Great News for Self-Funded Plans: Senators Want to Quash ACA Sec 6056

The article below was published on October 10, 2017 by MyHealthGuide, written by Matthew Albright.

capital-hillA bipartisan group of senators introduced a bill the first week in October that will significantly ease the Affordable Care Act reporting mandates for employer-sponsored health plans.

The bill, called the Commonsense Reporting Act of 2017, in effect rolls back the employer reporting requirements of Section 6056 and creates a voluntary reporting system in its place. Self-funded plans must comply with both 6055 and 6056, though it’s less clear how the bill would affect Section 6055 requirements.

Technically, the bill proposes that an employer does not have to meet the 6056 IRS reporting requirements, as long as the employer takes part in a prospective reporting system set up by the bill.

The bill also relieves employers of the requirement to send notices to all employees under 6056, as long as the employer provides notices to employees who have been reported as having enrolled through an Exchange.

Current Sections 6055 and 6056 mandate that employers report detailed coverage information to the IRS and give notices to all employees. Under 6055 and 6056, the IRS requires detailed information about each covered employee and the employee’s covered dependents. The information in the filing is intended to be used by the IRS to appropriately apply premium tax credits to consumers who purchase insurance through an Exchange.

According to the sponsors of the bill, Senators Mark Warner (D-VA) and Rob Portman (R- OH), current sections 6055 and 6056 do not create an effective way to administer the premium tax credits. The current administration has been looking for a regulatory solution to relieve the reporting burdens of 6055 and 6056, but concluded that legislative action would be needed.

The prospective reporting system proposed by the bill requires high-level information about an employer’s coverage, including:

  • the time period (months) that coverage is available;
  • waiting periods that may apply;
  • certification that the employer’s coverage meets the definition of minimum essential coverage and the minimum value requirement; coverage is offered to part-time employees, dependents and/or spouses of employees;
  • certification that the employer’s coverage meets affordability safe harbors; and
    certification that the employer reasonably expects to be liable for any shared responsibility payment.

In addition, there are a few other elements to the Commonsense Reporting Act that are important to note:

  • Allows payers to electronically transmit employee notices. The current statute now requires paper statements sent via snail mail.
  • Allows payers to use names and dates-of-birth in place of the currently required Social Security numbers when filing reports with the IRS.

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Leveling the Self-Funding Field

The article below, titled Leveling the self-funded field, written by Robert Bull, was originally published by Employee Benefit Adviser on July 18, 2017.

Technology is changing every aspect of the way businesses operate — and that includes health plan self-funding.

It used to be that self-funding was limited to only the largest companies that could afford the manpower to either administer their own plans or develop their own proprietary administrative software. Today, new data technologies are leveling the playing field, making it affordable for virtually all employers to self-fund.

For too long HR teams have shied away from self-funding due to the perceived administrative burden. But technology has removed this barrier, making it easier to track eligibility and generate billing information. What used to be a painstaking manual process has been automated, and HR teams at self-funded companies can now provide richer benefits at a lower price. A good healthcare plan goes miles in attracting and keeping quality employees — and ensuring that they’re productive by minimizing absenteeism due to a lack of care for either themselves or their family members.

self-funding'Here’s what to look for when shopping for a top-notch self-funding solution:

1. The ability to consolidate information and manage all healthcare-related data from a single system. Most employers deal with multiple service providers — stop loss, vision, pharmacy, dental, medical, wellness, and third-party administrators, just to name a few. But they should insist that all of the relevant data is consolidated onto one system. For one thing, it’s much simpler and less time consuming to administer and pay all of their providers from a single source. For another, it takes much less time and effort to master a single application — as opposed to having to learn the ins and outs of each provider’s software.

When the data from multiple vendors are integrated onto a single platform, the time-consuming process of having to reconcile across providers every month is eliminated. The plan’s administrator can instantly determine counts and claims. Likewise, multiple payment processes can be eliminated in favor of a single, consistent payment method.

Best of all, HR can take all this data, which reflects employee behavior and everything related to treatment, and use it for predictive modeling. With that level of insight, the employer can develop a plan that truly meets its — and its employees — needs.

2. Data transparency. For an employer to take on the added risk of self-funding, it needs to be able to closely examine its data and determine the underlying trends. Without pricing and transaction transparency, it is impossible to perform a meaningful cost analysis.

As opposed to fully-insured plans, where the data is the property of the insurance carrier, with a self-funded plan the employer owns the plan’s data. And once the employer can access its claims, demographic and pricing information, it can make accurate decisions about what is best for the company and its employees.

The data can also be used to influence employee behavior. By educating a workforce about those behaviors that are wasteful and ineffective, the employer can reap significant savings for itself and its employees. And by analyzing the response rate to different messages and campaigns, HR can then determine what incentives would be useful to obtain even greater compliance.

3. Real-time data access. It’s not enough to have healthcare plan data; it needs to be timely or its utility is diminished. The best way for employers to be proactive is for them to be able to see what is happening with claims and cash flow on a monthly, weekly or even a daily basis. At a minimum, the employer should review its data at least quarterly. And the larger the employer, the greater the number of employees and claims, the more frequently the data needs to be examined.

Three years ago, it would have taken three weeks to scrub a mid-size employer’s claims data. Now it can take just two hours.

4. Safeguards. Data is power. That’s why an employer wants to ensure that only authorized personnel have access to healthcare plan data and analytics. There are legal and privacy considerations as well. That’s why it’s crucial to have robust security that maintains an audit trail of who touches what data and when. In case of an error or a breach, the event can be traced back to the people involved at the moment where it occurred.

Self-funding will continue to be transformed by technology. Cloud-based software is making it possible for ever smaller employers to implement and administer self-funded plans. Embracing and utilizing these tools can lead to lower premiums, greater access to health care and reduced costs for employer and employee alike.

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State of Self-Funding State Benefit Plans

The article below is from International Foundation of Employee Benefit Plans, written by Teri Dougherty

Governor Scott Walker recently proposed self-funding Wisconsin’s $1.5 billion health insurance program for 250,000 state and local government workers and their dependents. For now, it is a proposal that is being heavily debated in the Wisconsin State Legislatures Joint Finance Committee. If self-insurance contracts are approved by May 1, 2017, a new self-funding arrangement could go into effect January 1, 2018.

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Image Source: www.ifebp.org

To self-fund or fully insure is mostly a question of who will take on the financial risk of paying claims for covered benefits. Here’s a closer look at the many considerations involved, using Wisconsin as an example.

Self-funding isn’t an all-or-nothing option. According to the National Conference of State Legislatures (NCSL), 46 of the 50 states self-fund at least one health benefit plan. Because Wisconsin currently self-funds three benefit plans, Wisconsin is considered a self-funding state by NCSL. Currently less than 30 states completely self-fund their health insurance programs.

Why self-fund some benefits and not others?

The state of Wisconsin is currently self-funding, or assuming the risk for their pharmacy, vision and wellness benefits. At the same time, the state pays health insurance premiums to 17 health maintenance organizations (HMOs) for fully insured medical coverage. A third option is to partially self-fund, in which the state/employer complements its self-funded program by purchasing stop-loss insurance.  Stop-loss insurance provides financial protection only if self-funded claims exceed a specified dollar amount within a specified period.

John C. Garner, in his book Self-Funding Health Benefit Plans, describes how state-sponsored self-funded plans may be structured:

  • Creation. Before a public employee plan may be self-funded, either enabling legislation or an opinion of the states attorney general is usually required.
  • Plan choice. Most state plans are multiple option plans, whereby employees are offered more than one health plan.
  • Participation. Most state plans permit other government entities within the state to become participating members, such as:
    • Independent state agencies
    • Counties
    • Cities, towns and municipalities
    • Principalities
    • Public universities
    • Water districts
  • The plans are usually funded as a general asset plan. Since public employers are tax-exempt, no trust is needed. Stop-loss agreements are typical with these plans.
  • Governance. Self-funded plans are usually managed as soundly as the political environment will permit. A board or committee that includes employee representatives typically governs the plan. With substantial employee representation, the need for a claims buffer may be greater for a public plan than for a private plan.
  • Administration of state plans (e.g., claims, consulting, risk management, utilization review, disease management and prescription drug cards) is generally provided by outside vendors—just like most other self-funded single employer plans.
  • Regulation. Public employee plans are not subject to ERISA, hence they do not have to meet federal reporting and disclosure requirements. Since they do not have ERISA preemption, the plans must meet any applicable state rules and regulations.

The Wisconsin debate involves multiple considerations, including how the elimination of multiple fully insured health plans options may affect the market and worker choice. The Legislature’s Joint Finance Committee is expected to consider the self-funding issue in April or May, 2017.  Will there be a shift in Wisconsin to self-insurance for the state workers’ health plan? How might that shift impact the state’s next budget, health care market and economy? The International Foundation, residing in the great state of Wisconsin, will stay tuned.

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An Employer with a Plan

employer-planHealthcare costs continue to rise at an alarming rate and we all need to be Defining our Health Strategy. We thought it would be helpful to share what we do here at Diversified in regard to our strategy as an employer that has a self- funded medical plan. We like to say at Diversified that we practice what we preach, or that when our team comes out to see you to review your plan we are speaking from experience. Below is the Diversified plan and what we do to control costs:

Appropriate Stop Loss Level and Coverage (family or individual) – At Diversified we are unique; we offer a family stop loss that limits the plan exposure on families that are enrolled on our plan.

Aggregate Coverage (optional) – Aggregate coverage is optional but can help cap risk on the volume of claims.

Fully Insured Organ Transplant Carve Out – This policy mitigates risk for transplants by carving them out and fully insuring those catastrophic claims.

Pharmasense – Our specialty bio-tech program that aggressively manages all aspects of specialty pharmacy claims from pre-cert, to acquiring the medications, and continued case management.

Medical Management – Case managers work directly with our plan participants to manage risk while working directly with their healthcare providers.

Worksite Wellness – Our employee contributions are tied to participation and outcomes.

Disease Management Program – We offer Nurse Navigators that assist our plan participants in managing 27 chronic conditions.

Culture of Health – Good health is part of our organization. We are constantly working to keep wellness and physical fitness as an integral part of cost control management.

Telemedicine – We offer 24/7/365 access to a doctor via phone, online and mobile app. Continue reading

Study Shows a 36.8% Increase for Self-Insured Plans In Private-Sector Establishments & More…

A recent Notes article from Employee Benefit Research Institute (ebri.org) examines 1996-2015 trends in self-insured health plans among private-sector establishments offering health plans and among their covered workers, with a particular focus on 2013 to 2015, so as to assess whether the Affordable Care Act (ACA) might have affected these trends. The data comes from the Medical Expenditure Panel Survey Insurance Component (MEPS-IC).

Self-Insured Health Plans: Recent Trends by Firm Size, 1996-2015

by Paul Fronstin, Ph.D., Employee Benefit Research Institute

Here are the key findings from the Employee Benefit Research Institute (EBRI):

  • The percentage of private-sector establishments offering health plans at least one of which is self-insured has increased from 28.5% in 1996 to 39% in 2015 (36.8% increase).
  • Between 2013 and 2015, the percentages of establishments offering health plans with at least one self-insured plan has increased for midsized establishments from 25.3% to 30.1% (a 19% increase); for small establishments from 13.3% to 14.2% (a 7% increase); and has decreased from 83.9% to 80.4% for large establishments (a 4% decrease).
  • Similarly, the percentage of health-plan-covered workers enrolled in self-insured health plans has increased from 58.2% to 60% (a 3% increase) from 2013 to 2015. The largest increases in self-insured plan coverage among covered workers have occurred in establishments with 25-99 employees and with 100-999 employees.

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Supreme Court Backs Self-Funded Plans

supreme-courtIn a 6-2 decision on a case involving Liberty Mutual Insurance Company, the Supreme Court, in early March, held that ERISA pre-emption blocks the state of Vermont from requiring self-funded health plans to put claims data into a statewide health claims database.

This decision appeared to be consistent with the original intention of Congress to place ERISA plans under the jurisdiction of the U.S. Department of Labor rather than state insurance departments. In describing the decision as a victory for employer-sponsored health benefit plans that would avoid complications with plan administration, the CEO of the National Business Group on Health stated “while employers support the intentions behind Vermont’s law, we believe that a national approach to rules for all payer claims databases will be more productive and less costly.”

Dissenters, led by Justice Ruth Bader Ginsburg argued that the decision could hamper efforts to provide cost transparency by creating gaps in the data that employers, insurers, consumers, providers and state policymakers need to understand the effects of benefit plans and payment models.

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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.

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