United Health Care is the largest carrier in the country for the moment…and the first one to decide to pull out of the health insurance marketplaces (exchanges). They can’t make money (and they are not the only ones) in a regulated environment and where they have to take even unhealthy individuals on a guaranteed basis or any number of people on group plans when there could easily be a case of adverse selection. Who can make money in this environment? One major carrier is saying they can’t.
Yearly Archives: 2015
December 30, 2015
Agencies Issue Final Rule on Grandfathered Health Plans and Other Initiatives | Petaluma Employee Benefits
December 29, 2015
By Danielle Capilla
Chief Compliance Officer at United Benefit Advisors
Federal agencies recently issued a final rule that essentially combined a variety of interim final rules and non-regulatory guidance on a variety of Patient Protection and Affordable Care Act (ACA) initiatives such as grandfathered health plans, preexisting condition exclusions, internal and external appeals, rescission’s of coverage, lifetime and annual limits, emergency care access and dependent coverage. The final rule was very similar to the previous guidance it consolidated. The final rule goes into effect on January 1, 2017. At that time all of the prior interim rules will be superseded.
The final rule also noted that various transitional rules are now void, such as the allowance of grandfathered health plans to exclude children under age 26 who were eligible for other group health plan coverage, and rules that provided a special enrollment period for children under age 26 who had been excluded from coverage.
Information on grandfathered health plans is shared below. For more information on the final rules related to pre-existing conditions, lifetime and annual coverage limits, rescission’s, adult children, appeals, designation of a primary care provider and access to emergency care, download UBA’s free ACA Advisor, “Agencies Issue Final Rule on Grandfathered Health Plans and Other Initiatives.”
The final rule reaffirmed that grandfathered status applies separately with respect to each benefit package. For example, a group health plan with a preferred provider organization (PPO) plan, a point of service (POS) arrangement, and a health maintenance organization (HMO) option would each carry grandfathered status (or not) separately. Requirements for grandfathered status notification remain the same — plans must include a statement that the plan or health insurance coverage believes it is a grandfathered health plan in any summary of benefits provided under the plan. The model disclosure notice remains the same.
Grandfathered plans have been governed by anti-abuse rules, to prevent plans from maintaining grandfathered status when employees transferred into the plan are from a transferee plan that would have caused the transferor plan to lose grandfathered status if its terms were adopted. There is an exception for bona fide reasons for employee transfers, such as a plan being eliminated by the carrier.
The final rule noted that a plan that eliminated substantially all benefits needed to diagnose a condition would cause a plan to lose its grandfathered status, but purposefully declined to provide a bright line rule to interpret the requirement. Excessive increases to a single or limited number of copayments would cause a plan to lose grandfathered status, even if the remaining copayments remained the same.
Plans that add additional tiers (such as individual plus one, individual plus two) will not lose grandfathered status if the contribution rate for the new tiers is not below the previous non-self-only tier by more than five percent. Employers with grandfathered health plans that offer wellness programs should take great caution if the wellness program imposes penalties for failing to meet standards, this could put the plan’s grandfathered status at risk. Finally, grandfathered health plans may move brand-name versions of drugs that become generic to a higher cost-sharing tier.
For more information on the final rules related to pre-existing conditions, lifetime and annual coverage limits, rescission’s, adult children, appeals, designation of a primary care provider and access to emergency care, download UBA’s free ACA Advisor, “Agencies Issue Final Rule on Grandfathered Health Plans and Other Initiatives”
December 24, 2015
By Danielle Capilla
Chief Compliance Officer at United Benefit Advisors
Federal agencies have released the proposed rule for the 2017 Benefit Payment and Parameters. Among other items, it provides updates and annual provisions relating to:
- Risk adjustments, reinsurance, and risk corridors programs
- Cost-sharing parameters and cost-sharing reductions
- User fees for Federally-Facilitated Exchanges (FFEs)
- The standards for open enrollment for the individual market for the 2017 benefit year
- Updates to the Small Business Health Options Program (SHOP)
- Definitions of large and small employer
- Guaranteed availability
- Medical loss ratio (MLR) program
The Benefit Payment and Parameters rule is typically finalized in the first quarter of the year following the release of the proposed version. Comments on the proposed rule are due by December 21, 2015 (today).
The proposed rule would set cost sharing for the 2017 calendar year for self-only coverage at $7,150 and $14,300 for other than self-only coverage. The 2017 open enrollment period would be from November 1, 2016, to January 31, 2017.
The proposed rule suggests amending the regulatory definitions of “large” and “small” employers to match the definition set by the Protecting Affordable Coverage for Employees Act (PACE Act). The definitions would be revised to define a large employer as one that averages at least 51 employees in the previous year, but states may elect to define large employers as those with 101 or more employees. Similarly, the definition of small employer would change to an employer with an average of at least one but not more than 50 employees on business days during the preceding calendar year. States may elect to define a small employer as one with 100 or fewer employees. The rule would also provide that, for an employer not in existence the preceding calendar year, its size should be determined by its reasonable expectation of the average number of employees during the year.
Download UBA’s ACA Advisor for additional detail on proposed rules related to:
- The rating area for a small group plan
- Availability of small group coverage based on employer contribution or group participation rules
- Standards of conduct for agents and brokers
- Special enrollment periods
- Employer appeals of an employee’s eligibility
- “Vertical choice” options
December 23, 2015
Once everyone finally saw what the Cadillac tax would do, there was predictable outrage. After all, it is outrageous, especially when they set numbers in 2010 that would not take effect until 2018. So there has been huffing and puffing in the past year and Democrats and Republicans alike trying to junk this heap. But they can’t do it easily, as a little recognized aspect of the ACA requires that the money the Cadillac tax was supposed to raise has to be raised somewhere else. No one has any suggestions at this point…
December 21, 2015
If you desire to have good time management then you need to have a strategy or an action plan. Following these strategies will help you get the most out of your days.
First thing to do is Prioritize your work.
Start each day by ranking the things that you much do. Starting with the most important and unpleasant tasks first, then go from there. Those things that can wait for later that day should be listed towards the bottom of your list. Don’t make your list too long because there are only so many hours in a day and you don’t want to feel like you will never get it all accomplished.
Second thing is to Assign Work Time Frame for each task.
At first this might not seem realistic but it is mostly so that you will have some sort of idea how long it will take to finish each task. You will find that once you start a task, it won’t really take very long unless it is a big project. If so, then break it down so that you can see some progress.
Third Be Flexible.
Unexpected things come up from time to time so if you have to stop to take care of some other matter, do not worry and stress out if you don’t accomplished a certain task in the time frame you set. Just like the saying goes, “Rome wasn’t built in a day” so make sure you allow for those time when things come up. Don’t let these things such as phone calls, important emails,kids and life in general frustrate you, the important thing to remember is that you are making progress on your list.
Fourth thing is to Say No if it isn’t important.
Whether you work from home or out of the home there are things that can distract us and waste time. Limit small talk with co-workers, family, friends, etc. while you are working. Respect your decision to make a plan and stick to it. Others will need to understand that if it isn’t something that needs to be taken care of right this minute then it can wait.
Fifth is to Delegate.
Remember that you probably can’t do everything yourself so if there is a task that you might not be very good at or like doing and there is someone that can do the task then by all means pass it on. In this way the task will get done and you won’t waste time putting it off because you can’t accomplish it yourself.
Compromise when necessary.
As your day progresses the urgency of a task may also change. There may be times when your tasks will need to be re-prioritized, rescheduled, postponed or dropped altogether, making adjustments if things come up that needs your attention is important.
Everyone has limitations and if you realize what those are then you will know what you can work on later to improve those skills or know in advance what tasks you will need help with.
Learning to manage your time is not to stress your day so remember to relax and learn as you go. The more you practice managing your time, the better you will get at it. Time management is so that you will take control of your days and see how much you really can accomplish each day and then enjoy some time with family and friends. This is your only viable option no matter where you are working, this is the only way to accomplish anything worthwhile.
December 17, 2015
By Elizabeth Kay, Compliance & Retention Analyst
A UBA Partner Firm
Have you ever overheard the new employee in the break room, bragging about how good their health insurance was with their previous employer, and how much less expensive it was than the coverage they are currently being offered?
You may think ”If it was so good, then why give it up?” There are always a number of factors that can lead to someone making a job change, but what happens when COBRA becomes a part of the negotiating process when they are working out the terms of employment with the new company?
We know that, as of November 2014, the Department of Labor (DOL) made it very clear that an employer cannot pay the premium for an individual plan of an employee or an employee’s dependents, period. If they do, the employer could pay an excise tax of $100 per day they are out of compliance per employee affected. That could be up to $36,500 for ONE employee, for ONE year!
But what if a prospective employee were coming to work for you, and the plan with their current employer had similar coverage but lower premiums because the employer was a larger company, the employees were in very good health overall and the employer had negotiated very low rates with its carrier as a result, or the employer was based in a different state where health care costs were lower? What if that prospective employee tells you that you could pay their COBRA premiums and pay less premium for them than if they enroll in your plan? Many employers would love to save $500 a month for one employee. But the deal is not nearly as sweet as it sounds, and here’s why.
While it is not illegal for an employer to pay for COBRA premiums, if it is for a group plan and not an individual plan, it can create other problems with regard to ERISA and COBRA compliance.
As soon as an employer pays the premium on a pre-tax basis on behalf of an employee for its company policy or another policy, an employer-sponsored plan is created, and is therefore subject to both ERISA and COBRA regulations.
ERISA requires that the plan sponsor distribute notifications to enrollees of the plan, including a Summary Plan Description, and other documents that contain specific plan details. If the employee’s plan benefits were under another employer’s plan, it may be difficult to get that information and distribute it to your employee.
Federal COBRA regulation requires that the employee have access to the same coverage for up to 18 months after he or she loses eligibility for the plan due to termination of employment, for example. What happens if the COBRA plan terminates because that previous company goes out of business and its group plan dissolves? Now the current employer is obligated to continue the employee’s coverage, perhaps without a means to do so.
Or, what if this employee terminates from your company after 12 months? It now becomes your responsibility to provide the employee with 18 months of COBRA coverage, except the employee has already used a portion of his or her COBRA eligibility while under your employment. Since COBRA is an employer obligation, you could be responsible for providing COBRA coverage to an employee who was never enrolled in your company’s group policy in the first place.
It becomes a sticky mess, indeed!
On the flip side, what about negotiating an employee’s severance package? If an employee is leaving your company and you are putting together a severance package, be careful when including paying for the employee’s COBRA continuation coverage. Many employers will offer to pay for three, six or 12 months of COBRA premiums on behalf of the terminated employee.
While this can be done, be careful how you word it in the severance agreement. Most employer sponsored plans are on a 12 month contract. If you make a very general statement saying you will pay to continue the employee’s COBRA coverage at your expense for 12 months, and your premiums skyrocket at renewal, or if you change carriers, and the terminated employee chooses a more expensive plan with richer benefits, you could be on the hook for the increase in premiums.
If you are clear in the severance agreement about the amount you will commit to pay on the employee’s behalf, or clear about the level of coverage to be provided (platinum, gold, silver, or bronze level plan, for example), then you will be better protected.
If you are paying COBRA premiums on a tax-exempt basis for a current employee, or you are concerned about a severance agreement that you made with a terminated employee, please seek advice from your ERISA or employment law attorney.
December 16, 2015
Republicans continue to beat their breasts, but there are certain aspects that remain pests, and these keep failing to meet the tests…of credulity and practicability. In the recent Bipartisan Budget Act of 2015, President Obama quietly erased the “auto enrollment” feature that was supposed to help employers, who didn’t want the help. Another one bites the dust…but there are plenty of provisions left
December 14, 2015
By Elizabeth Kay, Compliance & Retention Analyst
A UBA Partner Firm
The Affordable Care Act (ACA) has brought about many changes in employee benefits. Plans have been eliminated, benefits added, rules changed, and rules have been delayed.
The ACA has always been a heavily debated topic between the Republicans and Democrats, and now that we are coming up to another presidential election we know that we can expect it to be talked about quite a lot.
Some speculate that the Republicans will attempt to repeal the law, again, but the truth of the matter is that the ACA is bringing in too much revenue for a repeal to be successful. The Congressional Budget Office (CBO) projections there will be $353 billion dollars in revenue from the ACA over the next 10 years.
This means that in order for the Republicans to be successful in repealing any part of the law that generates revenue, they will need to find a way to replace that lost revenue.
Looking at the projected cost increases based on its annual Health Plan Survey of over 18,000 health, plans offered by nearly 11,000 employers nationwide, UBA estimates that nearly three out of four U.S. employers will be hit with the Cadillac tax by 2022. With alarm bells sounding, many employers are planning benefit cuts to avoid the tax and, as a result, the CBO actually expects the ACA’s Cadillac tax (and Medical Device Tax) won’t generate the most revenue. Instead they are counting heavily on the second largest source of expected revenue from the ACA: $209 billion dollars from ”other sources.”
What are ”other sources?” The CBO believes that there will be an increase in income taxes due to employers that reduce employee health plans in order to avoid having to pay the Cadillac tax, and in turn raise their employees’ wages to compensate.
If this scenario were realistic (although reducing benefits due to the rising cost of premiums without any increase in wages seems to be more realistic), we should see employers begin to modify their plans in anticipation of the Cadillac tax in 2018, and then a significant increase in salaries. But will employers act sooner? If the Cadillac tax were to be repealed by Congress, it would most likely happen in 2017 after the presidential election. The question then becomes when should employers make these changes? Do they make them now, live with the potential for the Cadillac tax to be eliminated, and their payroll will just remain higher? Or do they wait to make those changes until 2017, the year before the tax goes into effect?
As if another tax were not bad enough, the 2015 UBA Benefits Survey shows that, if some employers were to reduce benefits to avoid the Cadillac tax, they would no longer be able to offer a plan that meets the ACA minimum value requirement. It seems hard to believe that a plan could have premiums that are more than $10,200 annually for one person yet have an actuarial value of only 60 percent. And with the ever-increasing cost of health care, premiums will only continue to rise over the next three years. More and more employers will have to make difficult decisions about their benefit plans.
There is hope that legislators will add an actuarial value safe harbor into the Cadillac tax provision so that employers who are offering a plan that meets an actuarial value of less than 90 percent will be exempt from the Cadillac tax. Otherwise, an applicable large employer that is subject to the ACA’s “play or pay” rules may have to pay the Cadillac tax, and will also be fined for not offering a plan that meets the minimum value requirements.
Read UBA’s latest press release for the percentages of employers likely to be subject to the Cadillac tax broken down by actuarial value.
Download the free 2015 Health Plan Survey Executive Summary for additional information on health plan cost trends across the U.S., including employer contributions and costs for employees.
To benchmark your plan against others in your region, industry or size bracket, contact a UBA Partner near you to run a custom benchmarking report.
December 11, 2015
Then Arizona and then Michigan, which became the 12th co op failure of the year, which now makes it half of all of these non profits who have failed to provide adequate coverage for a reasonable length of time…at considerable taxpayer cost. As of the end of the third quarter this year, the remaining surviving 11 co ops have lost $200 million, which is triple the losses they reported at the end of June.
December 10, 2015
As the end of the year nears, many of us are preoccupied with holiday parties, searching for the perfect gift for loved ones or making lists of things to accomplish before the new year begins. During this busy time, one important task is often forgotten on the to-do list: Make sure to use flexible spending account (FSA) funds before it’s too late.
Some employers will allow you to roll over $500 of your FSA funds into the next year. However, for those who are not permitted a carryover, these funds must be used by the end of the benefits year, which for most people is Dec.31. Otherwise the funds will be forfeited back to your employer. In fact, each year more than $400 million in tax-free income is wasted when FSA holders don’t spend these funds or fail to submit expenses to be reimbursed.
That said, it’s not too late to create a health care checklist to keep you and your family on a healthy track during these last few weeks of the year. Here are five ways to ensure you get the most out of your benefits dollars:
1. Schedule annual check-ups with ALL physicians. Visit important specialists, such as an optometrist, dentist, dermatologist or gynecologist, along with your primary care physician.
2. Don’t forget about eye care/medical aids. Consider whether you need an additional pair of eyeglasses, contact lenses or even orthotic shoe inserts to help utilize FSA funds.
3. Consider purchasing low-cost health care items. Stock up on items for year-round and emergency use, such as first-aid kits, contact solution, thermometers, neck/wrist/joint braces, aspirin and other pain relievers.
4. Ask employers about unique FSA offerings. Find out whether Lasik eye surgery, massages, acupuncture treatments, and other unique procedures or treatments are included in your FSA plans.
5. Submit receipts. If spending your entire FSA funds still seems unrealistic after any last-minute checkups and first-aid purchases, double-check to make sure you’ve submitted past receipts for eligible out-of-pocket health care purchases so you can be reimbursed.
“It’s important to review your out-of-pocket expenses from the past year and consider any changes that may occur to gain a better idea of how much to contribute to an FSA in the coming year,” says Matthew Owenby, senior vice president and chief human resources officer at Aflac.
By creating a list, and checking it twice, you can ensure that you don’t leave money on the table as you prepare for a new year.