by US Rx Care | Oct 24, 2018 | Uncategorized
After managing to jettison the individual mandate requiring U.S. adults to carry health coverage, efforts are afoot in Congress to do away with the Affordable Care Act employer mandate, although there seem to be mixed views on the reality of the legislation making it to the president’s desk.
One bill, HR 4616, is currently in the House Ways and Means Committee awaiting further amendments before a vote can be made on it. The measure would suspend penalties for the employer mandate for 2015 through 2019, as well as postpone implementation of the “Cadillac tax” on high-cost employer-sponsored health plans for one more year, until 2022.
The Congressional Budget Office and the congressional Joint Committee on Taxation have estimated that the bill would increase the size of the federal budget deficit by $39.5 billion over the period from 2019 through 2028. This would be the result of decreased government revenue and additional spending.
The employer mandate requires applicable large employers (or ALES, which are firms with 50 or more full-time or full-time equivalent workers) to offer affordable health coverage that also covers certain minimum essential benefits as required by the ACA.
Employers that fail to offer health insurance could be fined up to $2,300 for every employee that wasn’t offered coverage, and up to $3,480 per employee who is eligible for an ACA exchange premium tax credit because they do not have access to affordable employer-sponsored health coverage.
This being an election year, however, pundits have told trade publications that they don’t think the legislation will be brought to vote in 2018.
For now, if you are an ALE that’s required to secure health insurance for your workers, you still have a number of obligations under the ACA. There has been no legislation that rolls back any requirements on employers in regards to securing coverage for their employees.
With that in mind, if you’re an ALE you need to keep the following top of mind:
The IRS is assessing penalties for ACA infractions – Employers that are flagged for possibly not providing affordable coverage that covers the minimum essential benefits, or have made filing errors, may receive a 226-J letter from the IRS.
The letters explain that the employer may be liable for a penalty, based on information obtained by the IRS from Forms 1095-C filed by the employer for a specific coverage year, and tax returns filed by the employer’s employees. If you receive a letter, you have 30 days to respond.
If you fail to respond, within 30 days, it will result in a final assessment of the proposed penalty.
You must still file Forms 1094-C and 1095-C, or risk a penalty for not doing so.
The IRS uses information on Forms 1095-C in applying the ESRP (employer shared responsibility payment) rules and deciding whether to assess penalties against the reporting employer. If you’re an ALE, you are required to file Form 1095-C annually with the IRS as well as send the forms to your employees. You must provide the forms to employees by Jan. 31, and to the IRS by March 31 of every year.
Failure to submit the forms to the IRS or provide them to employees as required can result in penalties. The penalties can be doubled if the IRS finds that an employer intentionally flouted the filing requirement.
Summary of Benefits and Coverage forms are still required – Not only are they still required, but the Centers for Medicare and Medicaid Services has, on occasion, rolled out new language and information that it requires all SBCs to include.
The SBC is designed so that your employees can easily compare plans, so they can make an informed decision about which health plan they should choose from your offerings.
If you fail to provide an SBC to your staff, it can result in penalties of $1,128 per employee.
The takeaway
While machinations continue in Washington, the full spectrum of employer-related rules of the ACA still applies. The administration has introduced new rules that would allow for “association” plans to be sold, but as of now no such plans have hit the market.
And due to the complexities of the ACA and the difficulty in having unlike employers band together for coverage, the marketplace may be slow to come up with products that are ACA-compliant (including complying with the affordability requirements of the law, as well as providing the minimum essential benefits as prescribed by the law).
That means ALEs should just continue complying with the law fully.
by US Rx Care | Oct 17, 2018 | Uncategorized
The Trump administration has taken another step in its effort to roll out short-term health insurance plans by extending the amount of time such plans can be in effect.
Under the new rule, which was issued August 1, short-term plans can be purchased for up to 12 months and policyholders can renew coverage for a maximum of 36 months.
These controversial plans, though, do not have to comport with the Affordable Care Act, like not covering 10 essential benefits and not having to cover pre-existing conditions – and they can even exclude coverage for medications.
As a result of the changes, the Centers for Medicare and Medicaid Services predicts that an additional 600,000 people will enroll in short-term plans in 2019, jumping to 1.6 million individuals by 2021. Part of that will include some 200,000 people who drop their plans in the individual market and sign up for short-term coverage.
That’s compared with about 122,500 people enrolled in short-term plans in 2017, according to the National Association of Insurance Commissioners. But enrollment is expected to surge now that the individual mandate penalty has been eliminated.
That said, CMS predicts that premiums for 2019 ACA exchange plans will rise 1%, while net premiums will decrease 6%.
The final rule goes into effect 60 days after it is posted, but state regulators would still need to approve any new plans that come to market. Health insurers may start selling short-term plans that last up to a year in a few months. The new regulation, however, does not require insurers to renew the policies.
Health insurers and consumer advocates have assailed the plans, saying they provide limited coverage and that many people won’t understand just how skimpy the plans are when they buy them.
They also said that if younger and healthier people gravitated to these less expensive plans, it would leave an older, sicker pool of enrollees in ACA marketplace plans, which could further force rates higher in the marketplaces.
New rules change the game
The renewability portion of the regulations was modeled on COBRA plans, which allow people who leave a job to continue on the same plans they had while on the job, but they have to foot the bill themselves.
Plans will be able to exclude someone based on pre-existing conditions. The plans also do not have to cover the ACA’s 10 essential health benefit categories, such as maternity care or prescription drugs, for example.
Insurers that sell these plans will be required to:
- Prominently display wording in the contract that the plans are exempt from some ACA provisions.
- List coverage exclusions and limitations for pre-existing conditions.
- List what health benefits are covered.
- Explain if the plans have lifetime or annual dollar limits on health benefits.
By skirting many of the ACA provisions, the short-term plans offer less coverage and are hence less expensive.
That said, states will be able to regulate these plans as they see fit. For example, California limits the time someone can be enrolled in a short-term plan, and it bars renewals.
by US Rx Care | Oct 9, 2018 | Uncategorized
A new study has found that many people in employer-sponsored health plans are enrolling in plans that are costing them more than they ought to be paying.
Many employees choose pricey plans with low deductibles, which force them to spend more up front on premiums to save just a few hundred dollars on their deductible. As result, many employees are spending hundreds, if not thousands of dollars more on their health care/health coverage than they need to.
A study by Benjamin Handel, a U.C. Berkeley economics professor, found that the majority of employees at one company he studied were in the highest-premium, lowest-deductible plan ($250 a year) their employer offered. This resulted in them spending about $4,500 a year on health care, compared to only $2,032 had they gone with the cheaper plan (which had a $500 annual deductible) and received exactly the same care.
Additionally, the research paper “Choose to Lose: Health Plan Choices from a Menu with Dominated Options,” published in the Quarterly Journal of Economics, found that more choices also didn’t yield more savings for individuals in employer-sponsored plans.
The study examined the health plan choices that 23,894 employees at one large U.S. employer made. They were able to choose from 48 different combinations of deductibles, pharmaceutical copayments, co-insurance and maximum out-of-pocket expenses. All of the plans offered the same network of doctors and hospitals.
As a result, workers paid an extra $528 in premiums for the year to keep their deductible at $750 instead of $1,000. In other words, they paid $528 to save $250.
For nearly every plan with a deductible of $1,000 (the highest deductible available for those seeking single coverage), the additional premiums required to reduce the deductible, with all other plan attributes fixed, exceeded the maximum possible out-of-pocket savings provided by the lower deductible.
The study also found that the lowest-paid workers were significantly more likely to choose dominated plans (the most expensive).
Both of the studies above looked at plan options with relatively low deductibles when compared with high-deductible health plans, which have become more popular with time.
In 2018, the minimum deductible for an HDHP is $1,350 for an individual and $2,700 for a family. But, under current regulations, total out-of-pocket expenses are limited to $6,650 for an individual and $13,300 for a family with a HDHP.
While these plans have gotten a bad rap lately, a study published by the National Bureau of Economic Research found they are often cheaper for employees, as well.
The authors, both from the University of Wisconsin-Madison, found in a study of 331 companies, that at firms offering both a HDHP and a low-deductible plan, selecting the HDHP typically saves more than $500 a year.
Strategies
To help offset the cost of a HDHP, you can offer your staff health savings accounts (HSAs), which offer a tax-advantaged way to save for health care costs. While there are annual contribution limits, HSAs allow your employees to roll over their balance from year to year. The funds they contribute to their HSA are pre-tax, so the savings are significant.
The Wisconsin-Madison authors surmised that many people choose the costlier health plan for two reasons:
- Inertia – It’s easier for consumers to stick with their old plan rather than crunch the numbers to see if a new plan may be more appropriate.
- Deductible aversion – When employees see a low-deductible plan they may associate it with better quality care, even though the network and coverage may be the same.
The best strategy to guide your staff to the plan that best suits them is to educate them. You should have workshops for your staff prior to open enrollment, to help them understand why the higher-deductible plan may often be the best choice for them if they want to save money on their overall premium and out-of-pocket expenses.
Ideally, you could encourage them to set aside the same amount of money in their HSA that would be enough to cover their deductible. This way, your employees would not feel burdened by health expenses they may have to pay for during the year.
by US Rx Care | Oct 5, 2018 | Uncategorized
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