As more workers struggle with stress in and out of the workplace, some are requesting time off in order to cope. This is not a problem for companies with sick-day policies that allow employees to use their paid personal days for any reason. In other workplaces, people who are honest about asking for a mental health day can sometimes be looked upon as suffering from a mental health issue. Regardless of how your organization may handle these issues, it is important to respect employees’ right to privacy and avoid probing for sensitive information about a person’s well-being.
On July 17, 2019, the U.S. House of Representatives voted across bipartisan lines to repeal the ACA’s Cadillac Tax. The final vote in the House was 419-6 in favor of repeal. The tax was designed as a penalty tax on high-value health coverage, to convince health plan sponsors to reduce benefits and keep costs down by discouraging overly generous plans. However, both employers and union groups opposed the tax.
This repeal is good news for plan sponsors but the measure still has to pass the Senate. One of the challenges to Senate passage is that the tax was originally included to help finance the ACA. Repealing the tax without replacing it with some other revenue source arguably leaves a sizable hole in the federal budget. It is estimated by the Congressional Budget Office that repealing the tax will cost the government approximately $196.9 billion over 10 years.
The Cadillac Tax, originally slated to go into effect in 2018, has been delayed by Congress repeatedly. After several delays, the 40% excise tax on the cost of health coverage that exceeds predetermined threshold amounts goes into effect in 2022. Currently, those thresholds, which will be updated prior to 2022, are $10,200 for individual coverage and $27,500 for family coverage.
Diversified Group will keep you up to date on any additional action on this topic.
The President’s Executive Order Demands Healthcare Cost Transparency
We have long chronicled the huge price swings that often exist among healthcare providers in the same locales. To combat this situation and help patients find low cost, high-quality care, the President recently signed an executive order directing HHS to develop rules requiring hospitals to publish clear and understandable pricing that reflects what people will actually pay for tests, surgeries and other procedures. HHS also wants the rules to ensure that providers and insurers give patients information about their potential out-of-pocket costs before receiving care.
While lobbyists argue that this requirement will only drive prices higher, the administration sees enabling patients to know how much hospitals charge as a relatively simple idea – one that will promote greater competition for health services and reduce costs for consumers.
When the Administration required hospitals to post prices online earlier this year, the step had little impact. Data included billing codes that few people could decipher and list prices which few people ever pay. While the rules for this order must be developed, it is intended to require that hospitals disclose what patients and insurers actually pay in a format that patients can understand.
We’re certain that the rules will not be written overnight and not without loads of input. But if an executive order can lead to an environment where patients can understand what costs lie ahead and how to find more affordable, high-quality options, then let’s give it a shot.
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On June 25, 2019, Governor Ned Lamont signed into law Connecticut’s Paid Family and Medical Leave law. Below are some highlights from the new law:
|Connecticut Paid Family and Medical Leave Law
||June 25, 2019 – CT Governor signs legislation into law;
January 1, 2021 – Employee payroll tax begins;
January 1, 2022 – Benefits become available and final regulations are due;
July 1, 2022 – Annual notice of benefits to all new employees required.
||New state agency, the Paid Family Leave Insurance Authority.
||Employers with at least one employee working in the state. The law exempts municipalities, local or regional boards of education, and nonpublic elementary and secondary schools. Municipal union employees can bargain to be covered under the state program. If the union bargains and is granted inclusion, non-union employees for that municipality will automatically be included.
||An employee who has earned at least $2,325 in a base period (ex: first four of the five most recently completed calendar quarters) and have been employed at least 3 months preceding the leave request. Available to full-time, part-time and former employees (if they apply within 12 weeks of losing their job).
||Family leave to bond with a newborn or adopted child. Medical leave to care for a family member with a serious illness (family member’s include spouse, child, parent, parent-in-law, stepparent, others who are equivalent to a family member, grandchild, grandparent or sibling). Medical leave is also available for the employee’s own serious illness. Paid leave is also available to serve as an organ or bone marrow donor.
Intermittent leave will also be allowed except in the case of bonding with a newborn or adoption.
|Length of Leave
||Up to 12 weeks of paid family and medical leave during a 12 month period, with another two weeks available for a serious health condition related to pregnancy.
||95% of base weekly earnings up to 60 times the minimum wage rate (maximum weekly amount will be approximately $780 per week in 2022 up to $900 per week in 2023).
||Beginning January 1, 2021, a new payroll tax up to .5 percent of the employee’s wages will be deducted to fund the program. Wages are capped at the Social Security wage base ($132,900 in 2019).
||If an employee is receiving worker’s compensation, unemployment compensation and another other state or federal wage replacement, they will not be eligible for benefits under the CT Paid Family and Medical Leave.
|Private Employer Plans
||Connecticut employers can opt out of the state program if they have an employer sponsored private plan that provides the same or more generous benefit. Private plans must be approved by a majority of covered employees.
The above is a brief overview of the law as it stands today and is subject to change. Final regulations are due by January 1, 2022 which is the same date that benefits are first payable. The regulations should clarify issues surrounding implementation, coordination with CT’s unpaid FMLA leave and provide sample model notices. Diversified Group will keep you informed of any developments.
CNBC recently featured a story about Walmart and their history of not only suggesting that employees visit Centers of Excellence for surgeries and second opinions but flying them all expenses paid. The case study revealed that between 2015 and 2018, more than half of their employees suffering from spine pain were able to avoid surgery by seeking treatment at Mayo Clinic.
Shorter hospital stays, lower readmission rates, fewer episodes of postsurgical care and a faster return to work were other benefits gained when results were compared to patients who chose other hospitals for treatment. Walmart reported that even though they spent more per surgery at Mayo Clinic than what other hospitals were charging, they saved money because of better outcomes and surgeries that were avoided.
On June 13, 2019, The Departments of Health and Human Services, Labor, and Treasury issued the final rule expanding health reimbursement accounts (HRAs) which allows employers greater flexibility in the breadth and scope of HRAs available for their employees.
Since 2013, regulations have prohibited employers from paying for an employee’s individual health insurance policy and required that HRAs offered to employees be integrated with a group health plan. In 2016, Qualified Small Employer HRAs (QSEHRA) were developed to allow small employers (under 50 lives) to offer an HRA with IRS defined annual limits (in 2019 $5,150/individual and $10,450/family) to be used to pay for individual health premiums of minimum essential coverage when the employer does not offer a group health plan. In October of 2017, President Trump issued an Executive Order that in part directed the agencies to end rules that prohibited employers from paying for individual health insurance premiums through an HRA.
Two New HRA Options arising out of the Executive Order effective January 1, 2020 are:
- Individual Coverage HRA
- Excepted Benefit HRA
Individual Coverage HRA:
This HRA would allow employers to provide tax-free funding to an employee’s HRA account that could be used to purchase individual health insurance policies. This differs from the QSEHRA in that there is no requirement around the size of the employer.
- Employers cannot offer both a traditional group health plan and an Individual Coverage HRA to similarly situated employees. However, they can choose a group of employees to offer either the group health plan or the HRA based on a specific class:
- Full-Time Employees*
- Part-Time Employees*
- Seasonal Employees
- Employees covered by a collective bargaining agreement
- Employees who have not satisfied a waiting period for coverage
- Non-Resident aliens with no US-based income
- Employees whose primary site of employment is in the same rating area*
- Salaried Employees*
- Non-Salaried Employees*
- Temporary Employees of staffing firms
- Combination of 2 or more of the above*
*Minimum class size requirements will apply depending upon the classes defined (those with asterisk), whether some classes have a group health plan offered, and the size of the employer. (For example, the minimum class size is 10 for employers with 100 or less employees and 20 employees for an employer with 200 or more employees. The minimum class size for mid-sized employers (between 100 to 200) is 10 percent of the total number of employees.)
- The HRA must be offered on the same terms and conditions to all similarly situated employees. Dollar amounts, however, can vary based on age and number of dependents;
- Employees must have the ability to opt out of the HRA and waive future HRA reimbursements at least annually;
- HRA sponsors must be able to vary their HRA terms to account for different effective dates for individual coverage which can vary based on enrollment;
- If an employee stops being enrolled in an individual policy, they forfeit the HRA prospectively;
- Loss of the HRA for reasons other than failing to maintain individual coverage may qualify the HRA for COBRA;
- Individuals covered by the HRA must attest to being enrolled in an individual policy providing minimum essential coverage. Employers can rely on their employees attestation statement as accurate. No further verification is required;
- Individual coverage can be purchased on or off the exchange. It also includes student health coverage;
- Employers can specify reimbursements – premiums only, non-premium cost shares, or particular medical expenses per existing HRA rules. An Individual Coverage HRA that reimburses solely for premiums would not disqualify contributions to an HSA if the individual otherwise meets the requirements (enrollment in a HDHP);
- Under some circumstances, an Individual Coverage HRA may reimburse for Medicare premiums;
- Employers must provide a notice to participants which outlines the terms and conditions of the HRA at least 90 days before the start of the plan year;
- Individual Coverage HRAs are not considered ERISA plans;
- Individual Coverage HRAs are considered an offer of minimum essential coverage for 4980H(a) employer shared responsibility provision. If the Individual Coverage HRA is also deemed affordable, the offer would also satisfy the 4980H(b) employer shared responsibility provision;
- Employees being offered an affordable Individual Coverage HRA will not be eligible for a premium tax credit from the exchange (also must be stated clearly in the employee notice);
- Affordability means that health insurance for the employee should cost no more than 9.86% (indexed annually) of the employee’s household income, using the lowest cost silver plan for self only coverage on the local exchange and incorporating the employer’s contributions. Because this would be a logistical impossibility for most employers, the final notice includes 3 safe harbors to determine affordability:
- Location: This safe harbor allows employers to use the lowest cost silver plan where the employer’s primary site of employment is located as the standard for affordability calculations;
- Calendar Year: Employers who implement an individual coverage HRA for the following calendar year could use the existing year’s estimates as a baseline for affordability;
- Affordability: Since it is unlikely that employers know their employee’s household income, they can use the already established affordability safe harbors of W-2, rate of pay or federal poverty line.
Excepted Benefits HRA:
Currently, only HRAs classified as an excepted benefit HRA (reimburses only limited expenses, such as vision or dental) can be stand-alone/not integrated with the medical plan. The new Excepted Benefit HRA would allow a stand-alone HRA to also reimburse cost sharing expenses and still qualify as an excepted benefit if it meets certain requirements:
- The maximum benefit cannot exceed $1,800 for the plan year (indexed annually);
- Must be offered alongside a traditional group health plan although employees do not have to be enrolled in the traditional plan;
- The HRA must be available on the same terms for all similarly situated individuals regardless of health factor. Similarly situated means job classification, such as full-time, part-time, different geographic locations, union, non-union, and different occupations or even dates of hire or length of service ;
- Reimburses cost sharing expenses as well as premiums for excepted benefits (such as vision, dental, std), short-term medical plans, and COBRA premiums (individual or group premiums, Medicare premiums are not eligible);
- No employer size requirement;
- Can permit rollover of unused amounts;
- Subject to Section 105(h) nondiscrimination rules.
Experience shows that worksite wellness is a big part of every high-quality health plan.
We take exception with a recent JAMA study that said wellness simply isn’t working. While we could point out many reasons why their assessment is short-sighted, our main objection is that their viewpoint was based on the assumption that all wellness programs are the same. Not true!
Corporate Fitness & Health, our worksite wellness subsidiary, has designed, implemented and maintained customized corporate wellness programs for businesses since 1985 – long before worksite wellness became a common part of the employee benefits landscape.
After serving as a consulting resource for clients around the country, CF&H knows that like health plans, there are no cookie-cutter solutions to worksite wellness. Our experience in both the fully-insured and self-funded markets helps CF&H design programs that work because they target the risks driving healthcare costs.
One thing we will concede is that short-term returns from wellness are tough to come by. Health is complex and you simply cannot influence behavior overnight. Yet, CF&H generates 80% participation in the corporate wellness programs it manages and 61% say their program has lowered healthcare costs.
Fostering a culture of wellness within an organization does take time. But when long-term health and well-being, employee attraction and retention and developing a sense of community within the work space are at stake, the investment is more than worthwhile.
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