Compliance – ACA & Other

Health Care Reform Updates – Hear are a few of the changes announced in the last weeks starting with Transition Policy.

Transitional Policy provides the Option to Keep Existing Coverage in 2014 – State agencies responsible are encouraged (but not required) to adopt the transitional policy. If the state allows, health insurers have the option of continuing small group coverage that would otherwise be terminated or cancelled.

Online Enrollment Delayed One Year for Federally-Facilitated SHOP (Small Business Health Options Program) Marketplace Further – Small Employers Must Continue to Apply Offline Until November 2014.

Enrollment Deadline Extended for Individual & SHOP Marketplace – Individuals and Small Businesses have until December 23rd to sign up. Coverage would begin January 1, 2014.

Temporary Hardship Exemption from Individual Mandate for Individuals with Cancelled Plans – The Hardship Exemption allows individuals to purchase catastrophic plans. One such exemption is for individuals with cancelled plans who have difficulty paying for coverage in the individual marketplace. (How ironic – exemption granted to those who cannot afford insurance under the Affordable Care Act.)

Effective for the plan year beginning on or after Jan 1, 2014 the new federal maximum 90-day waiting period limit applies to all group health plans, fully insured and self-funded, grandfathered and non-grandfathered. (States may mandate shorter waiting periods.)

Compliant waiting periods include: 

• No waiting period
• Date of Event: 1 to 90 calendar days; 1 or 2 months
• First of Month: Following the event, such as date of hire, 1 or 2 months or 1 to 60 calendar days.

We anticipate most employers declaring the eligibility to be ‘first of the month following…’, to minimize (if not eliminate) partial billing, with wording ‘not to exceed 90 days’.

A health savings account (HSA) is a tax-advantaged savings account available to those who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), funds roll over and accumulate year to year if not spent. HSAs are owned by the individual.

HSA 2014 annual contribution limits
HSA annual contributions limits – Single $3,300 / Family $6,550
HSA catch-up contributions – $1,000 for an accountholder age 55 or older

Plan Design Requirements
Minimum deductible  –   Single $1,250 / Family $2,500
Maximum out-of-pocket expenses – Single $6,350 / Family $12,700

(Other HSA-eligibility criteria apply including: cannot be enrolled in Medicare, have received VA medical benefits in the past three months, or be eligible to be claimed as a dependent on someone else’s tax return.)

HealthCare.gov website users should know that the issues with the website were not just a result of a very large amount of traffic pinging it in one go.

The security flaws in the website were quite primitive. Flaws you don’t really expect someone to have overlooked. For instance, the site relayed personal information without encryption and the e-mail verification could be easily bypassed – even if you did not have access to the e-mail account. Also, the amount of cookie data the site maintained was more than required and likely not tested under high loads. And these are only a few of the issues.

The site is a prime target for an account being hijacked. A malicious hacker has a vulnerable site where millions of victims are “coming” because the government mandated it. The holes in the website allow the hacker to compromise a very large amount of sensitive information about a lot of people, all in one shot.

There are certain precautions that website users can take…but the website has to be iron-clad to begin with. There are a lot of security tests, assessments, and penetration tests that the website, its servers, the supporting databases, and the entire infrastructure it was built on, need to undergo.

 Website users should take precautions to ensure they don’t become victims of identity theft. The Federal Trade Commission (FTC) offers some good guidelines –http://www.consumer.ftc.gov/features/feature-0014-identity-theft.

The public needs to demand the equivalent level of information security from the ACA infrastructure as the Government would expect from a large hospital or healthcare associate via the HIPAA regulations.

Thanks to Enterprise Risk Management, www.emrisk.com, for help with the blog. ERM performs Penetration Testing and Security Implementation to Protect Businesses. By simulating an attack on your computer system or network, you determine if your information infrastructure is strong enough to withstand a real data security breach from both external and internal threat.

Last week’s announcement the federal government is encouraging states to adopt a transitional rule which would allow insurance carriers to extend individual health insurance plans, which would otherwise be discontinued, into 2014, was only half the story. Only hours after the announcement the Centers for Medicare & Medicaid Services (CMS) released additional clarification on this announcement, advising that small groups are also included in the extension into 2014. By allowing members to remain in their current plans through 2014, they will have additional time to ascertain if they qualify for a subsidy and to find new plans for 2015 that meet the ACA requirements. Under the transitional policy, small group health insurance that is renewed for a policy year starting between January 1, 2014 and October 1, 2014 will not be considered to be out of compliance with certain key Affordable Care Act market reforms (originally scheduled to take effect for plan years starting on or after January 1, 2014), if certain conditions are satisfied. Requirements include:

• Covering essential health benefits
• Variations in premiums be limited to age, tobacco use, family size, and geography;
• Elimination of preexisting condition exclusions;

Where does each state stand? You can follow here.

Early 2014 large group renewals have come in for fully-insured and self-insured plans. Many employers are going to have an unpleasant surprise. A surprise to many who have had the belief that the postponement of the mandate postponed everything. Are you ready for this?

Example 1: A colleague of mine reports a 400 life group with a 77% loss ratio received an 8.5% increase, but it was actually a 21% increase. – How could this be? Answer: ACA fees are 4.00%, reinsurance fee $5.40 pmpm and insurer fee of 2.5%; no surprise, this was expected. Here is the surprise; 7.5% benefit adjustment added on top of the premium for the benefits to become ACA compliant – meaning all medical and RX expenses now apply to the maximum out-of-pocket limit. ACA by itself accounts for an 11% increase. My colleague’s client knew the benefit adjustment was coming but was expecting it next year since pay or play was pushed back. – Without Obamacare the increase was 8.5%.  With Obamacare the renewal increase is 21%!

Example2: A self-funded plan with 531 enrolled has done well managing costs with no increase to health insurance premiums in 2013 or deductible changes. They report beating the national averages in all but one of the last 6 years. The additional reinsurance fees, taxes, etc. alone will add over $131,000 dollars to their plan. The group has a cost sharing arrangement with their employee that includes the premium, deductible, and coinsurance.  The cost share will equal $85,000; and will need to be passed on in addition to any cost trend. That is $160 on each enrolled associate, before cost trend.

In announcing the postponement, the IRS took pain to note that only the employer shared responsibility mandate was postponed, everything else would become effective in accordance with the law’s requirements.

Let us know what you are experiencing.

Have you heard federal officials sate “Premiums before tax credits will be more than 16 percent lower than projected?” They are referring to the weighted average of the second lowest cost silver plan for 48 states (including DC) based on the ASPE-derived Congressional Budget Office.

Sounds good, until you dig deeper. The key word is projected. It does not say the cost will decrease; only the cost are going up, but not as much as anticipated.

What they fail to mention are the reasons. One big reason, insurers are significantly limiting the choices of doctors and hospitals available to consumers. In most states, Individual Medical premiums will soar for the under-50 crowd, including the vast majority who maintained continuous coverage and maintained their health. Some of those people simply cannot afford Obamaco$t, and in 2014 will drop their health insurance.

How much are cost going increasing and why? According to a study cited by America’s Health Insurance Plans (AHIP), it is estimated that in 2014, restrictions on age rating could result in premium increases up to 42 percent for people aged 21 to 29 and up to 31 percent for people aged 30 to 39. In addition to age rating restrictions, ACA also imposes new taxes, fees, and required benefits that could result in further premium increases. Making matters worse is a study from the Columbia School of Business that found more than 80 percent of consumers unknowingly will choose a higher cost health care plan than they need.

Adding to the cost, the US Treasury has ruled that an individual who is covered by an eligible employer-sponsored plan would not be eligible to receive a premium tax credit. According to the letter, an individual cannot benefit from both the exclusion from taxable income for employer-provided health coverage and the premium tax credit provided by the ACA. The law also would not allow an employee who was offered minimum essential coverage under an eligible employer-sponsored plan that provided minimum value and was deemed “affordable” to receive a premium tax credit, even if the employee declined the coverage.

Employee Benefit Advisors has been following two court cases that have been falling under the radar. These cases could dismantle health care reform as we know it.

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Excerpts from Employee Benefit News September 27, 2013 by Serena Yee and Christie Daly

The ACA requires the creation of a health insurance exchange in each state that will serve as a competitive marketplace where individuals and small businesses can purchase private health insurance. If a state refuses to establish an exchange then the federal government is taking over the implementation.

Section 1401 of the ACA provides that premium assistance is available to taxpayers who are enrolled in coverage through an exchange established by the state under Section 1311 of the ACA. Nonetheless, the Internal Revenue Service promulgated a regulation that bases eligibility for premium assistance subsidies on enrollment in coverage through any exchange, including a federally-established exchange. Specifically, the regulation states that subsidies shall be available to anyone “enrolled in one or more qualified health plans through an exchange,” and subsequently defines an exchange to mean “a state exchange, regional exchange, subsidiary exchange and federally-facilitated exchange.”

Potential impact

Since a majority of the states, 34 to be exact, have refused to establish a state exchange, a ruling in favor of the plaintiffs could seriously jeopardize the future of the ACA since the subsidies are key to the operation of other parts of the law, including the calculation and collection of the individual and employer mandate penalties.

read full article»

October 1 was a very significant date for the implementation of PPACA as the individual exchanges went live. However, there were reports from many states with problems with the rollout and not all exchanges were activated on schedule. Both the online small business markets known as SHOP exchanges and the Spanish language exchange are delayed. Going forward, there are several key provisions that will impact employers.

2014
Guaranteed availability/renewability – requires carriers to accept all groups applying for coverage
Waiting periods – requires waiting periods to be no more than 90 days
Auto enrollment – employers enroll their full-time employees in a health plan
Health care excise taxes – New taxes for health insurance and pharmaceutical companies, plus medical devices

2015
Originally effective 2014, employers with more than 50 Full Time Equivalent employees are now required to offer affordable health insurance

2018
PPACA imposes the Cadillac excise tax on rich benefit plans

2020
Medicare Part D coverage gap is reduced to 25 percent