Source: http://springgroup.com/category/employee-benefits/health-care-reform/
Timestamp: 2019-04-24 05:04:22+00:00

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The ACA’s Cadillac Tax implementation was pushed back even further to January 1st, 2022. You’ll recall that this 40% excise tax on higher-cost employer medical plans was originally set to go into effect in 2018 and was then moved to 2020 back in 2015. While this latest delay doesn’t kill the tax, the constant kicking of this can down the road certainly gives its opponents hope that it will never actually see the light of day.
The ACA’s Medical Device Tax has been delayed 2 years to 2020. This 2.3% tax on medical devices was included in the ACA legislation to offset some of its costly insurance subsidies, much like the Cadillac Tax.
The Health Insurance Tax (HIT) will be suspended for all of 2019. It will be collected in 2018 and then presumably again in 2020, unless another suspension or other Congressional act occurs. The HIT is essentially a health insurance excise tax which was included in the original ACA legislation and took effect this month.
What this means to employers: in the short-term, not much. Your health insurance premiums likely already reflect the 2018 HIT and the other two taxes have not taken effect yet, so their delay will not have any immediate financial impact on your company.
In the medium-term, this is a win for employers, as the HIT will go away for at least a year, resulting in temporarily lower 2019 renewals. Further, any employer with generous benefits won’t have the Cadillac Tax looming over their heads for at least four more years.
If the HIT is reinstated in 2020, fully-insured groups will see a big 2020 rate increase. Self-funding with stop-loss would avoid this unknown. It is also worth noting that these delays and suspensions, combined with the recent tax bill’s repeal of the ACA’s individual mandate, significantly reduce the ACA’s funding mechanism. We will be watching these issues closely and will be issuing further employer alerts as the ACA picture gains a bit more clarity.
Despite their campaign promises, Republican lawmakers lack sufficient votes to repeal the ACA outright. This would require 60 votes in the Senate; Republicans have 52. So they must instead rely on a special budget strategy—referred to as “reconciliation”—that permits them to repeal those provisions of the ACA that directly impact federal spending. Created by the Congressional Budget Act of 1974, reconciliation allows for expedited consideration of certain tax, spending, and debt limit legislation. In the Senate, reconciliation bills aren’t subject to filibuster. Because any controversial bills in the Senate tend to attract a filibuster, the Senate Parliamentarian reviews the bill and decides whether it qualifies for reconciliation. Under the so-called Byrd rule, reconciliation bills can only make legislative changes that affect the federal budget. A previous ACA repeal bill was approved for budget reconciliation, which passed by the Senate in December of 2015. The bill was vetoed by President Obama, however.
The ACA is a massive law with 10 titles and hundreds of provisions. Of these, it is the insurance reforms, the individual and employer mandates, and the exchanges/marketplaces that are the most well-known. But the ACA also includes Medicare reforms, workforce provisions, FDA approval of biosimilars, and the many other provisions.
40% excise tax on so-called Cadillac plans repealed (currently delayed until 2020). The excise tax may be replaced with a cap on the amount excluded from the employee’s income for employer-sponsored health plan coverage.
A complete list of ACA provisions that are subject to repeal under the reconciliation process can be found in Table 3 of the Congressional Research Service paper cited above.
There is alternative to the handling of the ACA insurance market reforms, which are enforced through an excise tax penalty imposed on the employer. The Penalty is $100 per affected individual, per day, and it applies to any employer (regardless of the size of its workforce) that offers a group health plan that fails to comply with the ACA’s market reform requirements. Congress could reduce the excise taxes to zero. Or the the Trump Administration might adopt a non-enforcement policy regarding some certain market reform violations, but still enforce other popular market reforms (e.g., coverage of adult children up to age 26).
While we find the Urban Institute’s analysis compelling, Congressional Republicans are almost certainly aware of this risk, and they may be prepared to appropriate funds necessary to stabilize the insurance markets pending passage of comprehensive ACA replacement legislation.
The ACA made some valuable, and correspondingly costly, changes to Medicare. Among other things, it expanded Medicare coverage to include certain preventive services, like mammograms or colonoscopies, without charging Part B coinsurance or deductible. In addition, the ACA phased out the prescription drug “donut hole.” Finally, the law took steps to ensure the Medicare program’s long-term solvency. All of this would be rolled back in the case of a full-blown ACA repeal. But at least one of the major replacement plans proposes to leave the ACA changes to Medicare intact. Presumably, this is a nod to popularity of the phase-out of the prescription drug donut hole.
One replacement plan (proposed by Rep. Paul Ryan) does not stop here. It instead proposes “transforming the [Medicare] benefit into a fully competitive market-based model using premium support.” Under the Ryan plan, beginning in 2024, Medicare beneficiaries would be given a choice of private plans competing alongside the traditional fee-for-service Medicare program on a newly created Medicare Exchange.
Medicaid is another matter entirely. The ACA vastly expanded the reach of the Medicaid program. The matter of Medicaid’s regulation post-ACA was further complicated by the Supreme Court’s ruling in 2012 that states were free to reject the ACA Medicaid expansion.
Before the ACA, Medicaid provided health care for children, pregnant mothers, the elderly, the blind, and the disabled.” The ACA expanded Medicaid’s reach to all low- income individuals. The Republican members of Congress roundly criticized this expansion, noting that the program’s expansion under the ACA accounts for more than 15 percent of all health care spending in the United States. This, they claim, is unsustainable.
The “Ryan” Plan’s approach to Medicaid is representative of the various “replace” proposals. Like the other plans, it makes radical changed to Medicaid that go well beyond mere repeal. This and the other plans offer two alternative approaches that states can elect: per capita allotment and block grants.
Under the per capita allotment approach a total federal Medicaid allotment would be available for each state to draw down on. The amount of the federal allotment would be the product of the state’s per capita allotment for the four major beneficiary categories—aged, blind and disabled, children, and adults—and the number of enrollees in each of those four categories. The per capita allotment for each category would be determined by each state’s average medical assistance and non-benefit expenditures per full-year-equivalent enrollee during the base year (2016), adjusted for inflation. The per capita allotment would be designed to grow at a rate slower than under current law.
Under the block grant option, a state that opts out of the per capita allotment could automatically receive a block grant of federal funds to finance their Medicaid program. States would then be free to manage eligibility and benefits generally as they see fit without the need to apply to the Department of Health and Human Services for waivers.
(1) PPACA §1201, §10103(e); PHSA §2704 Plan years beginning on or after September 23, 2010 Prohibition on preexisting condition exclusions for enrollees who are under 19 years of age.
(2) PPACA §1001, §10101(a); HCERA §2301(a); PHSA §2711 Plan years beginning on or after September 23, 2010 Ban on annual and lifetime dollar limits on essential health benefits. Applies to group and individual insurance markets, and group health plans, including grandfathered group and individual plans. Annual or lifetime limits are permitted for items and services that are not part of the essential health benefits.
(3) PPACA §1001; HCERA §2301(a); PHSA §2712 Plan years beginning on or after September 23, 2010 Rescissions permitted only for fraud or intentional misrepresentation of material fact and with prior notice to the enrollee. Applies to group and individual insurance markets, and group health plans, including grandfathered group and individual plans.
• Evidence-based items/services with a rating of “A” or “B” in the current recommendations of the U.S. Preventive Services Task Force (USPSTF).
• Immunizations recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention (CDC).
• Evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration (HRSA) for infants, children and adolescents.
• With respect to women, additional preventive care and screenings provided for in guidelines supported by HRSA.
(5) PPACA §1001; HCERA §2301(a), §2301(b); PHSA §2714 Plan years beginning on or after September 23, 2010 Group health plans that provide dependent coverage must make coverage available to age 26. Grandfathered group health plans may delay to plan years commencing on and after January 1, 2014, for adult children eligible to enroll in an employer-sponsored plan.
(6) PPACA §1001, §10101; PHSA §2715 Plan years beginning on or after September 23, 2010 Group health plans must provide summaries of benefits and coverage (SBC) explanation that meets standards developed by HHS.
(7) PPACA §1001, §10101(d); PHSA §2716 Plan years beginning on or after September 23, 2010, but enforcement suspended (Notice 2011-1, 2011-2 I.R.B. 259) Insured group health plans (other than grandfathered plans) must satisfy benefits-related non-discrimination rules under §105(h)(2) prohibiting discrimination in favor of highly compensated individuals in terms of eligibility and benefits.
• Improve health outcomes through activities such as quality reporting, effective case management, care coordination, case management and medication and care compliance initiatives, including through the use of the medical home model.
• Implement activities to prevent hospital readmissions through a hospital discharge program that includes patient-centered education and counseling, comprehensive discharge planning and post-discharge reinforcement by an appropriate individual.
(9) PPACA §1001; PHSA §2718 Plan years beginning on or after September 23, 2010 Bringing down the cost of health care coverage: Health insurance issuers provide an annual accounting for coverage offered (including grandfathered health plans) and rebates to enrollees if medical loss ratios are not met.
• Issuers in the group market and group health plans must have an internal claims and appeals process based on existing DOL claims and appeals procedures, updated by standards established by HHS.
• Non-group plans must have an internal claims and appeals process based on existing law, updated by standards established by HHS.External Review: Issuers in the group market and group health plans must comply with applicable state or federal external review requirements.
(11) PPACA §10101(h); PHSA §2719A Plan years beginning on or after September 23, 2010 Group health plans must provide patient protections, including more choice of health care professionals, coverage of emergency services, and access to pediatric care and obstetrical or gynecological care.
(1) PPACA §1201; PHSA §2704 Plan years beginning on or after January 1, 2014 Prohibition on preexisting condition exclusions or other discrimination based on health status.
(2) PPACA §1201; PHSA §2701 Plan years beginning on or after January 1, 2014 Fair health insurance premiums.
(3) PPACA §1201; PHSA §2702 Plan years beginning on or after January 1, 2014 Guaranteed availability of coverage.
(4) PPACA §1201; PHSA §2703 Plan years beginning on or after January 1, 2014 Guaranteed renewability of coverage.
(5) PPACA §1201; PHSA §2705 Plan years beginning on or after January 1, 2014 Prohibiting discrimination against individual participants and beneficiaries based on health status.
(6) PPACA §1201; PHSA §2706 Plan years beginning on or after January 1, 2014 Nondiscrimination in health care.
(7) PPACA §1201; PHSA §2707 Plan years beginning on or after January 1, 2014 Comprehensive health insurance coverage.
(8) PPACA §1201; HCERA §2301(a); PHSA §2708 Plan years beginning on or after January 1, 2014 Prohibition on excessive waiting periods.
(9) PPACA §10103(c); PHSA §2709 Plan years beginning on or after January 1, 2014 Prohibition on denial of participation in approved clinical trials.
Tables used with permission. © 2017 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com2017.
Short-term health policies are exactly as they sound: healthcare policies, limited in duration, that are meant to function to fill a gap in coverage some individuals may face during their lives if they transition between jobs or group health plans. They are currently limited to twelve months of coverage.
What the Departments have found is there is a growing practice of individuals purchasing short-term policies (which are generally cheaper than exchange policies) and then paying the IRS penalty (short-term policies are not considered Minimum Essential Coverage), which has become a cheaper option. In some cases, individuals are even allowed to renew their short-term policy past the twelve month period, further solidifying the policy as their primary coverage.
It is speculated those opting to go this route are healthier individuals that just want to ensure they have some coverage. These healthier individuals are exactly what the Affordable Care Act needs in the exchange risk pool to balance things out. This is why there was such a concerted effort to close the door on this practice and push these individuals to the exchanges.
To combat this practice and further diversify the exchange risk pool, the Departments have issues a Final Rule, which changes the twelve month maximum for short-term policy coverage to three months. This will be effective for any policies with policy years beginning January 1, 2017. It should be noted that the limit will not be enforced on any 2017 policies, sold before April 1, 2017, in states with existing approved 12 month limits providing the policy expires in the 2017 calendar year.
This change won’t cause a seismic shift in the exchange risk pool, but with some of the projected rate increases being reported for 2017 and beyond, even small steps certainly help in chipping away.
Let’s Combat Rising Health Insurance Costs!
We will leave it to the politicians to duke it out over the specific causes of the increase and who is to blame. As employee benefit advisors, we prefer to focus on how we can help employers get out from under these significant cost hikes, while still providing your employees with robust, cost-effective benefit packages. One solution that is generating positive results and cost savings for businesses is self-funding their health insurance.
A self-funded health insurance plan is one in which an employer retains the financial risk of covering employees’ health care costs with the option to insure against the cost of catastrophic claims. Contracting with a third-party payer, administrative services organization, or an insurance company, an employer will pay a third party to administer the benefits, pay claims and perform certain limited fiduciary functions.
There are many benefits to self-funding including plan design choice, cost transparency and cost savings. Self-funded employers have much more flexibility in their plan design than insured employers, as they are not subject to state coverage mandates. They also have insight into the actual cost of care, administrative costs and any loaded fees or additional expenses to the plan. Other benefits of moving to self-insurance include eliminating a number of taxes, fees and administrative costs incurred with a fully funded plan.
Once an employer has made the conversion to self-funding, they can achieve savings of anywhere from 5% to 15% depending on their cost structure. Self-insurance remains a powerful weapon in the war on burgeoning benefit costs. Employers who make the change can reap immediate benefits and avoid, or at least slowdown, some of the significant and inevitable cost increases on the horizon.
If your company is in the process of renewing your health insurance for 2017, or if a renewal is on the horizon, we can help. You owe it to your business and employees to talk to us about self-funding. Speak to one of our team of brokers, consultants, underwriters and actuaries for self-funding advice and a free, no-obligation quote. In the end, you may chose to go a fully funded route, but you should know your options especially in light of the projected increases.
Contact us today using the form below to discuss self-funding health insurance further.
You might also be interested in our FREE white paper on self-funding. This helpful eguide was written by our funding experts and will give you more detail about how exactly self-insurance works.
With the 2-year delay of the “Cadillac Tax” getting the lion’s share of the publicity surrounding the passage of last month’s omnibus spending bill in Congress, two additional important Affordable Care Act (ACA) taxes were also delayed with little fanfare.
The Health Insurance Tax (HIT) was suspended for one year to 2017. The HIT is a tax on health insurance carriers in the form of a per subscriber, fixed-dollar fee that insurers pay into based on their premiums written. While this tax doesn’t directly impact employers, it has been widely speculated that most insurers would pass most if not all of the cost of the HIT onto their customers in the form of rate hikes, benefit reductions and co-payment increases. The suspension of the HIT provides an estimated 2.5-3% savings on fully insured insurance premiums.
Also delayed for two years, is the implantation of the tax on medical device manufacturers. This is a 2.3% tax on revenue from medical device sales. This tax was poised to deal a significant blow to the medical device manufacturing industry as it dug into money otherwise spent on research and development and would likely result in steeper prices for life-saving medical devices.
It is important that employers know these taxes exist and that they have been delayed. While they may not impact most businesses directly, their cost will almost certainly be passed on to businesses and consumers in some fashion when implemented.
Recently, the Internal Revenue Service (IRS) announced the extension of a couple of the important Affordable Care Act (ACA) reporting dates.
The IRS announced that they are extending the deadline for employers distributing health coverage offers and coverage provided to employees to March 31, 2016. The IRS is also pushing back the deadline for employers to report offers and coverage provided to May 31, 2016 for paper filing and June 30, 2016 for electronic returns.
The proper form for employers to distribute to employees are Form 1095-B and 1095-C. Forms submitted to the IRS by employers are 1094-B, 1095-B, 1094-C and 1095-C.
This most recent ACA delay/modification is certainly good news for employers struggling to keep up with the increasing demand on resources to comply with the new healthcare regulations.
Of course, if you have any questions or concerns about ACA reporting, compliance or implementation, you owe it to yourself to contact us. Spring’s compliance experts are consistently tracking and studying healthcare law to ensure our clients get the best and most up-to-date advice possible on this evolving topic.

References: §1201
 §10103
 §2704
 §1001
 §10101
 §2301
 §2711
 §1001
 §2301
 §2712
 §1001
 §2301
 §2301
 §2714
 §1001
 §10101
 §2715
 §1001
 §10101
 §2716
 §105
 §1001
 §2718
 §10101
 §2719
 §1201
 §2704
 §1201
 §2701
 §1201
 §2702
 §1201
 §2703
 §1201
 §2705
 §1201
 §2706
 §1201
 §2707
 §1201
 §2301
 §2708
 §10103
 §2709