All posts tagged health coverage

0826The Health Insurance Portability and Accountability Act (HIPAA) established national standards to secure and protect the privacy of health information. The Health Information Technology for Economic and Clinical Health Act (HITECH) requires the Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) to conduct audits of covered entities and business associates in order to ensure compliance with the HIPAA Privacy, Security, and Breach Notification Rules.

OCR initiated a pilot program in 2012 to assess the processes implemented by 115 covered entities to comply with HIPAA’s requirements. The pilot program was a three-step process: (1) initial protocol development, (2) test of these protocols by conducting 20 audits, and (3) full audit execution using revised protocol materials, which were completed by the end of December 2012.

OCR selected a pool of covered entities for audits that broadly represented a wide range of healthcare providers, health plans, and healthcare clearinghouses. Criteria to select entities to be audited included whether the entity was public or private, size of the entity, affiliation with other healthcare organizations, the type of entity and relationship to patient care, past and present interaction with OCR concerning HIPAA enforcement and breach notification, as well as geographic factors.

A wide range of covered entities were audited in Phase 1. The audit process began when selected entities received a notification letter from OCR notifying them of their selection and asking them to provide documentation of their privacy and security compliance efforts. Every audit included a site visit during which auditors interviewed key personnel and observed processes to determine compliance. Following the site visit, auditors developed a draft audit report which described how the audit was conducted, what the findings were, and what actions the covered entity took in response to those findings. The covered entity had the opportunity to remedy any compliance issues. The final report included the steps the entity took to resolve any compliance issues identified by the audit and it also described best practices.

OCR used the final audit to understand HIPAA compliance efforts and to determine the types of technical assistance that should be developed and the types of corrective action that are most effective. The technical assistance and best practices that OCR generated assisted covered entities and business associates in improving their efforts to keep health records safe and secure.

Originally published by United Benefit Advisors – Read More

UBA’s Special Report – Trends in Prescription Drug Benefits explores our Health Plan Survey findings in more detail, particularly examining what’s happening with prescription drug plan design among different group sizes, regions and industries. When it comes to copay amounts, median retail prescription drug copays are $10/$30 for two-tier plans, $10/$35/$55 for three-tier plans, and $10/$35/$60/$100 for four-tier plans. These amounts have remained largely flat from 2014.

Generic drugs in the lowest tier generally cost less than $10, so employees are paying all or most of the generic cost with the tier 1 copay. This makes it difficult to raise that amount, especially if employers are concerned about medication adherence. But in four-tier models, the tier 3 copay increased 20%. Since this tier covers non-formulary brands, copay increases may continue as drug costs in this category soar.

Median Prescription Retail Copays by Plan Design            © 2016 United Benefit Advisors. All rights reserved.

While median copays in four-tier plans see no fluctuation among region, size or industry, three-tier plans show some creative cost management among some groups. For example, the largest employers (1,000+ employees) and Northeastern groups are pushing up the tier 3 copay above average. With employers flocking to 4+ tier plans, copay hikes in three-tier models may become more common for those hesitant to expand drug tiers.

As five-tier plans emerge, the median copays are $10/$10/$40/$70/$100. This will be an important baseline to watch now that the UBA Health Plan Survey will start to break this out separately. In predictable fashion, small groups tend to set copays higher than average, while the large groups are below average. Regionally, the West is experimenting with driving the fifth tier copay significantly higher than average ($150) while keeping the other copays at or below average. The Central U.S. is pushing most copays in five-tier plans higher than average.

Originally published by United Benefit Advisors – Read More

pills0805According to UBA’s new Special Report – Trends in Prescription Drug Benefits, 61.8% of plans required employees to pay more when they elect brand-name drugs over an available generic drug (a 5.5% increase from 2014); 37.9% of those plans require the added cost even if the physician notes “dispense as written.” On the other hand, only 1% of plans offer no coverage for brand-name drugs if generics are available and 37.2% offer no added cost coverage. So while most employers aren’t completely penalizing those who choose brand-name drugs, more and more plans are requiring employees to pay higher copays when they elect brand-name drugs. Some plans have a mandated step therapy program that makes sure employees try a lower class alternative before they move to a medication in a higher class (or try a generic or generic equivalent in a particular therapeutic class). Some plans exclude certain drugs altogether. This cost pressure has made employers more aware of drug costs, so many are beginning to educate employees about using benefits cost-effectively. Here’s what our Health Plan Survey data shows about which employers are steering employees to generics:

  • Predictably, the larger the employer, the more generous it is in covering brand name drugs either with no added cost or at least not incurring added cost when the physician notes “dispense as written.” Seventy-seven percent of plans for groups with 1,000+ employees fall in this category while only 51% of small group plans offer this benefit.
  • Plans in the central U.S. and within the construction, agriculture, mining, and transportation industries are making the most aggressive push to generic drugs, with only 46.3% and 53.8%, respectively, providing relief for brand name drugs.

While injectable drugs are often watched as a significant liability when it comes to cost containment, nearly all plans have no separate deductible for these medications. Additional tiers, coinsurance models and mail order benefits are overwhelmingly the way employers are dealing with the highest cost drugs.

In 2015 alone, 38 specialty drugs received FDA approval, and more are in the pipeline. “The latest development among aggressively managed drug plans is to move specialty drugs (oral and injectable) to the major medical portion of the policy, delivering an initial 7- to 15-day supply to confirm the drug’s effectiveness before dispensing a full 30-day supply” says Scott Deru, President of UBA Partner Firm Fringe Benefit Analysts. “Requirements also include frequent patient follow-up to verify adherence to the prescription schedule, any adverse reactions, and to verify that mail order drugs amounting to tens of thousands of dollars are being tracked and received by the patient. Other cost containment strategies include bringing a registered nurse to a patient’s home for infusion therapy to avoid the facility and prescription mark-up costs from inpatient and outpatient facilities.”

Originally published by United Benefit Advisors – Read More

The Latest UBA Survey data shows employers are flocking to two strategies to control rising prescription drug costs: moving to blended copay/coinsurance models vs. copay only, and adding tiers to the prescription drug plans. Almost half (48.9%) of prescription drug plans utilize three tiers (generic, formulary brand, and non-formulary brand), 4.3% retain a two-tier plan, and 44.1% offer four tiers or more. The number of employers offering drug plans with four tiers or more increased 34% from 2014 to 2015. The fourth tier (and additional tiers) pays for biotech drugs, which are the most expensive. By segmenting these drugs into another category with significantly higher copays, employers are able to pass along a little more of the cost of these drugs to employees. Over the last two years, the number of plans with four or more tiers grew 58.1%, making this a rapidly growing strategy to control costs.

Employers with 1 to 99 employees have been driving the trend to adopt prescription drug plans with four or more tiers. In three years, plans with four or more tiers increased approximately 60% among these groups, making this the top cost-containment strategy for small employers, who make up the backbone of America.

Even the largest employers (1,000+ employees), 81% of which historically have offered plans with two or three tiers, have seen a 12.9% decrease in these plans as they, too, migrate to plans with four or more tiers (albeit more slowly).

The construction, mining and retail industries have also been steadily leading the migration to plans with four or more tiers over the last three years, and in the latest UBA survey, 47.5%, 53.2% and 46.3% of their respective plans fall in this category. But this year, the utilities industry has made a more sudden switch, with 58.3% of those plans now consisting of four or more tiers, leapfrogging its perennial tier-climbing peers. This is a significant jump, considering nearly 20% of plans in the utilities industry were still two-tier plans just three years ago—far more two-tier plans than any other industry group at that time. However, this wasn’t a total surprise since, in the 2014 survey year, the industry had an above-average amount of three-tier plans (65.9% vs. an average of 57.1%).

The education and manufacturing industries are more reluctant to shift to plans with four or more tiers. Over the last three years those industries have maintained the highest amounts of three-tier plans, and in the latest survey, 52.8% of their plans remain at three tiers.

Two-tier plans are becoming nearly as rare as single-tier plans, shrinking 45% to 4.3% of all prescription plans in three years. Agriculture has the most holdouts, with 14.8% of plans still comprised of one or two tiers.

Regionally, the East Central U.S. has been leading the migration to plans with four or more tiers for the last three years, followed by North Central and Southeast employers. In the 2015 survey year, Southeast employers eclipsed East Central employers with 60.7% of their plans with four or more tiers.

Strangely enough, East Central and Southeast employers have the lowest percentage of three-tier plans (34.3% and 34.1%, respectively) but the highest percentage of single-tier plans (4.7% and 4.2%, respectively). Other Western employers (excluding California) also have below-average three-tier plans (40.6%), above-average four-tier plans (49.1%) and above-average (10.2%) one- to two-tier plans.

Groups increasing tiers most aggressively for cost savings

California employers have the most two-tier plans (22.9% vs. the average of 4.3%) which, although still off the charts, represents a 20% decline from the previous survey year.

Mid-Atlantic and New England employers have had the most three-tier plans for the last three years, making them the top resisters of plans with four or more tiers over time.

Groups resisting 4+ tier plans

For more information on prescription drug trends, including the companies making an early leap to five-tier plans, download UBA’s free (no form!) publication: Special Report: Trends in Prescription Drug Benefits.

Originally published by


0526Eighty-one percent of employees have elected vision benefits in 2016, up from 78 percent last year, according to Transitions. This increase moved vision into a tie with dental as the second most popular benefit election behind medical.

Digital eye strain, which is detailed by a report from The Vision Council, could be a contributing factor to the trend. Some of the Council’s findings include:

  • 65 percent of Americans report experiencing symptoms of digital eye strain, including 70 percent of women.
  • Nearly 90 percent of Americans use digital devices for two or more hours daily and nearly 60 percent do so for five or more daily.
  • 77 percent of those who suffer from digital eye strain use two or more devices simultaneously, with women more likely to do so than men. In comparison, only 53 percent of those who use only one device at a time suffer from digital eye strain.

The symptoms of digital eye strain include neck/back/shoulder pain, headache, blurred version and dry eyes. In addition to the health concerns they bring, these symptoms can also negatively impact employee productivity.

An article in Employee Benefit News by Dr. Linda Chous, UnitedHealthcare’s chief eye care officer, titled “Digital Eye Strain Among Workers Causing Employers to Rethink Vision Benefits,” has several prevention tips for reducing digital eye strain in your employees:

  1. Employees should keep computer screens about 30 inches away from their eyes.
  2. Employees should rest their eyes every 15 minutes.
  3. Employees should blink frequently, which reduces dry eye and helps maintain eye health.

Chous also advocates for regular eye exams, for reasons beyond digital eye strain. She writes, “The eyes are also a window to overall health. Regular eye exams play an important role in identifying and managing serious, chronic conditions, including diabetes, high cholesterol, hypertension, multiple sclerosis and some tumors.”

She goes on to note how some employers are now “embracing an integrated approach to vision and medical benefits that support patients and health care professionals with information, decisions and outcomes.” These programs have a variety of features, such as:

  • Eye care practitioners can be encouraged to code claims with chronic condition categories, and patients with those diagnoses can be automatically referred to disease management programs.
  • Eye care practitioners can be notified of patients with at-risk conditions during the exam authorization process.
  • Patients with certain conditions (such as diabetes and hypertension) can be notified with a phone call about the importance of their annual eye exam.
  • For patients who may have chronic conditions, eye care practitioners can use specially designed online forms to refer them to primary care providers or specialists.

As an employer, you have the ability to help protect your employees’ eye health–which, in turn, influences their overall health and productivity. And, with adults under 30 experiencing the highest rates of digital eye strain (73 percent) of all age groups, taking actions and providing benefits that protect employees’ eye health is likely to become even more important.

Originally published by United Benefit Advisors – Read More

Designing Your HRA or Flex Contributions to Meet Affordability Requirements | OH Employee Benefits

Categories: HRA
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An Applicable Large Employer (ALE) that offers minimum essential coverage (MEC) to substantially all of its full-time employees may still owe penalties if the coverage it offers is inadequate because it is not “affordable” or it does not provide “minimum value.” Coverage is considered affordable if it costs less than 9.5 percent of the Looking at dollar bill wtih magnifying glassemployee’s household income. Because employers rarely know an employee’s household income, employers may meet the affordability requirement through one of three safe harbor options – the W-2 safe harbor, the rate of pay safe harbor, or the federal poverty level safe harbor.

Health reimbursement arrangement (HRA) contributions by an employer that may be used to pay premiums for an eligible employer sponsored plan are counted toward the employee’s required contribution, subsequently reducing the amount required for their contribution. Practically speaking, an employer can design an HRA to reduce the employee premium and meet affordability requirements.

Similarly, an employer’s flex contributions to a cafeteria plan can reduce the amount of the employee portion of the premium so long as the employee may not opt to receive the amount as a taxable benefit, the flex credit may be used to pay for the MEC, and the employee may use the amount only to pay for medical care. If the flex contribution can be used to pay for non-health care benefits (such as dependent care), it could not be used to reduce the amount of the employee premium for affordability purposes. Furthermore, if an employee is provided with a flex contribution that may be used for health expenses, but may be used for non-health benefits, and is designed so an employee who elects the employer health plan must forego any of the flex plan’s non-health benefits, those flex benefits may not be used to reduce the employee’s premium for affordability purposes.

However, for plan years beginning before January 1, 2017, and for benefits adopted prior to December 16, 2015, an employer flex contribution that is not a health flex contribution because it may be used for non-health benefits but that may be used by the employee toward the amount the employee is otherwise required to pay for the health coverage, will be treated as reducing the amount of an employee’s required contribution.

Furthermore, only for coverage for plan years beginning before January 1, 2017, an employer may reduce the amount of the employee’s required contribution by the amount of a non-health flex contribution (other than a flex contribution made under a non-relief-eligible flex contribution arrangement) for purposes of information reporting on Line 15 of Form 1095-C. However, because treating a non-health flex contribution as reducing an employee’s required contribution may affect the employee’s eligibility for the premium tax credit, the IRS encourages employers not to reduce the amount of the employee’s required contribution by the amount of a non-health flex contribution for purposes of information reporting. After reports have been submitted, if the employer is contacted by the IRS concerning a potential penalty relating to the employee’s receipt of a premium tax credit, the employer will have an opportunity to respond and show that it is entitled to the relief described in the Notice, to the extent that the employee would not have been eligible for the premium tax credit if the required employee contribution had been reduced by the amount of the non-health flex contribution or to the extent that the employer would have qualified for an affordability safe harbor if the required employee contribution had been reduced by the amount of the non-health flex contribution.

An employer’s non-health flex contribution will not be used to reduce the employee’s premium for purposes of determining their eligibility for a tax credit.

Download UBA’s ACA Advisor for a complete breakdown of the recent IRS notice pertaining to HRAs and other employer payment plans, the impact of HRAs, flex credits, opt-out incentives or fringe benefit payments on affordability calculations relating to applicable large employers (ALEs), IRS reporting that is required for ALEs, rules for health savings accounts (HSAs) for individuals eligible for benefits administered from the Department of Veterans Affairs (VA), COBRA rules in relation to unused health flexible spending arrangement (HFSA) funds and a reiteration of safe harbors relating to good faith reporting for ALEs


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January is Glaucoma Awareness Month | OH Employee Benefits

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January is National Glaucoma Awareness Month, an important time to spread the word about this sight-stealing disease.

Currently, more than 3 million people in the United States have glaucoma. The National Eye Institute projects this number will reach 4.2 million by 2030, a 58 percent increase.

Glaucoma is called “the sneak thief of sight” since there are no symptoms and once vision is lost, it’s permanent. As much as 40% of vision can be lost without a person noticing.

Glaucoma is the leading cause of preventable blindness. Moreover, among African American and Latino populations, glaucoma is more prevalent. Glaucoma is 6 to 8 times more common in African Americans than Caucasians.

Over 3 million Americans, and over 60 million people worldwide, have glaucoma. Experts estimate that half of them don’t know they have it. Combined with our aging population, we can see an epidemic of blindness looming if we don’t raise awareness about the importance of regular eye examinations to preserve vision. The World Health Organization estimates that 4.5 million people worldwide are blind due to glaucoma.

Help Raise Awareness


Talk to your family about glaucoma.

In the United States, approximately 120,000 are blind from glaucoma, accounting for 9% to 12% of all cases of blindness. Here are three ways you can help raise awareness:

  1. Talk to friends and family about glaucoma. If you have glaucoma, don’t keep it a secret. Let your family members know.
  2. Refer a friend to our web site,
  3. Request to have a free educational booklet sent to you or a friend.

Connect with us on Facebook or follow us on Twitter for regular updates on glaucoma research, treatments, news and information. Share information about glaucoma with your friends and family.

What is Glaucoma?

Glaucoma is a group of eye diseases that gradually steal sight without warning. Although the most common forms primarily affect the middle-aged and the elderly, glaucoma can affect people of all ages.

Vision loss is caused by damage to the optic nerve. This nerve acts like an electric cable with over a million wires. It is responsible for carrying images from the eye to the brain.

There is no cure for glaucoma—yet. However, medication or surgery can slow or prevent further vision loss. The appropriate treatment depends upon the type of glaucoma among other factors. Early detection is vital to stopping the progress of the disease.

Watch a video from the research scientists working to find a cure.

Types of Glaucoma

There are two main types of glaucoma: primary open-angle glaucoma (POAG), and angle-closure glaucoma. These are marked by an increase of intraocular pressure (IOP), or pressure inside the eye. When optic nerve damage has occurred despite a normal IOP, this is called normal tension glaucoma.

Secondary glaucoma refers to any case in which another disease causes or contributes to increased eye pressure, resulting in optic nerve damage and vision loss.

Read more about Types of Glaucoma.

Regular Eye Exams are Important

Glaucoma is the second leading cause of blindness in the world, according to the World Health Organization. In the most common form, there are virtually no symptoms. Vision loss begins with peripheral or side vision, so if you have glaucoma, you may not notice anything until significant vision is lost.

The best way to protect your sight from glaucoma is to get a comprehensive eye examination. Then, if you have glaucoma, treatment can begin immediately.

Glaucoma is the leading cause of blindness among African-Americans. And among Hispanics in older age groups, the risk of glaucoma is nearly as high as that for African-Americans. Also, siblings of persons diagnosed with glaucoma have a significantly increased risk of having glaucoma.

Read about Glaucoma Eye Exams.

Risk Factors

Are you at risk for glaucoma? Those at higher risk include people of African, Asian, and Hispanic descent. Other high-risk groups include: people over 60, family members of those already diagnosed, diabetics, and people who are severely nearsighted. Regular eye exams are especially important for those at higher risk for glaucoma, and may help to prevent unnecessary vision loss.

Help Us Find a Cure

Glaucoma Research Foundation is a national non-profit organization funding innovative research to preserve vision and find a cure for glaucoma. Gifts of every size make a difference. Donate today.

Learn more about Glaucoma Research Foundation.

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New Tax Breaks Affect Employer Benefit Plans | Ohio Employee Benefit Broker

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Congress passed a sweeping omnibus spending bill including government appropriations and tax extenders. Included in the 2,200-plus page bill are four provisions of particular interest to employers that sponsor Businessman Holding Blocks with TAX Wordgroup benefit plans.
Cadillac Tax Delayed Until 2020

The Affordable Care Act (ACA) imposes a 40-percent excise tax on the value of employer-provided health coverage exceeding certain thresholds. This so-called Cadillac tax was scheduled to take effect in 2018 but now is delayed until 2020. Further, the tax will be deductible as a business expense.

Efforts to repeal the Cadillac tax are expected to continue. The two-year delay provides temporary relief to employers while giving Congress and the Administration time to consider future action.
Two-Year Moratorium on Medical Device Tax

The ACA added a 2.3-percent excise tax on the sale of medical device products, starting in 2013. Analysts cite the tax as one factor in increased health care expenses that are passed on to health insurers and employers. Today’s spending bill provides a two-year moratorium from the tax for years 2016 and 2017.
One-Year Moratorium on Health Insurance Providers (HIP) Fee

Starting in 2014, the ACA has imposed an annual fee on certain health insurers that generally is passed on to their policyholders. The new spending bill provides a moratorium for 2017.
Commuter Benefits – Parity Is Restored

Prior law provides that the 2015 monthly benefit limit for qualified parking expenses is $250 while the limit for qualified mass transit expenses is $130. Further, for 2016, the limit for parking expenses increases to $255 (due to routine IRS inflation adjustment).

Today’s law amends the relevant tax code section to increase the mass transit limit for 2015, and all future years, to automatically match the parking limit. Thus, the mass transit limit is increased to $250 retroactively for months in 2015 and will be $255 for months in 2016.

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Negotiating over COBRA Coverage – Use EXTREME CAUTION! | OH Employee Benefits

Categories: COBRA
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By Elizabeth Kay, Compliance & Retention Analyst AEIS Advisors, A UBA Partner Firm

Have you ever overheard the new employee in the break room, bragging about how good their health insurance was with their previous employer, and how much less expensive it was than the coverage they are currently being offered?Proceed with caution

You may think ”If it was so good, then why give it up?” There are always a number of factors that can lead to someone making a job change, but what happens when COBRA becomes a part of the negotiating process when they are working out the terms of employment with the new company?

We know that, as of November 2014, the Department of Labor (DOL) made it very clear that an employer cannot pay the premium for an individual plan of an employee or an employee’s dependents, period. If they do, the employer could pay an excise tax of $100 per day they are out of compliance per employee affected. That could be up to $36,500 for ONE employee, for ONE year!

But what if a prospective employee were coming to work for you, and the plan with their current employer had similar coverage but lower premiums because the employer was a larger company, the employees were in very good health overall and the employer had negotiated very low rates with its carrier as a result, or the employer was based in a different state where health care costs were lower? What if that prospective employee tells you that you could pay their COBRA premiums and pay less premium for them than if they enroll in your plan? Many employers would love to save $500 a month for one employee. But the deal is not nearly as sweet as it sounds, and here’s why.

While it is not illegal for an employer to pay for COBRA premiums, if it is for a group plan and not an individual plan, it can create other problems with regard to ERISA and COBRA compliance.

As soon as an employer pays the premium on a pre-tax basis on behalf of an employee for its company policy or another policy, an employer-sponsored plan is created, and is therefore subject to both ERISA and COBRA regulations.

ERISA requires that the plan sponsor distribute notifications to enrollees of the plan, including a Summary Plan Description, and other documents that contain specific plan details. If the employee’s plan benefits were under another employer’s plan, it may be difficult to get that information and distribute it to your employee.

Federal COBRA regulation requires that the employee have access to the same coverage for up to 18 months after he or she loses eligibility for the plan due to termination of employment, for example. What happens if the COBRA plan terminates because that previous company goes out of business and its group plan dissolves? Now the current employer is obligated to continue the employee’s coverage, perhaps without a means to do so.

Or, what if this employee terminates from your company after 12 months? It now becomes your responsibility to provide the employee with 18 months of COBRA coverage, except the employee has already used a portion of his or her COBRA eligibility while under your employment. Since COBRA is an employer obligation, you could be responsible for providing COBRA coverage to an employee who was never enrolled in your company’s group policy in the first place.

It becomes a sticky mess, indeed!

On the flip side, what about negotiating an employee’s severance package? If an employee is leaving your company and you are putting together a severance package, be careful when including paying for the employee’s COBRA continuation coverage. Many employers will offer to pay for three, six or 12 months of COBRA premiums on behalf of the terminated employee.

While this can be done, be careful how you word it in the severance agreement. Most employer sponsored plans are on a 12 month contract. If you make a very general statement saying you will pay to continue the employee’s COBRA coverage at your expense for 12 months, and your premiums skyrocket at renewal, or if you change carriers, and the terminated employee chooses a more expensive plan with richer benefits, you could be on the hook for the increase in premiums.

If you are clear in the severance agreement about the amount you will commit to pay on the employee’s behalf, or clear about the level of coverage to be provided (platinum, gold, silver, or bronze level plan, for example), then you will be better protected.

If you are paying COBRA premiums on a tax-exempt basis for a current employee, or you are concerned about a severance agreement that you made with a terminated employee, please seek advice from your ERISA or employment law attorney.


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By Elizabeth Kay, Compliance & Retention Analyst AEIS Advisors, A UBA Partner Firm

The Affordable Care Act (ACA) has brought about many changes in employee benefits. Plans have been eliminated, benefits added, rules changed, and rules have been delayed.Change ahead

The ACA has always been a heavily debated topic between the Republicans and Democrats, and now that we are coming up to another presidential election we know that we can expect it to be talked about quite a lot.

Some speculate that the Republicans will attempt to repeal the law, again, but the truth of the matter is that the ACA is bringing in too much revenue for a repeal to be successful. The Congressional Budget Office (CBO) projections there will be $353 billion dollars in revenue from the ACA over the next 10 years.

This means that in order for the Republicans to be successful in repealing any part of the law that generates revenue, they will need to find a way to replace that lost revenue.

Looking at the projected cost increases based on its annual Health Plan Survey of over 18,000 health, plans offered by nearly 11,000 employers nationwide, UBA estimates that nearly three out of four U.S. employers will be hit with the Cadillac tax by 2022. With alarm bells sounding, many employers are planning benefit cuts to avoid the tax and, as a result, the CBO actually expects the ACA’s Cadillac tax (and Medical Device Tax) won’t generate the most revenue. Instead they are counting heavily on the second largest source of expected revenue from the ACA: $209 billion dollars from ”other sources.”

What are ”other sources?” The CBO believes that there will be an increase in income taxes due to employers that reduce employee health plans in order to avoid having to pay the Cadillac tax, and in turn raise their employees’ wages to compensate.

If this scenario were realistic (although reducing benefits due to the rising cost of premiums without any increase in wages seems to be more realistic), we should see employers begin to modify their plans in anticipation of the Cadillac tax in 2018, and then a significant increase in salaries. But will employers act sooner? If the Cadillac tax were to be repealed by Congress, it would most likely happen in 2017 after the presidential election. The question then becomes when should employers make these changes? Do they make them now, live with the potential for the Cadillac tax to be eliminated, and their payroll will just remain higher? Or do they wait to make those changes until 2017, the year before the tax goes into effect?

As if another tax were not bad enough, the 2015 UBA Benefits Survey shows that, if some employers were to reduce benefits to avoid the Cadillac tax, they would no longer be able to offer a plan that meets the ACA minimum value requirement. It seems hard to believe that a plan could have premiums that are more than $10,200 annually for one person yet have an actuarial value of only 60 percent. And with the ever-increasing cost of health care, premiums will only continue to rise over the next three years. More and more employers will have to make difficult decisions about their benefit plans.

There is hope that legislators will add an actuarial value safe harbor into the Cadillac tax provision so that employers who are offering a plan that meets an actuarial value of less than 90 percent will be exempt from the Cadillac tax. Otherwise, an applicable large employer that is subject to the ACA’s “play or pay” rules may have to pay the Cadillac tax, and will also be fined for not offering a plan that meets the minimum value requirements.

Read UBA’s latest press release for the percentages of employers likely to be subject to the Cadillac tax broken down by actuarial value.

Download the free 2015 Health Plan Survey Executive Summary for additional information on health plan cost trends across the U.S., including employer contributions and costs for employees.

To benchmark your plan against others in your region, industry or size bracket, contact a UBA Partner near you to run a custom benchmarking report.


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