 Forms W-2 (which generally are filed with the SSA in early 2013). For purposes of this relief, the number of Forms W-2 the employer files includes any forms it files itself and any filed on its behalf by an agent under § 3504 (see Q&A-3 of Notice 2012-9 for more information). In addition, for purposes of this relief, the employer is determined without the application of any aggregation rules
- multi-employer plans
- Health Reimbursement Arrangements
- dental and vision plans that either
- are not integrated into another group health plan or
- give participants the choice of declining the coverage or electing it and paying an additional premium (see Q&A-20 of Notice 2012-9 for more information)
- self-insured plans of employers not subject to COBRA continuation coverage or similar requirements
- employee assistance programs, on-site medical clinics, or wellness programs for which the employer does not charge a premium under COBRA continuation coverage or similar requirements and
- employers furnishing Forms W-2 to employees who terminate before the end of a calendar year and request a Form W-2 before the end of that year.
For more information on the additional transition relief for certain employers and with respect to types of coverage, see Section IV of Notice 2012-9.
Q5. What types of health care coverage must be included in the amount reported on the Form W-2?
A. The chart on the Form W-2 Reporting of Employer-Sponsored Health Coverage lists many types of health care coverage and various other situations, and explains whether reporting is required, prohibited, or optional.
The chart was created at the suggestion of and in collaboration with the IRS’ Information Reporting Program Advisory Committee (IRPAC). IRPAC’s members are representatives of industries responsible for providing information returns, such as Form W-2, to the IRS. IRPAC works with IRS to improve the information reporting process.
Q6. What amount should the employer report on the Form W-2 for health coverage? The amount the employer paid? The amount the employee paid? Or both?
A. In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee. In the case of a health FSA, the amount reported should not include the amount of any salary reduction contributions. See Notice 2012-9 for more detail on the interim rules that apply to reporting contributions to a health FSA.
Q7. Where on the Form W-2 should the employer report the cost of these health care benefits?
A. The cost of these health care benefits will be reported in box 12 of the Form W-2, with Code DD to identify the amount.
Q8. What amount of health benefits should be reported on the Form W-2 for employees that terminated employment during the year and had employer-provided coverage both before and after termination?
A. Under the interim rules, the employer may use any reasonable method for inclusion of the coverage provided after termination, so long as that method is applied consistently. See Notice 2012-9, Q&A-6, for examples.
Q9. What amount of health benefits should be reported on the Form W-2 for an employee that leaves during the year and requests a W-2 before the end of the year?
A. If an employee makes such a request in writing, the employer must provide the W-2 within 30 days. However, under the interim rules, the employer will not be required to report any amount of health benefits in box 12, Code DD.
Q10. Will employers now be required to issue a Form W-2 to retirees or other former employees to whom the employer would not otherwise issue a Form W-2?
A. No.
Q11. Where can I get more information about the employer’s requirement to report the aggregate cost of an employee’s health care benefits on the Form W-2?
A. Detailed information about the interim rules for this reporting requirement and the additional transition rules for certain employers and with respect to certain types of coverage can be found in Notice 2012-9 and the instructions for the 2012 Form W-2.
Most employers to continue offering health care plans in 2014
Source: Business Insurance
By Jerry Geisel
The overwhelming majority of employers say they will continue to offer health care plans after core provisions of the health care reform law take effect in 2014, but most say they will need to make plan changes later to avoid a new excise tax on the most costly plans, according to a new survey.
Eighty-eight percent of employers surveyed by Towers Watson & Co. said they have no plans to terminate coverage in 2014 or after for full-time employees, while 11% were not sure. Just 1% said they planned to terminate coverage for some employees.
Under the Patient Protection and Affordable Care Act, starting in 2014, employers with at least 50 employees are liable for a fee of $2,000 per full-time employee if they do not offer qualified coverage to employees working at least 30 hours a week.
The Towers Watson survey results mirror numerous other surveys also reporting that most employers intend to continue to provide coverage. Benefit experts say there are several reasons for that continued employer commitment to offering coverage, including the penalty imposed by the law for not offering coverage, the costs employers would face in grossing up employees’ salaries to enable them to buy coverage on their own and the need for employers to stay competitive.
On other hand, 83% of employers say they are planning to take steps to control costs to avoid a health reform law-imposed excise tax that takes effect in 2018. Under that provision, a 40% excise tax will be imposed on premium costs that exceed $10,200 for single coverage and $27,500 for family coverage. Insurers will pay the tax on plans they insure, while third-party administrators will pay the tax for self-funded plans. Insurers and TPAs are expected to recover the taxes they paid from employer plans.
Other findings include:
• Employers expect health care plan costs to rise—after plan changes—by an average of 5.3% in 2013, boosting total costs to an average of $11,507 per employee. That compares with an expected 2012 average cost increase of 5.9%.
• Employer interest in offering account-based health care plans, such as plans linked to health savings accounts and health reimbursement arrangements—continues to grow. While nearly 60% of respondents now offer account-based plans, by 2018, 80% expect to be offering them.
The survey is based on the responses of 440 employers.
HHS Shaming Power Has Little Effect on Health Plans
By Lisa V. Gillespie
Last September, after the Patient Protection and Affordable Care Act gave the Department of Health and Human Services authority to review premium rates in states that didn't have strong enough review programs, the agency began handing down decrees of "unreasonable" premium rates for insurers that proposed increasing rates by an average of 10% or more - meaning HHS can publically shame an insurer.
"HHS and states are really coming down hard on just about any carrier, which is creating a lot of angst at the carrier level and hand wringing. HHS seems very proud of it; so, this is a hot topic [among] insurance carriers and state-level bureaucrats," says Alan Cohen, chief strategy officer and co-founder of Liazon, a private health insurance exchange that serves mainly small employers. "But, in another realm where benefits managers live, this is a nonevent; they're not paying attention. Maybe they read it in the newspaper, but what matters to them is what the effect will be to their renewal." Cohen says that, depending on the size of the employer, rate increases may differ. Even if an employer is going with one insurer who is increasing rates, the company may not be any better off with another carrier.
Reviews politically motivated
Others experts think that the HHS reviews are politically motivated.
"Benefits managers don't pay attention to regulatory squabbles as rates are filed and improved," says Mike Turpin, executive vice president of USI, an insurance and financial services broker. "And I think they're getting conditioned [to] health care reform politics. They're not as enraged; they're kind of numb to it."
Further, employers may empathize with insurers, says Steven Friedman, chair of the employee benefits practice at Littler Mendelson. More than 13.5 million people now have health savings accounts complementing high-deductible health plans, according to the 2012 HSA Census by America's Health Insurance Plans.
"Employers often see themselves on the same side of the insurance companies in terms of trying to limit costs for participants covered under health plans," Friedman says. "The increases in annual premiums are viewed as industry wide phenomena, and employers will annually bid for the best coverage that is the most cost-efficient. I'm not sure the insurers are being tarred by the employers, because health care costs seem to rise universally."
Rate review offers transparency
PPACA requires states to report on trends in premium increases and recommend whether certain plans should be excluded from health insurance exchanges beginning in 2014, based on unjustified premium increases. HHS also may make that decision in states where rate review programs lack sufficient strength. Small employers in public exchanges will be able to see upfront which companies have been flagged for "unreasonable" hikes and be able to go to another insurer.
"[PPACA's] rate review policies bring an unprecedented level of scrutiny and transparency to health insurance rate increases. They ensure that, in every state, every proposed increase of 10% or more is evaluated by independent experts to assess whether they are based on reasonable assumptions and sound data," a CMS spokesperson tells EBN. "Rate review is expected to help moderate premium increases and provide consumers and employers with greater value for their premium dollar. Additionally, health insurance companies must provide easy-to-understand information to their customers about their reasons for significant rate increases, as well as publicly justify and post on their website any unreasonable rate increases. These protections allow consumers and employers in every state to learn more about their insurance premiums. All of this information is available at companyprofiles.healthcare.gov."
"Thanks to the Affordable Care Act, consumers are no longer in the dark about their health insurance premiums," said HHS Secretary Sebelius in a press release earlier this year. "It's time for these companies to immediately rescind these unreasonable rate hikes, issue refunds to consumers or publicly explain their refusal to do so."
However, industry groups say that it's not premium hikes that are driving up costs, but underlying medical and administrative costs. "New medical technologies that have high costs associated, new benefit mandates - all of those will drive up the cost, which is where the focus should be," says Robert Zirkelbach, press secretary for AHIP. He says the focus should be on providers, as opposed to insurers. "You saw this during reform, when [the debate] focus was on premiums and largely ignored cost drivers. If you want to bring down the cost, then that's where they lie."