All posts tagged healthcare reform

Following the November 2016 election, Donald Trump (R) will be sworn in as the next President of the United States on January 20, 2017. The Republicans will also have the majority in the Senate (51 Republican, 47 Democrat) and in the House of Representatives (238 Republicans, 191 Democrat). As a result, the political atmosphere is favorable for the Trump Administration to begin implementing its healthcare policy objectives. Representative Paul Ryan (R-Wis.) will likely remain the Speaker of the House. Known as an individual who is experienced in policy, it is expected that the Republican House will work to pass legislation that follows the health care policies in Speaker Ryan’s “A Better Way” proposals. The success of any of these proposals remains to be seen.

Employers should be aware of the main tenets of President-elect Trump’s proposals, as well as the policies outlined in Speaker Ryan’s white paper. These proposals are likely to have an impact on employer sponsored health and welfare benefits. Repeal of the Patient Protection and Affordable Care Act (ACA) and capping the employer-sponsored insurance (ESI) exclusion for individuals would have a significant effect on employer sponsored group health plans.

Trump Policy Proposals

President-elect Trump’s policy initiatives have seven main components:

  • Repeal the ACA. President-elect Trump has vowed to completely repeal the ACA as his first order of Presidential business.
  • Allow health insurance to be purchased across state lines.
  • Allow individuals to fully deduct health insurance premium payments from their tax returns.
  • Allow individuals to use health savings accounts (HSAs) in a more robust way than regulation currently allows. President-elect Trump’s proposal specifically mentions allowing HSAs to be part of an individual’s estate and allowing HSA funds to be spent by any member of the account owner’s family.
  • Require price transparency from all healthcare providers.
  • Block-grant Medicaid to the states. This would remove federal provisions on how Medicaid dollars can and should be spent by the states.
  • Remove barriers to entry into the free market for the pharmaceutical industry. This includes allowing American consumers access to imported drugs.

President-elect Trump’s proposal also notes that his immigration reform proposals would assist in lowering healthcare costs, due to the current amount of spending on healthcare for illegal immigrants. His proposal also states that the mental health programs and institutions in the United States are in need of reform, and that by providing more jobs to Americans we will reduce the reliance of Medicaid and the Children’s Health Insurance Program (CHIP).

Speaker Ryan’s “A Better Way” Proposal

In June 2016, Speaker Ryan released a series of white papers on national issues under the banner “A Better Way.” With Republican control of the House and Senate, it would be plausible that elected officials will begin working to implement some, if not all, of the ideas proposed. The core tenants of Speaker Ryan’s proposal are:

  • Repeal the ACA in full.
  • Expand consumer choice through consumer-directed health care. Speaker Ryan’s proposal includes specific means for this expansion, namely by allowing spouses to make catch-up contributions to HSA accounts, allow qualified medical expenses incurred up to 60 days prior to the HSA-qualified coverage began to be reimbursed, set the maximum contribution of HSA accounts at the maximum combined and allowed annual high deductible health plan (HDHP) deductible and out-of-pocket expenses limits, and expand HSA access for groups such as those with TRICARE coverage. The proposal also recommends allowing individuals to use employer provided health reimbursement account (HRA) funds to purchase individual coverage.
  • Support portable coverage. Speaker Ryan supports access to financial support for an insurance plan chosen by an individual through an advanceable, refundable tax credit for individuals and families, available at the beginning of every month and adjusted for age. The credit would be available to those without job-based coverage, Medicare, or Medicaid. It would be large enough to purchase a pre-ACA insurance policy. If the individual selected a plan that cost less than the financial support, the difference would be deposited into an “HSA-like” account and used toward other health care expenses.
  • Cap the employer-sponsored insurance (ESI) exclusion for individuals. Speaker Ryan’s proposal argues that the ESI exclusion raises premiums for employer-based coverage by 10 to 15 percent and holds down wages as workers substitute tax-free benefits for taxable income. Employee contributions to HSAs would not count toward the cost of coverage on the ESI cap.
  • Allow health insurance to be purchased across state lines.
  • Allow small businesses to band together an offer “association health plans” or AHPs. This would allow alumni organizations, trade associations, and other groups to pool together and improve bargaining power.
  • Preserve employer wellness programs. Speaker Ryan’s proposal would limit the Equal Employment Opportunity Commission (EEOC) oversight over wellness programs by finding that voluntary wellness programs do not violate the Americans with Disabilities Act of 1990 (ADA) and the collection of information would not violate the Genetic Information Nondiscrimination Act of 2008 (GINA).
  • Ensure self-insured employer sponsored group health coverage has robust access to stop-loss coverage by ensuring stop-loss coverage is not classified as group health insurance. This provision would also remove the ACA’s Cadillac tax.
  • Enact medical liability reform by implementing caps on non-economic damages in medical malpractice lawsuits and limiting contingency fees charged by plaintiff’s attorneys.
  • Address competition in insurance markets by charging the Government Accountability Office (GAO) to study the advantages and disadvantages of removing the limited McCarran-Ferguson antitrust exemption for health insurance carriers to increase competition and lower prices. The exemption allows insurers to pool historic loss information so they can project future losses and jointly develop policy.
  • Provide for patient protections by continuing pre-existing condition protections, allow dependents to stay on their parents’ plans until age 26, continue the prohibitions on rescissions of coverage, allow cost limitations on older Americans’ plans to be based on a five to one ratio (currently the ratio is three to one under the ACA), provide for state innovation grants, and dedicate funding to high risk pools.

Speaker Ryan’s white paper also addresses more robust protection of life by enforcing the Hyde Amendment (which prohibits federal taxpayer dollars from being used to pay for abortion or abortion coverage) and improved conscience protections for health care providers by enacting and expanding the Weldon Amendment.

Speaker Ryan also proposes other initiatives including robust Medicaid reforms, strengthening Medicare Advantage, repealing the Independent Payment Advisory Board (IPAB) that was once referred to as “death panels,” combine Medicare Part A and Part B, repealing the ban on physician-owned hospitals, and repealing the “Bay State Boondoggle.”

Process of Repeal

Generally speaking, the process of repealing a law is the same as creating a law. A repeal can be a simple repeal, or legislators can try to pass legislation to repeal and replace. Bills can begin in the House of Representatives, and if passed by the House, they are referred to the Senate. If it passes the Senate, it is sent to the President for signature or veto. Bills that begin in the Senate and pass the Senate are sent to the House of Representatives, which can pass (and if they wish, amend) the bill. If the Senate agrees with the bill as it is received from the House, or after conference with the House regarding amendments, they enroll the bill and it is sent to the White House for signature or veto.

Although Republicans hold the majority in the Senate, they do not have enough party votes to allow them to overcome a potential filibuster. A filibuster is when debate over a proposed piece of legislation is extended, allowing a delay or completely preventing the legislation from coming to a vote. Filibusters can continue until “three-fifths of the Senators duly chosen and sworn” close the debate by invoking cloture, or a parliamentary procedure that brings a debate to an end. Three-fifths of the Senate is 60 votes.

There is potential to dismantle the ACA by using a budget tool known as reconciliation, which cannot be filibustered. If Congress can draft a reconciliation bill that meets the complex requirements of our budget rules, it would only need a simple majority of the Senate (51 votes) to pass.

Neither President-elect Trump nor Speaker Ryan has given any indication as to whether a full repeal, or a repeal and replace, would be their preferred method of action.

The viability of any of these initiatives remains to be seen, but with a Republican President and a Republican-controlled House and Senate, if lawmakers are able to reach agreeable terms across the executive and legislative branches, some level of change is to be expected.

Minimum essential coverage (MEC) is the type of coverage that an individual must have under the Patient Protection and Affordable Care Act (ACA). Employers that are subject to the ACA’s shared responsibility provisions (often called “play or pay”) must offer MEC coverage that is affordable and provides minimum value.

In the fall of 2015 the IRS issued Notice 2015-68 stating it was planning to propose regulations on reporting MEC that would, among other things, require health insurance issuers to report coverage in catastrophic health insurance plans, as described in section 1302(e) of the ACA, provided through an Affordable Insurance Exchange (an Exchange, also known as a Health Insurance Marketplace). The notice also covered reporting of “supplemental coverage” such as a health reimbursement arrangement (HRA) in addition to a group health plan.

Recently, the IRS released the anticipated proposed regulations, incorporating the guidance given in Notice 2015-68. These regulations are generally proposed to apply for taxable years ending after December 31, 2015, and may be relied on for calendar years ending after December 31, 2013.

The proposed regulations provide that:

  1. Reporting is required for only one MEC plan or program if an individual is covered by multiple plans or programs provided by the same provider.
  2. Reporting generally is not required for an individual’s eligible MEC only if the individual is covered by other MEC for which section 6055 reporting is required.

These rules would apply month by month and individual by individual. Once finalized, the regulations would adopt the same information provided in the final instructions for reporting under sections 6055 and 6056 of the ACA.

For examples under the first rule and more detail on the second rule, as well as how to avoid penalties, view UBA’s ACA Advisor, “Reporting Minimum Essential Coverage”.

Originally published by www.ubabenefits.com

The Affordable Care Act (ACA) has brought about many changes to the health insurance industry. As we are now in the sixth year of implementation of the Act, we are seeing more changes coming just around the corner.

Generally speaking, most health plans can be classified into two categories: HMO and PPO. With an HMO plan, you choose your physician group where you will seek services, and you choose a primary care physician that you will see for all of your needs, who will refer you to a specialist or other service facility, if needed. The HMO model is designed to be as cost-effective as possible, only providing services when the physician deems it necessary, or solely for the benefit of the patient.

Due to the ACA, with an HMO plan, a woman is no longer required to get a referral from her primary care physician to an OB-GYN, and a parent is not required to get a referral to a pediatrician for his or her children even though neither are classified as primary care physicians.

In contrast, a PPO plan has more flexibility for the patient. With a PPO plan you are encouraged to see physicians and providers that are participating in your plan’s network, but are not required to do so. You can, in fact, see any doctor or provider that you wish, when you wish to see them, and without a referral from your primary care physician.

However, times they are a-changin’. Beginning January 1, 2017, Covered California, California’s state insurance exchange, will require both HMO and PPO enrollees to specify their primary care physician during the enrollment process. If one is not selected, the plan will select one for the plan participant. A plan participant is allowed to change their primary care physician at any time. Right now, this is only being implemented for individual plan subscribers.

It is expected that this change will be implemented for group PPO plan subscribers in 2018.

Beginning in 2012, the ACA implemented the Patient-Centered Outcomes Research Institute (PCORI) fee. This is a charge of $1 to $2 per enrollee, per year in a plan. If the plan is fully insured, the fee is paid to the government directly by the insurance carrier. If the plan is self-funded it is paid by the plan sponsor using IRS Form 720 and is due by July 31 for the previous plan year.

The purpose of the PCORI is to help analyze the overall costs of health care and identify trends to find ways to best reduce the overall cost of health care.

HMOs like Kaiser Permanente have fully integrated information systems that allow them to track each patient electronically so that they can see everything about the patient in one place. By tracking each patient, notes from the nurses and physicians, treatments, and medications, they can track costs and trends easily by mining the data from the system.

Most PPO plans do not track this data, in part because patients in the past have not had to choose a primary care physician or provider group. When they can see whomever they choose, it makes tracking of this data very difficult across multiple providers. In addition, participants in a small group, fully-insured plan are pooled with other small groups where claim data is not shared with the plan sponsor, and there is no need to track it closely as the information at the patient level is not relevant to the actuaries that calculate plan costs and premiums.

However, that is going to change. In order to study the overall cost of medical care, identify trends, and discover ways to curb inflating costs, data is needed, and selecting a primary care physician for plan participants is the first step.

Cigna, which provides both HMO and PPO plans, has implemented a Collaborative Care Program with more than 120 physician groups in 29 states, including provider group Palo Alto Medical Foundation (PAMF) in the San Francisco Bay area. By tracking client claims data and patient outreach programs to help patients to remember to take their medications as prescribed and continue with follow up treatments, PAMF has been able to reduce its inflation trend by 5 percent compared to other providers in the San Francisco Bay Area. The goal is to duplicate and build on the success that Cigna has already shown through its program and control and reduce the cost of health care.

So when you or your employees are applying for health insurance, make sure that primary care physician information is handy, because it is going to be needed.

Originally published by www.ubabenefits.com

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 UBABenefits.com

 

0603The Department of Health and Human Services (HHS) recently issued a final rule implementing Section 1557 of the Patient Protection and Affordable Care Act (ACA), which will take effect on July 18, 2016. If entities need to make changes to health insurance or group health plan benefit design as a result of this final rule, such provisions have an applicability date of the first day of the first plan year beginning on or after January 1, 2017.

ACA Section 1557 provides that individuals shall not be excluded from participation, denied the benefits of, or be subjected to discrimination under any health program or activity which receives federal financial assistance from HHS on the basis of race, color, national origin, sex, age, or disability. The rule applies to any program administered by HHS or any health program or activity administered by an entity established under Title I of the ACA. These applicable entities are “covered entities” and include a broad array of providers, employers, and facilities. State-based Marketplaces are also covered entities, as are Federally-Facilitated Marketplaces.

The final regulations are aimed primarily at preventing discrimination by health care providers and insurers, as well as employee benefits programs of an employer that is principally or primarily engaged in providing or administering health services or health insurance coverage, or employers who receive federal financial assistance to fund their employee health benefit program or health services. Employee benefits programs include fully insured and self-funded plans, employer-provided or sponsored wellness programs, employer-provided health clinics, and longer-term care coverage provided or administered by an employer, group health plan, third party administrator, or health insurer.

Affected employers include:

  • Hospitals
  • Nursing homes
  • Home health agencies
  • Laboratories
  • Community health centers
  • Therapy service providers (physical, speech, etc.)
  • Physicians’ groups
  • Health insurers
  • Ambulatory surgical centers
  • End stage renal dialysis centers
  • Health related schools receiving federal financial assistance through grant awards to support 40 health professional training programs

When determining if it receives federal financial assistance through Medicaid payments, meaningful use payments, or other payments a physician or physicians’ group would not count Medicare Part B payments because that is not considered federal financial assistance. In the proposed rule, HHS estimated that most physicians will still be a covered entity because they accept federal financial assistance from other sources. The final rule includes the same estimate of physicians receiving federal financial assistance as in the proposed rule because almost all practicing physicians in the United States accept some form of federal reimbursement other than Medicare Part B. As a result, most physicians are reached by this rule.

Covered entities must take steps to notify beneficiaries, enrollees, applicants, or members of the public of their nondiscrimination obligations with respect to their health programs and activities. Covered entities are required to post notices stating that they do not discriminate on the grounds prohibited by Section 1557, and that they will provide free (and timely) aids and services to individuals with limited English proficiency and disabilities. These notices must be posted in conspicuous physical locations where the entity interacts with the public, in its significant public-facing publications, and on its website home page. In addition, covered entities that employ 15 or more persons must designate a responsible employee to coordinate the entity’s compliance with the rule and adopt a grievance procedure.

For detailed information on how the rule addresses sex, gender, and sexual orientation discrimination, how marketplace plans and third party administrators are affected, discrimination against persons with Limited English Proficiency (LEP) and disabilities, enforcement mechanisms, and the key differences between the proposed and final rule, download UBA’s ACA Advisor, “Nondiscrimination Regulations Relating to Sex, Gender, Age, and More Finalized”.

Originally published by United Benefit Advisors – Read More

New Survey Data Reveals Health Plan Costs, Options by State and Industry

health-care-medical-records-stethoscopeHealth insurance premium renewal rates increased an average of 6.2 percent for all plans in 2015, up from the previous year’s 5.6 percent increase, according to new survey data released from United Benefit Advisors (UBA), the nation’s leading independent employee benefits advisory organization. Small businesses with fewer than 25 employees, which account for five million U.S. employers, were hit the hardest, finds UBA.

“In 2014, employers overwhelmingly utilized early renewal strategies to delay moving to higher cost ACA- compliant plans and keep increases in check,” says Les McPhearson, CEO of UBA. “These delay tactics ran out in 2015 and, as a result, these small businesses (that make up the majority of American businesses), were forced into higher-cost, community-rated ACA plans. Without the negotiating power of bigger groups or the protection from grandmothering, many small employers were left with no cost containment strategies other than reducing coverage.”

Health Plan Costs

In line with previous years’ findings, UBA finds there are significant regional differences in health plan costs. The Northeast continues to be the region with the highest average annual cost per employee in the country, but Alaska tops the chart with an average annual cost of $12,822 per employee.

“To put that in perspective, that is 27.4 percent above the national average of $9,736 per employee annually,” says Matt Weimer, Director of Strategic Solutions for Diversified Insurance Solutions, a UBA Partner Firm. “In fact, Alaska is 11.1 percent above the fifth highest cost state of Massachusetts, which comes in at $11,468 average per employee annually.”

On the other end of the spectrum, Hawaii has the lowest average annual cost per employee, which is 24.5 percent below the national average at $7,610, finds UBA. Put another way, Alaska’s average annual cost is 51.0 percent higher than Hawaii.

“Hawaii is a state that was on the forefront of managed care and adopted an integrated care model as a strategy to address cost, quality, and access over 40 years ago,” explains Lon Wilson, President & CEO of The Wilson Agency, a UBA Partner Firm in Alaska. “Alaska, on the other hand, has resisted most forms of care management, not the least of which is the carrier’s limited ability to contract with physicians. We are just now beginning to see collaboration between payers, providers, and hospitals, but we are way behind the rest of the country. This, coupled with our small population, geographic size, lack of transportation infrastructure, and cultural diversity, add up to a perfect storm of high cost of care, large variations in quality and access challenges,” says Wilson.

Other states that fare better than the national average, and are among the five best states for health plan costs, include Arkansas, New Mexico, Virginia, and Oklahoma at $7,704, $7,793, $7,858, and $7,915, respectively.

Premiums increased the most for singles in Louisiana (23.5 percent) and California (17.2 percent), and families saw the biggest premium increase (7.6 percent) in South Carolina. Connecticut was the only state to see a modest decrease in single premiums (5.1 percent) and decreases in family premiums were largely nonexistent, according to the survey.

Costs and Contributions by Industry

Total costs per employee for the retail, construction, and hospitality sectors are 8.6 percent to 21.2 percent lower than the average, making employees in these industries among the least expensive to cover. Surprisingly, the finance industry eclipsed the government sector—the perennial leader in the highest costs per employee— and now pays, on average, $11,842 per employee, a 16 percent increase from 2014. Government plans still have the third highest average cost per employee ($11,817), yet employee contributions are 45.2 percent ($2,105) less than the average employee contribution of $3,333.

Health Plan Options

UBA finds that more than half (53.7 percent) of all employers offer one health plan to employees, while 28.7 percent offer two plan options, and 17.6 percent offer three or more options.

“The percentage of employers now offering three or more plans is of particular interest since it represents nearly a 28 percent increase over the past five years,” says McPhearson. “More and more, employers are offering expanded choices to employees either through private exchange solutions or by simply adding high-, medium-, and low-cost options, a trend we believe will continue to increase. Not only do employees get more options, but employers can introduce lower-cost plans that ultimately may attract enrollment and lower their costs.”

Originally published by United Benefit Advisors – Read More

 

uba0330picIn the earlier days of the Patient Protection and Affordable Care Act (ACA), a common question among employers and benefit advisors was whether there would still be a need for COBRA, the Federal Consolidated Omnibus Budget Reconciliation Act of 1985. Many people speculated that COBRA would be a thing of the past. This was a logical step for those in the insurance industry. When an employee was faced with the option of paying full cost for continued employer coverage or possibly qualifying for heavily subsidized care on the Marketplace, it seemed to be a “no brainer.” Six years after the passage of the ACA, which was signed into law on March 23, 2010, and three years after the initial launch of the Marketplace in October 2013, COBRA is still a law with which to be reckoned. In a series of articles, I will address COBRA in general and also delve into other related issues, such as mini-COBRA, COBRA and account-based plans, and the interaction of COBRA and Medicare.

First, let us begin with the legal framework and general rule of COBRA, note the exceptions, and perform the basic analysis to see which employers and group health plans are subject to COBRA.

What is COBRA?

COBRA is a federal law which amended the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code (Code), and the Public Health Service Act (PHSA). The provisions found in ERISA and the Code apply to private-sector employers sponsoring group health plans; the PHSA provisions apply to group health plans sponsored by state and local governments. COBRA regulations have been issued by the Internal Revenue Service (IRS) and the Department of Labor (DOL).

The general rule is that COBRA applies to group health plans sponsored by employers with 20 or more employees on more than 50 percent of its typical business days in the previous calendar year. This rule must be broken into its elements, applying the exceptions, and determining whether an employer is subject to COBRA. After that determination is made, it must be determined what plans must be available for continuing coverage and what individuals are entitled to an election of coverage.

Who is an employer?

Most employers are subject to COBRA. An “employer” is a “person for whom services are performed.” Employers include those with common ownership or part of a controlled group pursuant to Code sections 414(b), (c), (m), or (o). Successors of employers, whether by merger, acquisition, consolidation, or reorganization, are also employers. Many times, COBRA issues, and benefits issues in general, are overlooked when companies are merged or acquired.

What group health plans are subject to COBRA? Does not being covered by COBRA relieve employers of the obligation to offer continuation coverage?

The general rule is that group health plans are subject to COBRA. A group health plan is any arrangement that provides medical care, within the meaning of Code section 213 and is maintained by an employer or employee organization.

The first requirement is that the arrangement must provide medical care. This includes medical, dental, vision, and prescription benefits. It does not include life, disability, or long-term care insurance or amounts contributed by an employer to a medical or health savings account (Archer MSA or HSA).

The second prong is that the arrangement must be maintained or established by the employer. This includes multiemployer plans, an employee benefit plan that is maintained pursuant to one or more collective bargaining agreements and to which more than one employer is required to contribute. More than just insurance plans are subject to COBRA. The arrangement may be provided through insurance, by a health maintenance organization (HMO), out of the employer’s assets, or through any other means.

Examples of group health plans subject to COBRA include:

  • Plans provided by an HMO
  • Self-insured medical reimbursement plans
  • Health reimbursement arrangements (HRAs)
  • Health flexible spending accounts (health FSAs)
  • Wellness programs to the extent they provide medical care
  • Treatment programs or health clinics
  • Employee assistance programs (EAPs)

However, there are several group health plan exceptions to COBRA, and the plans excepted by the general rule may still be obligated under another law to provide some sort of continuation coverage.

Exception #1. COBRA does not apply to plans sponsored by the federal government or the Indian tribal governments, within the meaning of Code section 414(d). Although COBRA does not apply to federal governmental plans, the PHSA, amended by COBRA and overseen by the Department of Health and Human Services (HHS), generally requires that state or local government group health plans to provide parallel continuation coverage. Additionally, the Federal Employees Health Benefits Amendments Act of 1988 requires a similar continuation of coverage for federal employees and their family members covered under the Federal Employees Health Benefit Program.

Exception # 2. COBRA does not apply to certain plans sponsored by churches, or church-related organizations, within the meaning of Code section 414(e).

Exception #3. COBRA does not apply to small-employer plans. Generally, a small-employer plan is a group health plan maintained by an employer that normally employed fewer than 20 employees on at least 50 percent of its typical business days during the preceding calendar year.

For multiemployer plans, all contributing employers must have employed fewer than 20 employees on at least 50 percent of its typical business days during the preceding calendar year. The determination of whether a multiemployer plan is a small-employer plan on any particular date depends on the contributing employers on that date and the size workforce of those employers during the preceding calendar year. The regulations clarify:

“If a plan that is otherwise subject to COBRA ceases to be a small-employer plan because of the addition during a calendar year of an employer that did not normally employ fewer than 20 employees on a typical business day during the preceding calendar year, the plan ceases to be excepted from COBRA immediately upon the addition of the new employer. In contrast, if the plan ceases to be a small-employer plan by reason of an increase during a calendar year in the workforce of an employer contributing to the plan, the plan ceases to be excepted from COBRA on the January 1 immediately following the calendar year in which the employer’s workforce increased.”

Who are employees and what employees count toward the threshold?

All common law employees of the employer are taken into account when determining if an employer is subject to COBRA. Therefore, self-employed individuals, independent contractors and their employees and independent contractors, and directors of corporations are not counted.

The threshold number of employees is 20, counting both full-time and part-time common law employees.

Each part-time employee counts as a fraction of a full-time employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full time.

Next Step: The who, when, and how long for COBRA coverage

Now that we know generally who is subject to COBRA from an employer standpoint and what group health plans must be offered, the next step is to determine – from an individual’s standpoint – who is eligible for COBRA coverage, when that person is entitled to coverage, and how long the continuation coverage lasts.

For an in-depth look at qualifying events that trigger COBRA, the ACA impact on COBRA, measurement and look-back issues, health FSA carryovers, and reporting on the coverage offered, request UBA’s ACA Advisor, “COBRA and the Affordable Care Act”.

Originally published by United Benefit Advisors – Read More

0328ubaThe 2017 Benefit and Payment Parameters (BPP) rule, an annual rule that sets policies relating to the Patient Protection and Affordable Care Act (ACA), has been released by the Centers for Medicare and Medicaid Services (CMS). The 2017 rule contains numerous updates, including the annual open enrollment periods for the individual market, rating areas for small group health plans, guaranteed availability and renewability, broker and agent registration to assist consumers with applying for Exchange coverage, the employer notice system when its employees are determined to be eligible for a tax credit, and exemptions to the individual mandate. The rule also set cost sharing limits for 2017.

In conjunction with the rule, the Department of Health and Human Services (HHS) released an FAQ on the implementation of the 2017 moratorium on the Health Insurance Provider (HIP) fee. The FAQ states that insurers will not be charged the HIP fee for the 2017 fee year, based on 2016 information. Insurers should adjust premiums downward as a result.

Finally, HHS also released a bulletin that extends transitional plans from expiring on October 1, 2017, to the end of 2017 to allow individuals to enroll in an ACA-compliant plan beginning in calendar year 2018, rather than having to account for October through December 2017 prior to the new calendar year.

Cost Sharing Limits

The rule set the 2017 maximum annual limitation on cost sharing at $7,150 for self-only coverage and $14,300 for other than self-only coverage.

Open Enrollment – Exchange

Open enrollment for 2017 and 2018 will be from November 1 until January 31. No new special enrollment periods are being added, and no current special enrollment periods are being eliminated.

Employer Notice

Employers will be notified when an employee actually enrolls in a qualified health plan through the Exchange. Currently employers are notified when an employee is determined to be eligible for federal financial assistance. The Exchange can either notify employers on an employee-by-employee basis or for groups of employees who enroll with financial assistance. The notice employers receive will indicate that the law prohibits retaliation against employees who receive financial assistance on the Exchange.

For more information on standardized plans, small employer definition, reinsurance fees, rating areas, guaranteed availability, and exemptions, download UBA’s ACA Advisor, “Benefit and Payment Parameters Rule and HIP FAQ”.

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Transitional Reinsurance Fee for Self-funded Group Health Plans |Team Kaminsky

Categories: Health Insurance
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By Jennifer Kupper, In-house Counsel for iaCONSULTING, a UBA Partner Firm

The Patient Protection and Affordable Care Act (ACA) established the Transitional Reinsurance Program to help stabilize premiums in the individual private and public marketplaces. The Transitional Reinsurance Fee (TRF) Transitional Reinsurance Feeapplies to fully insured and self-funded major medical plans for 2014, 2015, and 2016, regardless of the policy or plan year. Insurers of fully insured major medical plans and sponsors of self-funded major medical plans are responsible for filing and submitting contributions for the Transitional Reinsurance Program. Self-funded plans include those plans that are partially self-insured and partially fully insured. (There is a limited exception for certain self-insured, self-administered plans.) The self-funded plan’s TPA may assist with the calculation and pay the associated fee on behalf of the plan sponsor.

Contribution Amounts, Tax Implications, and Record Retention

For the 2014 calendar year, the contribution fee was $63 per covered life. The 2015 contribution fee is $44 per covered life, and the contribution fee will be $27 per covered life for 2016. The fee is tax-deductible as a business expense. A plan sponsor may treat the contributions as ordinary and necessary business expenses, subject to any applicable disallowances or limitations under the Internal Revenue Code. This treatment applies whether the contributions are made directly, through a third-party administrator (TPA), or through an administrative-services-only contractor. Plan sponsors must maintain paper or electronic records to substantiate the enrollment count on which the fee is based for at least 10 years.

Contribution Payments Schedules

The Department of Health and Human Services (HHS) gives plan sponsors the option of either paying the fee in full or in two installments. The plan sponsor’s decision is reported at the time the sponsor submits the Contribution Form. If the plan sponsor chose to pay the 2014 fee in full, the payment was due on January 15, 2015. For plan sponsors who chose to pay the fee in two installments, the first installment of $52.50 per covered life was due on January 15, 2015. The second installment of $10.50 per covered life is due on November 15, 2015. For the 2015 payment of $44 per covered life, the plan sponsor may pay the total amount on or before January 15, 2016. If the plan sponsor is making two payments, the first installment of $33 dollars per covered life is due January 15, 2016; the second installment of $11 per covered life is due no later than November 15, 2016.

For comprehensive information on how to calculate covered lives for this fee, including the acceptable methods, request UBA’s ACA advisor, “Frequently Asked Questions about the Transitional Reinsurance Fee (TRF)”.

To understand the difference between the Patient-Centered Outcomes/Comparative Effectiveness (PCORI) Fee and the Transitional Reinsurance Fee, request UBA’s ACA Advisor, “Comparison of PCORI and TRF” for a side-by-side comparison of each, including start and end dates, reporting methods, fee due dates, exclusions, calculation methods and more. UBA also offers a free download of its ACA Advisor on the PCORI Fee, “Frequently Asked Questions about the Patient-Centered Outcomes/Comparative Effectiveness (PCORI) Fee.”

 

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Trade Bill Increases ACA Reporting Penalties; Reinstates Tax Credit | Ohio Employee Health Insurance

Categories: ACA
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By Danielle Capilla, Chief Compliance Officer at United Benefit Advisors

Most employers are familiar with the penalties assessed to applicable large employers that fail to offer minimum essential coverage that is minimum value and affordable. In addition to being required to offer coverage, employers (all applicable large employers, and all employers with self-funded plans regardless of size) are required to complete IRS reporting forms under sections 6055 and 6056 of the Patient Protection and Affordable Care Act (ACA). These forms are used to inform the IRS and employees about the coverage that was offered and enrolled in, allowing IRS Reportingemployees to satisfy the individual mandate and allowing employers to confirm they met the requirement to offer coverage.

On June 29, 2015, President Obama signed the Trade Preferences Extension Act of 2015. The bill included significant increases for failure to file a number of required tax reporting forms, including the forms required under sections 6055 and 6056.

For specifics on the penalty increases as well as information on the Health Coverage Tax Credit (HCTC) which was restored by the Trade Preferences Extension Act of 2015, view UBA’s ACA Advisor: Trade Bill Increases ACA Reporting penalties; Reinstates Tax Credit.

For more information on forms for 6055/6056 reporting, see our recent blog.

A more detailed overview of employer reporting requirements can be found in the UBA document “IRS Issues Final Forms and Instructions for Employer and Insurer Reporting Forms.”

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