Posts Tagged ‘Dax Hill’

Employer vs. Federal Marketplace Open Enrollment

Thursday, June 19th, 2014

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

hcw juneEmployers with “non-calendar” plan years may find themselves in the middle of a dilemma with the Marketplace open enrollment.

In preparation of the “pay or play” provision under PPACA, some employers are looking to shift contributions towards the employee portion and away from the dependents coverage.  This strategy will help employers avoid penalties under 4980h of the tax code and make coverage “affordable” for the employee only portion.  However, redistributing premium contributions towards employees only coverage could significantly increase the cost for those employees with dependents.  These employers might assume that the dependents could then go apply for coverage though the Federal Marketplace – which works only if the employer’s open enrollment coincides with the Federal Marketplace open enrollment period. For 2014, the Open Enrollment Period was October 1, 2013–March 31, 2014. In 2015, the proposed Open Enrollment Period is November 15, 2014–February 15, 2015.

What happens if the employer increases dependent premiums during their open enrollment and the employer’s open enrollment does NOT coincide with the Federal Marketplace open enrollment?  In this scenario, an increase in premium is NOT a qualifying event for the Federal Marketplace – meaning that the dependents would not be eligible to enroll for medical coverage until the next Marketplace open enrollment.  Things can get more complicated assuming that your Section 125 plan runs on the same non-calendar plan year as your medical insurance plan year.  If dependents decide to remain on the employer’s medical insurance plan and pay on a pre-tax basis, the dependents would not be allowed to come off of the employer’s medical insurance plan unless they experienced a life qualifying event. At which point, they would again miss the open enrollment for Federal exchange.  You can see that this could become a vicious cycle and lead to frustration to both employers and employees.

There is a push to modify the regulations to allow individuals to obtain coverage mid-year through the Marketplace for non-calendar year plans.  In the meantime, employers should understand the regulations and strategies allowing individuals to enroll onto the Marketplace.

Contact an HCW consultant regarding possible solutions to this problematic situation.


Be Prepared: Healthcare Spending Projected to Escalate for Next 10 Years

Tuesday, December 17th, 2013

The post below is a guest blog from Dax Hill who serves as Principal, Health & Welfare Consultant  for CAI’s employee benefits partner Hill, Chesson & Woody. Over the past several years, we have seen medical inflation increasing at a lower rate than in the past. In fact, healthcare spending increases are at the lowest levels since the government started tracking this data in 1960.  hcw graph This may provide a false sense of security for some employers regarding healthcare costs and their future trajectory. Employers might conclude that medical expenditures are finally coming under control due to the Affordable Care Act (ACA), requiring less time and effort spent monitoring their effects on the bottom line. However, actuaries from The Centers for Medicare and Medicaid Services (CMS) recently forecasted that the nation’s healthcare spending will jump by 6.1 percent next year. They claim some of this expected rise will actually come from implementation the Affordable Care Act, but more will be the result of an improving economy and an aging population in the United States. The reason behind this forecast includes the assumption that when individuals possess more buying power, they tend to visit their providers more and pursue treatments they previously delayed during the recession. These visits and hospitalizations will contribute to overall healthcare costs substantially. There are no major solutions for cost containment planned to go into effect in the next few years, apart from projections by the CMS incorporating some modest savings regarding delivery system reforms from the Affordable Care Act. Based on these dynamics, medical expenditures are projected to increase 5.8 percent per year over the next 10 years. This means that total U.S. spending on healthcare is expected to hit $5 trillion in 2022, accounting for almost 20 percent of the economy, up from 18 percent this year. That leap is going to have a huge impact on everyone, including both employers and employees. Employers failing to act in adjusting employee healthcare benefits may find themselves substantially affected by growing costs. Employers should resist any temptation to think that the healthcare crisis has been solved with the implementation of the ACA. Healthcare cost control is an ongoing dilemma that appears to have no simple answer over the next decade. With that in mind, employers must be diligent and continue to evaluate ways to improve the health of their members and control the cost of healthcare through plan design and disease management programs. Employers will want to make sure that they are providing coverage to their employees in the most efficient way possible. This can include, but are not limited to:

  • Selecting an insurance carrier that provides deepest provider discounts, lower administrative fees and effective disease and case management;
  • Outsourcing to a benefits administrator or other business to oversee case management of employees enrolled in a plan; and
  • Considering whether self-funding or other funding options are the best option for long-term savings and plan optimization.

Other significant approaches that can be considered are launching and/or redefining company wellness initiatives, including changes in diet and exercise for participants, as well as discussing healthcare expenses with employees and how to address them. It will be important for employees to be engaged and an active participant in their own healthcare. Employees need to understand that their lifestyle decisions do impact future insurance premiums and more importantly their own health. Hill, Chesson & Woody can provide further assistance for employers who want specific advice on strategies to address the anticipated rise in healthcare costs.

Encouraging Preventive Care Among Your Employees

Thursday, January 3rd, 2013

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

The old saying “An ounce of prevention is worth a pound of cure” is very appropriate for today’s healthcare coverage plans. Employers and employees are able to pay less if they are proactive in trying to avoid illnesses that can cost thousands or more to treat.

But knowing what you are supposed to do and making it actually happen are two very different concepts. How do you inspire your staff to turn your dreams of prevention into a reality? Here are some suggestions:

 1)  Clearly communicate to employees what their benefits are. We talk a lot about communicating benefits to employees. If your workforce knows precisely what options are available to them, and how to better use their benefits by taking advantage of preventive services – they will! Communications experts agree, that effectively communicating benefits is key for prevention to occur among employees. As the Affordable Care Act begins to be implemented, employees:

  • Want to understand the big picture of healthcare.
  • Want to know what their employer knows when they know it.
  • Want their employer to also share what they don’t know.

 2)  Seek medical providers using interactive health records. A new study reports that medical records patients can access online may encourage more people to get recommended screening tests and immunizations. The use of electronic health records (EHRs) allows doctors, hospitals and other providers to communicate more easily as well as help more patients know the tests and treatments they need. Providers are being encouraged to switch to EHRs and will face federal penalties if they do not convert by 2015, so check to see if and when your primary care physicians plan to make the changes.

 3)  Investigate programs being offered by the Prevention and Public Health Fund. The Affordable Care Act’s Prevention and Public Health Fund is designed to assist major national groups such as the Centers for Disease Control with developing programs to discourage tobacco use as well as address obesity and other conditions that result in chronic diseases which are expensive to treat. Among those available for possible inclusion in your workplace from the Centers for Disease Control are:

  • National Diabetes Prevention Program
  • Immunizations
  • Tobacco Use Prevention
  • Workplace Health

There are many other options available for preventive healthcare designed for specific requirements. To see what might work best for the needs of your company, contact a health and welfare consultant at HCW.

Pay or Play Mandate 2014 – Do You Have Your Head in the Sand?

Tuesday, April 24th, 2012

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

There is a book titled “Hope Is Not a Strategy.”  I believe this statement to be particularly true regarding the Healthcare Reform “Pay or Play” mandate.   This regulation will require great attention as employers determine their future path in offering employee benefits.

As you are probably aware, the following penalties will apply to employers with 50 or more full-time equivalent employees, effective 2014:

1)      If you provide no group medical insurance: you will pay a $2,000 per employee per year penalty.  The first 30 employees are exempt from the penalty.

2)      If you provide unaffordable insurance coverage:  applies to employees making between 100% and 400% of the Federal Poverty Level (400% of the FPL equates to a single employee making ~$44,000) AND EITHER your group medical insurance plan provides less than 60% value OR payroll deductions for employee-only coverage are more than 9.5% of the employee’s W-2 income.  If one of these employees receives a subsidy through the state exchange, the penalty will be subject to the lesser of:  1) a $3,000 penalty per employee receiving a subsidy through the insurance exchange OR  2) $2,000 for all employees (the first 30 employees are exempt from the penalty).

Have you asked yourself the following questions?

  • How will the government penalties impact us if we don’t offer group medical insurance?
  • What will be the financial impact if some employees opt out of our group medical insurance plan and purchase individual coverage through the state insurance exchange?
  • Should we drop our employer-sponsored coverage all together and direct our employees to the exchange?  If we go this route, how are we going to differentiate ourselves as an employer?
  • Or, are we better off continuing to offer our group medical insurance plan?

So, which approach are you taking?

  1. “Let’s wait and see…hopefully this will all go away” approach while waiting for the Supreme Court’s decision before analyzing what type of impact the Play or Pay mandate will have on your company.
  2. “This doesn’t apply to my organization” so I have no reason to consider options related to this mandate.
  3. “Let’s plan now in order to determine which options would provide us with the best possible outcome,” I want to make sure I have a great plan to make this a competitive advantage as possible for my organization.

While 2014 seems so far away, it is not.  Many employers are currently planning for the future and determining which option provides the most favorable outcome based on today’s regulations.  HCW is helping employers quantify those scenarios.  These are just a couple of different scenarios employers are considering:

1)      Stay the course on our current medical insurance plan.

2)      Drop coverage and pay the penalty for all employees. This could be most disruptive and provide no perceived value to the employees.  Additionally, higher compensated employees might not be eligible for any subsidy, which would be a negative impact.

3)      Offer a high/low option for all employees and base the premium contribution on the base plan.

4)      Adjust the “employee-only” premiums in order to meet the 9.5% threshold and prevent any penalties.

5)      Redistribute the premiums from Family to Employee-only coverage to meet the 9.5% threshold.

6)      Have employees work less than 30 hours in order to avoid penalties.

7)      Add all employees to the plan and adjust other forms of compensation to balance the budget.

So, will you Pay or Play? There are many more solutions to consider.  The key is to QUANTIFY possible solutions that align with your culture and the direction of your organization.  This will enable you to make educated decisions around this important benefits strategy.  It’s time to think strategically and not rely on hope.   What steps have you taken to map out a plan?

Health Savings Accounts – 3 Situations Human Resources Professionals Should Know

Tuesday, January 17th, 2012

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

So, you’ve just gotten through your benefits open enrollment and you signed up for your company’s health savings account (HSA). You probably decided to take part because you know about the triple tax savings advantages of HSAs:

  1. Your money goes in tax free
  2. It grows tax free and
  3. It comes out tax free (when used for qualified medical expenses)

 Ultimately, most people who enroll in an HSA understand the basics:

  1. An HSA is used in conjunction with a High Deductible Health Plan (HDHP).
  2.  An HDHP is a medical plan that has a high deductible that you must pay fully before the insurance company pays its first dollar of coverage.
  3. For an individual, the maximum amount you can contribute to an HSA is $3,100 for 2012.
  4. For more than one covered life, the maximum HSA contribution amount is $6,250 this year.
  5. The tax-free money you deposit into the HSA must be used to reimburse qualified medical expenses.

That’s pretty straightforward. But, as an HR professional, you may find yourself in one of the following situations where the basics simply aren’t enough.

Here are 3 “what if” scenarios that might not have been covered during your enrollment:

1)“I am covered under a High Deductible Health Plan (HDHP) with employee plus spouse coverage.  My spouse is also covered under a PPO plan (not a HDHP).  How much can I contribute to my 2012 HSA?”

In this scenario, the individual may contribute the $6,250 tax free.  The contribution amount is based on the coverage election (employee plus spouse), even though the spouse has non- HDHP coverage. 

2) “I am covered under an HDHP and my husband is covered under Medicare. Can my spouse be covered under my HDHP?  And, if so, can I can use my HSA to reimburse medical expenses for my spouse?” 

In this situation, the individual spouse can participate in the HDHP.  In addition: 

For Medicare premiums:  The HSA can reimburse Medicare premiums if the account holder is 65 or older, but cannot be used to reimburse Medicare supplement policy premiums.  So, the employee could use her HSA money to reimburse for her spouse’s Medicare premiums as long as the employee is age 65 or older.  Otherwise, the Medicare premiums cannot be reimbursed tax-free.

Other Section 213(d) qualified expenses:  The employee can reimburse her spouse’s qualified medical expenses even if the spouse has Medicare, provided that the expense has not already been reimbursed by Medicare or other insurance.  So, once Medicare pays the expense, any remaining portion unpaid could be reimbursed by the HSA.  

3)“Can I use my HSA account for my children if they are not covered under my HDHP Plan?”

Yes, you can reimburse the children’s qualified medical expenses provided that the children are Section 152 tax dependents and the expense has not been reimbursed by other insurance.  So, once the insurance policy pays the expense, any remaining portion unpaid could be reimbursed by the HSA. 

A section 152 tax dependent for a child is generally defined as a child who is under the age of 19 at the end of the tax year, or under the age of 24 if a full-time student for at least five months of the year. In addition, the dependent could be permanently and totally disabled at any time during the year and qualify under section 152.

Confusing tax codes, contribution limits and other factors can sometimes make simple concepts more difficult to understand. What questions have you had regarding your employer’s benefits plans?