IRS Releases Adjusted PCOR Fee

The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of health insurance policies and plan sponsors of self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI), which was established by the Affordable Care Act (ACA). The institute assists, through research, patients, clinicians, purchasers and policy-makers, in making health decisions by advancing the quality of evidence-based medicine. The institute compiles and distributes comparative clinical effectiveness research findings. Under the ACA, all medical plans are responsible for paying the Patient-Centered Outcomes Research fee to the IRS, based on the number of plan participants. If the plan is fully-insured, the insurance carrier pays the fee on behalf of the policyholder. If the plan is self-insured, the employer/plan sponsor must file the Form 720 for the second quarter and pay the fee to the IRS directly.

The IRS recently published its PCOR fee for policy and plan years ending:  January through September 2018 the applicable dollar amount is $2.39, which is multiplied by the number of covered lives determined for the appropriate period. For policy and plan years ending October through December 2018, the applicable dollar amount is $2.45.

All self-insured medical plans, including health FSAs and HRAs must pay the fee unless they are considered an excepted-benefit:

  • A health FSA is an excepted-benefit as long as the employer does not contribute more than $500/year to the accounts and offers another medical plan with non-excepted benefits.
  • An HRA is an excepted-benefit if it only reimburses for excepted-benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and is not integrated with the group medical plan.

The PCORI fee is calculated off the average number of lives covered during the policy year. That means that all parties enrolled will have to be accounted for such as dependents, spouses, retirees, and COBRA beneficiaries. For HRA and health FSA plans, just count each participating employee as a covered life.

Payment of the PCOR fee for the calendar 2018 plan year — the last year the fee applies — will be due by July 31, 2019 (payments may extend into 2020 for non-calendar-year plans).

Clients who have elected to have Diversified Group assist with the PCOR fee calculation can expect an email in June 2019, which will include a copy of the completed Form 720 and a PCOR calculation worksheet with supporting documentation. Clients will need to file the Form 720 by July 31, 2019.

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MassHealth Reinstates HIRD Reporting for Employer Sponsored Health Plans

The Health Insurance Responsibility Disclosure (HIRD) form is a new state reporting requirement in Massachusetts beginning in 2018. This form differs from the original HIRD form that was passed into law in 2006 and repealed in 2014. The 2018 form is administered by MassHealth and the Department of Revenue (DOR) through the MassTaxConnect (MTC) web portal. The HIRD form is intended to assist MassHealth in identifying its members with access to employer sponsored health insurance who may be eligible for the MassHealth Premium Assistance Program. The HIRD form is required annually beginning in 2018. The reporting period opens on November 1 and must be completed by November 30 of the filing year. 

Any employers with six or more employees in Massachusetts in any month during the past 12 months preceding the due date of the form (November 30th of the reporting year) are required to annually submit a HIRD form. An individual is considered to be an employee if they were included on the employer’s quarterly wage report to the Department of Unemployment Assistance (DUA) during the past 12 months. This includes all employment categories, full-time and part-time.

The HIRD form is reported through MassTaxConnect (MTC) web portal (https://mtc.dor.state.ma.us/mtc/_/#1). The MTC is where employer-taxpayers register to file returns, forms and make tax payments. To file your HIRD form, login to your MTC withholding account and select the “file health insurance responsibility disclosure” hyperlink. If you do not have a MTC account or you forgot your password or username, follow the prompts on the site or call the DOR at 614-466-3940.

INFORMATION REQUIRED FOR HIRD REPORTING

The HIRD Form will collect information about the employer’s insurance offerings, including:

  • Plan Information – plan year, renewal date.
  • Summary of benefits for all available health plans – information regarding in and out of network deductibles and out-of-pocket maximums can be found on the plan’s summary of benefits and coverage.
  • Eligibility criteria for insurance offerings – minimum probationary periods and hours worked per week to be eligible for coverage.  Employment based categories, such as full-time, part-time, hourly, salaried.
  • Total monthly premiums of all available health plans
  • Employer and employee shares of monthly premiums – information on employer and employee monthly contributions toward the cost of medical. Employer cost of coverage is your COBRA rate less 2% and less the employee contribution.

Due to the nature of the filing online, employers with employees in Massachusetts will need to complete this reporting themselves. However, Diversified Group may be able to assist you in the gathering of the required information. Please contact us by November 15th  if you need assistance with accumulating data.

Mass.gov has compiled a list of frequently asked questions regarding the HIRD form here.

Economies of Scale for Small Businesses

dgb-embIn late June, the Department of Labor introduced final rules on Association Health Plans (AHP), which will allow bonafide associations to offer healthcare plans to member companies. While we had hoped for a different approach to regulating these plans, association health plans will be regulated by states as MEWAs.

According to the final rules, an association that wants to establish a healthcare plan must already exist for another purpose. In other words, an association cannot be formed for the exclusive purpose of offering healthcare plans to its members. Another stipulation is that new self-funded association health plans cannot be established until April 1, 2019.

Association Health Plans will be exempt from the federal mandate on essential health benefits, but will remain consistent with popular Obamacare rules such as coverage of preexisting conditions and bans on lifetime limits.

While reserve requirements will vary from state to state, we expect that these plans will be quite costly to establish and closely monitored by state regulators. Nonetheless, for large associations with significant cash reserves, we expect this option to make it possible for thousands of small businesses to lower their cost of employee health benefits.

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The end of the health insurance carrier

This article was published on September 27, 2018 on Employee Benefit News, written by Nelson Griswold.

More than six years ago, Aetna CEO Mark Bertolini proclaimed that “the end of insurance companies, the way we’ve run the business in the past, is here.”

At the very least, it’s the beginning of the end for these dinosaurs. The health insurance carriers face slow but steady disintermediation by innovative next generation employers and benefits professionals who are using alternative funding to take control of employer health plans and reduce costs.

Merriam-Webster defines “disintermediation” as “the elimination of an intermediary in a transaction between two parties.” In general, the purpose of disintermediation is the removal of an unnecessary middleman that adds more cost than value to a process.

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Photo Source: Employee Benefit News

In our dysfunctional benefits/healthcare model, the employer delegates to the carrier middleman responsibility for controlling costs by managing the healthcare supply chain, which is all the medical and health-related products and services purchased by employees. The most costly are prescription drugs, hospitalization, outpatient surgery, and physician visits.

The employer wants lower healthcare costs and with a fully insured plan depends on the carrier to control the cost of healthcare by managing this complex supply chain. The carriers, however, consistently have failed to perform this most basic task. Healthcare costs have risen every year since 1960, according to the Centers for Medicare and Medicaid Services. And healthcare costs haven’t just risen but have soared, growing 261% between 1999 and 2016.

The carriers’ spectacular failure is the logical result of grossly misaligned incentives: Carriers financially benefit from rising healthcare costs. From 1999 to 2016, rising healthcare costs drove up health insurance premiums — also known as carrier revenue — by 213%, according to the Kaiser Family Foundation.

As of July, BUCAH stock values had grown an average of more than 255% in the previous five years. We can’t expect carriers to work to reduce healthcare costs and healthcare spending; businesses never work long-term for their customers’ interests against their own financial interests.

The employer that wants to take control of its health plan to reduce costs must disintermediate the carrier and implement some form of self-funding. No, self-funding isn’t new and it isn’t the solution by itself. I’ve written previously that the value in self-funding is control, not cost savings. Self-funding is a means to an end.

With control of the health plan thanks to self-funding, the employer can work with a NextGen benefits professional who knows how to manage the supply chain to both improve the quality and lower the cost of healthcare for the employer and employees.

This does not mean that every employer should disintermediate the carrier and jettison their fully insured plan. Not every employee population is a good fit for a self-funded health plan; some are too sick and need to stay fully insured. But for employers that are a good candidate for self-funding, responsible brokers and advisers have a fiduciary responsibility to their clients to disintermediate the carrier, if possible.

Sounds crazy … extreme? So did today’s $2,000, even $5,000 deductibles, just five years ago.

Benefits professionals and employers today have the power to reduce year-over-year healthcare cost while enhancing benefits and improving medical outcomes. But you can’t do it with a carrier running the show. If the employer can move to self-funding, it’s sheer malpractice not to disintermediate the carrier.

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Why brokers should be afraid of Amazon & Co.’s new venture

This article was published on September 5, 2018 on BenefitsPro, written by Kevin Trokey.

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Source: BenefitsPro

You don’t have to scroll very far in your social media feeds to see posts of outrage and calls for transparency aimed at the players in today’s health care game. The waste, fraud and at times seemingly criminal behavior of some carriers, pharma and providers is a travesty. All of them need to be called to account for their contributions to this mess.

Oh, it’s happening sweetheart

The Bezos-Buffett-Dimon (BBD) health care venture is heating up. While I have serious doubts about their ability to solve the crisis (I believe that will happen on a much smaller, more local scale), there is one thing that this trio will certainly bring: visibility and outrage.

I predict BBD will open the floodgates of horror stories from victims of the travesty that has befallen our health care system. We will see and hear, at the most publicly visible level, stories we are already sharing within our relatively small inner circles on a daily basis:

  • Lives lost due to inaccessibility of care.
  • Couples who opt for divorce so their child can get the care they need.
  • Artificially inflated insurance premiums that have stifled business growth.

I can feel you getting excited. I can hear you saying, “Bring it on, BBD!”

Be careful what you wish for

The spotlight will be shone into every perceived dark corner of the system, with a particular intensity on anyone seen as a middleman. If you aren’t concerned yet, you should be. Make no mistake: benefits advisors will be next.

I know most of you work your asses off every day with the best interests of your clients in mind. I know the decisions you help your clients make are some of the most complex they face. I get it.

But, perception is reality, and you need to brace yourself for the picture BBD will paint. Be prepared to deal with the perception of being nothing more than a distribution channel for carriers—a middleman.

The carriers are going to be a big target. But when your compensation ties you directly to them, when you are contractually tied to them more closely than you are to your clients, it is going to be very difficult to separate yourself from the carriers.

No time to spare

Now is the time to re-engineer your business to separate yourself from the carriers and to formally serve your clients. I get that there are significant changes you will have to make, many of which are not going to be easy. But there are a couple of things that will take you in that direction.

  1. Sit down with each of your clients and have a stewardship meeting where you explain very clearly the various ways in which you bring them value.
  2. Have a transparent conversation about how much you are being paid for delivering that value. If possible, let them know you will be asking the carriers to remove your commissions and switch to a fee-based arrangement.
  3. Educate them about what is broken about the system and the solutions we are starting to see. Let them know you will be there to help them take advantage of every solution that makes sense.

These may be difficult discussions to have but I promise you, they are nowhere near as difficult as the discussion you will have to have if you wait for BBD to tell the story on your behalf.

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3 reasons self-funding is a great option for smaller companies

This article was published on September 10, 2018 on BenefitsPro, written by Darick Bradford.

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Source: BenefitsPro

“Wait, what’s a self-funded plan again? And why does it make sense for my clients?”

These are questions I hear from brokers all the time. And I get it. Self-funding can be complex. But it’s time to get smarter about self-funded health benefit plan designs as this type of product could be a game-changer for your smaller clients.

Let’s start with the basics. What is a self-funded plan? Self-funding is an arrangement where an employer sponsors a self-funded health benefit plan and is financially responsible for employee covered claims up to a certain dollar amount. Covered claims in excess of this dollar amount are reimbursed to the employer through stop-loss insurance.

Larger organizations have used self-funding for years as a way to save costs, but more recently we’re also seeing smaller businesses offering self-funded health benefit plans to their employees.

The numbers back it up. Between 2013 and 2016, the percentage of small employers offering at least one self-funded health benefit plan increased from 13.3 percent to 17.4 percent—a 31 percent increase.

Why are more small businesses offering self-funded health benefit plans? I see three big reasons:

1: Self-funding can be a great tool to attract and retain employees.

When it comes to health care, employees want choice and affordable options. Self-funded health benefit plans can give your employees both. From comprehensive medical to preventive-only coverage, your employees will have a variety of options. And, they’ll have those choices at affordable prices. That can be a key tool to attracting and retaining employees in an increasingly tight labor market.

2: Self-funding provides flexibility.

Employers can customize their self-funded health benefit plans with different deductibles and coinsurance choices to fit their needs, whether it’s a preferred provider organization (PPO) plan design, consumer-directed health plan (CDHP) design, or a reference-based pricing or preventive-only plan design.

3: Self-funding can help lower employer costs.

There are a variety of ways self-funded health benefit plans can help employers lower costs. First, employers can receive refunds if there is a surplus of claim dollars in their prefund account at the end of the plan year. Second, claim dollars are not subject to state health insurance premium taxes, which can help lower costs (premium taxes average around 2 percent). And finally, self-funded health benefit plans give employers access to aggregate health claims data and demographic information. This data — available exclusively under a self-funded arrangement versus traditional health insurance — allows employers to better manage costs and encourage cost-savings measures their employees can practice, such as switching to generic medications, using in-network providers, and selecting a different level of care.

In the end, better understanding the ins and outs of self-funding will mean more choices for your small employer clients—and more success for you.

With some research and education on how self-funding works and the carriers/TPAs that offer administrative services, self-funded health benefit plan designs and stop-loss insurance, you can become well-versed in what’s available in the marketplace and learn if and when a self-funded health benefit plan design could be a potential fit for your smaller clients. Having a solid knowledge is a good start to have the advantage over another broker who didn’t evaluate self-funding as a viable option.

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Medicare D Credible Coverage Notices Due by October 15th

dg-medicare-partd-blogThe Medicare Prescription Drug Improvement and Modernization Act of 2003 implemented prescription drug coverage under Medicare (Medicare D), requiring all employers that offer prescription drug benefits to provide an annual notice of Medicare open enrollment. The notice must go to all Medicare eligible plan participants and qualified beneficiaries before October 15th each year. The notice requirement applies to all employers offering prescription drug benefits regardless of size, whether fully-insured or self-funded, or regardless of ACA grandfathered status. Notification must go to all Medicare eligible plan participants, including active employees and their dependents, retirees and COBRA participants. For most employers, it is easier to issue the notice to all participants as a blanket notice than to identify Medicare eligible employees.

The notice requires that the plan sponsor first determine if their plan offers creditable coverage (meaning it is on average at least as comprehensive as Medicare D coverage), or non-creditable. The Centers for Medicare and Medicaid Services (CMS) provides a simple process to determine whether prescription drug coverage is creditable or not. Once that determination is made, CMS provides model notices to send to participants in both English and Spanish. Notices may be sent separately, included as part of open enrollment or other benefit related materials, or electronically as long as the DOL’s rules on electronic delivery are followed.

Additionally, all plan sponsors are required to notify CMS within 60 days of the start of each plan year as to whether or not their prescription drug plan is creditable or not creditable. This notification is done online at CMS here.

For Diversified Group clients who have elected to have Diversified Group handle your Medicare D notices, DG will determine if the plan is considered creditable or not and will then send the notice either to the client or directly to the plan participant depending upon which service was elected.

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