Two Minute Drill

UnitedHealthcare News Release Indicates Small Group Transitional Relief Plans (pre-ACA) Are Likely To Be Extended Beyond 2017

While we wait to see what happens with the New Trump Administration’s plans to repeal and replace………….

In a recent field communication pertaining to Small Group renewals, UnitedHealthcare (UHC) announced that they were making provisions for small employers with non-ACA compliant plans to have the option to keep those plans in place beyond 2017. This “Keep Your Plan” option from UHC is contingent upon the Transitional Relief provision being extended again as expected.  Our guess is that some of other carriers in the Small Group market will follow suit.

The Transitional Relief provision was first enacted when the ACA went into full effect in 2014. Often referred to as the “Keep Your Plan” provision, this provision was extended twice after it first went into effect.  Under the last extension all plans not compliant with ACA were set to expire 12/31/2017.

In January, the new Trump Administration issued a memo “to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the [ACA] that would impose a…cost…or regulatory burden on individuals, families, [or]…purchasers of health insurance.” UHC’s move indicates they expect the new Administration to issue another “Keep Your Plan” extension and that the expiration date will be postponed for at least another year (through 2018) and perhaps indefinitely.

UHC indicated that the Transitional Relief notice applies to: Arizona, Arkansas, Alabama, Florida, Georgia, Illinois, Iowa, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, and Wisconsin.

We’ll be following closely and will keep our clients, especially those who currently have Transitional Relief Plans, posted.

For more info click on the links below:

Trump Administration Aims to Reduce Regulatory Burden

Previous Extension of Transition Policy for Non-ACA Compliant Health Plans Issued 2_29_16

ACA in 2017… Stay Tuned

What do we see?

Our opinion was that if Hillary Clinton had won, ACA would have gotten the heavy lift it would have needed to advance.  The difficult regulations would have been imposed (vs delayed further) and the money would have been allocated from general funds to stabilize the market.

Without the heavy lift, big trouble for ACA would be on the horizon.

The horizon is here.  What we see initially is that the regulations will start to go away (changed or ignored) and cash infusion will not happen.  What remains to be seen is what the party  in power will do to replace the law.  Doing nothing will almost be a replacement, but to what?  The Republicans do have various plans, but which course they will follow remains to be scene.

Our job will be to let you know how this will affect you and your people.  As of today, we just hold the course.  The taxes and reporting requirements are still in place. The plans on the market have not changed.  We will keep you aware as things change. If things hit your radar or you have questions on what you read or hear, please let us know and we will dig in.

For more on the latest:  ACA Compliance Bulletin — Congress Clears Path for ACA Repeal

RECURRING EMPLOYER QUESTION: WHEN ARE THE COSTS OF GROUP TERM LIFE INSURANCE TAXABLE?

Maybe it’s because we’re approaching the end of the year and many are prepping for reporting season.  Whatever the reason, this question about the taxability of Group Term Life Premiums has been asked a few times lately.

So we thought it might be worth posting some info for you.

Here’s the short answer:  Amounts up to $50,000 in coverage are not taxable.  Incremental amounts of coverage above $50,000 in group term life products are taxable based on something called an IRS Premium Table (for more info click on the links below).

In other words, employers can make group-term life insurance coverage available to employees that is in excess of $50,000, but the excess cost of coverage above $50k is taxable to the employee even if employees are paying for the insurance premiums associated with the coverage.

For more detailed information, here’s a link to the IRS page that  discusses Group Life Insurance.

The attached Compliance Overview may also be helpful.   

DO ELECTION RESULTS SIGNAL END OF OBAMACARE?

Highly respected industry expert Bob Laszewski provides an ongoing review of health care policy activity and the health insurance marketplace. We have followed his takes on healthcare reform for some time and have always found them to insightful, balanced, realistic and mostly on target.  And, you can count on straight talk, no bull.  We were very interested in his reaction to last night’s election results.

Here’s some of what Laszewski had to say about Obamacare immediately on the heels of last night’s presidential election:

There is no doubt that Obamacare is dead……..

…….There are two routes they will consider:

  1. Immediate repeal and replace that can rebuild insurance reform under the Senate 51-vote budget rule. Following this route will mean that the pre-existing condition reforms, for example, would have to remain in any new law because they are not budget related and would have to stay. The individual mandate (the Supreme Court declared it a tax) could be done away with as well as all of the exchange subsidies and the Medicaid expansion because they are spending related. Just what this path would look like in detail will depend upon what Senate budget rules ultimately determine to be budget items and whether that would be enough to build a health law consistent with a Republican vision.
  2. Effectively repealing by using the Senate 51-vote budget rules to gut the financing of the law on a future date certain. That would be followed by the Republicans saying to the country and the Democrats that Obamacare would continue as is until that future date––Obamacare would continue to cover everyone in the exchanges and under Medicaid. But if Democrats didn’t cooperate in legislating a new health insurance law, they will argue, it will be on the head of the Democrats that people lost their coverage on the day funding ends. This course could have the effect of forcing the Congress to agree on a new bipartisan path for health insurance reform––or result in one incredible implosion of coverage if the Democrats didn’t cooperate.

Either way, Obamacare is over.”

No words minced, for sure.

You can read Bob’s entire article Obamacare: Dead Law Walking!  here.

http://healthpolicyandmarket.blogspot.com

Using An Old Opening Joke Line To Illustrate Costs In Healthcare

We have all heard jokes that begin with
“Three guys walk into a bar….”

I thought it might make sense to use that model to explain why “referenced-based pricing” and general consumer awareness in healthcare are important to consider. Here goes:

Three guys walk into a hospital to get the same procedure….

– THE FIRST GUY is covered by MEDICAID and the billed amount to the government is $60.

– THE SECOND GUY is covered by MEDICARE and the billed amount is $100.

– THE THIRD GUY is covered by PRIVATE INSURANCE and the billed amount is $250.

cost-1174933_1280

There are long and complicated reasons why this exists, but it does.  One of the things that many people are talking about but still few are doing is called “reference-based pricing” (RBP).  This is where an employer will agree to only pay a percentage above MEDICARE.  It is still edgy and can create problems for members under this type of program, but it makes sense.  Basically, the employer is saying “I understand that providers charge us more but we will only agree to a certain percentage above what you bill to Medicare.”   The reason it is edgy is that it could pit the provider against the member or the provider may even turn the member away.  Nonetheless, RBP is out there and will likely get more attention.

Although structural programs like referenced-based pricing may be too early to embrace, it is wise to know that better pricing is out there and consumers can take advantage by asking questions and comparing prices.

I know that “three guys walk into a bar” has a much better ring to it than “three guys walk into a hospital”, but it is important to know that you may be able to find a better deal on your costs.

This is something BBG is studying and we are gathering pricing differences for our clients.

CDHC-Comparison-Shopping

 

2016 Medical Loss Ratio Rebates: Get a Check From Your Carrier?

Notifications from insurance carriers about this year’s rebates have recently started going out to employers. Under the ACA, carriers have until September 30 to notify employers if they are to receive a rebate.  Any impacted employees will also be notified by the carriers that a rebate is being issued to their employer and that the employee can check with their employer to find out if they qualify for a portion of it.

This is the fourth year of the medical loss ratio rebate checks. While the total number and the aggregate dollar amounts of rebates are about half of what they were in the MLR provision’s first year (2013), more are being issued this year than last year.  From what we hear, a relatively small percentage of employers are receiving rebates and for those that do the amounts are modest.

As a refresher….

The Minimum Medical Loss Ratio (MLR) requirement is part of the Affordable Care Act (ACA). The MLR requirements set minimum percentages of premium dollars that health plans must spend on health care (medical costs and activities that improve health care quality).  If a health plan spends less in medical costs than the minimum percentage it has to pay rebates to employers.  The employer then has to follow government guidelines on how to use the rebates. The employer must use the amount of an MLR rebate that is proportionate to the premiums paid by subscribers (enrolled employees) to benefit its subscribers. There are several ways employers can choose to do this.

For more information you can read our earlier article, refer to 68557 How Employers Should Handle MLR Rebates 8-30-16, or go to

https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/technical-releases/11-04

https://www.irs.gov/uac/medical-loss-ratio-mlr-faqs

Example Rebate Check

ARE YOU WONDERING ABOUT THE “CONTROLLED GROUP” QUESTION? HERE’S WHAT YOU NEED TO KNOW

The “Controlled Group” question is popping up for many employers with much greater frequency as part of various and sundry regulatory applications, audits, surveys, reporting requirements and underwriting questionnaires.

Netting it out in layman’s terms — at least as it relates to health insurance and ACA compliance — a controlled group may exist when multiple companies fall under common ownership.

The ACA includes a provision under which companies that have a common owner (or are otherwise generally related) are combined and treated as a single employer for purposes of determining if the companies collectively employ at least 50 FTEs (the combo of full-time EEs and full-time equivalent EEs).

THE LAW OF DISPROPORTIONATE COSTS: SMALL NUMBER OF EMPLOYEES ACCOUNT FOR LION’S SHARE OF GROUP HEALTH PLAN MEDICAL COSTS

There’s plenty of cost related analytics available to support the disproportionate cost premise that medical expenses are highly concentrated among a very small proportion of enrolled employees.  These highlights, for example, from a Agency for Healthcare Research and Policy (AHRQ) are pretty telling:

  • 1 % of the population accounts for 21.4 % of total health care expenditures nationally
  • 5 % of the population account for 49.9 % of total expenditures
  • 10 % of accounts for 65.6 % of all medical costs
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