Employers are turning to consumer-directed health care to help lower costs more than ever. Many employers turn to health flexible spending accounts ("health FSAs"), health reimbursement arrangements ("HRAs") and health savings accounts ("HSAs") to accomplish this goal. These are all types of consumer-driven health care, each with its own compliance-related issues. Surprisingly, many employers do not realize that health FSAs and HRAs require ERISA compliance. Plus, healthcare reform and recent IRS regulatory guidance impacts consumer-directed accounts. Employers must be more cautious than ever to ensure they are not inadvertently operating their consumer-directed plans out of compliance with a variety of employee benefits laws.
Please be very aware of the changes and contact me if you need some guidance. Rules have changed.
Tuesday, March 10, 2015
Tuesday, February 10, 2015
Should you "Self-Fund" your group health care plan?
Self-funding an employee health benefit plan is a long-term health strategy to save money
because it can provide an excellent opportunity for a company to achieve immediate savings
plus sustainable cost control. However, smaller employers may be hesitant to self-fund their health plan because they commonly perceive it as appropriate only for large companies.
Establishing the right health plan can become an integral part of the growth and success of
your company.
Smaller employers can be hesitant to self-fund a health plan because such plans are perceived as only appropriate for large employers. However, there exists new and innovative products and services specifically designed for employers with fewer than 250 employees that can make a self-funded health plan a compelling option for employers with as few as 25 employees.
This plan is called Level Funded or "Agg" only product. Individual Stop-loss insurance is purchased to protect the employer. With individual stop-loss insurance, when health claims reach a specific dollar limit in a plan year for a covered individual, the stop-loss insurance policy reimburses the employer’s health plan for claim amounts above the individual stop-loss insurance
limit. For example, if an employer has individual stop-loss insurance of $25,000 and an individual has $85,000 worth of claims, the stop-loss insurance policy would reimburse the employer’s health plan $60,000. The cost of stop-loss insurance is a monthly premium, and there are a variety of stop-loss insurance dollar amounts from which to choose. For employers with fewer than 250 employees,Pekin GPS offers stop-loss insurance with individual dollar limits.
They also deal with stop-loss carriers that reimburse the plan promptly when the stop-loss dollar limit is reached. Otherwise,your company could be responsible for covering the full amount of any excess claims until it’s reimbursed under the stop-loss insurance policy.
If claims are lower than predicted, the employer can save money directly, compared to paying the set monthly premium of a fully insured plan, while the stop-loss insurance policy puts a ceiling
on the maximum amount the employer would pay in claims.
because it can provide an excellent opportunity for a company to achieve immediate savings
plus sustainable cost control. However, smaller employers may be hesitant to self-fund their health plan because they commonly perceive it as appropriate only for large companies.
Establishing the right health plan can become an integral part of the growth and success of
your company.
Smaller employers can be hesitant to self-fund a health plan because such plans are perceived as only appropriate for large employers. However, there exists new and innovative products and services specifically designed for employers with fewer than 250 employees that can make a self-funded health plan a compelling option for employers with as few as 25 employees.
This plan is called Level Funded or "Agg" only product. Individual Stop-loss insurance is purchased to protect the employer. With individual stop-loss insurance, when health claims reach a specific dollar limit in a plan year for a covered individual, the stop-loss insurance policy reimburses the employer’s health plan for claim amounts above the individual stop-loss insurance
limit. For example, if an employer has individual stop-loss insurance of $25,000 and an individual has $85,000 worth of claims, the stop-loss insurance policy would reimburse the employer’s health plan $60,000. The cost of stop-loss insurance is a monthly premium, and there are a variety of stop-loss insurance dollar amounts from which to choose. For employers with fewer than 250 employees,Pekin GPS offers stop-loss insurance with individual dollar limits.
They also deal with stop-loss carriers that reimburse the plan promptly when the stop-loss dollar limit is reached. Otherwise,your company could be responsible for covering the full amount of any excess claims until it’s reimbursed under the stop-loss insurance policy.
If claims are lower than predicted, the employer can save money directly, compared to paying the set monthly premium of a fully insured plan, while the stop-loss insurance policy puts a ceiling
on the maximum amount the employer would pay in claims.
Sunday, February 8, 2015
China Suspected in Anthem Cyberattack
The massive cyberattack against health insurer Anthem Inc. received significant coverage on television and in print, garnering nearly seven minutes of coverage across all three network newscasts Thursday night. Sources indicate the attack, which compromised the personal information of tens of millions of Americans, may have originated in China. A number of media outlets portray the attack as the latest example of broader cybersecurity issues across the healthcare industry.
Scott Pelley reported in the lead story for CBS Evening News (2/5, lead story, 2:50, Pelley) that “cyber thieves” broke into a database at Anthem Inc., the country’s second-largest health insurer, jeopardizing the privacy of “millions of Americans.” The company “says that database contains 80 million records, including names, birth dates, and social security numbers,” though it’s unclear whether the hackers gained access to health records. Speaking on the potential fallout from the breach, American Medical Association President Robert Wah, MD, said, “If you lose your credit card, we all know you call 1-800-I lost my card and they turn your credit card off. There is no one-800-I lost my health record and you can turn off all that rich information in your health record.” CBS Correspondent Kris Van Cleave added that sources “say the FBI Is looking into the possibility the attack came from overseas, possibly China.”
Correspondent Pete Williams reported on NBC Nightly News (2/5, story 2, 2:40, Williams) that the Anthem cyberattack “is different from the recent big hack attacks of Target and Home Depot,” which “went after credit cards and account numbers.” This time, “the hackers were targeting the kind of personal information that can be used to steal someone’s identity.” Anthem says it appears no medical information or credit card numbers were compromised, “but it says a trove of personal data was stolen – names, social security numbers, birth dates, street and email addresses, and employment information.”
Scott Pelley reported in the lead story for CBS Evening News (2/5, lead story, 2:50, Pelley) that “cyber thieves” broke into a database at Anthem Inc., the country’s second-largest health insurer, jeopardizing the privacy of “millions of Americans.” The company “says that database contains 80 million records, including names, birth dates, and social security numbers,” though it’s unclear whether the hackers gained access to health records. Speaking on the potential fallout from the breach, American Medical Association President Robert Wah, MD, said, “If you lose your credit card, we all know you call 1-800-I lost my card and they turn your credit card off. There is no one-800-I lost my health record and you can turn off all that rich information in your health record.” CBS Correspondent Kris Van Cleave added that sources “say the FBI Is looking into the possibility the attack came from overseas, possibly China.”
Correspondent Pete Williams reported on NBC Nightly News (2/5, story 2, 2:40, Williams) that the Anthem cyberattack “is different from the recent big hack attacks of Target and Home Depot,” which “went after credit cards and account numbers.” This time, “the hackers were targeting the kind of personal information that can be used to steal someone’s identity.” Anthem says it appears no medical information or credit card numbers were compromised, “but it says a trove of personal data was stolen – names, social security numbers, birth dates, street and email addresses, and employment information.”
Repeal and Replace
On Tuesday, the House voted for the fourth time to repeal the Patient Protection and Affordable Care Act (PPACA). This was the first time during this congressional session and the 56th overall repeal of all or part of the law. The vote for H.R. 596 was 239-186 and included three Republican 'no' votes from Bob Dold (R-IL-10), John Katko (R-NY-24) and Bruce Poliquin (R-ME-2); all of whom represent districts previously represented by Democrats. There were no Democrats who crossed-over to vote yes, with many of those Democrats who supported repeal no longer in Congress. Speaker Boehner contended that this vote allowed the 47 new House Republican members to have a chance to vote against the law. The repeal includes a six-month delay before it would take effect to allow Congress enough time to develop a replacement plan.
The repeal now heads to the Senate where Senator Ted Cruz (R-TX) introduced companion legislation to repeal with a six-month delay. This bill is likely to skip the committee process under Rule 14, and instead head straight to the Senate floor. Majority Leader Mitch McConnell has not yet announced a schedule for a floor vote. Crossing the 60-vote threshold in the Senate will be a challenge, as few moderate Democrats remain to join the chamber's 54 Republicans in voting for repeal. However, there could be potential to pass a repeal in the Senate by the budget reconciliation process, which only requires 51 votes, and was the process by which PPACA was ultimately passed in 2010. Yet, even with a passage, President Obama has made it clear that he will veto a full repeal of the law.
The repeal now heads to the Senate where Senator Ted Cruz (R-TX) introduced companion legislation to repeal with a six-month delay. This bill is likely to skip the committee process under Rule 14, and instead head straight to the Senate floor. Majority Leader Mitch McConnell has not yet announced a schedule for a floor vote. Crossing the 60-vote threshold in the Senate will be a challenge, as few moderate Democrats remain to join the chamber's 54 Republicans in voting for repeal. However, there could be potential to pass a repeal in the Senate by the budget reconciliation process, which only requires 51 votes, and was the process by which PPACA was ultimately passed in 2010. Yet, even with a passage, President Obama has made it clear that he will veto a full repeal of the law.
Thursday, October 30, 2014
What is "Minimum Essential Coverage" ?
Question: In 2015, my client is a large employer and has to comply with the employer mandate. What coverage does it have to offer to its full-time employees to avoid the $2,000 penalty under Code Section 4980H(a).
Answer: Beginning in 2015, a large employer will pay a penalty tax for any month that-
(1) the employer fails to offer full-time employees (and their dependents) the opportunity to enroll in "minimum essential coverage" under an "eligible employer-sponsored plan" for that month; and
(2) at least one full-time employee has been certified to the employer as having enrolled for that month in a QHP for which health coverage assistance is allowed or paid.
The $2,000 penalty applies only if the employer fails to offer adequate coverage and at least one employee enrolls for subsidized exchange coverage. If it offers "minimum essential coverage" to full-time employees and dependents, a large employer will not be liable for this penalty. Most employer-provided group health coverage will meet the very broad definition of minimum essential coverage.
The definition includes any coverage under an "eligible employer-sponsored plan"-a term that means a group health plan or group health insurance coverage offered by an employer to an employee that is (1) a governmental plan, or (2) any other plan or coverage offered in a state's small or large group market. IRS regulations clarify that self-insured employer coverage qualifies as an eligible employer-sponsored plan.
Minimum essential coverage does not include certain excepted benefits. HRA coverage that does not consist solely of excepted benefits generally will be considered minimum essential coverage.
Benefits under an EAP-even if the EAP is considered a group health plan-will be considered "excepted benefits" if the EAP does not provide "significant benefits in the nature of medical care or treatment."
It is important not confuse the term "minimum essential coverage" with minimum value. "Minimum value" refers to a requirement that an eligible employer-sponsored plan cover at least 60% of the allowed cost under the plan and is important in determining whether the penalty under Code Section 4980H(b) may apply.
Minimum essential coverage is the term used to describe both the coverage that an individual must have to avoid the individual shared responsibility tax and the coverage that large employer member must offer to full-time employees and dependents to avoid the $2,000 penalty under Code Section 4980H(a).
Essential health benefits, on the other hand, is the term used to describe the benefits that qualified health plans are required to cover. Pending further clarification, it is important to note that coverage under an employer-sponsored health plan can be "minimum essential coverage" even if it does not cover all essential health benefits.
Minimum essential coverage may not necessarily be affordable or provide minimum value. An employee who is eligible for minimum essential coverage that is not affordable or does not provide minimum value may still qualify to purchase subsidized Marketplace coverage. If the employee purchases subsidized Marketplace coverage, the employer may be liable for $3,000 penalty under Code Section 4980H(b).
Tuesday, October 14, 2014
What to expect from another Health Care enrollment-changes
WASHINGTON (AP) -- HealthCare.gov, the website for health insurance under President Barack Obama's health care law, has been revamped as its second enrollment season approaches. But things are still complicated, since other major provisions of the Affordable Care Act are taking effect for the first time. A look at some of the website and program changes ahead:
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Old: 76 online screens to muddle through in insurance application.
New: 16 screens - for the basic application that most new customers will use. But about a third of those new customers are expected to have more complicated cases, and how they'll fare remains to be seen.
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Old: Prone to crashing, even with relatively few users.
New: Built to withstand last season's peak loads and beyond, at least 125,000 simultaneous users. Actual performance still to be demonstrated.
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Old: Six-month open enrollment season, extended to accommodate customers bogged down by website glitches or stuck in line at the last minute.
New: Shorter open enrollment season, just three months, from Nov. 15 to Feb. 15.
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Old: Everybody was new to the system.
New: As many as 7 million existing customers could be coming back, and that could create a crunch. Returning customers who want to make changes to their accounts must act by Dec. 15 for those changes to take effect Jan. 1. Many will want to at least look, because they could save money. Potential wrinkle: Returning customers have to go back into their long-form application for 2014. It will have the information they already provided, but it's not the new streamlined form.
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Old: Amateur Spanish, to put it kindly.
New: HealthCare.gov's Hispanic-oriented website could still use a going-over from a high school Spanish teacher. But one conspicuous mistake in translating the appeal to "get ready" got fixed quickly. Maybe that's a sign of things to come.
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Old: No way to window-shop anonymously when the system went live.
New: Window-shopping for health insurance plans available without first creating an account. But the site still lacks a way for consumers to search for plans by simply entering their doctor's name. Instead, they'll have to follow links to individual insurance company directories. Tip: Double check with your doctor's office to see whether he or she is still in the plan.
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Old: Subsidies to keep premiums affordable were paid directly to your health insurance plan.
New: The government will keep paying your health plan, but this year you will also have to show the Internal Revenue Service that you got the right subsidy for 2014. If you got more than you were entitled to, your tax refund will be dinged. If you got less than you deserved, your tax refund will be fatter.
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Old: Budget number crunchers for Congress had estimated 7 million people would enroll, but cut that back to 6 million because of website glitches. Eight million actually signed up, beating expectations. About 7 million are still enrolled.
New: The Congressional Budget Office expects enrollment next year to total 13 million - the new yardstick for HealthCare.gov.
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Old: Pent-up demand from people denied coverage by insurance companies because of pre-existing medical conditions, or who were just unable to afford it.
New: Tougher sell to convince customers who sat out last year's open enrollment season, even under threat of fines.
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Old: Fines for staying uninsured the full year start at $95.
New: Fines for staying uninsured all of 2015 start at $325.
Monday, October 13, 2014
Group Health Benefits
This is an exciting time for the employee benefits industry.
The Patient Protection and Affordable Care Act (PPACA) has precipitated a new appreciation for voluntary benefits and a spike in enrollment. Businesses are enhancing their benefits packages to offset rising healthcare costs and to allow employees to fill the gaps left by high-deductible health plans.
Employees are taking a more active role in decisions about coverage. Carriers and brokers are responding with customized products and platforms that ease administration and cost for employers; and that assist employees in the decision-making process.
While the landscape of employee benefits is continually changing, the industry’s message to the market has remained relatively static. Healthcare costs are rising. Emergency savings accounts are shrinking. Employees are shouldering greater accountability and risk.
While these arguments are valid, ultimately PPACA prompted employers to make fundamental changes in their approach to employee benefits.
It is time for employers to look at the Self Funded, or Level Funded, options available.
Contact me for a quote.
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