Posts Tagged ‘Affordable Care Act’

What Employers Should Know About Section 1411 Certifications

Tuesday, May 24th, 2016

The post below is a guest blog from Jay Lowe who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

The Employer Mandate is perhaps one of the most nerve-wracking parts of the Affordable Care Act (ACA) for large employers: those employing morehcw than 50 full-time equivalent employees, or FTEs. (What’s an FTE? Find out here!) Many large employers understand that they can be fined with a tax penalty if they don’t provide coverage that meets the minimum requirements or is deemed unaffordable for their employees. In the event that coverage does not meet these requirements and is not affordable, employees may be eligible for a premium subsidy when purchasing individual coverage through the government’s healthcare marketplace (the Exchange). This subsidy eligibility is what triggers the penalty back to the employer.

Section 1411 of the ACA establishes the procedures for determining an individual’s eligibility for subsidies from the Exchange. A Section 1411 Certification is the notice to an employer that an employee has enrolled in a qualified health plan through the Exchange and been provided a subsidy. If you are an Applicable Large Employer (more than 50 full-time equivalent employees) that receives one or more of these notices, this could mean that you are facing a penalty from the IRS as part of the Employer Mandate provision of the ACA.

Employers should be prepared to see these certifications and have a plan of action in place once they do. For more details on the Section 1411 Certification, see here.

Dealing, Appealing, and Other Important Things to Know About 1411 Certifications

First, remember that these certifications are not penalty notifications from the IRS. They are simply informational, letting you know that an employee has received a tax credit and named you as the employer as part of their application process. You can expect a formal penalty notice from the IRS to follow; however, the notice will give you the ability to appeal if your health plan does meet all of the Employer Mandate requirements. By appealing, you can potentially stop the penalty process from the IRS.

It is important to educate the employees who will be handling these notices within your organization. This is a new form and something that most will not be familiar with. They need to know what to look out for and be prepared for what to do. If your health plan does meet minimum essential ACA requirements, make sure the employees in question understand that they will need to act quickly to appeal these notices; you will only have 90 days from the date of the notice to file your appeal.

In the event that your plan is not meeting all of the requirements of the Employer Mandate, look out! You’ll probably have to pay a fine. The Section 1411 Certification will alert you to your penalty liability. Only employees who receive a subsidy in the Exchange can trigger a penalty for you, and these notices will tell you exactly who those people are. As a best practice, employers should keep track of what their total exposure could be prior to receiving the notices. Their final liability could be less than what they are expecting.

With the delay of the Employer Mandate reporting requirements, it is likely that employers will not begin to see Section 1411 Certifications until late 3rd quarter or 4th quarter of 2016. That gives you plenty of time to educate your people, prepare an action plan, and learn all about 1411 Certifications!

Study Shows Possible Negative Effects of Special Enrollment Periods

Tuesday, October 20th, 2015

Blog 015 PictureThe post below is a guest blog from Jay Lowe who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

Recent data from the Centers for Medicare and Medicaid Services show that enrollment in Marketplace plans during Special Enrollment Periods (SEP) continues to increase. Between February 23 and June 30, 2015, CMS reports that close to 950,000 people enrolled in coverage. Under the ACA, a qualifying life event allows someone to enroll in Marketplace coverage at that time. One does not have to wait until the normal open enrollment period that begins November 1 for coverage to be effective January 1. The SEP could be triggered by such things as loss of group coverage, birth of a child, marriage or divorce. While this is a provision of the law that ensures Americans will not have to go without coverage, the SEP could prove to play a big part in the rising rates of the individual market year after year.

The Good and the Bad

The data in the CMS report suggests that during this SEP timeframe those enrolling tended to be younger than average. This can account for things like children aging off of their parents’ plans and parents enrolling their newborns in coverage. This is good as those that are younger tend to be healthier and have more predictable costs year in and year out. Insurers like this as the premium they pay in helps to offset the costs for those that have more health-related issues and tend to use more healthcare. Insuring the young, healthy population is a vital piece in helping to keep Marketplace costs lower and something that the insurance companies count on when determining rates every year. But the SEP provision for the Marketplace can pose a potential problem for these insurance companies.

So that insurers can more accurately determine the risk of their blocks of business and set rates accordingly, the ACA provides for an open enrollment period once per year. Without an SEP, a person is unable to enroll and must wait until the beginning of the next calendar year to have coverage. The problem that the SEP creates is now people can buy coverage outside of the normal annual open enrollment period. While the addition of the younger, healthier members is good, the SEPs also provide an opportunity for unhealthy members to join. The ACA requires insurance companies that participate in the Marketplace to provide coverage to anyone who enrolls. No longer can somebody be denied coverage or be rated up based on a health condition. While many who enroll during an SEP are young and healthy (which the insurance companies like), there are many who are sick and unhealthy. The insuring of this unknown risk poses a big problem for insurers as they are unable to adjust rates during the course of the year based on the medical conditions of those entering the plans. Members who enroll during an SEP get the same rates (based on age and plan design) as those that enrolled in the annual open enrollment period.

Ultimately, insurance companies may be forced to raise rates as claims and loss ratios go up. The SEPs provide a much needed avenue for people to buy insurance coverage. But what will this do to rates? As we enter in to the third year of the Marketplace it will be interesting to see how the insurers continue to respond to constant dilemma.


How Can Staffing Firms Manage The Employer Mandate?

Thursday, October 16th, 2014

The post below is a guest blog from Jay Lowe who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

hcw 10 16 14Be sure your staffing firm is ready to be part of the solution, not part of the problem.

Many companies use staffing firms to fill placement needs within their organizations. The placements can be for short-term coverage needs or longer term work assignments. Under the Employer Mandate portion of the Patient Protection and Affordable Care Act (PPACA), these temporary employees must be classified just as any other permanent employee based on their job description or role within the company. The classification determines whether or not this temporary employee should be offered health coverage. Improper classification and failure to offer health coverage to a full-time but temporary employee could result in significant tax penalties levied against the client employer.

The Problem

When PPACA was initially enacted, the rules around staffing firms were not clearly defined. There was some speculation that these entities would not be subject to the Employer Mandate or penalties and that companies who use staffing agencies would not be required to offer their ”staffed” or “temporary” employees coverage. Earlier in 2014, however, the IRS and the Department of Labor issued clarification around this and deemed that the Common Law Employer is to be responsible for providing coverage to staffed employees and will receive the penalty if out of compliance with the Employer Mandate.

The Common Law Employer may or may not be the staffing agency and is to be determined using the IRS 20 factor test. This determination would be made regardless of any agreement or contract between the staffing agency and the client employer. Additionally, the issuing company of an employee’s Form W-2 is not determinative of who is responsible for offering coverage. In many cases, the Common Law Employer is the client employer who receives the temporary employees from the staffing firm. When the client employer is the Common Law Employer, the burden of offering coverage (and the risk of penalty) lies with the client employer.

The Solution

The Employer Mandate final rules provide some relief to companies using staffing firms, by allowing a staffing firm to make an offer of coverage on behalf of the Common Law Employer. A compliant offer of coverage for staffed employees releases the Common Law Employer (i.e., the client employer) of the Employer Mandate obligations for those employees procured through the staffing agency. The rules around this are simple:

  1. First, the offer of coverage must be made by the staffing firm. The coverage will consist of a medical plan that meets or exceeds the 60% actuarial value limit set by law and be affordable to the employee (total annual premium cost to the employee of no more than 9.5% of their W-2 income).
  2. Second, the plan that is offered is a group health plan established or maintained by the staffing firm.
  3. Third, the fee paid to the staffing firm by the client employer is higher for those temporary staffers who enroll in the plan than it is for those temporary staffers who choose not to enroll. Basically, the staffing company is required to pass along a portion of the cost of insurance to their client employer.

What should you do now?

Employers who use temporary employees should ask their staffing firms questions about how they are complying with the PPACA regulations, as that could have a significant impact if penalties are triggered. Conversely, staffing firms must be prepared to answer the questions they will receive from their clients.

Questions that should be asked and answered are:

  1. How do you plan to comply with PPACA in 2015?
  2. Do you plan to offer MEC to full‐time employees?
  3. Will the MEC be of minimum value (i.e., 60% plan value)?
  4. Will you be charging a different fee for employees enrolled in the plan than for employees not enrolled in the plan?
  5. If yes, what will the differential be?
  6. Will you obtain and maintain waivers for those employees who waive coverage?

Ultimately, there is a vital necessity for any company that uses temporary employees to have an open channel of communication with their staffing firm. Employers must educate their staffing firms on types of employees they need with respect to their classification. Conversely, staffing firms must educate their employer clients on how they plan to manage the Employer Mandate and what to expect regarding pricing and coverage on the employees they place. Staffing firms and their employer clients must work together to develop a plan to reduce and/or eliminate the exposure to penalties.

In An Environment Of Uncertainty, Prepare To Comply With The ACA

Thursday, August 14th, 2014

The post below is a guest blog from Mike Beck who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

hcw 8 14In the last few weeks, there’s been multiple Affordable Care Act (ACA) developments, ultimately impacting large employers with 50 or more employees. How and when will they occur is another story, and it is easy to see why some employers are perplexed. Predicating what the ACA will look like a year from now is very difficult with some saying the employer mandate may be delayed again. Let’s review the recent events and how they are contradictory in many ways.

On July 22, the United States Court of Appeals for the District of Columbia Circuit concluded that PPACA’s subsidies should only be available to individuals purchasing health insurance in exchanges operated by a state – calling into question all the subsidies that have been obtained to date through the Federal exchange. Hours later in Richmond, Va., the United States Court of Appeals for the Fourth Circuit decided that legislative intent was to make tax subsidies available to individuals purchasing health insurance through a federally funded exchange or a state-based exchange if the state failed to create one. These two conflicting rulings are likely to go to the Supreme Court. For now, subsidies/tax credits will continue to be granted on the Federal Exchange. If the D.C. Circuit’s decision is upheld, it could strike a serious blow to the employer mandate since receiving a subsidy is a primary trigger of the employer mandate.

On July 24, the IRS published draft forms for the Code 6056 employer Minimum Essential Coverage reporting and disclosure requirement to the IRS and to individuals. This reporting requirement has multiple purposes as it allows the IRS to enforce the employer mandate, enforce the individual mandate, and confirm eligibility for premium tax credits for coverage purchased through an Exchange. This reporting along with the associated forms take effect in 2015 and are due in January 2016.

So in the same week, we witnessed a decision by an appeals court that called into question the viability of the Employer Mandate and suggested a possible delay, and then actions by the IRS which seem to indicate the Employer Mandate is moving forward as scheduled.

Regardless, large employers need to be prepared to comply with the employer mandate in 2015 and the associated reporting requirements. This should include a review of current payroll and HRIS systems to ensure they will be able to meet the new reporting requirements. The safe play is to assume that the employer mandate will go into effect without another delay, and if a delay occurs, organizations will have more breathing room to implement.

Treasury Issues Final Regulations, Announces Another Delay of PPACA’s Employer Mandate

Tuesday, February 25th, 2014

The post below is a guest blog from Lindsey Surratt, JD who serves as Compliance Officer  for CAI’s employee benefits partner Hill, Chesson & Woody.

Now and Later ChoiceAfter more than a year of anticipation, on Monday, February 10, 2014, the US Treasury Department issued final regulations and announced yet another delay of the Patient Protection and Affordable Care Act’s Employer Shared Responsibility provision, which requires employers with more than 50 employees to offer health insurance coverage to full-time workers or pay a penalty.  Notably, the final regulations include welcome transition relief for employers with fewer than 100 full time equivalent employees and for employers with 100 or more full time equivalent employees.  Employers with fewer than 100 full time equivalent employees will not be required to offer health insurance coverage to full time employees until January 1, 2016.  Employers with 100 or more full time equivalent employees must offer coverage to at least 70% of their full-time employees in 2015.  This will increase to 95% in 2016. Other important changes and clarifications include the following:

  • COMMONLY OWNED ENTITIES: The final regulations have retained the rule applying the aggregation rules under the IRS Code to employers.  This means that all employees within a controlled group of corporations or affiliated service groups will be counted for determining the applicable large employer member’s size.  However, penalties will still be calculated on an entity-by-entity basis.
  • ROUNDING: When calculating full time equivalent employees, employers may round to the nearest one hundredth.
  • HOURS OF SERVICE: Equivalency methods for calculating an employee’s hours of service do not require that an employee must have actually worked one  hour during a day or week to be credited with 8 or 40 hours respectively for that period.  Employees must be credited with hours of service  for all paid hours.
  • VOLUNTEERS: Hours worked by  a “bona fide volunteer” are not treated as hours of  service.  A bona fide volunteer includes any volunteer who is an employee of a government entity or an organization described in section 501(c) that is exempt from taxation under section 501(a) whose only  compensation from that entity or organization is in the form of (i)   reimbursement for (or reasonable allowance for) reasonable expenses incurred in the performance of services by volunteers, or (ii) reasonable  benefits (including length of service awards), and nominal fees,   customarily paid by similar entities in connection with the performance of  services by volunteers.
  • STUDENT EMPLOYEES: Hours of service for section 4980H purposes do not  include hours of service performed by students in positions subsidized through the federal work study program or a substantially similar program of a State or political subdivision thereof. However, the final regulations do not include a general exception for student employees. All      hours of service for which student employee of an educational organization (or of an outside employer) is paid or entitled to payment in a capacity other than through the federal work study program (or a State or local government’s equivalent) are required to be counted as hours of service.
  • ADJUNCT FACULTY: Employers of adjunct faculty are required to use a  reasonable method for crediting hours of service.  However, the IRS and Treasury have proposed multiples that might be applied to credit  additional hours of service for each credit hour or hour of classroom time assigned to the adjunct faculty member.
  • DEFINITION OF FULL-TIME EMPLOYEE:  The hours of service threshold for  a full-time employee remains at an average of 30 hours of service per  week.
  • SEASONAL EMPLOYEES:  A seasonal employee means an employee in a position for which the customary annual employment is six months or less.
  • BREAKS IN SERVICE: The length of the break in service required before a  returning employee may be treated as a new employee is reduced from 26  weeks to 13 weeks (except for educational organization employers).
  • AFFORDABILITY SAFE HARBORS:  Employers are not permitted to use the prior year’s  Form W-2 to determine affordability under the Form W-2 safe harbor.  Additionally, no accommodation was provided for tipped employees under the Rate of Pay safe harbor.  The IRS and Treasury advise employers with tipped employees to use either the Form W-2 safe harbor or the Federal Poverty Line safe harbor.
  • PARTICIPATION:  In the large group market, a minimum participation requirement cannot be used to deny guaranteed issue.
  • STAFFING AGENCIES:  Health insurance coverage offered by a staffing agency to its employees (in the typical case in which the staffing agency or PEO is not the common law employer of the employee) may be treated as an offer  of coverage made on behalf of the client employer if the offer of coverage  meets certain requirements.
  • PENALTY CALCULATION: The following two questions in the IRS Q&A also make an important change to the way penalty amounts will be calculated for employers with 100 or more full time equivalent employees in 2015. Notice the (minus 80) and (minus up to 80) parentheticals in each answer below:

38.  For 2015, if an employer with at least 100 full-time employees (including full-time equivalents) that does not offer coverage or that offers coverage to fewer than 70% of its full-time employees (and their dependents) owes an Employer Shared Responsibility payment, how is the amount of the payment calculated? For any calendar month in 2015 or any calendar month in 2016 that falls within an employer’s non-calendar 2015 plan year, if an applicable large employer with at least 100 full-time employees (including full-time equivalents) does not offer coverage to at least 70% of its full-time employees (and their dependents), it owes an Employer Shared Responsibility payment equal to the number of full-time employees the employer employed for the month (minus 80) multiplied by 1/12 of $2,000, provided that at least one full-time employee receives a premium tax credit for that month.  See questions 24 and 25.

39.  For 2015, if an employer with at least 100 full-time employees (including full-time equivalents) offers coverage to at least 70% of its full-time employees, and, nevertheless, owes an Employer Shared Responsibility payment, how is the amount of the payment calculated? For an employer with at least 100 full-time employees (including full-time equivalents) that offers coverage to at least 70% of its full-time employees in 2015, but has one or more full-time employees who receive a premium tax credit, the payment is computed separately for each month. The amount of the payment for the month equals the number of full-time employees who receive a premium tax credit for that month multiplied by 1/12 of $3,000. The amount of the payment for any calendar month is capped at the number of the employer’s full-time employees for the month (minus up to 80) multiplied by 1/12 of $2,000. See questions 24 and 25.

The 227 pages of guidance issued contain many clarifications and additional rules – the bullets in this posting only provide highlights from the final regulations.  Please consult your legal counsel regarding the impact these rules might have on your organization.  You may find the Treasury Fact Sheet and the final regulations for further details.  Politico and the Washington Post were the first to report. Hill, Chesson & Woody will continue to report additional insight into the impact of these final regulations on our Healthcare Reform Digest.

4 Questions to Answer Before Tackling the Affordable Care Act

Thursday, August 8th, 2013

In today’s video blog, CAI’s CEO, Bruce Clarke, offers employers advice for the Affordable Care Act (ACA). He suggests that your next few group health benefit renewals should be less about rates and more about fundamental decisions and choices.

Bruce says renewal meetings should be more like strategy meetings. Some tips for conducting productive meetings include asking these four questions:

  • Has the ACA dramatically affected your company or workforce?
  • Are your satisfied with your current plan design as it is?
  • Does the act open new options to you that would improve your plan?
  • Are you getting a specialist’s advice on all of your options?

CAI is here to help you navigate through the changes and opportunities that health care reform will bring. Please call a member of the Advice and Counsel Team at 919-878-9222 or 336-668-7746 with any questions.

7 Things You Should Know From the 2013 Employment and Labor Law Update

Thursday, June 6th, 2013

2013ELLU-FlashCAI hosted its annual Employment and Labor Law Update at Raleigh’s McKimmon Center on May 22 and May 23. More than 430 people attended the conference to hear the latest updates in state and federal law.

Attorneys from Ogletree Deakins imparted important information to conference attendees about issues currently facing employers. Some of the topics included health care reform, unemployment insurance reform, North Carolina legislative updates, and wage and hour audits.

Below is a list of some of the pertinent information shared at the conference that company leaders should know:

Health Care Reform

1) The “pay or play” mandate of the Affordable Care Act  applies to “Applicable Large Employers”

  • An “Applicable Large Employer” is an employer with 50 or more full-time employees
  • “Employer” includes all entitles within the same controlled group of entities, including parent-subsidiary relationships and brother-sister relationships.

2) According to the “pay or play” mandate of the Affordable Care Act, Applicable Large Employers can choose to:

  • “Pay” by not offering coverage to all of their full-time employees and their dependents  OR
  • “Play” by offering coverage to their full-time employees and their dependents

3) Penalties Associated with the “pay or play” mandate include:

  • “’No Coverage‘ penalty”: Employer fails to offer coverage to all full-time employees and their dependents AND one or more full-time employees purchases coverage through the Exchange AND is eligible for premium tax credit or subsidy
    • § Penalty is $2,000 per full-time employee excluding the first 30 full-time employees
  • Employers that choose to “play” can still be subject to a penalty if they offer “Inadequate Coverage.” For example:
    • § Employer offers coverage to all of its full-time employees and their dependents but that coverage is NOT “affordable” OR does not provide “minimum value”
    • § Any full-time employee purchases coverage through the Exchange and receives a subsidy or tax credit

Complying with the Americans with Disabilities Act (ADA)

4) The ADA prohibits discrimination against qualified individuals with a disability, and it requires employers to make reasonable accommodations for disabled individuals where no undue hardship results for the employer.

5) Employee must be a qualified individual with a disability, meaning:

  • Must meet qualification standards for position
  • The individual must be qualified to perform the essential functions of the job with or without reasonable accommodation
  • Employers do not need to eliminate essential job functions

Workplace Violence

6) Workplace violence is any act of aggression, or threat of an act, that threatens the safety, security, or well-being of an individual who is at work or on duty.

  • One in six violent crimes occurs at work, including 7 percent of all rapes, 8 percent of all robberies and 16 percent of all assaults

7)  Workplace bullying is defined as repeated infliction of intentional, malicious, and abusive conduct that interferes with a person’s ability to do his/her work and is substantial enough to cause physical or psychological harm and a reasonable person would find hostile or offensive.

  • There is a strong correlation between bullying and violence
  • 43 percent of bullying comes from coworkers
  • 25 percent of bullying targets have protected status (other than gender)
  • 80 percent of bullying targets are women

If you are interested in attending CAI’s next Employment and Labor Law Update in 2014, please contact an Account Manager at 919-878-9222 or 336-668-7746.

Staffing Agencies and Common Law Employees: Who is Responsible for Offering Coverage?

Thursday, May 23rd, 2013

The post below is a guest blog from W. Hunter Walton, JD who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner, HCW Employee Benefit Services.

Many employers use staffing agencies to provide workers for short-term projects and tasks and to supplement their full-time permanent workforce. This common practice has always been a convenient way to outsource labor and to avoid the complicated administrative processes of hiring temporary employees.  However, with the new shared employer responsibility mandate that goes into effect on January 1, 2014 as a part of the Affordable Care Act, staffing agencies are beginning to adapt to a new set of rules and regulations.

Traditionally, employers who utilize staffing agencies for temporary employees pay a fee to the staffing agency and are paired with an applicant. The staffing agency then pays the applicant, the associated taxes, and in some instances will offer benefits. There has often been no question that while the applicant may work on projects for the company hiring them through the staffing agency, the staffing agency is the employer and is responsible for complying with the laws pertaining to employee/employer relationships.

Insurance CoverageWith the introduction of the shared employer responsibility provision of the Affordable Care Act, employers with more than 50 full-time employees must offer health insurance to their employees. While determining who is responsible for offering coverage to employees hired through a staffing agency may seem straightforward, guidance from the IRS and the Department of Labor suggests that it may not be so simple.

In order to make this determination and establish who is responsible for providing health coverage or paying the associated penalties, the government may use the common law employee test traditionally used for determining Social Security liability. Using this test, employers may find that temporary employees whom they thought were the responsibility of a staffing agency may actually be their own legal employees.

The common law test is subjective and requires several factors to be taken into consideration. No one factor is controlling and all factors are intended to serve as guides to reaching a reasonable conclusion. The two primary factors are determining who controls what must be done by the employee and how it is done. Other factors include determining who trains the employee, the degree of integration within the hiring firm, the duration of the relationship, the manner that business expenses are paid, who furnishes tools and materials used on the job, the right to discharge, and the right to quit. Even if the employer does not give the employee orders on what to do, including, how, when, and where to do the job, he or she only needs the right to do so for the worker to be considered an employee.

All of these factors should be considered in their totality, and it is possible that they will vary from temporary employee to temporary employee.

HCW Viewpoint

Given the myriad of factors used to determine who an employee’s common law employer is, it is imperative that employers currently utilizing the services of a staffing agency clarify who will be responsible for providing coverage to workers working more than 30 hours per week. With the use of the common law employer rules, many companies may have more employees than they currently realize and this could affect how they determine their size for the pay or play penalty, as well as to which employees they offer coverage if they have more than 50 full-time employees.

Determining who is truly the common law employer in these situations will not only affect determination of who is responsible for providing coverage or paying the associated penalties, it will also determine who is required to receive certain new notices, who should be counted when paying new taxes and fees, and who should be eligible for COBRA.

To fully comply with the Affordable Care Act and avoid unnecessary penalties, employers need to make these determinations now and not wait until they go into effect in 2014. HCW anticipates that many staffing agencies will begin to include contract provisions for these kinds of determinations; however employers cannot rely solely on a third party to confirm their liability. Most employers will need to make these determinations independently and protect their liability by consulting outside counsel. By determining what employees are required to be offered health coverage now, before a penalty is imposed, there will be a much smoother transition once the penalties are in full force.

The Healthcare Reform Timeline – What To Tell Employees When Changes Happen

Thursday, April 18th, 2013

The post below is a guest blog from Lindsey Surratt, JD who serves as Compliance Officer for CAI’s employee benefits partner, HCW Employee Benefit Services.

After lingering doubts about whether it would actually occur, the U.S. Supreme Court decision affirming the Patient Protection and Affordable Care Act (PPACA), coupled with the re-election of Barack Obama as president, has virtually ensured that national healthcare reform is underway. That means employers need to accept this reality and prepare employees for what they can expect.

We provided a timeline on how PPACA came into fruition and initial implementation at the end of last year. This blog offers an update on what developments to expect in 2013 and beyond.

Changes In Effect Now and In Upcoming Months

  •  At Present: PPACA contains several tax changes that affect select taxpayers. For one, it increases the Medicare Part A (hospital insurance) tax rate on wages by 0.9 percent on earnings more than $200,000 for individual taxpayers and earnings more than $250,000 for married couples filing jointly. Additionally, it imposes a 3.8 percent assessment on unearned income for higher-income taxpayers. 
  • On Oct. 1, 2013: Individuals and small businesses can buy affordable and qualified health benefit plans in insurance exchanges. The U.S. Department of Health and Human Services is offering a checklist for small businesses to prepare for the change that provides information that owners can use to tell employees about their options in this area. North Carolina has decided to follow a Federally-facilitated Exchange that will be in effect at the start of 2014.  All employers subject to the Fair Labor Standards Act must notify employees of the existence of the insurance exchanges prior to insurance exchange open enrollment in October 2013.

What to Anticipate in 2014

hcw 4 17Several big items will take effect on January 1, 2014, including:

  • The requirement for all U.S. citizens and legal residents to have qualifying health coverage or pay a tax penalty
  • The requirement for carriers to issue and renew health insurance regardless of pre-existing health conditions or gender.
  • No annual limits on coverage of essential health benefits.
  • Deductible limits in the individual and small group markets.
  • Eligibility waiting periods are limited to 90 days.
  • Prohibitions on insurers from dropping or limiting coverage because an individual chooses to participate in a clinical trial, such as those that treat cancer or other life-threatening diseases.
  • Tax credits will become available for those with income between 100 percent and 400 percent of the poverty line who are not eligible for other affordable coverage.  These individuals may also qualify for reduced cost-sharing (copayments, co-insurance and deductibles).

All of these changes will all need to be explained to employees in advance of the date of implementation, with particular note to one other item. PPACA requires that health insurance plans offered in the individual and small group markets provide essential health benefits – items and services in 10 different categories listed in PPACA. The range of essential health benefits offered in these categories will be determined by a benchmark plan. Employers in the small group market should review their benefit plan designs to confirm that their plan(s) comply with the essential health benefits requirements upon renewal in 2014.

What Else to Tell Employees

Remember to let employees know that there already has been and likely will continue to be updates and revisions to these provisions as new regulations are released. While many effective dates are already established, the resulting effects remain unclear. However, proactive communication regarding upcoming changes may help soften the blow of any unintended consequences as implementation of healthcare reform moves forward.

To stay up to date on the changing healthcare reform requirements, register for one of HCW’s upcoming mini webinars held throughout the year and listed on our events calendar. Our June 26th mini webinar titled, Impact of Reform on Employees, will focus on what your employees need to know as 1/1/2014 approaches.

The Top 10 Healthcare Industry Issues Of 2013 – How They Will Affect Employers?

Tuesday, March 19th, 2013

The post below is a guest blog from Ellen Tucker who serves as Principal, Health & Welfare Consultant  for CAI’s employee benefits partner, HCW Employee Benefit Services.

healthcare_industry_issues This year it is crucial for employers to have a clear understanding of the timeline of each of the components in healthcare reform and a defined strategy around them. It is evident that, while there is change on the horizon, even more change will occur as employers, insurance carriers and members react to the new options and requirements at hand.

 As employers are considering these issues, PricewaterhouseCoopers has released its annual list of the top 10 issues for the healthcare industry, and the topics include a few items of particular importance for employers. This is the list, followed by the implications for employers:

 1)      States on the frontlines of the implementation of the Affordable Care Act (ACA). State officials will decide how to run insurance exchanges, whether to expand Medicaid coverage and what type of insurance market regulation is needed. The biggest challenge facing state governments over the next year is information technology, as most must conduct significant upgrades to existing systems.

 2)      Caring for the nation’s most vulnerable: Dual eligible. Dual eligibles (individuals eligible for both Medicare and Medicaid coverage) are among the nation’s sickest and poorest and often fall through the cracks of two programs not designed to work together. The result is a lack of coordination that often leads to poor quality, inefficiency and avoidable costs. With the ACA set to add 16 million people to Medicaid by 2019, the number of dual eligibles is certain to increase.

 3)      Bigger than benefits: Employers rethink their role in healthcare. Employers have never had a better opportunity to re-examine their long-term role in providing healthcare coverage for their employees. This year will likely be the turning point for how healthcare benefits evolve over the next decade.

 4)      Consumer revolution in health coverage. More Americans will be shopping for their health insurance. As a result, consumers want convenience in how they purchase coverage and transparency in comparing their options. Nearly 40 percent of consumers surveyed by PricewaterhouseCoopers’ Health Research Institute (HRI) said they would purchase insurance at a private insurance company retail store. Consequently, an increase in the use of retail clinics is expected as consumers seek lower cost options for minor ailments.

 5)      Consumer experience hits the pocketbooks of healthcare companies. The Medicare Advantage Star Quality rating system relies on consumer input to generate penalties and bonuses for hospitals and insurers. This could mean a bonus payout of more than $3 billion for insurers and a holdback of $850 million for providers in 2013 based on the impact of the results. Hospitals and health systems are feeling the pinch, as nearly a third of the federal government’s value payment program connects to consumer experience and satisfaction. Moreover, customers support the trend.

 6)      Goodbye cost reduction, hello transformation. With more than 40 percent of consumers postponing care because of costs, hospitals must be competitive. Organizations are making full-scale transformations of their care delivery models, including how and by whom care is delivered. To maintain high quality while implementing sustainable cost reductions, health systems are involving clinicians, staff and patients in redesigning the delivery of care.

 7)      The building blocks of population health management. Population health management shows promise for better health at a lower cost by creating an integrated system of care. Expect to see more partnerships between providers as companies build their population health infrastructure to include shared responsibility for patient outcomes and satisfaction, data collection and analysis, member education and engagement, and a focus on at-risk populations.

 8)      Bring your own device: Convenience at a cost. Only 46 percent of hospitals have a security strategy regulating the use of mobile devices. With more hospitals permitting clinicians to access electronic health records on their personal devices, privacy and security concerns need to be addressed.

 9)      Meeting the new expectations of pharma value. Interest is growing among insurers to partner with pharmaceutical companies to determine unmet medical needs, and improve medication adherence and clinical outcomes. In a recent HRI insurer survey, 43 percent of insurers agreed that they would benefit from a data sharing partnership with pharma companies.

 10)   Medtech industry braces for excise tax impact. The 2.3 percent excise tax on medical devices effective this year could prompt consolidation in a $308 billion global industry consisting mainly of small start-ups with lean product portfolios. Federal bank accounts stand to gain $29.1 billion over the next 10 years from this tax included in the ACA.

 HCW Viewpoint

 Since employers spend a considerable amount of money on healthcare coverage for their employees, health industry issues are of key interest. With the most impactful year regarding healthcare reform implementation quickly approaching, employers are even more eager for information. The decisions facing them are significant, and mistakes could prove costly. 

 Employers have been watching as states decided whether to have a state run exchange, state/federal partnership or a federal run exchange, and whether to implement the Medicaid expansion. For some employers, the Medicaid expansion would provide coverage to additional employees, lowering their possible play or pay penalties effective beginning in 2014. Additionally, employers are determining who they will be required to offer coverage to, whether their benefits are rich enough and whether they meet the affordability requirement. 

 Employers will need to make decisions regarding if they intend to offer coverage to employees in 2014 and beyond, or send their employees to the exchange and pay the penalty. More information regarding the exchanges is emerging, and there may be hundreds of plan designs offered among the four coverage levels. While sending employees to the exchange may sound like the cheapest and easiest option, doing the math generally supports continuing to offer coverage. HCW has developed a “Play or Pay Calculator” that can assist employers in making an objective decision regarding what is otherwise a subjective, reactive one.

 New delivery systems such as accountable care organizations and tiered networks can provide additional options for employers to provide appropriate, cost-effective care over the next few years. These should be part of the overall strategy regarding what actions to take in 2014 and beyond. Staying abreast of health industry issues is critical for employers as decisions are being made. Employers need a custom strategy that is updated with emerging information to allow them to successfully navigate healthcare reform.

 HCW will continue to track these issues throughout 2013, as well as additional emerging information regarding healthcare reform. HCW offers one-hour meetings to walk employers headquartered in North Carolina through a Reform Readiness Plan. To take advantage of this guidance, call 919-403-1986 today and schedule a meeting with on of our experts.