Compliance – ACA & Other

Knock Out Blow? – Trump Ends Cost-Sharing Reduction Subsidies

The White House confirmed Thursday that it will stop making federal payments for cost-sharing reductions, payments to health insurers. The Department of Health and Human Services confirmed that the cutoff would be immediate. This action could throw the Marketplace into immediate turmoil as insurers start to evaluate their options for 2018.

Many, certainly democrats, have been calling for a bi-partisan solution to the health care problems in America. However, let’s not forget, it was the democrats that ramrodded the misnamed Affordable Health Care Act through the legislative process, behind closed doors, with absolutely no input from republicans.

Employee Benefit Advisors has blogged several times about legal challenges to the ACA, specifically pin pointing, the Obama administration saying they did not receive, but needed, an appropriation to make these payments to insurance companies. Obama used executive orders to put into place key finance regulations behind the ACA. Problem is, what can be done by executive order can be undone by executive order.

 

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.

Trump’s Executive Order – What it is & What happens next

President Trump signed an executive order in an attempt to improve access, increase choices and lower costs for healthcare.

What Is in the EO?

The EO directs the secretary of Labor to consider proposing regulations or revising guidance to expand Association Health Plans. The intent of this directive is to allow employers in the same line of business anywhere in the country to join together to offer healthcare coverage to their employees. It could potentially allow employers to form AHPs through existing organizations, or create new ones for the express purpose of offering group insurance. This could lead to the sale of insurance across state lines through AHPs; however, more action will need to be taken by the Department of Labor before this option can be available.

The EO directs the secretaries of HHS, Treasury and Labor to consider proposing regulations or revising guidance to expand short-term limited duration insurance (STLDI). This directive would allow the agencies to revisit the rule enacted by the Obama Administration that limited the length of STLDI plans to three months.

The EO directs the secretaries of HHS, Treasury, and Labor to consider proposing regulations or revising guidance to expand Health Reimbursement Arrangements. The intent of this directive is to allow employers to contribute more to their employees’ HRAs. HRAs are employer-funded accounts that reimburse employees for healthcare expenses, including deductibles and copayments. The IRS does not count funds contributed to an HRA as taxable income. The intent of this directive is to expand HRAs, which could provide employees with more flexibility in how their healthcare is financed.

What Happens Next?

The EO directs the secretary of Labor to act within 60 days to consider proposing regulations or revising guidance on AHPs. It also directs the secretaries of Treasury, Labor and HHS to act within 60 days to consider proposing regulations or revising guidance on STLDIs, and for the agencies to act within 120 days to consider changes to HRAs.

Within 180 days, the secretary of HHS, in consultation with the secretaries of Treasury, Labor and the Federal Trade Commission, must report to the president on state and federal laws, regulations and policies that limit healthcare competition and choice, as well as on actions that federal and state governments could take to increase competition and choice and reduce consolidation in healthcare markets.

The EO does not direct the agencies to adopt specific regulations; therefore, in order for any policies to change, the agencies will have to go through the traditional rule-making procedures of providing a proposed rule for public comment before being able to enact any final rules.

What about Open Enrollment for 2018?

At this time, nothing in the EO will affect open enrollment for 2018 unless regulatory action is taken by the agencies. Until any such regulations are enacted, the ACA and all of its regulations, penalties and enforcement remain.

 

Content provided by a statement from the National Association oh Health Underwriters of which Employee Benefit Advisors is a member.

Power of THE Pen – Trump holds the key to Repeal!

Many have forgotten that our Congress (Senate and State Representatives) and public employees are not fully subject to Obamacare. President Trump can change that with a stroke of THE Pen.

Congress was initially subject to the ACA. However, after a meeting with Senate Democrats in March 2013, Obama exempted Congress from section 1312(d)(3)(D). That section would have required Congress and their staff to buy insurance through an Obamacare exchange and does not authorize an employer contribution toward their premium. Congress and their staff would lose their taxpayer-funded, gold-plated health care rather than go into Obamacare and pay their own way.

The Office of Personnel Management (OPM), under the instruction of President Obama, ruled “the DC Health Link Small Business Market administered by the DC Benefit Exchange Authority, is the appropriate SHOP from which Members of Congress and staff purchase health insurance in order to receive a government contribution (subsidy). The Congress employees thousands, not the required 50 or fewer required to be eligible for the DC (or any) Exchange.

Federal Employees Health Benefits Program: Members of Congress and Congressional Staff, 78 Fed. Reg. 60653- 01 (Oct. 2, 2013). https://www.gpo.gov/fdsys/pkg/FR-2013-10-02/pdf/2013-23565.pdf

President Trump has the power to end this abuse by directing OPM to rescind the rule and issue a new one that conforms to the statutory requirement the congress and their staff pay their own premiums in the individual Obamacare Exchange.

Employee Benefit Advisory provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.

Health Care Reform – Where do we stand?

By now everyone knows the initial attempt to replace Obamacare with a more workable solution has failed. I’m sure another attempt will resurface later. Let’s focus on what we know and how President Trump’s executive order, signed in January, impacted Obamacare.

President Trump’s executive order is still in effect. – The primary focus of the executive order was for Federal agencies to minimize the economic burden of the Affordable Care Act (ACA), pending repeal of the law. However, until further guidance or legislation, all ACA requirements remain in effect, including penalties for noncompliance.

The executive order specifically calls upon agencies to exercise authority and discretion to:

  • exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications;
  • provide greater flexibility to States and cooperate with them in implementing healthcare programs; and
  • encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.

Although the penalties for noncompliance remain in effect it does give the appearance that there is an out. However, I don’t recommend you be the one to test it.

IRS Guidelines – Indexed for 2017

FICA
Social Security Tax is 6.2% on income up to $127,200 up from $ 118,500.
Medicare Tax unlimited 1.45% to Unlimited

High Deductible Health Plans
Minimum Annual Deductible (Individual/Family) $1,300 / $2,600
Maximum Out-of-Pocket Limit (Individual/Family) $6,550 / $13,100

Health Savings Accounts
Individual / Family $3,400 / $6,750
Catch-up Contribution $1,000

Flexible Spending Accounts
Health Care Flexible Spending Account Maximums $2,600
Dependent Care Spending Account Maximum $5,000

Mileage & Transportation
Standard Mileage Rate
53.5 cents per mile for business miles driven
17 cents per mile for medical or moving purposes
14 cents per mile driven in service of charitable organizations
Parking (monthly) $255
Mass Transit Passes (monthly) $255

Compensation
Compensation Limit $270,000
Highly Compensated Employee Salary Amount $120,000
Annual Compensation for Key Employee $175,000
Defined Benefit Plan Limit $215,000
Defined Contribution Plan Limit $54,000

Retirement Plans
401(k) $18,000
401(k) Catch-up $6,000
403(b) $18,000
457(b)(2) and 124(c)(1) $18,000
457(b) Catch-up $6,000
IRA Limit $5,500/$6,500 for age 50+
Simple IRA Limit $12,500/$3,00 Catch-Up

 

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.

Repealing Obamacare (Part 2of 2) – The Employer Tax Exclusion

The National Association of Health Underwriters (of which Employee Benefit Advisors is a member) and other industry groups support the employer-based healthcare system and have been opponents to eliminating or capping the exclusion and supports a platform that would preserve existing tax incentives for insurance, including the exclusion.

Proposals that eliminate the exclusion would push individuals from group coverage into the individual market. While deductions or refundable tax credits would help consumers secure coverage in the individual market, NAHU believes that they would fall far short both financially and in terms of coverage of the current system that allows for tax-free contributions from employers.

An individualized health insurance market would be ripe for adverse selection leading to higher insurer losses participating in these markets. Insurers would offset these losses by reducing provider networks and increasing cost-sharing. Currently, employer-sponsored plans are much more likely to have a mix of health risks and, in this case, the volume of individuals allows the costs associated with higher risks to be spread over that mixed population of high and low risks. Eliminating the exclusion and pushing consumers to the individual market would reduce the means for spreading risk among healthy and unhealthy individuals. The healthiest would be more likely to opt-out of coverage, leaving the most unhealthy covered. Employers still offering health insurance could be faced with difficulty meeting participation requirements and ever-increasing rates in a potential death-spiral as only the sickest remain insured.

Financially, employees receiving employer contributions already receive generous “subsidies” for their health coverage. Group premium rates tend to be more favorable than individual markets given the ability to control for adverse selection, and employers and employees alike benefit by reducing the taxable income for contributions made to insurance premiums. When employees’ taxable income increases due to the new taxable status of employer contributions, the employer’s FICA match would also increase. For every new dollar of taxable income due to newly taxable employer contributions or employee contributions previously made on a pre-tax basis under Section 125, employers would be responsible for 7.65% in new costs until the employee reached the Social Security wage base.

Ultimately, eliminating the exclusion would in turn result in a massive tax increase on middle class Americans that would not come close to being offset by any deduction, particularly for lower-paid workers who don’t have a deduction for income tax. Rather, a deduction for this type of worker would likely cause them to forego coverage altogether since it would offer no immediate relief towards the cost of coverage.

Finally, moving from a group insurance marketplace to an individualized marketplace would cause considerable strain on the enrollment process. Group plans are highly efficient at seamlessly enrolling millions into coverage, and without these group plans agents and brokers would be faced with enrolling upwards of 170 million Americans individually into plans. The ACA has demonstrated the challenges of enrolling as few as 13 million consumers onto the federal and state marketplaces. Increasing this number by more than ten-fold would not be any less chaotic.

The bottom line is that the employer-based system has proven highly efficient at providing Americans with affordable coverage options for decades. Eliminating the tax exclusion would likely result in the demise of the employer-based system, a significant tax increase on middle-class families, significantly increased costs for coverage, and more restrictive plan offerings. Healthcare reform has proven its challenges; however it is important that any policy proposals not make difficult situations worse and eliminating or even capping the exclusion would be far worse for all Americans.

Repealing Obamacare (Part 1 of 2) – Individual Tax Credits

Republicans hope to repeal Obamacare. One plan getting attention is creating a health insurance federal income tax deduction of $7,500 per individual and $20,500 for family. Everyone will be free to use their tax credit to buy the health insurance of their choice, not just the plan their employer provides.

A derivative plan recommends a refundable health insurance tax credit that is based on age, rather than income since 40% of people don’t pay any federal income tax. Money left could be put into a health savings account. HSA eligibility would be extended beyond age 65 (an idea Employee Benefit Advisors really likes).

Policy proposals would eliminate or cap the employer tax exclusion for health insurance. This would decimate the employer-based system, where a majority of Americans, roughly 169 million, receive their insurance coverage.

The employer exclusion allows an employer’s contributions to an employee’s health insurance to be excluded from that employee’s compensation for income and payroll tax purposes. The result has been a highly efficient means of providing affordable coverage through group purchasing and its economies of scale by spreading risk and avoiding adverse selection.

Proponents contend that eliminating the exclusion would result in Americans having more control over their coverage, reduce job-lock, and result in greater transparency and reduced costs.

Everything You Need to Know About COBRA in Under 5 Minutes

Have your employees ever asked you for information about COBRA? Have you ever had to spend time trying to explain how it works? Wouldn’t it be nice to have a simple reference you could point them to?

Diversified Administration came up with this 5 minute video “Everything You Need to Know about COBRA in Under 5 Minutes”. This video answers some of the most frequently asked questions, such as:

  • What is COBRA?
  • Can I change plans with COBRA?
  • How long can my COBRA last?
  • How long does it take for my benefits to be reinstated?
  • Can I pick the date my COBRA starts?
  • When are my COBRA premiums due?
  • How long does my employer have to send out my COBRA Election Notice?

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services. We can customize a wellness plan for your budget and culture.

2017 ACA Required Contribution Percentages

The required contribution percentages for 2017 used to determine whether individuals are eligible for a premium tax credit and whether individuals are eligible for an affordability exemption from the individual mandate have increased.

Premium Tax Credit Eligibility will increase to 9.69% – Percentage is used to determine if an individual is eligible for a premium tax credit to purchase health coverage through the Health Insurance Marketplace (Exchange) if not able to get affordable coverage through an eligible employer plan.

Individual Mandate Affordability Exemption will increase to 8.16% – Exemption applies when the individual cannot afford coverage because the minimum amount they must pay for the premiums is more than 8.16% of the individual’s household income.

Pay or Play Affordability Safe Harbors – The employer shared responsibility (“pay or play”) regulations are expected to mirror the percentage in the affordability safe harbors.

 

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services. We can customize a wellness plan for your budget and culture.

Up Up and Away – 2017 ACA Cost-Sharing Limits Released

HHS updated the annual limits based on the premium adjustment percentage for 2017. As a result, annual out-of-pocket expenses may not exceed $7,150 for self-only coverage or $14,300 for family coverage in 2017. – Why? It is an attempt to keep the premiums down. – I can hear the moans and groans of open enrollment already!

 

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services. We can customize a wellness plan for your budget and culture.

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