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.
What is the real cost of free women’s health care?
By Marli D. Riggs
https://ebn.benefitnews.com
Although eight new prevention-related health care services for women included in the Patient Protection and Affordable Care Act are now available at no cost to female patients, many are left wondering about the real price tag.
Tanya Boyd, owner of Sunnyvale, Texas-based Tanya Boyd & Associates, believes the Department of Health and Human Services and the Obama administration should not tout the word “free” when talking about health care coverage. “It is completely misleading,” she says.
Free is more of a fallacy and should be replaced with the more appropriate word “covered,” when talking about health care services covered for women, adds Reid Rasmussen, owner of McKinney, Texas-based Benefit Brainstorm. “While many call these ‘free’ services, there is still a cost that’s being shared by Americans who are buying insurance,” he says.
As of Aug.1, the new rules in the health care law requiring coverage of these services take effect at most health insurance plans’ next renewal date.
The services are expected to cover 47 million women, and the total number of prevention-related health care services for women climbs to 22, rising from 14 that became effective in September 2010, according to the federal government. The eight new prevention-related services are based on recommendations from the Institute of Medicine, which polled independent physicians, nurses, scientists and other experts, as well as evidence-based research, to develop its recommendations.
Non-grandfathered group health plans offering group or individual health insurance coverage must provide coverage for preventive care without any cost-sharing requirements such as copayments, coinsurance or deductibles, as long as services are administered by physicians and other health care professionals who participate in the plan’s network.
Group health plans and issuers that have maintained grandfathered status are not required to cover these preventive services. In addition, certain nonprofit religious organizations, such as churches and schools, are also not required to cover these services.
Boyd claims that the services were already readily available to women who needed and wanted them. “Many women who put health care at the top of their priority list have always had the services done, whether they paid a copay, found a clinic that provided services for free, or paid 100% out of their pocket,” Boyd says. “Now insurance companies are forced to pay for these services, which will be reflected in the premiums we all pay.”
Putting it bluntly, Boyd says: “All of this ‘free’ stuff is going to be very expensive.”
Workers Flounder with Health Care Decision
By Editorial Staff
Source: https://eba.benefitnews.com
Open enrollment deadlines are just around the corner, and a new survey suggests the choices aren’t getting any easier for many workers.
According to a report from Aetna, Americans rank choosing health care benefits as the second most difficult life decision, behind only saving for retirement. Aetna’s survey shows those who stress over health benefits decisions cite confusing and complicated information (88%), conflicted data (84%) and difficulty knowing which plan is right for them (83%).
“The … results showed that consumers understand the importance of health benefits. However, they don’t feel they have the resources they need to make an educated decision,” says Mark T. Bertolini, Aetna’s chairman and CEO “We need to make the process of choosing and using health benefits easier for consumers.”
Conducted in July with results released last week, the survey finds Americans split on the Patient Protection and Affordable Care Act, though 75% think that all of its key elements are important for them or their families. Forty-one percent of respondents said they need more information on health care reform to understand its impact.
Reducing medical costs remains a major economic and political issue, even though 42% of Americans reportedly never or rarely monitor out-of-pocket health care expenses. This is despite the fact that more than one in five respondents had to dip into their savings in the past year to help cover medical bills.
The survey further finds that more than 40% of respondents have skipped a prescription dose, halted their medication or delayed a needed medical procedure. What’s worse, those in fair or poor health (76%) or with chronic conditions (57%) are the most likely to engage in those dangerous behaviors.
Wendy Shanahan-Richards, national medical director for Aetna, says the survey illustrates the need for health plans data to walk the line between concise and digestible and thorough and comprehensive information.
“The [survey] results help us better understand the challenges that consumers are facing today,” Shanahan-Richards says. “We want to arm consumers with as much useful, easy-to-understand information as possible to help them make more informed health benefits choices and take better control of their health.”
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.
Employers Prep for New Moves under PPACA
As the 2013 enrollment time draws near, employers are preparing to jump through a few extra hoops thanks to the recently reaffirmed health care reform law.
In addition to the usual notices and benefit communications that employers must prepare and distribute to their employees, the Patient Protection and Affordable Care Act has added a summary of benefits and coverage (SBC) to the enrollment pile for plans that begin on or after Sept. 23, 2012.
The SBC is a four-page document that provides information about a plan's health care coverage and out-of-pocket costs for employees, according to a recent online post by law firm Warner Norcross & Judd LLP. Employers with fully insured plans can expect their insurers to provide the bulk of the content for their SBCs. Self-insured companies, on the other hand, will have to craft the SBCs themselves, the law firm notes.
The rules allow for a few actions that can simplify the process for employers, Warner's post notes. For example:
- Separate tiers of coverage can be covered in a single SBC.
- The SBC can be a stand-alone document or it can be included in an enrollment booklet, provided that it isn't buried and hard to find.
- A single SBC can be used for multiple plans, assuming that the only differences are deductibles and copay/coinsurance amounts, and that the document clearly defines these differences between the plans.
- The same distribution rules apply to SBCs as to summary plan descriptions (SPDs) under ERISA.
Employers with calendar-year health flexible spending accounts also will want to inform workers about the new $2,500 annual contribution cap created by PPACA, according to Linda Rowings, compliance director for United Benefit Advisors. Prior to enrollment, companies should double-check to ensure that their FSA administrator is prepared for this change, Rowings added.
Unfortunately for employers, these changes represent only the tip of the iceberg for new PPACA notices and enrollment duties. Once the health care exchanges, "pay or play" penalties and other major provisions of the law come into effect in 2014, employers can expect even more work around enrollment time.
One thing PPACA likely won't change, though: Quality employer-sponsored health benefits, which can strengthen recruiting/retention efforts and improve a workforce's health and productivity, remain highly valued by employees.
That's the result of a new survey that shows employees' satisfaction with their employer-provided benefits either rose or remained stable in 2012 compared with 2009, despite increased cost-sharing. The poll by the National Business Group on Health found that nearly two-thirds of workers are very satisfied with their health coverage through their employer or union, according to aPLANSPONSOR report.
While the increasing compliance hassles and climbing costs may prompt some employers to dump health coverage in the future and send their employees into the health care exchanges, a separate study suggests that move won't save employers money in the short or long term.
The study by Truven Health Analytics, as reported by the Employee Benefits Counsel, found that employers that choose to drop coverage in 2014 and pay penalties under PPACA likely will feel pressure to "make employees whole" by increasing compensation (which lacks the tax shelters of providing health benefits). This, combined with the penalties, will make dropping coverage a losing proposition financially, researchers said.
In light of those facts, most employers likely will be better off suffering through the extra enrollment and compliance work and continuing to provide health benefits, the report suggests.
"Employers must provide market value -- in benefits and compensation -- to retain skilled workers and will not be able to unilaterally cut benefits and expect employees to absorb the projected inefficiency of exchange-based coverage," the Counsel study notes.
HIGHLIGHTS OF THE PATIENT-CENTERED OUTCOMES / COMPARATIVE EFFECTIVENESS FEE
Important: these highlights describe the rules based on the actual law and proposed regulations. Most likely, therefore, the rules will take effect largely as described here, but some of the details may change.
- The fee applies from 2012 to 2019, based on plan/policy years ending on or after Oct. 1, 2012, and before Oct. 1, 2019
- The fee is due by July 31 of the year following the calendar year in which the plan/policy year ended
- The first fee is due July 31, 2013, for calendar year plans and for those on October, November and December plan years
- The first fee is not due until July 31, 2014, for those with plan years that start February through September.
- The fee will be calculated and paid by:
- The insurer for fully insured plans (although the fee likely will be passed on to the plan)
- The plan sponsor of self-funded plans
- This includes health reimbursement arrangements (HRAs)
- Third-party administrator (TPA) may assist with calculation, but plan sponsor must file
- If multiple employers participate in the plan, each must file separately unless the plan document designates one as the plan sponsor
- The fee is based on covered lives (i.e., employees, retirees and dependent spouses and children)
- May exclude employees/dependents residing outside U.S.
- May exclude dependents, and only count the employee/retiree, when counting for an HRA
- For the first year, the fee is $1 per covered life during the plan/policy year
- For the second year, the fee is $2 per covered life during the year
- For the third through seventh years, the fee is $2, adjusted for medical inflation, per covered life during the year
- Applies to private, government, not-for-profit and church employers
- Applies to grandfathered plans
- "Group health coverage" includes:
- Medical plans
- Retiree only plans
- HRAs
- "Group health coverage" does not include:
- Stand-alone dental and vision (stand-alone means these benefits are elected separately from medical and have discrete premiums)
- Life insurance
- Short- and long-term disability and accident insurance
- Long-term care
- Health flexible spending accounts to which only employee contributions are made
- Health savings accounts
- Hospital indemnity or specified illness coverage
- Employee assistance programs and wellness programs that do not provide significant medical care or treatment
- Stop loss coverage
- Several options have been proposed for calculating the fee:
- Actual count method -- count the covered lives on each day of the year, and average the result
- Snapshot method -- determine the number of covered lives on the same day of each quarter or month, and average the result
- Could multiply the employee/retiree count by 2.35 to approximate the number of covered dependents rather than actually counting them
- 5500 method - determine the number of participants at the beginning and end of year as reported on the 5500
- If dependents are covered, add the participant count for the start and the end of the plan year
- If dependents are not covered, add the participant count for the start and the end of the plan year and average the result (this method cannot be used by insurers)
- If there are multiple self-funded plans (e.g., self-funded medical and HRA) with the same plan year, only one fee would apply to a covered life
- If there are both fully insured and self-funded plans (e.g. insured medical and a self-funded HRA), a fee would apply to each plan -- the insurer would pay the fee on the insured coverage and the plan sponsor would pay the fee on the HRA
- Plan sponsor reporting and paying the fee would be done electronically on IRS Form 720 each July 31
- This would be an annual filing, even though form 720 is generally filed quarterly
Action Steps:
- Insured plans may want to:
- Ask their carrier if/when this fee will be reflected in rates
- Include the anticipated fee in their budget
- Self-funded plans may want to:
- Include the anticipated fee in their budget
- Review the likely calculation methods, determine which is best for their situation and close any data gaps
- Verify there is a named plan sponsor if more than one employer participates in the plan, and if a plan sponsor has not been named, amend the plan to name a plan sponsor before the first fee is due
Note: PPACA created a private, non-profit corporation called the Patient-Centered Outcomes Research Institute. The Institute's job is to research the comparative effectiveness of different types of treatment for certain diseases, and to share its findings with the public and the medical community. The goal is to improve quality of treatment and reduce unnecessary spending. This fee is to support this research.
Reminder: These highlights describe the rules based on proposed regulations. Some of this may change.
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."
Pay or play? A strategic HR response to PPACA
By Timothy Wojcik
Source: eba.benefitnews.com
With the recent Supreme Court ruling now finalized and the minimum essential health insurance provisions in place, companies have begun to ask us “What’s next?” or “What will the financial impact be for our company in 2014?” My belief is that by taking a proactive approach to the individual mandate and understanding the impact on your company’s financials, you will be able to make that critical decision whether to continue offering a group health care plan or allow employees to elect coverage through the state mandated exchanges.
Based on external research, a recent study by Deloitte has found that approximately one in ten employers in the U.S. intend to “Pay” the penalty imposed on employers for opting out of group health coverage. This number, however, does not reflect an additional 10% of employers who weren’t sure if they would continue coverage. An overarching theme heard from our clients is that the benefits program offered today is instrumental in attracting, retaining, and engaging employees.
Ultimately, the decision to Pay or Play is a strategic HR decision which will not only impact the company’s fixed costs, but also the level of engagement and retention within the company. A thorough analysis delicately weighing the financial and non-financial factors must occur to ensure that the decision falls in line with the company’s overall business and HR strategy.
Administration Launches New Effort Against Healthcare Fraud
By Elise Viebeck
Source: thehill.com
The Obama administration announced a new plan to crack down on healthcare fraud, which costs taxpayers and industry tens of billions of dollars per year.
Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius said the new effort will cut down on illicit healthcare billings by coordinating public and private fraud-fighting.
Health insurers have been at odds with the administration over parts of the Affordable Care Act, but several have signed on to the new effort, including WellPoint, UnitedHealth Group and the industry's main lobby, America's Health Insurance Plans (AHIP).
AHIP President and CEO Karen Ignagni called the partnership a "major step forward in the fight against fraud and abuse."
"By sharing data, information, and best practices across all payers," she said in a statement, "this partnership will ... provide a powerful deterrent to would-be perpetrators looking to prey on patients and steal money from taxpayers."
Details of the expected collaborations were not released, but the announcement described how stakeholders might curb fraud by sharing information on specific schemes.
Better coordination could avert the payment of an illicit claim billed to multiple insurers, for example.
"Bringing additional healthcare industry leaders and experts into this work will allow us to act more quickly and effectively in identifying and stopping fraud schemes," Holder said in a statement.
He praised the Obama administration's efforts on healthcare fraud, which have recovered $10.7 billion over the last three years, according to the federal Health department.
Sebelius said the healthcare law has made better tools available to combat fraud, such as tougher sentences for criminals.
"Thanks to this initiative today and the anti-fraud tools that were made available by the health care law, we are working to stamp out these crimes and abuse in our healthcare system," she said in a statement.
"This partnership puts criminals on notice that we will find them and stop them before they steal healthcare dollars."
Fraud in Medicare costs about $60 billion annually, according to estimates.