Improving the ACA: What’s on employers’ wish list

The article below was published on September 27, 2017 by Employee Benefit News, written by John Barkett and Julie Stone.

The Affordable Care Act brought some significant changes to employer-sponsored healthcare, which employers factored into their long-term healthcare strategies. Revised plans were built to comply with the law’s many complex requirements, even though employers hoped for relief from the law’s more onerous provisions. Yet, despite the recent legislative drama and the promise of repeal and replace, seven years later the ACA is still the law of the land.

But just because employers continue to execute on their ACA-compliant healthcare strategies, doesn’t mean they aren’t yearning for improvements to the existing law. In fact, there are a number of items on their “ACA improvements wish list.”

Of greatest concern to employers about the ACA is the Cadillac tax, the excise tax on what the law defines as “high-value” health plans. Even though imposition of the tax is delayed until 2020, most employers believe it will constrain their flexibility to expand or improve benefits as competition for talent intensifies. They also worry that with low limits on plan values and many open questions on the administration of the tax, it has the potential to prevent them from creating a total rewards portfolio aligned with their overall talent strategy.

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Image Source: Benefitnews.com

A 2014 Willis Towers Watson analysis, completed when the Cadillac tax was set to go into effect in 2018, found that nearly half of large U.S. employers would start to incur the tax in its first year. In response, many employers redoubled their efforts to anticipate and modify plans to avoid the tax.

Regardless, employers want the tax eliminated. If that cannot be accomplished, they would like to see regulatory guidance that addresses the provision’s inherent flaws and challenges. Employers would also want the thresholds that trigger the tax revised upward, which would give them more latitude to offer a slate of benefits that meets their business need.

Another ACA provision employers would like to see eliminated is the employer mandate. The mandate requires employers with 50 or more full-time equivalent employees to offer affordable healthcare coverage or face penalties. Employers object to this provision more on principle than out of a desire to discontinue offering healthcare benefits; they want to see less government involvement in employer-sponsored healthcare. But our research shows that the vast majority of employers — especially large employers — have no intention of discontinuing employee health benefits.

A more tactical reason employers want to see the mandate eliminated is because it created onerous compliance and reporting requirements that have significantly increased employers’ annual administrative costs and the complexity of day-to-day management.

Recently, it was revealed that a bipartisan group of lawmakers in the House have been quietly working on a bill that, among other things, would raise the employer mandate size limit from 50 to 500 full-time equivalent employees. Although completely eliminating the employer mandate would be preferred, this would be a welcomed by some employers while exacerbating inequities in the law for others.

Looking even more broadly at ways to improve the ACA, high on employers’ wish list are provisions that would address the high cost of healthcare. Reducing costs was a stated goal of the ACA, but as the law took shape and was debated in Congress, there was little to no agreement on how to achieve this. Interestingly, one of the most significant provision aimed at lowering costs was the creation of the excise tax.

Bottom line: When the ACA was first passed, most employers were apprehensive about several of the law’s provisions and worried about their ability to meet some of its requirements. Seven years later, nearly all employers have made the changes necessary to co-exist with the law. And now, after several attempts to pass healthcare legislation friendlier to employers have failed, many are now hoping Congress will turn its attention to the more productive work of improving existing law.

4 ways employers can prepare for healthcare changes

The article below was published on June 23, 2017 by Employee Benefit News, written by Mark Johnson.

The new healthcare bill, revealed by U.S. Senate Republicans Thursday, could bring significant changes to organizations and their employees. Granted, there’s a long way to go before any Obamacare replacement legislation is signed. But health insurance is a complex component of running any business, and it’s important that employers start preparing for what might come.

Here are four actions items employers should be addressing now.

1. Create a roadmap. A compliance calendar is a helpful tool in identifying major deadlines. Employers are legally obligated to share health insurance and benefits updates with their employees by certain dates. Employees must be given reasonable notice — typically 30 days prior — of a major change in policy. There will likely be a set date for compliance and specific instructions around notice requirements that accompany the new legislation.

One step to compliance is adhering to benefit notice requirements. Benefit notices (i.e., HIPAA, COBRA, Summary Plan Descriptions, Special Health Care Notices, Health Care Reform, Form 5500 and others) vary by the size of the organization. Other steps can be more involved, such as required changes to plan design (e.g., copays, deductibles and coinsurance), types of services covered and annual and lifetime maximums, among others. Create a compliance calendar that reflects old and new healthcare benefit requirements so you can stay on track.

Senate Majority Leader Mitch McConnell (R-Ky.)
Image Source: benefitnews.com

2. Rally the troops. Managing healthcare compliance spans several departments. Assemble key external and internal stakeholders by department, including HR, finance, payroll and IT.

Update the team on potential changes as healthcare legislation makes its way through Congress so they can prepare and be ready to execute should a new bill be signed. HR is responsible for communicating changes to employees and providing them with information on their plan and benefits. Finance needs to evaluate how changes in the plan will affect the company’s bottom line. Payroll must be aware of how much of an employee’s check to allocate to health insurance each month. In addition, payroll and Human Resources Information Systems (HRIS) are used to track and monitor changes in employee population, which helps employers determine benefit notice and compliance requirements. All departments need to be informed of the modified health insurance plan as soon as possible and on the same page.

3. Get connected. It’s essential to verify information as it’s released, via newsletters, seminars, healthcare carriers, payroll vendors and consultants. These resources can help employers navigate the evolving healthcare landscape. Knowledge of changes will empower an organization to handle them effectively.

4. Evaluate partnerships. There’s no better time for employers to examine their current partners, from an insurance consultant or broker to the accounting firm and legal counsel. An employer’s insurance consultant should be a trusted adviser in working on budgeting and benchmarking the company plan, administering benefits, evaluating plan performance and reporting outcomes. Finding an insurance solution that meets a company’s business goals, as well as its employee’s needs, can be accomplished with a knowledgeable, experienced insurance partner.

Staying ahead of healthcare changes is essential for organizations to have a smooth transition to an updated healthcare plan. Strategic planning, communication among departments and establishing the right partnerships are key. Employers must be proactive in addressing healthcare changes so they are ready when the time comes.

DG Compliance

Health care reform: Don’t wait for the politicians

The article below is from BenefitsPRO written by Dinesh Sheth on May 16, 2017.

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Let the politicians argue about who is going to pay for health care and who is not.
Photo: Getty Images

Business owners across all industries are facing uncertainty surrounding the status of current laws and regulations. A Republican majority in Congress and the new presidential administration have created a climate of de-regulation. Luckily, or perhaps unluckily, depending on your view, U.S. employers of all sizes are currently facing a potentially major regulatory change with U.S. Republicans attempting to replace the Affordable Care Act (ACA) with their own bill: the American Health Care Act (AHCA). Now, the big question is: “What will be next?”

Aside from the implications this holds for the health care industry, enacting the ACHA would have a tremendous impact on employers by repealing the mandate that requires certain businesses to offer health insurance to their employees. While most businesses would likely support fewer regulations, repealing this mandate would do little to help them encourage healthier behaviors amongst their employees; and at the end of the day, that is the only true way to lower health care costs. Rather, repealing the mandate simply means that fewer Americans will be insured and that the cost-burden will shift to employees and their families.

Whether or not the current administration or even the public at-large wants to admit it, someone is going to pay for the costs of health care. All current or proposed laws and regulations do is juggle who is going to pay and who is not. Behind all these changes, however, it’s necessary to understand that employers need healthy, productive employees in order for their business to function, In addition, they want them to be insured at a reasonable cost, while also staying healthy and avoiding getting sick or injured. If the goal really is to lower actual costs, then this is where the real debate must be focused. Since it’s impossible to predict exactly how legislative initiatives will play out, employers should double down on their approach to employee wellbeing and examine how a holistic approach to wellness will improve the health of their workforce and bottom line, independent of laws or mandates from Washington. Continue reading

Tell your Senators to Preserve the Employer-Based System and Permanently Repeal the Cadillac/excise Tax!

The National Association of Health Underwriters (NAHU)

Operation Shout!

DGBTakeActionOn May 4, the House of Representatives passed H.R. 1628, the American Health Care Act (AHCA), a reconciliation bill to repeal and replace portions of the ACA. It will now be considered by the Senate, where it is expected to be significantly altered, including possibly addressing two critical NAHU policy priorities: the employer exclusion of health insurance and the Cadillac/excise Tax. NAHU strongly opposes any efforts that would undermine the employer-sponsored health insurance system by eliminating or placing a cap on the employer-tax exclusion of health insurance and is strongly advocating a full repeal of the Cadillac/excise Tax, which under the AHCA would only be temporarily delayed.

More than 175 million Americans currently receive their coverage through the employer-based system, largely due to the tax exclusion where employers provide contributions for an employee’s health insurance that are excluded from that employee’s compensation for income and payroll tax purposes. Proposals that would cap the exclusion would devalue the benefit and serve as one of the largest tax increases in history for middle-class Americans, forcing many to drop employer-sponsored insurance, including dependent coverage, and be forced to seek coverage in the volatile individual market, where premiums are ever-increasing. Employers would be incentivized to only offer coverage to their employees that would fall below the value of the cap in order to avoid paying any increased taxes, potentially resulting in a race to the bottom for employers to sponsor insurance that wouldn’t meet the cap’s thresholds and further shifting costs onto employees.

In addition to opposing proposals to cap the exclusion, we are strongly advocating a complete repeal of the Cadillac/excise Tax. Currently set to take effect in 2020 under a two-year delay, this tax calls for a 40% excise tax on the amount of the aggregate monthly premium of each primary insured individual that exceeds the year’s applicable dollar limit, which will be adjusted annually to the Consumer Price Index plus one percent. Given that the pace of medical inflation is well beyond that of general inflation, the tax is destined to outgrow itself in short order and many employers will be impacted by the cost of the tax and the enormous compliance burden that the tax creates. The AHCA, as passed by the House, would only delay the tax until fiscal year 2026.

Over the coming weeks, as the Senate debates the AHCA and the other healthcare-reform proposals, we urge all agents, brokers and your clients to tell your senators not to do anything that would undermine the employer-sponsored health insurance system and to fully repeal the Cadillac/excise tax. You can help us spread the message by taking action below:

  1. Contact your senators. Send an Operation Shout today asking your senators to oppose any changes the employer tax exclusion and to support a full repeal of the Cadillac/excise Tax. You can also call your senators at the numbers below.
  2. Tell your employer clients to take action. Your employer clients would be most directly impacted by the elimination or cap of the employer tax exclusion and are seeking a full repeal of the Cadillac/excise Tax. Tell them to take action here.
  3. Share your story. As a licensed insurance specialist who works closely with employers to help them offer and utilize employer-sponsored health insurance, stories about how the employer tax exclusion directly impacts your clients will demonstrate the value of the exclusion and the need to preserve it, as well as the need to fully repeal the Cadillac/excise Tax. We will share your stories with appropriate legislators and staff. You can share your story here.

Take Action today and tell your senators to preserve the employer-based system and permanently repeal the Cadillac/excise Tax!
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Don’t want to send an email? No problem, you can also reach your senators by phone:
Sen. Richard Blumenthal (D) can be reached at (202) 224-2823.
Sen. Christopher Murphy (D) can be reached at (202) 224-4041.

This call to action is designed as an email message to your legislators. You are welcome to use the prepared text as talking points to call your legislators, or to expand on the prepared message to share your personal story on how this issue will impact you and your clients.

ACA Fee Moratorium and Self-Funding

acaWhen Congress delayed the Cadillac Tax until 2020, the same law placed a one-year moratorium on the annual fee the ACA imposes on health insurance carriers. While the fee does not have a direct impact on TPAs or self-funded plans, it does sometimes impact stop loss premiums. Since this fee applied to insurance carriers and not the majority of self-funded plan costs claims, some small group plans that moved to level funding may experience a slight cost increase in 2017. When the tax returns in 2018, the revenue targets are expected to increase. If the tax increases from its previous levels of 3% to 4%, the potential savings available to self-funded and level funded plans will increase as well.

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How New York’s canceling health coverage for 130,000 workers

Article written by Michael W. Ferguson, as seen in the New York Post

New York’s state legislators are thinking small — literally.

The state’s definition of “small business” expanded Jan. 1, thanks to legislation passed in 2013. Many firms that thought of themselves as medium-size are now legally considered “small.” One consequence: They’re barred from choosing self-insurance — a form of health coverage that allows employers to pay their employees’ medical bills directly.

State legislators must restore this vital health care option for these newly small businesses. If they don’t, firms may have to slash their benefits — or stop offering them altogether.

Firms that offer conventional health insurance pay monthly premiums to insurers to cover medical claims for their employees. Companies that self-insure, by contrast, pay the doctor when an employee goes in for a check-up or an operation.

That can save businesses big money. By one estimate, companies can cut their health care costs by up to 25 percent by self-insuring.

Self-insurance also enables employers to provide higher-quality care. Because they’re not bound to the generic health care options provided by insurers, they can customize coverage for their employees’ unique needs.

Continue reading

Cadillac Tax Delayed Until 2020

CadillacTaxWhen President Obama signed the new Consolidated Appropriations Act of 2016 into law in late December, he delayed both the Cadillac and Medical Device taxes by two years, from 2018 to 2020. The legislation also provided for the deductibility of the Cadillac Tax, which is an excise tax of 40% on the “excess benefit” of high cost employer-sponsored coverage, regardless of whether the health plan is fully insured or self-funded.

The cost thresholds associated with “high cost” coverage were initially indexed annually from a base value of $10,200 for individual coverage and $27,500 for other than self-only coverage, adjusted to reflect the age and gender composition of the employee population. The Cadillac Tax was originally intended to take effect in 2013, but in 2010, was postponed from 2013 to 2018. The Medical Device tax was originally projected to raise $29 billion over 10 years to help pay for Obamacare. While the delays were welcome news to employers and medical device makers alike, most are still hoping for outright repeals.

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