FAQ: What Workers And Employers Need To Know About The Postponed Employer Mandate
Originally posted by KHN Staff on https://www.kaiserhealthnews.org
Surprising both friends and foes of the health law, the Obama administration on Tuesday announced the delay of a key provision: the requirement that all but the smallest employers offer medical coverage or pay a fine.
Companies with at least 50 workers now have until 2015 to provide coverage if they don’t offer it already, giving them and Washington an extra year to work through the complex details of the legislation. The administration will deliver more guidance next week.
Meanwhile other parts of the law remain on track for implementation next year, according to officials. Here’s what the change means — and doesn’t mean — for workers and employers.
Q. The government has delayed the requirement for large employers to offer health plans. Am I still obligated to obtain coverage next year?
Yes. The requirement that individuals obtain health insurance or pay a penalty — which starts at $95 next year, or 1 percent of household income, whichever is higher, and rises to $695 or 2.5 percent of household income in 2016 — has not changed. But for workers whose employers delay plans to offer coverage, buying a health plan in the subsidized marketplaces known as exchanges might actually be a better deal than what they would have been offered.
Q. My employer already has a health plan. Does this increase chances the company will drop coverage next year?
A. Probably not. The large majority of employers provide insurance even without a government requirement — to recruit and retain good, healthy workers, analysts say. The administration’s decision doesn’t change that.
“For people whose employers already offer coverage, they’re doing it for a reason, and that reason still exists,” said Paul Ginsburg, president of the Center for Studying Health System Change.
Q: If my employer already offers insurance, will this decision mean my coverage will be less generous in 2014?
That’s unlikely. The law requires all employer-sponsored insurance to cover at least 60 percent of medical costs. Coverage that costs more than 9.5 percent of household income is deemed to be unaffordable and those workers may qualify for premium subsidies on the online health marketplaces – putting the employer at risk of incurring a federal penalty. In addition, employers that buy policies rather than self-insure must provide a minimum set of benefits.
Sandy Ageloff, a benefits consultant with Towers Watson, says the administration’s announcement appears to lift the threat of financial penalties for companies that don’t meet these thresholds in 2014, though “those finer points will come out in next week’s guidance” from the administration. It may be an academic point for most companies already offering insurance, because as Paul Fronstin of the Employee Benefit Research Institute notes, most existing employer policies already meet the law’s 2014 requirements.
Q. What kinds of companies are likely to delay offering insurance to employees?
A. Large employers with lower-wage or variable-hour workers such as retailers, farms, food processors, restaurant chains, casinos and hotels are most likely to delay offering or upgrading coverage, analysts say.
But even well-paying companies such as Wall Street banks might employ uninsured call-center workers whose coverage could be delayed, said Steve Wojcik, vice president of public policy at the National Business Group on Health, an employer group.
“This could be far-reaching into all kinds of companies that you might not think of,” he said.
Q. What does the delay of the employer mandate mean for lower-wage workers?
A. Many low-wage workers already are employed by firms that don’t offer coverage, and, absent a mandate, that may not change next year, says Sabrina Corlette of the Center on Health Insurance Reforms at Georgetown University. Workers who don’t get coverage through their jobs can enroll in an insurance plan through online marketplaces, or exchanges, set to open Oct. 1.
Uninsured people earning less than 400 percent of the federal poverty level, about $45,960 for an individual or $94,200 for a family of four, would be eligible for a sliding scale federal subsidy to help offset the premium cost.
The lowest wage workers – those earning up to about 200 percent of the poverty level – may actually be better off if their employer does not offer coverage and they go onto the exchange. That’s because the subsidies in that income range are larger, and coverage may actually be more affordable than that offered by an employer, particularly for family policies. Some of those workers may also qualify for Medicaid, particularly in the 23 states and the District of Columbia, which have expanded eligibility for the federal-state program. “This is going to be a boon” for some people, said Ginsburg.
Q. Will Tuesday’s announcement mean that more Americans will be eligible for subsidies to purchase coverage?
The Obama administration said its decisions won’t affect employees’ access to the premium tax credits. In fact, the delay in the employer mandate may result in more low-to-moderate income Americans seeking coverage – many of them eligible for federal assistance. So that could push up the amount the government is expected to pay out in premium and cost-sharing subsidies, which before Tuesday’s announcement wasestimated at about $23 billion next year.
Tracking who is eligible for such tax credits or subsidies may be more complex. The subsidies are available only to people who meet the income requirements and don’t have job-based coverage that meets minimum affordability and adequacy requirements. With the one-year delay for employers to report such coverage, “it would be impossible for Treasury to determine whether someone had access to affordable health insurance,” said Joseph Antos at the American Enterprise Institute. Proposed rules, expected to be finalized soon, allow people applying for subsidies through the new market to simply attest that they don’t have access to job-based coverage, said Timothy Jost, a law professor at Washington and Lee University, in an analysis on the website of policy journal Health Affairs.
The Obama administration also hopes that employers will voluntarily provide the information, starting next year, according to a post by Mark J. Mazur, assistant secretary for tax policy at Treasury.
KHN reporters Julie Appleby, Mary Agnes Carey, Jay Hancock and Jordan Rau contributed.
PPACA employer mandate delay: What now?
Originally published by Connie Cass, Ricardo Alonso-Zaldivar on https://www.lifehealthpro.com
The Obama administration is giving large employers an additional year before it will try to enforce a Patient Protection and Affordable Care Act (PPACA) provision requiring them to offer medical coverage to their workers or pay a fine.
What does the delay mean for workers? And struggling businesses?
Is the delay a significant setback for a law already beset by court challenges, repeal votes and a rush of deadlines for making health insurance available to nearly all Americans next year?
A few questions and answers:
Why the delay?
Businesses said they needed more time.
Obama administration officials say they listened to businesses that complained they needed to figure out how to comply with complicated new rules written since the plan became law. And the delay buys time for the government, as well, to improve and simplify the rules.
PPACA required employers with more than 50 employees working 30 or more hours a week to offer them suitable health coverage or pay a fine. What's changed is the deadline for that requirement, which was to begin in January. The new deadline is Jan. 1, 2015.
Who else benefits from the delay?
- Democratic candidates. The employer mandate was set to take effect at the start of a congressional election year, intensifying the focus on one of the Republicans' favorite campaign issues. Postponing the requirement should mean fewer ads featuring business owners saying they're drowning under health care mandates.
- Maybe Republicans, too. They get new ammunition for their argument that the law is an unworkable "train wreck." Voters' complaints and worries about the health law helped the GOP win control of the House in 2010.
- Some low-income workers. When the employer mandate does take effect, some smallish companies have threatened to lay off workers or cut back their hours to stay under the 50-employee threshold. There's debate about how many workers might be harmed by this.
- Some job hunters. Once the mandate kicks in, job-seekers may find fewer openings for unskilled workers. That's because some restaurants and other small companies say the mandate will force them to cut back on staff or freeze hiring. The economy is likely to continue improving, which will help offset the impact by increasing demand for workers.
Who loses?
- Uninsured people who already are confused about the law. The law doesn't change the January 2014 deadline for individuals to get insurance or the tax credits in the law to help them pay for it. But many people don't understand how the law works or when it takes effect, and the delay for the employer mandate may further muddle the issue for many.
- Some workers. Those whose employers might add insurance coverage to avoid the law's penalties will have to wait a year. But this group is expected to be small. The penalties are designed more to discourage businesses from dropping their existing health plans than to encourage them to start new ones. And these employees can buy their own insurance through the new health care exchanges being set up under the law.
What about me?
Most consumers won't be affected.
The vast majority of Americans already have insurance — even those working at companies that hover around the 50-employee level.
A Kaiser Family Foundation study found that 87 percent of companies that employed from 25 to 49 workers last year offered health coverage, and the percentage goes up for bigger businesses.
Consumers should not be affected by the delay if they already are insured through:
- A job at a large company that already offers insurance.
- A job at a small company employing fewer than 50 workers, because such companies are exempt from the rules.
- Medicaid or Medicare, not affected by the delay.
- A private insurance policy, also not affected.
Is this delay part of a downward spiral for PPACA implementers?
The delay adds to an appearance of disarray surrounding PPACA.
It comes after other glitches and angry opposition: Lawsuits reaching all the way to the Supreme Court. Protests by religious employers who say covering contraception is against their beliefs. Repeated votes by House Republicans to repeal "Obamacare."
But the postponement doesn't affect the heart of the law — the requirement that individuals get insurance, and the subsidies to help them pay for it. The Obama administration insists the rest of the law will keep rolling along.
Is the rest of the law on track?
Not for everyone.
A majority of the neediest people may remain uninsured. Medicaid changes in the health care law designed to help some 15 million low-income people are being rejected by many states with Republican leaders. That amounts to about half the people who were supposed to be helped by the law.
Last summer, the Supreme Court said states have the right to opt out of the law's Medicaid expansion.
Eighteen states aren't expanding their programs, including populous Texas and Florida. In nine other states, the outcome remains unclear.
Under the law, Medicaid is the only coverage option for people below the poverty line — $11,490 for an individual or $23,550 for a family of four. People this poor cannot get subsidized private coverage in the new health insurance markets.
The poor will be exempt from penalties for being uninsured, but they also won't get help with their health care.
Medicaid already covers more than 60 million people, including many elderly nursing home residents, severely disabled people of any age and many low-income children and their mothers.
PPACA Critics Pounce On Employer Mandate Delay
Originally published by Elizabeth D. Festa on https://www.propertycasualty360.com
The Obama administration announcement July 2 that it was going to delay implementation of the employer mandate of the Affordable Care Act (ACA) until 2015 has thrown into a tailspin expectations of the act’s requirements and revised expectations for other provisions of the Act.
Conservative politicians pounced.
House Energy and Commerce Committee Chairman Fred Upton (R-MI) stated that “the Administration's sudden turnabout is a clear admission that its signature law is bad for business and bad for jobs. This law will never be ready for prime time and sadly, the administration's acknowledgement that it still needs yet another year clearly disrupts everyone's ability to determine what is best for them and their business."
Regulators seemed a bit worried but were quick to come up with solutions--if they had one.
The California Department of Insurance pointed people toward the state-operated health insurance exchange, expected to go into operation Jan. 1, 2014.
“Employees whose employers do not provide health insurance will be able to purchase health insurance in California’s new health benefit exchange.” stated Commissioner Dave Jones. He noted that many will be eligible for a premium subsidy if they make less than 400 percent of the federal poverty level, which in California is about $94,000 for a family of four.
Jones also urged the Administration to “make sure that this provision can be implemented in 2015.”
Brokers say this delay will have tremendous consequences for the private marketplace.
“No doubt this is a huge capitulation by the Administration, consistent with getting ahead of the potential politics of a messy implementation,” stated Joel Wood of the Council of Insurance Agents & Brokers.
“Our members have mixed emotions about this. They’ve invested an astonishing amount of resources in running the pay-or-play scenarios for their clients and preparing for January. Those who haven’t prepared their clients will revel in the news, and conservatives will sense blood in the water. On the other hand, the mandate drives up the cost of labor; perhaps this is a modest mitigation,” Wood stated.
Health insurance representatives shook their collective heads, and wondered if another shoe would drop in the ACA implementation.
On June 19, the Government Accountability Office (GAO) issued a report entitled "Status of CMS Efforts to Establish Federally Facilitated Health Insurance Exchanges.
"The detailed 50-page report raises a red flag about whether the health insurance exchanges established by the Patient Protection and Affordable Care Act (PPACA) will be open for business on October 1, as the Act contemplates," stated a July 2 email alert from the American Health Lawyers Association.
The Report notes that many states, with both future federal partnership and state-operated exchanges, have not demonstrated that they will be able to carry out the necessary functions to run the exchanges or are behind on the timetables required to do so in a timely manner.
“Because the Act effectively requires the federal government to undertake whatever exchange functions states fail to carry out, the precise scope of what the federal government will need to accomplish in order to ensure that the exchanges are up and running is not yet clear and likely will remain something of a moving target until (and perhaps even after) the exchanges go live,” the AHLA stated.
For its part, the Administration is perhaps hearing from employee benefit groups that the paperwork is too complex and employers are not ready.
It said that said the delay is designed to meet two goals.
“First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law,” said Mark J. Mazur, assistant secretary for tax policy at the U.S. Department of the Treasury, who first unveiled the new from he administration on a blog post on the Treasury site.
The Treasury's IRS would levy the tax penalty for companies that did not comply with the mandate, when it goes into effect. IRS officials have suggested that employers and their advisors should avoid using complicated strategies to try to minimize the number of workers who are eligible for group health benefits under PPACA. It did so back in late December in the preamble to draft regulations for implementing the "shared responsibility" parts of PPACA.
PPACA calls for employers with more than 50 full-time equivalent employees to provide a minimum level of health benefits for year-round employees who work more than 30 hours per week. Workers who do not offer the minimum level of coverage, or fail to ensure that the coverage meets affordability requirements, are supposed to pay penalties.
Mazur pointed to the Administration’s work to reduce and simplify its 21-page application for health insurance to three pages as an example of the effort it is giving the employer mandate reporting requirements.
“Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees,” Mazur wrote.
Within the next week, the Administration is expected to publish formal guidance on its decision.
Official Press Release from DOT on Employer Mandate Delay
Originally posted by Mark J. Mazur on https://www.treasury.gov
Over the past several months, the Administration has been engaging in a dialogue with businesses - many of which already provide health coverage for their workers - about the new employer and insurer reporting requirements under the Affordable Care Act (ACA). We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively. We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so. We have listened to your feedback. And we are taking action.
The Administration is announcing that it will provide an additional year before the ACA mandatory employer and insurer reporting requirements begin. This is designed to meet two goals. First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees. Within the next week, we will publish formal guidance describing this transition. Just like the Administration’s effort to turn the initial 21-page application for health insurance into a three-page application, we are working hard to adapt and to be flexible about reporting requirements as we implement the law.
Here is some additional detail. The ACA includes information reporting (under section 6055) by insurers, self-insuring employers, and other parties that provide health coverage. It also requires information reporting (under section 6056) by certain employers with respect to the health coverage offered to their full-time employees. We expect to publish proposed rules implementing these provisions this summer, after a dialogue with stakeholders - including those responsible employers that already provide their full-time work force with coverage far exceeding the minimum employer shared responsibility requirements - in an effort to minimize the reporting, consistent with effective implementation of the law.
Once these rules have been issued, the Administration will work with employers, insurers, and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015. Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015.
We recognize that this transition relief will make it impractical to determine which employers owe shared responsibility payments (under section 4980H) for 2014. Accordingly, we are extending this transition relief to the employer shared responsibility payments. These payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015.
During this 2014 transition period, we strongly encourage employers to maintain or expand health coverage. Also, our actions today do not affect employees’ access to the premium tax credits available under the ACA (nor any other provision of the ACA).
Mark J. Mazur is the Assistant Secretary for Tax Policy at the U.S. Department of the Treasury.
White House To Delay Employer Mandate Until 2015
Originally published by Avik Roy on https://www.forbes.com
The Obama administration has decided to delay the implementation of the employer mandate—the requirement that all firms with 50 or more employees offer health coverage, or pay steep fines—until 2015. The mandate was supposed to go into effect on January 1, 2014. This development will have a significant impact on the rollout of the PPACA, the private health insurance market, and the nation’s economy, as I detail below.
The news was first reported by Mike Dorning and Alex Wayne of Bloomberg this afternoon. The ruling, they say, “will come in regulatory guidance to be issued later this week. It addresses vehement complaints from employer groups about the administrative burden of reporting requirements, though it may also affect coverage provided to some workers.”
“First,” wrote Treasury official Mark Mazur in a statement, the delay “will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.” (Mazur’s full statement is appended to the end of this article.)
Will more employers dump coverage if the mandate is delayed?
As a matter of background, Section 1513/4890H of the Affordable Care Act requires that all firms with more than 50 full-time-equivalent employees—defined as 120 hours per month—offer government-certified health coverage to their workers, or pay a steep fine. For more details on how the mandate works, and how it incentivizes firms to offer “unaffordable” coverage to their workers, read mypiece on the topic from May 21.
In the short term, the delay will have several effects. First, the mandate drives up the cost of labor, and therefore increases unemployment; delaying the mandate by one year may modestly mitigate that disincentive.
Most importantly, the delay of the mandate means that more people will want to enroll in subsidized insurance exchanges. Every year, fewer and fewer employers offer health coverage; given one more year to restructure their workforces, this process could accelerate.
There’s been a lot of debate as to whether or not the PPACA incentivizes employers to drop coverage for their employees. A 2011 survey of employers by McKinsey & Co. found that 30 percent of employers “definitely or probably” would stop offering coverage after 2014; among those who felt that they had the most knowledge of the law’s inner workings, that number rose to 50 percent.
However, the Congressional Budget Office, in a 2012 report, argued that employers do not have a large incentive to dump workers’ coverage. And even if employers dropped coverage for an additional 20 million workers relative to the CBO’s projections, the deficit would not increase, says the CBO, because the subsidies paid to low-income workers would be offset by an increase in tax revenue from lower utilization of the tax exclusion for employer-sponsored insurance.
In general, it would appear that with the rollout of PPACA exchanges in 2014, paired with a delay of the employer mandate until 2015, many more people may enroll in the exchanges. This is both good and bad: good, because it’s a good thing for people to buy insurance on their own, rather than having it bought on their behalf by someone else with their money; bad, because the exchanges are proving to be quite costly, though comparable in cost to premiums in the employer-sponsored market today.
Does Obama have the legal authority to delay the mandate?
The Affordable Care Act is quite clear as to the effective date of the employer mandate. “The amendments made by this section shall apply to months beginning after December 31, 2013,” concludes Section 1513.
The executive branch is charged with enforcing the law, and it can of course choose not to enforce the law if it wants. But people can sue the federal government, and a judge could theoretically force the administration to enforce the mandate.
So the question is: Would anyone sue the Obama administration over this? Employers, of course, will be thrilled to be spared the mandate for one more year. Democratic politicians, similarly, will be glad to have this not hanging over their heads for the 2014 mid-term election.
The wild-card is left-wing activists. Most, you’d think, would defer to the administration on questions of implementation. I’m no lawyer, but it seems to me that all it would take is for one judge to issue an injunction, for an activist to require the administration to enforce the mandate.
The employer mandate is bad policy and should be eliminated. But the unilateral way the WH is doing it isn’t good.
— Ezra Klein (@ezraklein) July 2, 2013
Delay could help to unravel the employer-sponsored insurance market
Health wonks of every persuasion, myself included, have long argued that the original sin of the U.S. health-care system is the quirk in the tax code that incentivizes people to get health coverage through their employers, instead of shopping for it on their own.
If you like the PPACA, and you want it to work, you don’t need the employer mandate. Democrats put the employer mandate in the Affordable Care Act because the President was worried that, without a mandate, employers would dump coverage, violating his oft-repeated promise that “if you like your plan, you can keep it.” Before Mitt Romney signed Massachusetts’ health-reform bill into law, he vetoed that state’s employer mandate. The heavily Democratic legislature overrode his veto.
Even if the Obama administration’s delay lasts for only one year, that delay will give firms time to restructure their businesses to avoid offering costly coverage, leading to an expansion of the individual insurance market and a shrinkage of the employer-sponsored market. Remember that the administration is not delaying the individual mandate, which requires most Americans to buy health coverage or face a fine.
But delaying the employer mandate could lead, ultimately, to its repeal, which would do much to transition our insurance market from an employer-sponsored one to an individually-purchased one. Indeed, earlier this year, a bill to do just that was introduced by Rep. Charles Boustany (R., La.) and Sen. Orrin Hatch (R., Utah). If the employer mandate were to ultimately be repealed, or never implemented, today’s news may turn out to be one of the most significant developments in health care policy in recent memory.
White House delays employer mandate requirement until 2015
Originally posted by Sarah Kliff on https://www.washingtonpost.com
The Obama administration will not penalize businesses that do not provide health insurance in 2014, the Treasury Department announced Tuesday.
Instead, it will delay enforcement of a major Affordable Care Act requirement that all employers with more than 50 employees provide coverage to their workers until 2015.
The administration said it would postpone the provision after hearing significant concerns from employers about the challenges of implementing it.
“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Mark Mazur, Assistant Secretary for Tax Policy, wrote in a late Tuesday blog post. “We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so.”
The Affordable Care Act requires all employers with more than 50 full-time workers provide health insurance or pay steep fines. That policy had raised concerns about companies downsizing their workforce or cutting workers’ hours in order to dodge the new mandate.
In delaying the enforcement of that rule, the White House sidesteps those challenges for one year. It is also the second significant interruption for the Affordable Care Act, following a one-year delay on key functions of the small business insurance marketplaces.
Together, the moves could draw criticism that the administration will not be able to put into effect its signature legislative accomplishment on schedule.
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.”
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.
Health law’s mandate, tax credit could help or hurt employers
Original article https://www.upi.com
By Andrew Hedlund – Medill News Service
Business owners view the new health care law through many different paradigms. Some see it as onerous, while others find it helpful. Research suggests that one of its most contentious provisions, the employer mandate, will have minimal impact.
Joe Olivo is a small business owner who finds the new health care law costly and confusing, particularly next year’s employer mandate. Mark Hodesh is a small business owner who finds the law to be a boon to his business.
Some business owners like Hodesh, the owner of Downtown Home and Garden in Ann Arbor, Mich., qualify for the tax credit, which is available to businesses with fewer than 25 employees to offer health insurance, and do not worry about the mandate, which only kicks in at the 50-employee mark.
Others like Olivo, who is a co-owner of Perfect Printing in Morristown, N.J., do not qualify for the credit and say the requirement that businesses with more than 50 employees must provide health insurance or face fines prevents them from growing.
Starting next year, employers that have 50 or more workers that are full-time, defined in the law as those working more than 30 hours a week, are required to provide coverage for their workers. For those with fewer than 25 employees, they receive a tax credit now of 35 percent of the cost of their employee health insurance costs, and that will increase to 50 percent next year. According to the Congressional Research Service, more than 90 percent of businesses had fewer than 50 employees.
Olivo’s business has 40 full-time employees and offers health insurance. With that number of full-time workers, he will not be subject to the mandate, but it gives him pause when deciding whether to expand the business.
In fact, Olivo is purposely avoiding hitting the 50-employee mark. Any new employees he hires work on a part-time basis. This decision is rooted in the uncertainty surrounding health care costs.
“If I see premiums are not going through the roof,” he said, “and I see there is a stable known situation where I can reasonably expect what will happen, I will have a better incentive to take the risk with my money and grow.”
What he has seen so far is not promising though, he said.
“(What) we’ve already started to see is how the regulation, the amount of work, for a company just under 50 employees,” Olivo said, “that we have to decide to make sure we’re in compliance — start looking at our employee’s hours, making sure we don’t go over the 50 mark because of the severe ramifications,” referring to law’s penalty of $2,000 per employee for any companies with 50 or more employees that don’t provide health insurance. The penalty would not apply to the first 30 employees.
Olivo also said the lack of finality in the IRS’s rules further confuses employers as 2014 draws closer. The agency will hold a public hearing on this provision Tuesday.
However, research on similar employer requirements in San Francisco and Massachusetts by the Urban Institute, National Bureau of Economic Research and the National Opinion Research Center found that the notion the requirement to provide insurance would lead to job loss or could lead to fewer employers offering health insurance was overstated.
In fact, the National Opinion Research Center found in its 2008 study that businesses with three or more employees offering health insurance in Massachusetts increased from 73 percent to 79 percent, though employers were less inclined to consider terminating coverage than national companies.
A study sponsored by the National Bureau of Economic Research found that, based on San Francisco’s efforts, employers nationwide will be less likely to choose the penalty option of this requirement because the Affordable Care Act lacks a public option. San Francisco does offer the equivalent of a public option, which some employers may find preferable.
Elise Gould, a health care economist at the Economic Policy Institute, said she expects the effects of the employer mandate to be minimal.
“I don’t think that it is going to lead to much job loss,” she said. “There may be some shifting in hours to avoid the mandate. I think that would be small though.”
Gould also added that she expects employers to take many different factors into account when considering expansion, with the insurance requirement being just one small factor.
The law attempts to aid small businesses with tax credits as well, though several restrictions come with them: firms must have fewer than 25 employees and pay them less than $50,000 in wages each year, meaning Olivo’s business is ineligible for a credit while Hodesh’s business qualifies.
He met the requirements and received a tax credit, allowing him to hire another employee.
Hodesh has 12 employees so he doesn’t need to worry about crossing the mandate’s 50-employee threshold soon.
“There are pluses and minuses to all issues,” Hodesh said. “And I think that people are focusing on the minus side of the requirements of the Affordable Care Act. They are missing out on all the positives of the law.”
Offering health insurance to his employees is also an important strategy for his store.
“We provide health care as a business tool,” Hodesh said. “We attract and keep good long-term employees, and we don’t have high turnover and we don’t have to train a lot.”
Starting around 2000, though, his company’s health care costs tripled, but the tax credit eased that cost.
“(The credit) gave us the confidence to hire a new person,” he said. “It’s a good deal for me.”
6 key compliance deadlines for 2013 and beyond
Source: https://ebn.benefitnews.com
By Kathleen Koster
For plan sponsors, 2013 is a year of crossing Ts and dotting Is on PPACA compliance for their health care plans and strategizing for next year, when the employer mandate and public exchanges go into effect. The health care reform law has many moving parts and a great deal of regulations yet to come, which will keep benefits professionals on their toes all year.
"Employers have never experienced this complexity and oversight in compliance for their health plans. Employers are used to a compliance-rich environment around their retirement plans, but they need an equally robust and hands-on approach to managing the compliance of their health plans," says Mike Thompson, a principal in the human resources services practice of PricewaterhouseCoopers. He adds that "the rules, regulations and level of enforcement have never been greater."
Thompson believes "2013 is a period of strategic re-evaluation of whom the employer will provide benefits to in light of the changes in the individual market allowing guaranteed issue and subsidies for lower- and middle-income Americans."
He believes that employers will also transition around financing as "more employers look at community-type programs with the interest of moving away from their own programs and potentially contributing towards a private exchange or facilitating access to coverage in the open market."
To help employers keep all their compliance ducks in a row while managing and determining long-term strategies for their plans, EBN asked legal and health care experts for top issues to keep in mind for 2013 and beyond.
1. Preparing for the 2014 employer mandate
"At the top of the list is the interpretation of employer responsibility provisions that includes what constitutes minimum essential coverage that employers have to provide or be subject to penalties. Along with that, there are very important issues around the minimum value of the coverage they provide as well as who they have to provide it to," says Paul Dennett, senior vice president of health care reform at the American Benefits Council.
The employer mandate applies only to large employers. Whether an employer is defined as large under PPACA (generally companies with 50 or more employees) depends on the number of its full-time equivalent employees. Companies with 50 or more full-time workers (averaging at least 30 hours per week) must offer minimum health care coverage that is affordable.
In 2013, an employer ought to be determining whether it is a large employer and, therefore, subject to the mandate. "If they offer coverage in 2014, the coverage must meet the minimum value standards and the contributions the employer requires of employees cannot be so high the coverage is unaffordable relative to the employee's household income," says Jean C. Hemphill, practice leader of Ballard Spahr's health care group.
To determine the minimum value, fully insured plans will rely on their insurance carrier for information on whether they meet the minimum value of 60% for their plan. Self-insured plans can turn to an actuary or determine their value with the aid of a government-provided calculator or government-provided checklists.
When it comes to determining the affordability of the plan, an employer cost-sharing arrangement must be affordable relative to the employees' household income, as stated under PPACA. So, "the employee's contribution and cost-sharing obligations can't exceed 9.5% of their household income," says Hemphill.
However, the IRS acknowledges that employers don't know workers' household income, and suggests employers use W-2 wage information instead to determine their plan's affordability.
Hemphill expects more guidance on this issue since employees' contributions are typically much greater for dependents coverage than their own. An employee offered otherwise qualifying coverage by their employer can't use the public exchange unless they prove their employer-sponsored coverage is unaffordable.
The affordability issue may be of greater concern to employers with fairly low-income workforces or for employers not offering comprehensive plans to employees or all employees, such as the mini-medical plans sometimes offered in the retail industry. Employers only need to offer one affordable plan with minimum value to satisfy the rules, however mini-medical plans will be illegal after 2014.
Actuarial experts predict that most high-deductible health plans with deductibles in the $2,000-$3,000 range will most likely qualify, however those with much higher cost-sharing may not meet the minimum value.
While sponsors can vary the deductible and coinsurance amount of HDHPs, they should remember that the higher the deductible, the lower actuarial value of the plan.
"There are variables that can be adjusted in the plan design, but the most important one is where to set the amount of the deductible," says Dennett. He adds that guidance so far has indicated employer contributions toward HSAs or credits toward HRAs will count toward the minimum value. The question is whether the amount contributed is counted 100% to the plan or if it is discounted in the actuarial value formula that HHS would use in the calculation of actuarial value coverage.
Overall, "the Affordable Care Act was designed so employers don't need to make too many plan design changes to their plan," says J.D. Piro, national practice leader for Aon Hewitt's health and benefits legal department. "They may need to open it up to more employees but, generally speaking, they should be able to meet the affordability and minimum value requirements."
2. Public exchanges
Employers are required to provide employees with notice alerting them of the existence of public insurance exchanges. It is thought that the government will issue a model notice for this purpose. At press time, the government had yet to produce this model notice or other guidance about the notice requirement. The March 1 notification deadline has been extended until "late summer or fall," according to a recent FAQ announcement from the Centers for Medicare and Medicaid Services.
"There may still be unanswered questions about whether the state exchanges, partnership exchanges or the federal exchanges are really at an operational readiness stage to be able to go live as of October 2013," says Dennett.
Assuming the exchanges are on track and sponsors receive the guidance they need, they should expect many questions from workers about how the process affects them.
"While most major employers will continue to offer coverage to employees, there will be some confusion around the availability of coverage in the public exchanges and what the implications are [for employees] getting coverage from their employer, says Thompson.
He suggests employees will primarily want to know:
* Do I still have coverage through my employer?
* Am I eligible to get coverage through the exchange?
* Can I potentially get subsidies through the exchange?
* Is it in my best interest to go through the exchange?
3. Waiting periods
Another design-related issue employers must factor into their plans is that under PPACA, waiting periods for health care coverage cannot exceed 90 days. The 90-day period begins when the employee is otherwise eligible for coverage. Employers with a high-turnover workforce that currently have long waiting periods will have to shorten them.
If an employer requires employees to work a minimum number of hours to qualify for coverage, it may need to monitor workers' timesheets in 2013 to determine if and when coverage needs to be offered in 2014; this may be complicated for seasonal employees and other employees with variable hours.
Thompson believes this is part of a larger question of meeting qualifications for providing coverage.
"It's part of a package in my mind," he says. "Employers must evaluate employee classes when looking at whether they meet the minimum threshold of providing coverage to full-time employees. Seasonal, temporary, or contract workers are classes that need to be evaluated in order to avoid or at least understand what the penalties might be."
4. Pre-existing and non-discrimination prohibitions
"The non-discrimination rules are new for insured plans in 2014," says Hemphill. Even though these prohibitions should already be in effect, government agencies have delayed enforcement until they release regulations.
"It will be an important issue because right now there is no requirement to offer coverage to part-time employees, but with the definition of full-time employees as an average of 30 hours per week and new non-discrimination testing rules, the employer obligation may be different," she says.
Either way, employers can expect notice and guidance well before implementation because, "it is a big plan design issue," says Edward I. Leeds, counsel in the employee benefits and executive compensation group at Ballard Spahr.
5. Wellness programs
PPACA includes rules that prohibit plans from discriminating against individuals based on a range of health-related factors. Plans cannot impose restrictions on eligibility or increase employee costs for coverage based on these factors.
"When the government issued guidance under ACA, they actually revised the HIPAA regulations. So now the ACA and HIPAA rules ... will be the same," says Leeds. "By and large the rules follow HIPAA with some changes, the most significant of which is that the potential reward for meeting requirements under the wellness programs will increase as of January 1, 2014."
The potential reward for meeting a wellness requirement will increase from 20% of cost of coverage to 30% of cost of coverage. Incentives related to tobacco cessation will increase up to 50%. (For more details, read "Regs increase wellness rewards," page 28.)
6. Upcoming fees and taxes
Patient-Centered Outcomes Research Institute, established by PPACA, will collect and publish information about clinical effectiveness of treatments for patients. It will be paid for through fees assessed against insurers and self-funded plans equal to $2 ($1 in the first year) per covered life. The assessment will last seven years and eventually be adjusted for inflation. Employers with self-funded plans will need to report and pay these fees starting in July 2013.
The Transitional Reinsurance Program aims to stabilize the individual health insurance market as insurers provide coverage, starting in 2014, to large numbers of individuals who do not currently have coverage and present uncertain risks. The program will provide reinsurance payments to insurers that take on high-risk individuals. The program is funded through a three-year tax (expected to be $63 per covered life in the first year.)
The Additional Medicare Tax, in effect this year, is an additional 0.9% tax applied to high-income individuals. Employers are responsible for withholding the tax from wages or compensation it pays to an employee in excess of $200,000 in a calendar year.