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Four Numbers that may cause you to say Four Letter Words

The U.S. Treasury Department and Internal Revenue Service has issued the final regulations on the employer mandate under the Affordable Care Act. The new 6055 & 6056 regulations are 227 pages long and Employee Benefit Advisors believes will prove to be the most cumbersome and costly part of Obamacare. We say costly because we believe this will prove to be far more complicated, and thus burdensome than employers realize. Employers with part-time, seasonal and variable hour employees (as an example a bus driver who also works maintenance; so he would have hours under two different pay codes or a temporary that works temp to perm etc.) will particularly have difficulties and will need a managed solution.

Software is available to help manage your employees and meet the new Healthcare Reform guidelines. This system is fully automated to your specifications and will complete all the necessary reporting documents. Contact Employee Benefit Advisors for a demo.
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The laws reporting requirements fall under sections 6055 and 6056 of the internal revenue code. Under section 6056, large employers subject to the employer mandate must file a return with the IRS and provide a statement to each full-time employee with information regarding their offer of employer-sponsored healthcare coverage. Under section 6055, employers who offer self-funded plans and insurers generally must file a return with the IRS and provide a statement to each individual who is covered by plans that constitute minimum essential coverage.
Here are the nuts and bolts of the full regulation:

  1. Employers that have between 50 and 99 full-time equivalents will have until 2016 to provide health insurance, not 2015. So if you have 100 or more full-time equivalents in 2014, Jan. 1, 2015 is still your target. But if you have 99 or fewer, you get a one-year extension.
  2. Transitional relief is now available for non-calendar plans. There was some confusion over whether the 2014 transition relief would apply for 2015 and now it appears that it does. Employers with non-calendar year plans are subject to the mandate based on the start of their 2015 plan year rather than on Jan. 1, 2015.
  3. Large employers (those with more than 99 full-time employees) have to comply in 2015, but for the first year, they will only have to offer coverage to 70% or more of their full-time employees. The 95% requirement will not go into effect until 2016.
  4. For large employers that contribute to a multi-employer plan, an employer will not be subject to shared responsibility penalties with respect to employees for whom the employer is required by the collective bargaining agreement or appropriate related participation agreement to make contributions to the multi-employer plan.
  5. Some categories of employees are better defined:
  • For volunteers for a government or tax-exempt entity (like emergency response personnel), hours they volunteer will not count in consideration of their full-time employment status.
  • For teachers and other educational employees, they will not be treated as part-time for the year simply because their school is closed or operating on a limited schedule during the summer. Also, for adjunct faculty, employers of adjunct faculty may credit them with 2 ¼ hours of service per week for each hour of teaching or classroom time.
  • For those in traditionally seasonal positions where annual employment is customarily six months or less, they will not be considered full-time employees.
  • For students in work-study programs, these hours will not be counted in determining whether they are full-time employees.

Charity & Community

Over $8,000 was raised for CARRFOUR by Mike Schunk / Employee Benefit Advisors working with the Miami Finance Forum. The event itself raised $1,360 and then for every dollar donated, Carrfour was able to leverage $5.00 in government funding. This means a gift of $1,360 will yield $6,800 in government funding for an impact value of $8,160; which will provide supportive housing for one family for approximately 13 months.

Carrfour’s mission is to confront homelessness by developing affordable housing and providing supportive services as a pathway to self-sufficiency. – See more at: http://carrfour.org

Employee Benefit Advisors donates a portion of our revenue on a monthly basis to local charities.

mike

 

Pictured left to right;
Mike Schunk, CEBS – President of Employee Benefit Advisors
Anthea Pennant – Director, Fund Development for Carrfour
Carlos J. Deupi – MFF Chairman, General Counsel the Brilla Group

How to choose a PEO – Part 3 (Payroll & Reporting Capabilities)

Payroll contains all the information needed to run the analyses need to comply with the complexities of PPACA. Thus your PEO should be able to run the reports to navigate through the ACA. Some PEO providers offer insight into only the parts of the law their system can interpret, the top tier vendor’s offer a comprehensive solution Support needs to include:

  • Eligibility – Measurement periods under Shared Responsibility and per-month detail of hours and average hours per week and month over the defined date range.
  • Affordability – Ability to calculate the percentage of federal poverty level earned by the employee over the date range to estimate Medicaid eligibility. View results of all affordability safe harbor methods including a count of how many employees exceed the affordability threshold.
  • FTE Determination Report – This report will calculate the number of FTEs for an entire organization or subset of employees within a group.

The ACA introduces numerous laws, safe harbor provisions and reporting requirements. To make the complexities of this act easier to understand and to effectively manage your company’s needs, be sure your PEO vendor can help you and your broker navigate across all these areas.

How to choose a PEO – Part 2 (Health Insurance)

Get a clear understanding of the health insurance. How is it rated? Ask about tier placement and get a guarantee you can only be moved down a few tiers in any one year. Ask for claims/utilization records supporting the decision. Key points for Health Insurance Renewals

  • What rate increases have your clients experienced in the past 3 years?
  • When? Annually? Quarterly?
  • How far in advance are clients notified of the renewal?

HR & Benefit Compliance is more and more important with required SBC distribution, increase in ACA & DOL audits resulting from Obamacare. I have asked several PEOs to show the support provided for these audits. Repeatedly I’m told “Our Benefits Department has advised that this information is provided to the employee in the package that is mailed to them from the carrier after enrollment and advises they may visit the carrier website or contact the carrier’s customer support to obtain a copy of the SPD.”

SPDs and Wrap documents are not provided by the carrier, SBCs ares. However, SBC distribution is the obligation of the PEO. – Whoever answered the question either did not understand or does not know what an SBC or SPD is. It is the responsibility of the group to provide the SPD and Wrap. I this case, if a PEO is undertaking the compliance for their clients, it would be the PEO’s responsibility.

We recommend working with a PEO broker like Employee Benefit Advisors. The experience brought to the table can save headaches that you otherwise might not have seen.

How to choose a PEO – Part 1 (Transparency)

Many variables exist when choosing a PEO. – The first step is deciding IF a PEO is the right decision. It’s never always yes or no. You may have the goal of being in a PEO for the short term or long term. If short term you may be trying to correct WC, health insurance or administrative problems. If long term, be sure to choose a strategic partner. Regardless, always consider the opt-out clause; i.e. lengthy contract obligation, one year, 30 day opt-out, terminate anytime or only at renewal…

Questions for a PEO and the right fit for each PEO will be different depending on the potential client. Is price the primary concern? What’s their culture? Do they value customer service? Do they provide training; HR, WC, etc…? Performance reviews? Are they strategic? Tactical?

Employee Benefit Advisors places transparency right at the top of the list. – Ask to see a sample bill and ask to see all rates you are being charged, not a bundled rate. What are they trying to hide that they cannot tell you? Many PEOs hide their cost within the margins of the billing points and charge an artificially low administration rate. What are the transparent points in evaluating a PEO?

  • WC
  • Payroll Tax; FICA, Medicare, FUTA, SUTA
  • FSAs
  • Tax cutoff points – Does PEO continue to charge?
  • Does the PEO make the ER/EE whole if contracted mid-year?
  • Is the PEO passing on Work Opportunity Tax Credits (WOTC) you may be eligible for?
  • Is the PEO SSAE 16 Type 2 certified? (formerly known as SAS70. This is an independent audit vendors should obtain to verify their systems, processes and data security.)
  • Restaurants: Is the PEO passing on FICA Tax Tip Credits you may be eligible for?

PEOs receiving federal and state tax credits should be offering this tax savings opportunity to their clients.

You want your PEO to be financially stable. The best PEOs are accredited by the Employer Services Assurance Corporation and have a current Statement on Standards for Attestation Engagements No. 16 audit (formerly known as SAS 70). Do your homework, make sure your PEO has a strong presence in your industry. Talk to references.

AngioScreen – Know more than your cholesterol level!

Forty percent of all Americans having a stroke have normal cholesterol levels. Not what one would expect considering vascular disease is the leading cause of death worldwide and the leading cause of heart attack and stroke.

A six minute health screen will provide the information needed. AngioScreen is a simple, non-invasive vascular screening designed to provide information about your circulation and risk of heart disease or stroke. Testing includes blood pressure, pulse, heart rhythm, BMI, ABI (Ankle Brachial Index). Screening is looking for blockage or plaque. You receive a color printout of photos of your carotid arteries (located in the neck and carry blood to the brain) along with written results and abnormal values highlighted in red which have also been copied to a CD to share with your doctor.

Log on to www.AngioScreen.com to inquire about screenings. Be sure to tell them Mike Schunk of Employee Benefit Advisors recommended the test.

Memorial Day – Short History Lesson

Memorial Day was formerly known as Decoration Day and originated after the American Civil War to commemorate the Union and Confederate soldiers who died in the war. By the 20th century, Memorial Day had been extended to honor all Americans who have died while in the military service.

(Memorial Day is not to be confused with Veterans Day; Memorial Day is a day of remembering the men and women who died while serving, while Veterans Day celebrates the service of all U.S. military veterans.)

Rx Impact – Bid Rx – Prescriptions for Less (Part 2 of 2)

BidRx (www.bidrx.com) is a website built by pharmacists that links consumers with pharmacies and pharmaceutical companies, so consumers can make better decisions when purchasing prescription drugs. BidRx provides the information needed to identify the best value drug; then pharmacies compete for filling prescriptions. Consumers can

  • See cost of prescriptions (original plus alternatives) and services.
  • See list of participating pharmacies in your geographic area.
  • Get bids from pharmacies that want to earn your business.

Employers can use the site to help communicate the true cost of prescriptions. Employees see the prescriptions’ maximum price before bids (a discounted price), alternative prescriptions with discounted prices, and competitive bids (even lower discounted prices). Employees can use the site to lower drug costs. 

Important – Medications ordered through BidRx.com may be out-of-network and thus not apply towards the deductible. Therefore, BidRx may be used best for drugs with bid prices less than your copay.  So if you find a deal, check your network price and copay, too.  If the savings is worth it, buy it.

When registering, you will need a referral code, feel free to use our code. EBA’s Referral Code is 35FFN.

Examples

  • Simvastatin (generic for Zocor and alternative for Lipitor and Crestor) for lowering cholesterol usually has a generic co-pay of $10 or $15 for a 30 day’s supply.  EBA was able to get a bid price of $3.40 for a 90 day’s supply.  That’s an annual savings of $75.
  • Amlodipine (generic for Norvasc) for lowering blood pressure usually has a generic co-pay of $10 or $15 for a 30 day’s supply.  EBA was able to get a bid price of $3.68 for a 90 day’s supply.  That’s an annual savings of $75.
  • Nexium (the purple pill) retails at $762 for a 40 mg 90 day supply. BidRx price was $660. Similar drugs (generics) cost just over $20.

Rx Impact – Specialty Drugs (Part 1 of 2)

Specialty Drugs – generally referring to drugs costing over $600 per month – are estimated to account for 30% of total drug costs and expected to reach 50% by 2018. These drugs are expensive to develop and pose challenges manufacturing. However they target life altering illnesses making them an absolute must if needed. These patients have chronic illnesses and are expected to be on medication for years.

The average cost of a specialty drug is $10,000 per month for a patient. (That’s not a typo – stat is provided by a principle of the Institute for Integrated Healthcare). Thus cost management is crucial to trying to hold down pharmacy costs. Strategies include requiring prior authorizations to assure the expensive drugs are the best fit and tiered out-of-pocket cost are two of the most common.

www.shrm.org/0314-specialty-drugs

 



A special thanks to SHRM – Content and video from the Article The Looming Rx Threat by Tamara Lytle.

New Rule on Market Reforms – 22% MLR

The rule makes a temporary change to the administrative cost ceiling. Currently, as a result of the Medical Loss Ratio (MLR), insurers are allowed to have 20% of their costs be administrative, with the other 80% devoted to claims. That number has been increased to 22% for 2015 under the proposal to accommodate the increased burden issuers have faced in complying with the law and adjusting to the Exchanges. Issuers now have some more resources to devote to administrative costs next year.

The Centers for Medicare & Medicaid Services (CMS) released the proposed rule and other guidance documents late March 14, 2014, in a continued effort to implement the Affordable Care Act (ACA).  The rule, is centered on implementation of market reform provisions of the ACA. The change to the risk corridors program was instituted as a way to cushion issuers from excessive gains or losses due to uncertainty surrounding premium rates.

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